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Item 8. Financial Statements and Supplementary Data

2024-03-14 compared with 2023-03-10 · 1088 added, 1226 removed, 378 unchanged (86% of the section changed)

Financial Statements and Supplementary Data

Akebia Therapeutics, Inc.

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID:

Financial Statements

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Stockholders’ (De ficit) Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and accompanying notes.

Akebia Therapeutics, Inc.

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Report of Independent Registered Public Accounting Firm

2 unchanged sentences

We have audited the accompanying consolidated balance sheets of Akebia Therapeutics, Inc.

(the Company) as of December 31, 2022, and 2021, the related consolidated statements of operations and comprehensive loss, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.

(the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, stockholders' (deficit) equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 10, 2023, expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 14, 2024 expressed a qualified opinion thereon.

Basis for Opinion

9 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

1 unchanged sentence

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Akebia Therapeutics, Inc.

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Revenue Recognition - Payor Mix Impact on Measuring Variable Consideration, Specifically Payor Rebates

4 unchanged sentences

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

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

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

11 unchanged sentences

Akebia Therapeutics, Inc.

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AKEBIA THERAPEUTICS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

December 31, 2022 December 31, 2021

(dollars in thousands, except per share amounts) 2023 2022

Current assets:

Cash and cash equivalents $ 42,925 $ 90,466

Inventory 21,762 38,195

Inventories 15,691 21,568

Accounts receivable, net 39,290 40,284

2 unchanged sentences

Property and equipment, net 3,629 5,214

Operating lease assets 29,158 33,852

Operating right-of-use assets 12,416 29,158

Intangible asset, net 36,042 72,084

Goodwill 59,044 59,044

Other intangible assets, net 72,084 108,127

Other assets 5,372 49,754

Other long-term assets 12,423 5,372

Total assets $ 241,703 $ 356,054

Liabilities and stockholders' equity

Liabilities and stockholders' (deficit) equity

Current liabilities:

5 unchanged sentences

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

Operating lease liabilities, net of current portion 28,961 33,703

Derivative liability 760 1,820

Long-term operating lease liabilities 8,947 28,961

Embedded debt derivative — 760

Long-term debt, net 17,183 34,078

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

Liability related to sale of future royalties 54,013 57,484

Refund liability to customer 40,093 40,992

Other non-current liabilities 12,161 82,525

Other long-term liabilities 8,885 15,717

Total liabilities 272,287 350,824

Commitments and contingencies (Note 10)

Stockholders' equity:

Preferred stock $ 0.00001 par value, 25,000,000 shares authorized at December 31, 2022 and 2021;

0 shares issued and outstanding at December 31, 2022 and 2021

Stockholders' (deficit) equity:

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

no shares issued and outstanding at December 31, 2023 and 2022

Common stock:

$ 0.00001 par value;

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

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

194,582,539 and 184,135,714 shares issued and outstanding at December 31, 2023 and 2022, respectively

Additional paid-in capital 1,578,358 1,562,247

Accumulated other comprehensive gain 6 6

Accumulated other comprehensive income 6 6

Accumulated deficit ( 1,608,950 ) ( 1,557,025 )

Total stockholders' equity 9,342 76,456

Total liabilities and stockholders' equity $ 351,830 $ 525,550

See accompanying notes to consolidated financial statements.

Total stockholders' (deficit) equity ( 30,584 ) 5,230

Total liabilities and stockholders' (deficit) equity $ 241,703 $ 356,054

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

Akebia Therapeutics, Inc.

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AKEBIA THERAPEUTICS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

Year Ended December 31,

2022 2021 2020

Years Ended December 31,

(dollars in thousands, except per share amounts) 2023 2022

Product revenue, net $ 170,301 $ 176,949

2 unchanged sentences

Cost of goods sold:

Product 48,754 117,352 148,866

Amortization of intangibles 36,042 36,042 31,515

Impairment of intangible asset — — 115,527

Cost of product and other revenue

38,107 49,526

Amortization of intangible asset 36,042 36,042

Total cost of goods sold 74,149 85,568

2 unchanged sentences

Selling, general and administrative 100,233 138,601

License expense 3,175 3,489 3,409

Restructuring 181 15,933

Total operating expenses 166,730 287,695

Operating loss ( 79,115 ) ( 265,318 ) ( 376,442 )

Other income (expense):

Interest income (expense) ( 15,687 ) ( 19,936 ) ( 8,871 )

Loss from operations ( 46,256 ) ( 80,779 )

Other income (expense):

Interest expense ( 6,032 ) ( 15,687 )

Other income 887 3,146

Loss on extinguishment of debt — ( 906 )

Loss on termination of lease ( 524 ) —

Net loss before income taxes ( 51,925 ) ( 94,226 )

Benefit from income taxes — — —

Net loss $ ( 51,925 ) $ ( 94,226 )

Net loss per share - basic and diluted $ ( 0.51 ) $ ( 1.70 ) $ ( 2.77 )

Weighted-average number of common shares - basic and diluted 182,782,680 165,949,695 138,463,152

Comprehensive loss $ ( 51,925 ) $ ( 94,226 )

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

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

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

See accompanying notes to consolidated financial statements.

Net loss per share:

Basic and diluted $( 0.28 ) $( 0.52 )

Weighted average number of common shares outstanding:

Basic and diluted 187,465,448 182,782,680

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

Akebia Therapeutics, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share data)

Common Stock Additional Paid-In

Capital Unrealized Gain/Loss Accumulated Deficit Total Stockholders'

Shares $ 0.00001

Balance at December 31, 2019 121,674,568 $ 1 $ 1,188,810 $ — $ ( 794,054 ) $ 394,757

Issuance of common stock, net of issuance costs 24,133,348 — 209,519 — — 209,519

Proceeds from sale of stock under employee stock purchase plan 235,658 — 1,100 — — 1,100

Exercise of options 166,633 — 1,226 — — 1,226

Share-based compensation expense — — 24,460 — — 24,460

Restricted stock unit vesting 1,863,878 — — — — —

Unrealized gain — — — 13 — 13

Net loss — — — — ( 383,457 ) ( 383,457 )

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Akebia Therapeutics, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

Common Stock Additional

Paid-In Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders'

(Deficit) Equity

(dollars in thousands) Shares Amount

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

1 unchanged sentence

Proceeds from sale of stock under employee stock purchase plan 335,146 — 410 — — 410

Share-based compensation expense — — 22,735 — — 22,735

Stock-based compensation expense — — 17,849 — — 17,849

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

Unrealized loss — — — ( 7 ) — ( 7 )

Exercise of options 142,440 — 67 — — 67

Net loss — — — — ( 94,226 ) ( 94,226 )

2 unchanged sentences

Proceeds from sale of stock under employee stock purchase plan 200,194 — 85 — — 85

Share-based compensation expense — — 17,849 — — 17,849

Stock-based compensation expense — — 9,317 — — 9,317

Restricted stock unit vesting 4,054,407 — — — — —

2 unchanged sentences

Balance at December 31, 2023 194,582,539 $ 2 $ 1,578,358 $ 6 $ ( 1,608,950 ) $ ( 30,584 )

See accompanying notes to consolidated financial statements.

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

Akebia Therapeutics, Inc.

Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

2022 2021 2020

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Akebia Therapeutics, Inc.

CONSOLIDATED STATEMENT OF CASH FLOWS

Years Ended December 31,

(dollars in thousands)

Operating Activities:

1 unchanged sentence

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

Depreciation and amortization 1,654 1,927 2,075

Amortization of intangibles 36,043 36,043 31,515

Intangible asset impairment charge — — 115,527

Non-cash interest expense related to sale of future royalties 6,182 9,117 —

Non-cash royalty revenue related to sale of future royalties ( 1,777 ) ( 821 ) —

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

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

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

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

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

Non-cash loss on extinguishment of debt 406 — —

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

Write-down of inventory 30,242 15,618 20,072

Change in excess inventory purchase commitments ( 67,618 ) 33,391 25,114

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

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

Depreciation expense 1,585 1,654

Amortization of intangible asset 36,042 36,043

Interest expense related to sale of future royalties (non-cash) — 6,182

Accretion of interest expense and amortization of refund liability ( 2,228 ) 2,121

Royalty revenue from MTPC (non-cash) ( 1,977 ) ( 1,777 )

Collaboration revenue in connection with the termination of the Otsuka Agreement (non-cash) — ( 9,550 )

R&D expense in connection with the termination of the Otsuka Agreement (non-cash) 782 8,768

Amortization of right-of-use assets 4,219 ( 2,417 )

Write-off on termination of Boston Lease (non-cash) ( 825 ) —

Loss on extinguishment of debt — 406

Provision of inventories 1,580 30,242

Change in firm purchase commitments 1,533 ( 65,946 )

Stock-based compensation expense 9,317 17,849

Change in fair value of embedded debt derivative ( 760 ) ( 1,060 )

Changes in operating assets and liabilities:

Accounts receivable 994 11,297

Inventory 19,793 ( 25,847 ) 6,163

( 2,542 ) 19,087

Prepaid expenses and other current assets 11,839 1,058

Operating lease assets — ( 13,888 ) —

Other long-term assets ( 1,361 ) ( 5,623 )

Accounts payable ( 5,244 ) 1,501

Accrued expense ( 38,227 ) ( 24,680 ) 6,356

Operating lease liabilities 2,311 15,398 1,411

Accrued expense and other current liabilities ( 10,021 ) ( 38,005 )

Lease liabilities ( 4,963 ) 2,311

Deferred revenue ( 3,738 ) 4,654

Other non-current liabilities 2,080 ( 12,481 ) —

Other long-term liabilities ( 5,691 ) 2,277

Net cash used in operating activities ( 23,384 ) ( 73,154 )

1 unchanged sentence

Purchase of property and equipment — ( 114 )

Purchase of available for sale securities — — ( 99,932 )

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

Net cash provided by (used in) investing activities — ( 114 )

Financing Activities:

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

Proceeds from refund liabilities to customers 40,000 — —

Proceeds from refund liability to customer — 40,000

Proceeds from the issuance of common stock, net of issuance costs 6,708 7,121

Proceeds from the sale of stock under employee stock purchase plan 85 410

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

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

Payments on debt ( 33,000 ) — —

Net cash provided by financing activities 14,598 133,731 231,720

Increase (decrease) in cash, cash equivalents, and restricted cash ( 58,670 ) ( 79,293 ) 81,328

Proceeds from the exercise of common stock options 1 67

Principal payments on debt ( 32,000 ) ( 33,000 )

Net cash (used in) provided by financing activities ( 25,206 ) 14,598

Decrease in cash, cash equivalents and restricted cash ( 48,590 ) ( 58,670 )

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

Cash, cash equivalents and restricted cash at end of the period $ 44,579 $ 93,169

Non-cash financing activities

Unpaid offering costs $ — $ 2 $ 100

Cash paid for:

Interest 6,755 9,632 7,843

See accompanying notes to consolidated financial statements.

Supplemental disclosure of cash flow information:

Cash paid for interest $ 6,059 $ 6,755

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

Akebia Therapeutics, Inc.

Notes to Consolidated Financial Statements

Nature of Organization and Operations

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Since inception, the Company has devoted most of its resources to research and development, including its preclinical and clinical development activities, commercializing Auryxia, and providing general and administrative support for these operations.

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Akebia Therapeutics, Inc.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NATURE OF BUSINESS

Akebia Therapeutics, Inc., referred to as Akebia or the Company , was incorporated in the State of Delaware in 2007 and became a public company in 2014.

Akebia is a fully integrated commercial-stage biopharmaceutical company committed to addressing patients’ unmet needs.

Our purpose is to better the life of each person impacted by kidney disease.

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

Food and Drug Administration, or FDA , and marketed for two indications:

(i) the control of serum phosphorus levels in adult patients with dialysis dependent chronic kidney disease, or DD-CKD , and (ii) the treatment of iron deficiency anemia, or IDA, in adult patients with non-dialysis chronic kidney disease, or NDD-CKD .

Auryxia will lose exclusivity in the U.S.

in March 2025.

Ferric citrate is also approved in Japan, and is marketed and sold by the Company's collaboration partner, as an oral treatment for the improvement of hyperphosphatemia in patients with chronic kidney disease, or CKD , including DD-CKD and NDD-CKD and for the treatment of adult patients with IDA under the trade name Riona (ferric citrate hydrate).

The Company has early to late-stage clinical programs, including vadadustat, the Company’s lead investigational product candidate.

Vadadustat is an investigational oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH , inhibitor.

In October 2023, the FDA acknowledged the Company's New Drug Application, or NDA , resubmission for vadadustat was complete, classified it as a Class 2 response and set a user fee goal date, or PDUFA date , of March 27, 2024.

Vadadustat is approved for the treatment of symptomatic anemia associated with CKD under the trade name Vafseo in the European Economic Area, or EEA , the United Kingdom, or UK , Switzerland, Australia and Taiwan in adult patients on chronic maintenance dialysis, in Korea for adult patients with CKD on hemodialysis and in Japan for adult dialysis-dependent and non-dialysis patients.

The Company will continue to support its partners in preparation to launch vadadustat in Europe, Taiwan and potentially other countries to pursue our goal of enabling broad access to vadadustat for patients globally.

Since its inception, the Company has devoted most of its resources to research and development, or R&D , including its preclinical and clinical development activities, commercializing Auryxia and providing general and administrative support for these operations.

The Company began recording revenue from the U.S.

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

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

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

In February 2021, the Company entered into a royalty interest acquisition agreement with HealthCare Royalty Partners IV, L.P., or HCR, or the Royalty Agreement, whereby the Company sold its right to receive royalties and sales milestones under its Collaboration Agreement with MTPC, or the MTPC Agreement, subject to certain caps and other terms and conditions (see Note 6 for additional information).

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

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

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

Going Concern

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

Pursuant to the requirements of ASC 205-40, the Company’s management must evaluate whether there are conditions or events considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one

year after the date the financial statements are issued.

This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

As of December 31, 2023, the Company had cash and cash equivalents of approximately $ 42.9 million.

Based on its current operating plan, the Company believes that its cash resources will be sufficient to allow the Company to fund its current operating plan through at least the next twelve months from the filing of the Company’s 2022 Annual Report on Form 10-K.

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

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

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

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

Based on its current operating plan, the Company believes that its cash resources and the cash the Company expects to generate from product, royalty, supply and license revenues will be sufficient to allow the Company to fund its current operating plan through at least twelve months from the filing of this Annual Report on Form 10-K, or Form 10-K .

However, if the Company’s operating performance deteriorates significantly from the levels expected in the Company’s operating plan, or if vadadustat is not approved in the U.S., it would affect the Company’s liquidity and its ability to continue as a going concern in the future.

The Company expects to finance future cash needs through product and collaboration, license and other revenue, including royalties and revenue from supply agreements.

If the Company believes its resources are insufficient to satisfy its liquidity requirements, we may seek to sell public or private equity, enter into new debt transactions, explore potential strategic transactions, consider other cash-generating or saving measures or a combination of these approaches or other strategic alternatives.

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S., or GAAP .

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

Akebia Therapeutics, Inc.

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

All intercompany balances and transactions have been eliminated in consolidation.

These consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (U.S.

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

GAAP as found in the Accounting

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

New Accounting Pronouncements – Recently Adopted

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

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

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

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

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

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

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

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

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company views its operations and manages its business in one operating segment, which is the business of developing and commercializing novel therapeutics for people with kidney disease.

Derivative Financial Instruments

The Company accounts for warrants and other derivative financial instruments as either equity or liabilities in accordance with ASC Topic 815, Derivatives and Hedging, or ASC 815, based upon the characteristics and provisions of each instrument.

Warrants classified as equity are recorded at fair value as of the date of issuance on the Company’s consolidated balance sheets and no further adjustments to their valuation are made.

Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as liabilities are recorded on the Company’s consolidated balance sheets at their fair value on the date of issuance and will be revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense.

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

The derivative liability recorded in connection with the Company’s Loan Agreement with Pharmakon is classified as a liability in the Company’s consolidated balance sheet (see Note 11).

All significant intercompany balances and transactions have been eliminated in the consolidated financial statements herein.

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

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

Use of Estimates

The preparation of financial statements in conformity with U.S.

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

Actual results may differ from those estimates.

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

Management must apply significant judgment in this process.

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

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

Estimates are used in the following areas, among others:

prepaid and accrued research and development expense, operating lease assets and liabilities, derivative liabilities, refund liabilities to customers, other non-current liabilities, the excess purchase commitment liability, stock-based compensation expense, product and collaboration revenues including various rebates and reserves related to product sales, non-cash interest expense on the liability related to sale of future royalties, inventories, income taxes, intangible assets and goodwill.

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

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

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

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

On an ongoing basis, management evaluates its estimates.

Management bases its estimates and assumptions on historical experience when available and on various factors, including expected business and operational changes, sensitivity and volatility associated with the assumption that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of the assets and liabilities that are not readily apparent from other sources.

In certain circumstances, management must apply significant judgment in these processes.

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

Although, we regularly assesses these estimates, actual results may differ materially from those estimates and changes in estimates are recorded in the period they become known.

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

accrued expenses, other long-term liabilities, product revenues, including various rebates, returns and reserves related to product sales, inventories, classification of expenses between cost of goods sold, R&D and selling, general and administrative, long-term assets, including the Company's right-of-use assets, intangible asset and goodwill.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of all cash on hand, deposits and funds invested in available for sale securities with original maturities of three months or less at the time of purchase.

Cash equivalents are reported at fair value.

At December 31, 2022, the Company’s cash is primarily in money market funds.

The Company may maintain balances with its banks in excess of federally insured limits.

Restricted cash represents amounts required for security deposits under the Company’s office and lab space lease agreements.

Restricted cash is included in “prepaid expenses and other current assets” and “other assets” in the consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated balance sheet that sum to the total of the amounts reported in the consolidated statement of cash flows (in thousands):

December 31, 2022 December 31, 2021 December 31, 2020

In determining cash, cash equivalents and restricted cash, the Company considers only those highly liquid investments, readily convertible to cash within 90 days from the date of purchase to be cash equivalents.

As of December 31, 2023, cash and cash equivalents primarily included cash on hand and funds invested in money market funds.

Restricted cash represents amounts required to secure the outstanding letter of credit in connection with the Company’s office and laboratory space in Cambridge, Massachusetts, or the Cambridge Lease .

Restricted cash is included in “other long-term assets” in the consolidated balance sheets.

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

Reconciliation of cash, cash equivalents and restricted cash (in thousands) 2023 2022

Cash and cash equivalents $ 42,925 $ 90,466

Prepaid expenses and other current assets — — 395

Other assets 2,703 2,039 2,039

Total cash, cash equivalents, and restricted cash shown

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

Restricted cash included in other long-term assets 1,654 2,703

Total cash, cash equivalents and restricted cash $ 44,579 $ 93,169

Fair Value of Financial Instruments

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

When determining the fair value measurements for assets and liabilities required to be recorded at fair value, management considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability.

ASC Topic 820, Fair Value Measurement , establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

To the extent the valuation is based on models or inputs that are less observable in the market, the determination of fair values requires more judgment.

A financial instrument categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The three levels of inputs that may be used to measure fair value are:

• Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities to the reporting entity at the measurement date.

• Level 2 – quoted prices for similar assets or liabilities in markets that are not active, or for which all significant inputs are observable, either directly or indirectly, for substantially the full term of the asset or liability.

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• Level 3 – unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

Accounts Receivable

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

The Company’s accounts receivable represent amounts due to the Company from product sales (see Note 11) and from its collaboration, license and other agreements (see Note 12).

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

Accounts receivable arising from product sales primarily represent amounts due from wholesale distributors as well as certain specialty pharmacy providers, or collectively, Customers.

The Company deducts trade allowances for prompt payment, among other discounts, from its accounts receivable based on its experience that the Company’s Customers will earn these discounts and fees.

Accounts receivable arising from product sales primarily represent amounts due from the Company's customers, net of allowances for customer discounts and chargebacks.

The Company deducts trade allowances for prompt payment, among other certain discounts or chargebacks, from its accounts receivable based on its experience that the Company’s customers will earn these discounts and fees.

The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for receivables when collection becomes doubtful.

Provisions are made based upon a specific review of all significant outstanding invoices and the overall quality and age of those invoices not specifically reviewed as well as historical payment patterns and existing economic factors.

Provisions are made based upon a specific review of all significant outstanding receivables and the overall quality and age of those invoices not specifically reviewed as well as historical payment patterns and existing economic factors.

The Company believes that credit risks associated with its customers and collaboration partners are not significant.

The Company did not have a material allowance for doubtful accounts as of December 31, 2022 and 2021.

Concentrations of Credit Risk and Off-Balance Sheet Risk

The Company's allowance for credit losses was $ 1.0 million and $ 1.1 million as of December 31, 2023 and 2022, respectively.

The write-offs for the year ended December 31, 2023 and 2022 were $ 0.1 million and $ 0.4 million, respectively.

Concentrations of Risk and Off-Balance Sheet Risk

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

The Company maintains its cash and cash equivalents with high quality, accredited financial institutions and, accordingly, such funds are subject to minimal credit risk.

The Company’s investment policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk.

The Company has no significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.

Accounts receivable represent amounts due from the Company’s customers and collaboration partners.

As part of its credit management policy, the Company performs ongoing credit evaluations of its Customers and generally does not require collateral from any customer.

The Company also monitors economic conditions of its collaboration partners to identify facts or circumstances that may indicate that any of its accounts receivable are at risk of collection.

The Company maintains cash accounts principally at three financial institutions in the U.S., which at times, may exceed the Federal Deposit Insurance Corporation's limits.

The Company has not experienced any losses from cash balances in excess of the insurance limit.

The Company's management does not believe the Company is exposed to significant credit risk at this time due to the financial condition of the financial institutions where its cash is held.

Gross revenues and accounts receivable from each of the Company’s customers or collaboration partners who individually accounted for 10% or more of total gross revenues and/or 10% or more of total gross accounts receivable consisted of the following:

Percent of Total Gross Revenues

% of Total Gross Revenues

Years Ended December 31,

2022 2021 2020

Fresenius Medical Care Rx 40 % 34 %

Otsuka Pharmaceutical Co.

20 % 14 % 29 %

AmerisourceBergen Drug Corporation 15 % 16 % 12 %

Cencora, Inc., formerly known as AmerisourceBergen Drug Corporation 21 % 15 %

McKesson Corporation 11 % — %

Cardinal Health, Inc.

Percent of Gross Accounts Receivable

As of December 31,

Otsuka Pharmaceutical Co.

% of Gross Accounts Receivable

Fresenius Medical Care Rx 31 % 44 %

AmerisourceBergen Drug Corporation 16 % 15 %

Cencora, Inc., formerly known as AmerisourceBergen Drug Corporation 25 % 16 %

Cardinal Health, Inc.

McKesson Corporation 12 % 10 %

Otsuka Pharmaceutical Co.

MTPC — % 20 %

Off-Balance Sheet Accounts

The Company has no significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangement.

See Note 9, Leases, for further details.

Manufacturing and Distribution Risk.

The Company is dependent on third-party manufacturers, logistics company and distributors to supply products for commercial activities associated with its product and product candidates, as applicable.

In particular, the Company relies and

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expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to the Company's product and product candidate activities.

These activities, including the commercialization of Auryxia, could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs or distribution of finished product to the market.

Inventories, including Pre-Launch Inventories

The Company values its inventories at the lower-of-actual cost or net realizable value.

The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis.

When the Company expects to utilize the inventory beyond one year we record it in inventories, long-term on its consolidated balance sheets.

Prior to obtaining initial regulatory approval for an investigational product candidate the Company expenses costs relating to production of pre-launch inventory as R&D expense in its consolidated statements of operations and comprehensive loss in the period incurred.

After regulatory approval has been received, the Company capitalizes such inventory costs.

Products used in clinical trials are expensed as R&D expense in the statement of operations and comprehensive loss.

The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess or obsolete inventory to its net realizable value in the period in which the impairment is identified through cost of product and other revenue in the consolidated statements of operations and comprehensive loss.

Additionally, the Company’s product is subject to strict quality control and monitoring that is performed throughout the manufacturing process, including release of work-in-process to finished goods.

In the event that certain batches or units of product do not meet quality specifications, the Company will record a write-down of any potential unmarketable inventory to its estimated net realizable value and record the expense as cost of product and other revenue in the consolidated statements of operations and comprehensive loss.

The Company prepays for certain manufacturing costs, including the raw materials to its CMOs which are included in prepaid manufacturing on the consolidated balance sheet.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation.

Assets under capital lease are included in property and equipment.

Property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets, generally three years to seven years .

Such costs are periodically reviewed for recoverability when impairment indicators are present.

Such indicators include, among other factors, unused capacity, market value declines and technological obsolescence.

Recorded values of asset groups of equipment that are not expected to be recovered through undiscounted future net cash flows are written down to current fair value, which generally is determined from estimated discounted future net cash flows (assets held for use) or net realizable value (assets held for sale).

The following is the summary of property and equipment and related accumulated depreciation as of December 31, 2022 and 2021.

Useful Life December 31, 2022 December 31, 2021

(in thousands)

Computer equipment and software 3 $ 1,010 $ 1,010

Furniture and fixtures 5 - 7 2,086 2,086

Equipment 7 2,750 2,750

Property and equipment are recorded at cost, less accumulated depreciation.

Expenditures for repairs and maintenance are expensed as incurred.

Depreciation expense is recognized using the straight-line method over the estimated useful lives, which are typically:

Asset Category

Estimated Useful Life

Computer equipment and software 3 years

Furniture and fixtures 5 years - 7 years

Laboratory and other equipment

Leasehold improvements Shorter of the useful life or remaining lease term

14,533 14,419

Less accumulated depreciation ( 9,319 ) ( 7,665 )

Net property and equipment $ 5,214 $ 6,754

Depreciation expense was approximately $ 1.7 million, $ 1.9 million and $ 2.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes the existing guidance for lease accounting, Leases (Topic 840).

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

In 2018, the FASB issued

additional ASUs related to Topic 842, or ASC 842, that clarified various aspects of the new lease guidance, including how to record certain transition adjustments, as well as other improvements and practical expedients.

The Company made an accounting policy election not to recognize leases with an initial term of 12 months or less within its consolidated balance sheets and to recognize those lease payments on a straight-line basis in its consolidated statements of operations.

Maintenance and repairs to an asset that do not improve or extend its life are charged to operations.

When assets are retired or otherwise disposed of, the assets and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in the Company's consolidated statements of operations and comprehensive loss.

Intangible Asset

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

The intangible asset was initially recorded at fair value and is stated net of accumulated amortization.

The Company amortizes its intangible asset that has a finite life using the straight-line method.

Amortization for the Company’s intangible asset is recorded over its remaining estimated useful life, which as of December 31, 2023 is estimated to be six years .

Goodwill reflects the excess purchase price over the fair value of the net tangible and intangible assets acquired in a business combination.

Goodwill is evaluated for impairment on an annual basis, and more frequently if indicators are present or changes in circumstances suggest that impairment may exist.

The Company compares the fair value of its reporting unit to its carrying value.

If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of its reporting unit, the Company would record an impairment loss equal to the difference.

As described above, the Company operates in one operating segment which the Company considers to be the only reporting unit.

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Impairment of Long-Lived Assets and Intangible Assets Subject to Amortization

Long-lived assets primarily include property and equipment, intangible assets.

The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

The recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

The Company did not recognize any impairment losses on long-lived assets for the years ended December 31, 2023 and 2022, respectively.

The Company made an accounting policy election not to recognize leases with an initial term of twelve months or less within its consolidated balance sheets and to recognize those lease payments as an expense on a straight-line basis in its consolidated statements of operations and comprehensive loss.

The Company also made the accounting policy election not to separate the non-lease components from the lease components for its building leases and, rather, account for each non-lease component and lease component as a single component.

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Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent its obligation to make lease payments arising from the leasing arrangement.

Operating lease assets and operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The right-of-use asset and operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

The Company uses the implicit rate when readily determinable and uses an estimate of its incremental borrowing rate when the implicit rate is not readily determinable based upon the available information at the commencement date of lease inception.

The incremental borrowing rate is determined using a credit rating scoring model to estimate the Company’s credit rating, adjusted for collateralization.

The calculation of the operating lease assets includes any lease payments made and excludes any lease incentives.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

The Company’s operating leases are reflected in prepaid expenses and other current assets, operating lease assets, accrued expenses and operating lease liabilities, net of current portion in its consolidated balance sheets.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

The Company values its inventories at the lower-of-cost or net realizable value.

The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis.

The Company classifies its inventory costs as long-term, in other assets in its consolidated balance sheets, when it expects to utilize the inventory beyond their normal operating cycle.

Prior to the regulatory approval of a product candidate, the Company incurs expenses for the manufacture of material that could potentially be available to support the commercial launch of its products upon approval.

Until the first reporting period when regulatory approval has been received or is otherwise considered probable and the future economic benefit is expected to be realized, the Company records all such costs as research and development expense.

Inventory used in clinical trials is also expensed as research and development expense, when selected for such use.

Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in a clinical manufacturing campaign.

The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventory to its net realizable value in the period in which the impairment is first identified.

Such impairment charges, should they occur, are recorded as a component of cost of product sales in the consolidated statements of operations and comprehensive loss.

The determination of whether inventory costs will be realizable requires the use of estimates by management.

If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required.

Additionally, the Company’s product is subject to strict quality control and monitoring that it performs throughout the manufacturing process.

In the event that certain batches or units of product do not meet quality specifications, the Company will record a charge to cost of product sales, to write-down any unmarketable inventory to its estimated net realizable value.

In all cases, product inventory is carried at the lower of cost or its estimated net realizable value.

The Company performs an assessment of all embedded features of a debt instrument to determine if (1) such features should be bifurcated and separately accounted for, and (2) if bifurcation requirements are met, whether such features should be classified and accounted for as equity or liability instruments.

If the embedded feature meets the requirements to be bifurcated and accounted for as a liability, the fair value of the embedded feature is measured initially, included as a liability on the consolidated balance sheet, and re-measured to fair value at each reporting period.

Any changes in fair value are recorded in the consolidated statement of operations.

The Company monitors, on an ongoing basis, whether events or circumstances could give rise to a change in the classification of embedded features.

The calculation of the right-of-use asset includes any lease payments made and excludes any lease incentives.

If a lease includes an option to extend or terminate the lease, the Company reflects the option in the lease term if it is reasonably certain the Company will exercise the option.

The Company’s operating leases are reflected in operating right-of-use assets, accrued expenses and other current liabilities and long-term operating lease liabilities in its consolidated balance sheets.

Derivative Financial Instruments

The Company accounts for derivative financial instruments as either equity or liabilities in accordance with ASC Topic 815, Derivatives and Hedging , or ASC 815, based on the characteristics and provisions of each instrument.

Embedded derivatives are required to be bifurcated from the host instruments and recorded at fair value if the derivatives are not clearly and closely related to the host instruments on the date of issuance.

Derivative instrument liabilities are classified in the consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date.

The embedded derivatives are revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense in the consolidated statements of operations and comprehensive loss.

The derivative liability recorded in connection with the Company’s prior Loan Agreement with Pharmakon was classified as a liability in the Company’s consolidated balance sheets.

See Note 3, Fair Value Measurements , and Note 7, Indebtedness , for more information.

Liability Related to Sale of Future Royalties

The Company treats the liability related to sale of future royalties (see Note 6) as a debt financing, amortized under the effective interest rate method over the estimated life of the related expected royalty stream.

The Company accounts for the liability related to sale of future royalties as a debt financing, amortized under the effective interest rate method over the estimated life of the related expected royalty stream.

The liability related to sale of future royalties and the debt amortization are based on the Company’s current estimates of future royalties expected to be paid over the life of the arrangement.

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To the extent the Company’s estimates of future royalty payments are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, the Company will adjust the effective interest rate and recognize related non-cash interest expense on a prospective basis.

In the event the Company's estimates of future royalties are less

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than the proceeds from the sale of future royalties, the Company will not recognize related non-cash interest expense.

Non-cash royalty revenue is reflected as royalty revenue within License, collaboration and other revenue, and non-cash amortization of debt is reflected as interest expense in the consolidated statements of operations and comprehensive loss.

See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , for more information.

Refund Liability to Customer

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

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

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

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

Restructuring

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

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

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

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

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

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

Excess Purchase Commitment Liability

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

These executory contracts were deemed to have an off-market element related to the amount of purchase commitments that exceed the current forecast and as such, the Company recorded a liability in purchase accounting.

The Company re-evaluates the excess purchase commitments each reporting period to assess whether any adjustments to the excess purchase commitment liability are necessary.

This evaluation includes reviewing the contractual minimums, expiration and utilization assumptions, and sales forecasts.

Inventory receipts that have been previously identified as excess are recorded as a reduction to the excess purchase commitment liability.

The Company accounts for the refund liability as a debt arrangement, which is recorded at net present value.

When the funds were received from the customer, the Company recorded an initial discount on the refund liability and a corresponding deferred gain to the refund liability.

The discount on the refund liability is being amortized to interest expense on the consolidated statement of operations and comprehensive loss and the deferred gain is being amortized to other income on the consolidated statement of operations and comprehensive loss over the expected term of the arrangement .

See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , for more information.

Excess Firm Purchase Commitment Liabilities

At each reporting period, the Company assesses whether there are excess firm non-cancelable purchase commitment liabilities, resulting from supply agreements with third-party CMOs.

The determination of excess firm purchase commitment liabilities requires judgment, including consideration of many factors, such as estimates of future product demand, current and future market conditions, impact of our loss of exclusivity, expiration and utilization of drug substance under firm purchase commitments, and contractual minimums.

Inventory receipts, if any, that have been previously identified as excess are recorded as a reduction to the firm purchase commitment liability.

Any changes in the firm purchase commitment liability are recorded in cost of product and other revenue in the consolidated statements of operations and comprehensive loss.

Revenue Recognition

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

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

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

Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

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Product Revenue, Net

The Company sells Auryxia in the United States, or U.S., primarily to wholesale distributors as well as certain specialty pharmacy providers, collectively, Customers.

The Company recognizes product revenues on sales of Auryxia primarily attributable to a limited number of customers, including wholesale distributors as well as certain specialty pharmacy providers, in the U.S., which accounts for the largest portion of the Company's total revenue.

These customers resell the Company’s product to health care providers and patients.

In addition to distribution agreements with customers, the Company enters into arrangements with health care providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of the Company’s product.

The Company recognizes revenue on product sales when the Customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the Customer.

The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less.

Reserves for Variable Consideration

Revenue from product sales is recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, chargebacks, rebates, co-pay assistance and other allowances that are offered within contracts between the Company and its Customers, health care providers, payors and other indirect customers relating to the Company’s sales of its products.

These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount will be credited to the Customer) or as a current liability (if the amount is payable to a Customer or a party other than a Customer).

The Company’s payment terms are consistent with prevailing practice in the respective markets in which the Company does business.

Most of the Company’s customers make payments based on contract terms, which are not affected by contingent events that could impact the transaction price.

Payment terms fall within the one-year guidance for the practical expedient, which allows the Company to forgo adjustment of the contractual payment amount of consideration for the effects of a significant financing component.

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The Company recognizes revenue on product sales when the customer obtains control of the Company’s product, which occurs at a point in time, typically upon receipt of the product by the Company's customer.

The Company expenses incremental costs of obtaining a contract, such as sales commissions, as and when incurred, if the expected amortization period of the asset that it would have recognized is one year or less.

Sales commissions are recorded in selling, general and administrative expense in the statements of operations and comprehensive loss.

Revenue from product sales is recorded at the net sales price, or Transaction Price , which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, chargebacks, rebates, co-pay assistance and other allowances offered within contracts between the Company and its customers, health care providers, payors and other indirect customers relating to the Company’s sales of its products.

When appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted in accordance with the expected value method in ASC 606 for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.

Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

The amount of variable consideration that is included in the Transaction Price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period.

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

If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

Trade Discounts and Allowances:

The Company generally provides Customers with discounts that include incentive fees that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized.

In addition, the Company compensates (through trade discounts and allowances) its Customers for sales order management, data, and distribution services.

However, the Company has determined such services received to date are not distinct from the Company’s sale of products to the Customer and, therefore, these payments have been recorded as a reduction of revenue within the consolidated statement of operations and comprehensive loss through December 31, 2022.

The Company records a corresponding reduction to accounts receivable (if the trade discount and/or allowance will be credited to the Customer) or an increase to accrued expense (if the trade discount and/or allowance is payable to a Customer) on the consolidated balance sheets.

Product Returns:

Consistent with industry practice, the Company generally offers Customers a limited right of return which allows for the product to be returned when the product expiry is within an allowable window, when the quantity delivered is different than quantity ordered, the product is damaged in transit prior to receipt by the customer, or is subject to a recall.

This right of return generally lapses once the product is provided to a patient.

The Company estimates the amount of its product sales that may be returned for credit by its Customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized.

The Company currently estimates product return reserve using available industry data and its own historical sales information, including its visibility into the inventory remaining in the distribution channel.

Provider Chargebacks and Discounts :

Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase the product from the Company.

The reserves are classified as reductions to accounts receivable, net of payable, if the trade discount and/or allowance will be credited to the customer or accrued expenses and other current liabilities or other long-term liabilities, if payable to a third-party in the consolidated balance sheets.

Trade Discounts and Allowances— The Company generally provides customers with prompt pay discounts and pay fees for distribution services, such as fees for certain data that customer's provide to the Company.

Trade discounts and allowances are recorded as a reduction of revenue within the consolidated statements of operations and comprehensive loss in the period the related product revenue is recognized.

The Company estimates that, based on its experience, its customers will earn these discounts and fees, and the Company will deduct the full amount of these discounts and fees from its gross product revenues and accounts receivable at the time such revenues are recognized.

Product Returns— Consistent with industry practice, subject to certain caps for certain customers, the Company generally offers customers a limited right of return which allows for the product to be returned when the product expiry is within an allowable window, when the quantity delivered is different than quantity ordered, the product is damaged in transit prior to receipt by the customer or is subject to a recall.

This right of return generally lapses once the product is provided to a patient or generally, if the bottle has been opened.

The Company estimates the amount of its product sales that may be returned and records this estimate as a reduction of revenue in the period the related product revenue is recognized.

The Company currently estimates product return reserve using available industry data and its own historical return information, including its visibility into the estimated inventory remaining in the distribution channel.

Provider Chargebacks and Discounts— Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to customers who directly purchase the product from the Company.

Customers charge the Company for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers.

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Reserves for chargebacks consist of credits that the Company expects to issue for units that remain in the distribution channel at each reporting period end that the Company expects will be sold to qualified healthcare providers, and chargebacks that customers have claimed but for which the Company has not yet issued a credit.

Commercial and Medicare Part D Rebates:

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

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

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

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

Other Government Rebates:

The Company is subject to discount obligations under state Medicaid programs and other government programs.

Other Government Rebates— The Company is subject to discount obligations under state Medicaid programs and other government programs.

The Company estimates its Medicaid and other government programs rebates based upon a range of possible outcomes that are probability-weighted for the estimated payor mix.

These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities on the consolidated balance sheets.

These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment

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of a current liability which is included in accrued expenses and other current liabilities in the consolidated balance sheets.

For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program.

The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel at the end of each reporting period.

Other Incentives:

Other incentives that the Company offers include voluntary patient assistance programs such as the Company’s co-pay assistance program, which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payors.

The calculation of the accrual for co-pay assistance is based on actual claims processed during a given period, as well as historical utilization data to estimate the amount the Company expects to receive associated with product that has been recognized as revenue, but remains in in the distribution channel at the end of each reporting period.

Collaboration Revenues

The Company enters into out-license and collaboration agreements which are within the scope of ASC 606, under which it licenses certain rights to its product candidates to third parties.

The terms of these arrangements typically include payment to the Company of one or more of the following:

non-refundable, up-front license fees;

development, regulatory, and commercial milestone payments;

payments for manufacturing supply services the Company provides through its contract manufacturers;

and royalties on net sales of licensed products.

Each of these payments may result in license, collaboration and other revenue, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues.

Other Incentives— The Company offers a voluntary patient co-pay assistance program, which provides financial assistance to qualified commercially insured patients with prescription drug co-payments required by payors.

The calculation of the accrual for co-pay assistance is based on actual claims processed during a given period plus an estimate of the amount the Company expects to pay based on historical utilization rates for the product that has been recognized as revenue but is estimated to be remaining in in the distribution channel at the end of each reporting period.

License, Collaboration and Other Revenues

The Company enters into license and collaboration agreements within the scope of ASC 606, under which it licenses certain rights to its product candidates to third parties.

The terms of these arrangements typically include the following:

(i) non-refundable, up front licenses fees associated with the licensing of intellectual property;

(ii) development, regulatory and commercial milestone payments;

(iii) drug product the Company supplies in connection with certain license and collaboration agreements and (iv) royalties earned on net sales of licensed products.

In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the Company implements the five-step model noted above.

As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine whether the individual promises should be accounted for as separate performance obligations or as a combined performance obligation, and to determine the stand-alone selling price for each performance obligation identified in the contract.

As part of the accounting for these arrangements, the Company develops assumptions that require judgment to determine whether the individual promises should be accounted for as separate performance obligations or as a combined performance obligation, and to determine the stand-alone selling price for each performance obligation identified in the contract.

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

(i) the customer can benefit from the good or service either on its own or together with other

resources that are readily available to the customer, and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

(i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.

The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates and probabilities of technical and regulatory success.

With regard to the MTPC and former Otsuka collaboration agreements, the Company recognizes revenue related to amounts allocated to the identified performance obligation on a proportional performance basis as the underlying services are performed.

Licenses of Intellectual Property

If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in an out-license and collaboration arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license.

For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees.

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The Company evaluates factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcome to assess the milestone as probable of being achieved.

There is considerable judgment involved in determining whether a milestone is probable of being reached at each specific reporting period.

There is considerable judgement involved in determining whether a milestone is probable of being reached at each specific reporting period.

Milestone payments that are not within the control of the Company or the customer, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

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Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenue in the period of adjustment.

Manufacturing Supply Services

Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options.

The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations.

If the Company is entitled to additional payments when the licensee exercises these options, any additional payments are recorded in license, collaboration and other revenues when the licensee obtains control of the goods, which is upon delivery.

The Company will recognize sales-based royalties, including milestone payments based on the level of sales, at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

The Company receives royalty payments from JT and Torii based on net sales of Riona and MTPC based on net sales of Vafseo in Japan.

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Drug Product Supply

Collaboration and license arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options.

The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as a separate performance obligation.

If the Company is entitled to additional payments when the licensee exercises these options, any payments are recorded in license, collaboration and other revenues when the licensee obtains control of the goods, which is generally upon delivery.

The Company will recognize sales-based royalties, including milestone payments based on the level of net sales, at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).

Collaborative Arrangements

The Company records the elements of its collaboration agreements that represent joint operating activities in accordance with ASC Topic 808, Collaborative Arrangements (ASC 808).

The Company records the elements of its collaboration agreements that represent joint operating activities in accordance with ASC Topic 808, Collaborative Arrangements, or ASC 808 .

Accordingly, the elements of the collaboration agreements that represent activities in which both parties are active participants and to which both parties are exposed to the significant risks and rewards that are dependent on the commercial success of the activities are recorded as collaborative arrangements.

The Company considers the guidance in ASC 606-10-15, Revenue from Contracts with Customers – Scope and Scope Exceptions , in determining the appropriate treatment for the transactions between the Company and its collaborative partners and the transactions between the Company and third parties.

Generally, the classification of transactions under the collaborative arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the

operations of the participants.

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

Agreement, as defined below in Note 4, as a component of the related expense in the period incurred.

Generally, the classification of transactions under the collaborative arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants.

To the extent product revenue is generated from the collaboration, the Company recognizes its share of the net sales on a gross basis if the Company is deemed to be the principal in the transactions with customers, or on a net basis if the Company is instead deemed to be the agent in the transactions with customers, consistent with the guidance in ASC 606.

Intangible Assets

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

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

The Company amortizes its intangible assets that have finite lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be utilized.

Amortization for the Company’s intangible asset is recorded over its remaining estimated useful life, which as of December 31, 2022 is estimated to be six years .

The Company reviews intangible assets subject to amortization to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life.

If an impairment indicator exists, the Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows of the intangible asset group to its carrying value on the consolidated balance sheet.

If the carrying value of the intangible asset group exceeds the undiscounted cash flows used in the recoverability test, the Company will write the carrying value of the intangible asset group down to the fair value in the period identified.

The Company calculates the fair value of the intangible asset group as the present value of estimated future cash flows expected to be generated from the intangible asset group using a risk-adjusted discount rate.

In determining estimated future cash flows associated with its intangible asset group, the Company uses market participant assumptions pursuant to ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820).

During the second quarter of 2020, the Company identified indicators of impairment related to the developed product rights for Auryxia and recorded an impairment charge of $ 115.5 million (see Note 9).

The Company allocates any excess purchase price over the fair value of the net tangible and intangible assets acquired in a business combination to goodwill.

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

The Company compares the fair value of its reporting unit to its carrying value.

If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of its reporting unit, the Company would record an impairment loss equal to the difference.

As described above, the Company operates in one operating segment which the Company considers to be the only reporting unit.

Fair Value of Financial Instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values.

ASC 820 establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available.

Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances.

The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments, and is not a measure of the investment credit quality.

The three levels of the fair value hierarchy are described below:

• Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

• Level 2 – Valuations based on quoted prices for similar assets or liabilities in markets that are not active, or for which all significant inputs are observable, either directly or indirectly.

• Level 3 – Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.

Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

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

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

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

Items measured at fair value on a nonrecurring basis include property and equipment, intangible assets and goodwill.

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

There were no impairments to assets measured using Level 3 inputs during the years ended December 31, 2022 and 2021.

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

The carrying amount for the Company’s Loan Agreement with Pharmakon approximates fair value because the interest rate is variable and reflects current market rates.

Research and Development Costs

Research and development costs are expensed as incurred.

Research and development expenses are comprised of costs incurred in providing research and development activities, including salaries and benefits, facilities costs, overhead costs, contract research and development services, and other outside costs.

Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.

External research and development expenses associated with the Company’s programs include clinical trial site costs, research compounds and clinical manufacturing costs, costs incurred for consultants and other outside services, such as data management and statistical analysis support, and materials and supplies used in support of the clinical and preclinical programs.

Internal costs of the Company’s clinical program include salaries, benefits, stock-based compensation, and an allocation of the Company’s facility costs.

When third-party service providers’ billing terms do not coincide with the Company’s period-end, the Company is required to make estimates of its obligations to those third parties, including clinical trial and pharmaceutical development costs, contractual services costs and supply costs, incurred in a given accounting period and record accruals at the end of the period.

The Company bases its estimates on its knowledge of the research and development programs, services performed for the period, past history for related activities and the expected duration of the third-party service contract, where applicable.

Advertising Expenses

The costs of advertising are expensed as incurred and included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

For the years ended December 31, 2022, 2021 and 2020, advertising expenses totaled $ 6.7 million, $ 8.2 million and $ 5.0 million, respectively, all related to Auryxia.

Income taxes are recorded in accordance with FASB Topic 740, Income Taxes, or ASC 740, which provides for deferred taxes using an asset and liability approach.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Valuation allowances are provided, if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

All deferred taxes as of December 31, 2022 and 2021 are classified as noncurrent within the income tax provision (see Note 13).

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740.

When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized.

The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position, as well as consideration of the available facts and circumstances.

As of December 31, 2022 and 2021, the Company does no t have any significant uncertain tax positions.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

Cost of Goods Sold

Cost of goods sold, or COGS , includes costs closely correlated or directly related to the costs to manufacture commercial drug product for Auryxia, including costs paid to the Company's contract manufacturing organizations, or CMOs , as well as indirect costs.

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

and Japan product sales recognized during the period.

In addition, COGS includes the amortization of development product rights for the Auryxia intangible asset.

The Company also includes personnel-related costs, including salaries and bonuses, employee benefits and stock-based compensation attributable to employees in particular functions and associated directly with the manufacturing of our commercial products.

Further, the Company includes in COGS costs to manufacture drug product provided to customers for which we have a license agreement.

Cost of goods sold for a newly launched product may not include the full cost of manufacturing until the initial pre-launch inventory is depleted, and additional inventory is manufactured and sold.

Until the Company receives regulatory approval for vadadustat, the Company records expenses incurred for the manufacture of pre-launch inventory that could potentially support a U.S.

launch as R&D expense.

The costs associated with the pre-launch inventory for the Medice Territory was expensed to R&D through April 2023 when marketing authorization was received.

The costs incurred to manufacturer vadadustat for the Medice Territory after the marketing approval in the Medice Territory is capitalized in inventory.

Therefore, the pre-launch inventory costs are not included in COGS.

Research and Development Expenses

R&D costs are expensed as incurred.

Internal R&D expenses are comprised of costs incurred in providing R&D activities, including salaries and bonuses, employee benefits, stock-based compensation for personnel engaged in R&D activities.

In addition, they include facility costs, including the laboratory and an allocation of office space for utilization by R&D staff, depreciation expense on the laboratory equipment as well as other direct costs such as lab supplies and equipment.

External R&D costs include development of potential new manufacturing processes and methods for both commercial and non-commercial products, conceptual formulation and design of possible product and process alternatives, research compounds and clinical manufacturing costs, costs incurred for consultants and other outside services, such as data

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management and statistical analysis support and materials and supplies used in support of the clinical and preclinical programs and costs paid to clinical resource organizations, or CRO , including investigative sites that conduct the Company's clinical trials.

Non-refundable advance payments for goods and services for both Auryxia and vadadustat are recorded in prepaid and other current assets in the consolidated balance sheets and expensed when the activity is performed or when the goods are received.

In addition, the costs associated with pre-launch inventory, including the cost of raw materials, costs paid to contract manufacturers for inventory manufacturing, freight and custom charges for vadadustat are expensed as R&D prior to regulatory approval.

For the years ended December 31, 2023 and 2022, material and production related costs of pre-approval inventory recorded to R&D was $ 6.4 million and $ 7.6 million, respectively.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A , expenses consist primarily of compensation for personnel, including stock-based compensation related to commercial, marketing, executive, finance and accounting, information technology, corporate and business development and human resource functions.

Other SG&A expenses include costs for marketing initiatives for the Company's commercial products, market research and analysis on the Company's commercial and product and potential product candidates, conferences and trade shows, travel expenses, professional services fees (including legal, patent, accounting, audit, tax, and consulting fees), insurance costs, general corporate expenses and allocated facilities-related expenses, including rent and maintenance of facilities.

Costs associated with advertising are expensed in the period incurred and are included in selling, general and administrative expenses.

For the years ended December 31, 2023 and 2022, advertising expenses totaled $ 1.0 million and $ 6.7 million, respectively, all related to the Company's U.S.

sales of its commercial product Auryxia.

All patent-related costs incurred in connection with the filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure.

Such amounts incurred are classified as SG&A expenses in the accompanying consolidated statements of operations and comprehensive loss.

Stock-Based Compensation

The Company’s stock-based compensation program allows for grants of common stock options, restricted stock awards, performance-based restricted stock units, or PSUs, stock appreciation rights, or SARs and restricted stock units.

Grants are awarded to employees and non-employees, including directors.

The Company accounts for its stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation , or ASC 718 .

ASC 718 requires all stock-based payments to employees and non-employees, including grants of stock options, restricted stock, restricted stock units, or RSUs, performance-based restricted stock units, or PSUs, and modifications to existing stock awards, to be recognized in the statements of operations and comprehensive loss based on their fair values.

The Company’s stock-based awards are comprised of stock options, RSUs and PSUs.

The Company estimates the fair value of options granted using the Black-Scholes option pricing model.

ASC 718 requires all stock-based payments to employees and non-employees, including modifications to existing stock awards, to be recognized in the statements of operations and comprehensive loss based on their fair values.

The Company estimates the fair value of options granted using the Black-Scholes option pricing model, or Black-Scholes .

The Company uses the market price at the time of grant to determine the fair value of restricted stock awards and performance-based restricted stock awards.

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The historical volatility was calculated based on a period of time commensurate with the expected term assumption.

The computation of expected volatility was based on the historical volatility of a representative group of companies with similar characteristics to the Company, including stage of product development and life science industry focus.

During 2017, the Company began to estimate its volatility by using a blend of its stock price history for the length of time it has market data for its stock and the historical volatility of similar public companies for the expected term of each grant.

The Company is a commercial-stage biopharmaceutical company and the representative group of companies has certain similar characteristics to the Company.

The Company believes the group selected has sufficient similar economic and industry characteristics and includes companies that are most representative of the Company.

The Company uses the simplified method as prescribed by the SEC Staff Accounting Bulletin No.

The Company uses the simplified method as prescribed by the Securities and Exchange Commission, or SEC , Staff Accounting Bulletin No.

107, Share-Based Payment , to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term.

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For options granted to non-employees, the Company utilizes the contractual term of the arrangement as the basis for the expected term assumption.

The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options.

The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock, which is similar to the Company’s peer group.

The risk-free interest rate is based on U.S.

Treasury securities with a maturity date commensurate with the expected term of the associated award.

The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock.

The Company recognizes forfeitures as they occur.

The Company’s stock-based awards are subject to either service or performance-based vesting conditions.

Compensation expense related to awards to employees and non-employees with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term, and is adjusted for pre-vesting forfeitures in the period in which the forfeitures occur.

Compensation expense related to awards to employees and non-employees with performance-based vesting conditions is recognized based on the grant date fair value over the requisite service period using the accelerated attribution method to the extent achievement of the performance condition is probable.

Compensation expense related to awards to employees and non-employees with performance-based vesting conditions is recognized based on the grant date

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fair value over the requisite service period using the accelerated attribution method to the extent achievement of the performance condition is probable.

For awards with performance conditions in which the award does not vest unless the performance condition is met, the Company recognizes expense if, and to the extent that, the Company estimates that achievement of the performance condition is probable.

If the Company concludes that vesting is probable, it recognizes expense from the date it reaches this conclusion through the estimated vesting date.

Income taxes are recorded in accordance with FASB Topic 740, Income Taxes , or ASC 740 , which provides for deferred taxes using an asset and liability approach.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.

Valuation allowances are provided, if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

All deferred taxes as of December 31, 2023 and 2022 are classified as non-current within the income tax provision.

See Note 15, Income Taxes , for further information.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740.

When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized.

As of December 31, 2023 and 2022, the Company does no t have any significant uncertain tax positions.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

Net Loss per Share

1 unchanged sentence

Diluted net loss per share is calculated by adjusting weighted-average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method.

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

For purposes of the diluted net loss per share calculation common stock options, stock appreciation rights, warrants and RSUs as well as restricted stock, if the Company was to issue any, are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented.

Therefore, basic and diluted net loss per share were the same for all periods presented.

Diluted net income per share is calculated by dividing the net income by the weighted-average common shares outstanding for the period, including any dilutive effect from outstanding options, warrants, restricted stock and RSUs using the treasury stock method.

Product Revenue, Net

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or CODM , or decision-making group, in deciding how to allocate resources and in assessing performance.

The Company operates its business in a single segment and as one reporting unit, which is how its chief operating decision maker (who is the Company's president and chief executive officer) reviews financial performance and allocates resources.

The Company views its operations as and manages its business in one operating segment.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 requires public companies to annually (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate).

ASU 2023-09 will be effective for the annual reporting periods in fiscal years beginning after December 15, 2024.

The Company is currently evaluating ASU 2023-09 and does not expect it to have a material effect on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures .

ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the CODM and included within the segment measure of profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM.

ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024.

The Company is currently reviewing the impact that the adoption of ASU 2023-07 may have on its consolidated financial statements and disclosure.

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FAIR VALUE MEASUREMENTS

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

December 31, 2023

Level 1 Level 2 Level 3 Total

Cash equivalents:

Money market funds $ 1,504 — — $ 1,504

December 31, 2022

Level 1 Level 2 Level 3 Total

Cash equivalents:

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

Long-term liability:

Embedded debt derivative — — $ 760 $ 760

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

Embedded debt derivative —As described in Note 7, Indebtedness , the Company’s prior Loan Agreement with Pharmakon contained certain provisions that change the underlying cash flows of the debt instrument, including the acceleration of the obligations under the Pharmakon Loan Agreement under certain events of default, and under certain circumstances, the application of a default interest rate on all outstanding obligations during the occurrence and continuance of an event of default.

The Company concluded that these features of the Pharmakon Loan Agreement represent a single compound embedded debt derivative required to be bifurcated from the debt host instrument and re-measured at fair value on a quarterly basis.

The Company classified the embedded debt derivative as a non-current liability in its consolidated balance sheets.

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

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

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

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

The following table reconciles the fair value of the embedded debt derivative (in thousands):

Balance at December 31, 2022 $ 760

Change in fair value, recorded as other income

Balance at December 31, 2023 $ —

INVENTORIES AND PREPAID MANUFACTURING

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Inventories consists of the following (in thousands):

Inventories, current:

Work-in-process $ 4,297 $ 7,892

Finished goods 11,394 13,676

Inventories, current $ 15,691 $ 21,568

Long-term inventories included in other long-term assets:

Raw materials

Work-in-process

Inventories, long-term

$ 9,403 $ 610

Total inventories $ 25,094 $ 22,178

For the period ended December 31, 2023 and 2022, inventories consisted primarily of inventories related to the Company's commercial product, Auryxia.

As of December 31, 2023, the Company had $ 0.5 million of prepaid manufacturing costs for Auryxia drug substance and manufacturing costs.

The Company did not have any prepaid manufacturing related to Auryxia as of December 31, 2022.

Inventory written down for Auryxia as a result of excess, obsolescence, scrap or other reasons charged to cost of product and other revenue in the consolidated statements of operations and comprehensive loss totaled approximately $ 1.6 million and $ 30.2 million during the years ended December 31, 2023 and 2022, respectively.

For the year ended December 31, 2023, the Company recorded $ 4.3 million of lowered cost of product and other revenue due to the Company's ability to commercially sell inventory previously written down to zero, its then net realizable value.

As of December 31, 2023, the Company has an additional $ 12.3 million of inventory previously written down inventory to its then net realizable value of zero for drug product that may be salable in future periods.

Pre-Launch Inventory

The Company records advance payments for vadadustat active pharmaceutical ingredient, or API , or drug substance (raw materials) it expects to use for the potential U.S.

launch and Medice Territory as prepaid manufacturing costs.

Upon the quality release of the vadadustat batches and transfer of title to the Company from the CMO, the cost of the pre-launch inventory, including the manufacturing costs is expensed to R&D.

As of December 31, 2023, the Company had $ 14.0 million of prepaid manufacturing costs for vadadustat drug substance expected to be used in the potential U.S.

launch of vadadustat included in prepaid expenses and other current assets on the consolidated balance sheet.

See Note 6, Additional Balance Sheet Detail , for further information.

INTANGIBLE ASSET AND GOODWILL

Intangible Asset

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

December 31, 2023 December 31, 2022

Intangible asset:

Value Accumulated

Amortization Net Book Value Net Book Value Estimated Useful Life

Developed product rights for Auryxia $ 214,705 $ ( 178,663 ) $ 36,042 $ 72,084 6 years

The Company recorded $ 36.0 million in amortization expense during each of the years ended December 31, 2023 and 2022 related to the developed product rights for Auryxia.

As of December 31, 2023 and 2022, the Company had goodwill of $ 59.0 million recorded in connection with the December 2018 merger with Keryx.

The Company has not identified any goodwill impairment to date.

ADDITIONAL BALANCE SHEET DETAIL

Prepaid expenses and other current assets are as follows (in thousands):

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Description 2023 2022

Prepaid manufacturing

$ 14,489 $ 15,615

Total prepaid expenses and other current assets

$ 20,243 $ 32,864

See Note 4, Inventories, for further information on prepaid manufacturing expenses.

Accrued expenses and other current liabilities are as follows (in thousands):

Product revenue allowances $ 22,940 $ 26,268

Product return reserves, current portion 5,420 7,789

Compensation and related benefits 8,216 11,894

Accrued manufacturing costs 5,555 4,310

BioVectra termination fees, current portion 7,500 —

Operating lease liabilities, current portion 4,491 4,744

Royalties due to Panion

Liability related to sale of future royalties, current portion 2,048 —

Professional fees 1,909 1,886

Clinical trial costs 328 5,755

Restructuring costs, current portion 737 2,751

Other 4,602 6,576

Total accrued expenses and other current liabilities $ 67,735 $ 75,777

Other long-term assets are as follows (in thousands):

Description 2023 2022

Long-term inventories

$ 9,403 $ 610

Restricted cash

Total other long-term assets

$ 12,423 $ 5,372

See Note 4, Inventories, for further information on long-term inventories.

Entry into BlackRock Loan Facility

On January 29, 2024, the Closing Date, the Company entered into the Agreement for the Provision of a Loan Facility, or the BlackRock Credit Agreement, with Kreos Capital VII (UK) Limited , or Kreos , which are funds and accounts managed by BlackRock Inc., collectively, BlackRock , and provides for a senior secured term loan facility in the aggregate principal amount of up to $ 55.0 million, or the Term Loan Facility .

The Term Loan Facility is available in three tranches (i) Tranche A — $ 37.0 million was funded on the Closing Date and used to repay the Pharmakon Term Loans;

(ii) Tranche B — $ 8.0 million is available in a single draw through December 31, 2024, and (ii) Tranche C — $ 10.0 million is available in a single draw through December 31, 2024, collective the Term Loans .

Tranche B and C are available subject to certain conditions, including the Company's receipt of marketing approval for vadadustat from the FDA and in the case of Tranche C, receipt of a certain amount of cumulative gross cash proceeds after the Closing Date in the form of equity or equity linked securities in one or more series of transactions.

The BlackRock Term Loan Facility has an initial maturity date of March 31, 2025, which will be automatically extended to January 29, 2028, if Company receives FDA approval for vadadustat on or prior to June 30, 2024, or the BlackRock Maturity Date .

The Company is required to make interest-only payments until December 31, 2026, after which the Company will begin paying equal monthly principal on the first calendar day of each month, or the BlackRock Interest Only Period .

In the event of certain prespecified events, the repayment schedule will be accelerated.

For example, if FDA approval of vadadustat is not

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obtained on or prior to June 30, 2024, the BlackRock Interest Only Period will automatically terminate on October 1, 2024, and the Company will be required to repay the Term Loans in seven equal monthly payments (comprised of principal and interest), commencing on October 1, 2024 and ending on the BlackRock Maturity Date.

The Term Loan Facility will accrue interest at a floating annual rate equal to the sum of (i) term Secured Overnight Financing Rate, or SOFR , for a tenor of one month (subject to a floor of 4.25 % per annum) plus (ii) a margin of 6.75 % per annum (subject to an overall cap of 15.00 % per annum on the all-in interest rate).

During the continuance of any payment event of default under the BlackRock Credit Agreement, the interest rate on such overdue sum will automatically increase by an additional 3.0 % per annum, and may be subject to an additional late fee of 2.0 % of such overdue sum.

The Term Loan Facility also includes transaction fees ranging from 1.00 % to 1.25 % of the draw down amount as well exit fees of 0.75 % of the amount funded to the relevant tranche.

If the Company prepays the outstanding loan prior to maturity, it will be required to pay a prepayment fee ranging from 1.0 % to 4.0 % of the amount prepaid.

If prepayment is made during the first year, the Company also is required to pay the amount of otherwise due interest payments for the twelve-month period following prepayment.

The BlackRock Term Loan Facility is secured by substantially all of the existing and after-acquired assets of the Company, including intellectual property.

The BlackRock Credit Agreement requires the Company to (i) maintain a minimum aggregate cash balance of $ 15.0 million in one or more controlled accounts or (ii) trailing twelve-month revenue of $ 150.0 million, both of which are measured monthly.

The BlackRock Credit Agreement contains various affirmative and negative covenants that limit the Company's ability to enter into certain transactions.

On the Closing Date, Kreos Capital VII Aggregator SCSp, an affiliate of Kreos, or the Warrant Holder , received a warrant to purchase 3,076,923 shares of the Company’s common stock, at an exercise price per share of $ 1.30 , and upon borrowing of Tranche C, the Company will become obligated to issue additional warrants to purchase 1,153,846 shares of the Company’s common stock at an exercise price per share of $ 1.30 .

Each warrant shall be exercisable for eight years from the date of issuance.

The Company's net proceeds from the Tranche A Loan were approximately $ 34.5 million, after deducting debt issuance costs, fees and expenses.

The amounts classified on the consolidated balance sheet as of December 31, 2023, are reflective of the current and long-term portions due under the repayment schedule due to Blackrock.

Other Agreements Accounted for as Debt

The Company has a liability related to the sale of future liabilities which is accounted for as a debt arrangement.

See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , for further information.

The Company has a refund liability with Vifor (International) Ltd.

(now a part of CSL Limited), or CSL Vifor, which is also accounted for as a debt arrangement.

See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , for further information.

Pharmakon Term Loan (Extinguished January 29, 2024)

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

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

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

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

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

On November 25, 2019, the Company drew $ 77.3 million on Tranche A, net of fees and expenses of $ 2.7 million.

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

On July 15, 2022, or Second Amendment Effective Date , the Company prepaid $ 25.0 million of the then outstanding principal, $ 5.0 million on Tranche A and $ 20.0 million on Tranche B as well as a $ 0.5 million prepayment fee under the terms of the Pharmakon Loan Agreement.

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

As of December 31, 2023, the Company had $ 35.0 million of principal outstanding.

The Pharmakon Term Loans, as amended, bore interest through maturity at a variable rate based on the three month SOFR plus a SOFR adjustment of 0.30 % plus 7.50 %.

The SOFR interest rate was capped at 3.35 % through October 31, 2023, the date of the Fourth Amendment to the Pharmakon Loan Agreement, or Fourth Amendment .

As of December 31, 2023, the three-month SOFR rate was no longer subject to the SOFR cap, therefore, the Company's interest rate was 13.13 %.

The Company recognized approximately $ 6.0 million and $ 9.5 million of interest expense related to the Pharmakon Loan Agreement during

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the years ended December 31, 2023 and 2022, respectively.

Unamortized discount and issuance costs were $ 0.3 million as of December 31, 2023.

The Company was required to make equal quarterly principal payments that started on the 33 rd-month anniversary of the applicable Funding Date until November 25, 2024, or Original Maturity Date.

The Fourth Amendment, which the Company entered into on October 31, 2023, extended the maturity date to March 31, 2025, or New Maturity Date , and revised the principal payments to monthly principal payments starting in October 2024 on the remaining principal balance of $ 35.0 million.

During the year ended December 31, 2023, the Company made quarterly principal payments totaling $ 32.0 million under the Pharmakon Term Loans.

The Pharmakon Loan Agreement was secured by a first priority lien on certain assets of the Company, including Auryxia and certain related assets, cash and certain equity interests held by the Company.

The Pharmakon Loan Agreement contained various affirmative and negative covenants, including that limit the Company's ability to engage in specified types of transactions and require the Company to maintain one or more controlled cash accounts.

In addition, the Pharmakon Loan Agreement, as amended, required the Company 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 Annual Reports on Form 10-K.

If an event of default occurred, including a qualification as a going concern, and was continuing under the Pharmakon Loan Agreement, the Collateral Agent would have been entitled to take enforcement action, including acceleration of amounts due under the Pharmakon Loan Agreement.

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

As of December 31, 2023 and 2022, the Company was in compliance with the covenants under the Pharmakon Loan Agreement.

Future principal payments pursuant to the contractual terms of the Pharmakon Loan Agreement, as amended, as of December 31, 2023 were as follows (in thousands):

Years ended December 31,

2024 $ 17,500

Total before unamortized discount and issuance costs 35,000

unamortized discount and issuance costs ( 317 )

Total term loans $ 34,683

As it relates to the Pharmakon Loan Agreement, the Company concluded the contingent put and call features that could require mandatory repayment upon the occurrence of an event of default, default interest rates to be payable and certain other events represent an embedded derivative required to be bifurcated from the debt host instrument and accounted for separately and re-measured at fair value on a quarterly basis.

The fair value of the derivative liability related to the Company’s Pharmakon Loan Agreement was $ 0 and $ 0.8 million as of December 31, 2023 and 2022, respectively.

During the years ended December 31, 2023 and 2022, the Company recognized a $ 0.8 million and $ 1.1 million gain, respectively, in other income in the consolidated statements of operations and comprehensive loss related to the decrease in the fair value of the embedded debt derivative.

On January 29, 2024, using the proceeds from the BlackRock Credit Agreement, the Company paid the then current outstanding principal balance under the Pharmakon Term Loan of $ 35.0 million, plus the outstanding interest and a prepayment fee of $ 0.2 million.

DEFERRED REVENUE, REFUND LIABILITY AND LIABILITY RELATED TO SALE OF FUTURE ROYALTIES

CSL Vifor License Agreement

Summary of Agreement

On February 18, 2022, the Company entered into a Second Amended and Restated License Agreement, or the Vifor Agreement , with CSL Vifor which amended and restated the License Agreement dated as of May 12, 2017, or the Original License Agreement .

The Vifor Agreement grants CSL Vifor an exclusive license to sell vadadustat to Fresenius Kidney Care Group LLC, an affiliate of Fresenius Medical Care North America, or FMCNA , and its affiliates, including Fresenius Kidney Care Group LLC, to certain third-party dialysis organizations approved by the Company, to independent dialysis organizations that are members of certain group purchasing organizations and certain non-retail specialty pharmacies, collectively, the Supply Group , in the U.S., or Vifor Territory .

The Company plans to market vadadustat in the U.S., if approved, including to the Supply Group, and sell vadadustat directly to organizations outside the Supply Group.

CSL Vifor has agreed that it would not sell or otherwise supply vadadustat until the FDA has granted regulatory approval for vadadustat for the treatment of anemia due to

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CKD in adult patients with DD-CKD in the Vifor Territory and until CSL Vifor has entered a supply agreement with the applicable member of the Supply Group.

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

In addition, CSL Vifor made an upfront payment to the Company of $ 25.0 million in February 2022 in connection with the amendment and restatement of the Vifor Agreement, which was recorded as long-term deferred revenue in the accompanying consolidated balance sheet.

Unless earlier terminated, the Vifor Agreement will expire upon the later of the expiration of all patents that claim or cover vadadustat or expiration of marketing or regulatory exclusivity for vadadustat in the Vifor Territory.

CSL Vifor may terminate the Vifor Agreement in its entirety upon thirty months ' prior written notice after the first anniversary of the receipt of regulatory approval, if approved from the FDA for vadadustat for dialysis-dependent CKD patients.

The Company may terminate the Vifor Agreement in its entirety for convenience, following the earlier of a certain period of time elapsing or following certain specified regulatory events, and upon six months ’ prior written notice.

If the Company so terminates for convenience, subject to specified exceptions, the Company will pay a termination fee to CSL Vifor.

In addition, either party may, subject to a cure period, terminate the Vifor Agreement in the event of the other party’s uncured material breach or bankruptcy.

Investment Agreements

In connection with the Original License Agreement, in May 2017, the Company sold an aggregate of 3,571,429 shares of the Company’s common stock, or 2017 Shares , to CSL Vifor at a price per share of $ 14.00 for a total of $ 50.0 million.

In February 2022, in connection with the Vifor Agreement, the Company sold an aggregate of 4,000,000 shares of its common stock, or 2022 Shares , to CSL Vifor for a price per share of $ 5.00 for a total of $ 20.0 million.

The $ 18.3 million representing the premium over the closing stock price, or $ 4.7 million for the 2017 Shares and $ 13.6 million for the 2022 Shares, represent consideration related to the Vifor Agreement.

CSL Vifor agreed to a lock-up restriction to not sell or otherwise dispose of the 2017 Shares or the 2022 Shares for a period of time, which restrictions have expired with respect to both the 2017 Shares and the 2022 Shares.

The 2017 Shares and 2022 Shares are subject to standstill agreement and are subject to voting agreements.

The 2017 Shares and 2022 Shares have not been registered pursuant to the Securities Act of 1933, as amended, or the Securities Act , and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder as the transaction did not involve any public offering within the meaning of Section 4(a)(2) of the Securities Act.

Deferred Revenue Recognition

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

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

The transaction price of $ 43.3 million was comprised of the up-front payment of $ 25.0 million and the premiums paid by CSL Vifor on the First Investment Agreement and Second Investment Agreement of $ 4.7 million and $ 13.6 million, respectively.

Pursuant to the Vifor Agreement, these payments are non-refundable and non-creditable against any other amount due to the Company.

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

Given the uncertainty associated with a potential future approval of vadadustat by the FDA, and whether, if approved, vadadustat would be included in certain reimbursement bundles by CMS, the Company constrained the entire transaction price at inception.

Until the license is delivered, the transaction price of $ 43.3 million will remain in long-term deferred revenue in the accompanying consolidated balance sheets.

(see Note 12, License, collaboration and other revenue for further information)

Refund Liability to Customer/Working Capital Fund

Pursuant to the Vifor Agreement, CSL Vifor contributed $ 40.0 million to a working capital fund, or Working Capital Fund , established to fund approximately 50 % of the Company’s costs of purchasing vadadustat from its contract manufacturers for the supply of vadadustat for the Vifor Territory already delivered or to be delivered to the Company through the end of 2023.

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

Upon termination or expiration of the Vifor Agreement for any reason other than

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

The Company has determined that the working capital fund does not represent an obligation to transfer goods or services to CSL Vifor in the future and thus under ASC 606 was recorded as a refund liability.

The refund liability is considered a debt arrangement with zero coupon interest and the Company imputes interest on the refund liability at a rate of 15.0 % per annum, which was determined based on certain factors, including the Company's credit rating, comparable securities yield and the expected repayment period.

On March 18, 2022, when the $ 40.0 million was received from CSL Vifor, the Company recorded an initial discount on the refund liability to the customer and a corresponding deferred gain to the refund liability to customer in the consolidated balance sheet.

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

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

The amortization of the discount was $ 3.1 million and $ 3.4 million for the years ended December 31, 2023 and 2022, respectively.

The amortization of the deferred gain was $ 4.0 million and $ 2.4 million for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, the $ 40.1 million total 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.

Liability Related to Sale of Future Royalties

In February 2021, the Company entered into a royalty interest acquisition agreement with HealthCare Royalty Partners IV, L.P., or HCR , or Royalty Agreement , pursuant to which the Company sold to HCR its right to receive royalties and sales milestones for vadadustat in Japan and certain other Asian countries, such countries collectively, the MTPC Territory , and such payments collectively the Royalty Interest Payments , in each case, payable to the Company under the MTPC Agreement.

The Royalty Interest Payments are subject to an annual maximum “cap” of $ 13.0 million, after which the Company will receive 85 % of the Royalty Interest Payments for the remainder of that year.

The Royalty Interest Payments are also subject to an aggregate maximum “cap” of $ 150.0 million, after which the Royalty Interest Payments will revert back to the Company.

The Company was eligible to receive an additional $ 5.0 million in each year from 2021 through 2023 under the Royalty Agreement if specified annual sales milestones were achieved for vadadustat in the MTPC Territory, subject to the satisfaction of certain customary conditions.

The sales milestones for vadadustat in the MTPC Territory were not achieved for 2023, 2022 or 2021.

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

The Royalty Agreement will terminate on the earlier of the date on which HCR has received (i) the last Royalty Interest Payment or (ii) payment by the Company of an amount equal to the Aggregate Cap minus the aggregate amount of all Royalty Interest Payments actually received by HCR.

At the transaction date, the Company recognized the proceeds received from HCR of $ 44.8 million (net of certain transaction expenses) as a liability and is amortizing it using the effective interest method over the life of the arrangement.

The liability related to sale of future royalties and the debt amortization are based on the Company’s current estimates of future royalties expected to be paid over the life of the arrangement.

In the event the Company's estimates of future royalties are less than the proceeds from the sale of future royalties, the Company will not recognize related non-cash interest expense.

On a quarterly basis, the Company assesses the expected royalty payments.

The annual effective interest rate as of December 31, 2023 was 0 % and, therefore the Company did not recognize any non-cash interest expense in the consolidated statements of operations and comprehensive loss.

As a result of the Company's ongoing involvement in the cash flows related to the royalties and sales milestones in the MTPC Territory, the Company will continue to account for the royalties received as non-cash royalty revenue which is reflected within license, collaboration and other revenue in the consolidated statements of operations and comprehensive loss.

During the year ended December 31, 2023 and 2022, the Company paid $ 2.0 million and $ 1.8 million of royalties to HCR and as of year end the balances were is as follows (in thousands):

Liability related to the sale of future royalties:

Current portion (included in accrued expenses and other current liabilities)

Long-term portion

54,013 57,484

Total liability related to sale of future royalties $ 56,061 $ 57,484

The Royalty Agreement requires the Company to take certain actions, including actions with respect to the Royalty Interest Payments, the MTPC Agreement, and the Company's intellectual property.

The Royalty Agreement also contains certain representations and warranties, covenants, indemnification obligations, events of default and other provisions that are

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customary for a royalty monetization transaction of this nature.

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

MTPC Supply Agreement

See Note 12, License, Collaboration and Other Revenues , for further information on short-term deferred revenue as of December 31, 2022 that was recognized during the year ended December 31, 2023.

Cambridge Leases

Under the Cambridge Lease, the Company leases approximately 65,167 square feet of office, storage and laboratory space in Cambridge, Massachusetts, which are non-cancelable operating leases.

5,951 square feet of the laboratory space is set to expire on January 31, 2025, with an extension option for one additional period through September 11, 2026 and 59,216 office and storage space are set to expire on September 11, 2026, with one five-year extension option available.

In addition to rent, certain leases require the Company to pay additional amounts for taxes, insurance, maintenance, and other operating expenses.

All of the Company's leases are classified as operating leases.

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

The lease agreements do not contain residual value guarantees.

The components of lease right-of-use assets and lease liabilities are included in the consolidated balance sheets.

Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term.

In determining the present value of lease payments, the Company used its incremental borrowing rate when measuring operating lease liabilities.

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

As of December 31, 2023, the remaining lease term for the Cambridge Leases was 2.70 years.

Operating lease costs were $ 5.7 million and $ 7.1 million for the years ended December 31, 2023 and 2022, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities were $ 5.9 million and $ 7.2 million for the years ended December 31, 2023 and 2022, respectively.

The security deposit in connection with the Cambridge Lease is $ 1.7 million in the form of a letter of credit, which is included as restricted cash in other long-term assets in the Company's consolidated balance sheet as of December 31, 2023.

Sublease and Former Boston Lease

Previously, the Company leased 27,924 square feet of office space in Boston, Massachusetts, or the Boston Lease , under a non-cancelable operating lease that was set to expire in July 2031.

The Company subleased the entire Boston Lease, effective October 2019 through February 2023.

The Company recorded $ 0.3 million and $ 1.8 million in rental income as other income in the consolidated statements of operations and comprehensive loss during the years ended December 31, 2023 and 2022, respectively.

In May 2023, pursuant to a Lease Assignment Agreement, or the Lease Assignment Agreement , the Company assigned all of its rights, title, and interest in, to, and under the Boston Lease to LG Chem Life Sciences Innovation Center, Inc., or LG Chem , and made a payment to LG Chem of $ 1.3 million.

As of May 2023, LG Chem assumed all of the rights and obligations of the Company under the Boston Lease and the Company has no further obligations for rent or other payments under the Boston Lease.

In accordance with ASC 842, Leases , the Company wrote off the right-of-use asset and lease liability associated with the Boston Lease, and recognized the difference between the right-of-use asset and the lease liability offset by the $ 1.3 million payment as a loss on lease termination in the consolidated statements of operations and comprehensive loss of $ 0.5 million.

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

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Future Lease Commitments

Future commitments under non-cancelable Cambridge Leases are as follows (in thousands):

Total lease commitments $ 14,693

present value adjustment ( 1,255 )

Current and long-term operating lease liabilities $ 13,438

COMMITMENTS AND CONTINGENCIES

Manufacturing and Unconditional Purchase Commitment Agreements

Siegfried Manufacturing

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

The Company and Siegfried entered into a Master Manufacturing Services and Supply Agreement, most recently amended in February 2023, or the Siegfried Agreement , under which the Company has agreed to purchase a minimum quantity of drug substance of Auryxia, annually at a predetermined price.

As of December 31, 2023, the Company had a minimum total commitment of approximately $ 29.6 million through the end of 2026.

The term of the Siegfried Agreement was set to expire on December 31, 2024, subject to the Company’s option to extend the term through December 31, 2026.

The Company provided Siegfried with written notice of its election to extend the term of the Siegfried Agreement through December 31, 2026.

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

In connection with the extension of the Siegfried Agreement and the related increase in contractual purchase commitments, the Company recorded an excess firm purchase commitment liability in other long-term liabilities of $ 1.5 million and corresponding expense to cost of product and other revenue during the year ended December 31, 2023.

Patheon Manufacturing

In March 2020, the Company entered into a Supply Agreement with Patheon Inc., or Patheon , or the Patheon Agreement, under which Patheon will manufacture vadadustat drug product for commercial use under a volume-based pricing structure through June 30, 2025, renewing annually unless either party gives the other party eighteen months ' prior written notice.

Under the Patheon Agreement, the Company agreed to purchase from Patheon a certain percentage of the estimated global demand for vadadustat drug product based on certain quarterly and annual forecasts provided by the Company.

As of December 31, 2023, the Company had no minimum commitment with Patheon, however, as estimated global demand fluctuates, the Company may have future obligations under the Patheon Agreement.

WuXi STA Manufacturing

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

Under the WuXi STA DS Agreement, WuXi STA will manufacture vadadustat drug substance for commercial use under a volume-based pricing structure through April 2, 2024.

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

As of December 31, 2023, the Company has committed to purchase $ 13.4 million of vadadustat drug substance from WuXi STA through the end of 2024.

On February 10, 2021, the Company entered into a Supply Agreement with WuXi STA, or the WuXi STA DP Agreement, under which WuXi STA will manufacture and supply vadadustat drug product for commercial purposes under a volume-based pricing structure through February 10, 2025.

The vadadustat drug product price is reviewed annually by the Company and WuXi STA.

The Company also reimburses WuXi STA for certain reasonable expenses.

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

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

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

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

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Esteve - Assigned Supply Agreement

On April 9, 2019, the Company and Esteve Química, S.A., or Esteve, entered into a Supply Agreement, or the Esteve Agreement, which included the terms and conditions under which Esteve would manufacture vadadustat drug substance for commercial use under a volume-based pricing structure.

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

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

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

BioVectra - Former Manufacturing and Unconditional Purchase Commitments

Under the Manufacture and Supply Agreement with BioVectra and the Amended and Restated Product Manufacture and Supply and Facility Construction Agreement with BioVectra, the Company agreed to purchase minimum quantities of Auryxia drug substance annually at predetermined prices as well as reimburse BioVectra for certain costs in connection with construction of a new facility for the manufacture and supply of Auryxia drug substance.

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

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

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

The upfront payment of $ 17.5 million was made during the quarter ended December 31, 2022 and was recorded in cost of product and other revenue.

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

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

The Company recorded an initial discount on the remaining termination fees in the consolidated balance sheet on the date of the termination.

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

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

The amortization of the discount was $ 1.9 million for the year ended December 31, 2023.

In-Licensing - Panion License Agreement

On April 17, 2019, the Company and Panion & BF Biotech, Inc., or Panion , entered into a second amended and restated license agreement, or Panion Amended License Agreement , which amended and restated in full the license agreement between the Company and Panion.

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

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

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

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

The Panion Amended License Agreement terminates upon the expiration of each of the Company’s and Panion’s obligations to pay royalties thereunder.

In addition, the Company may terminate the Panion Amended License Agreement (i) in its entirety or (ii) with respect to one or more countries in the Company’s licensed territory, in either case upon ninety days ’ notice.

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

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

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

In addition, the Panion Amended License Agreement provides that each of the Company and Panion has the right, but not the obligation, to conduct litigation against any infringer of certain patent rights under the Panion Amended License Agreement in certain territories.

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During the years ended December 31, 2023 and 2022, the Company incurred approximately $ 10.0 million and $ 13.8 million, respectively, in royalty payments due to Panion relating to the Company’s sales of Auryxia in the U.S.

and JT and Torii’s net sales of Riona in Japan.

Other Third Party Contracts

The Company contracts with various organizations to conduct R&D activities with remaining contract costs to the Company of approximately $ 44.7 million at December 31, 2023.

The scope of the services under these R&D contracts can be modified and the contracts cancelled by the Company upon written notice.

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

Litigation and Related Matters

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

Loss contingency provisions are recorded for probable and estimable losses at our best estimate of a loss or, when a best estimate cannot be made, at our estimate of the minimum loss.

These estimates are often developed prior to knowing the amount of the ultimate loss, require the application of significant judgment and are refined as additional information becomes known.

Accordingly, we are often initially unable to develop a best estimate of loss and therefore the estimated minimum loss amount, which could be zero, is recorded.

Changes in the Company’s estimates could have a material impact.

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

Guarantees and Indemnifications

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

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

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

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

For the years ended December 31, 2023 and 2022, the Company did not experience any losses related to these indemnification obligations, and no claims were outstanding as of December 31, 2023.

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

PRODUCT REVENUE AND RESERVES FOR VARIABLE CONSIDERATION

To date, the Company’s only source of product revenue has been from the U.S.

sales of Auryxia.

Total net product revenue was $ 177.1 million, $ 142.2 million, and $ 128.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The following table summarizes activity in each of the product revenue allowance and reserve categories for the years ended December 31, 2020, 2021, and 2022 (in thousands):

Total net product revenue was $ 170.3 million and $ 176.9 million for the years ended December 31, 2023 and 2022, respectively.

Product revenue allowance and reserve categories were as follows:

(in thousands) Chargebacks

Discounts Rebates, Fees

1 unchanged sentence

Balance at December 31, 2021 $ 1,047 $ 24,478 $ 10,065 $ 35,590

Provisions related to sales in current year 10,559 149,472 7,238 167,269

Adjustments related to prior year sales — 377 — $ 377

Credits/payments made ( 10,495 ) ( 140,489 ) ( 6,842 ) $ ( 157,826 )

Balance at December 31, 2020 802 39,912 649 41,363

Current provisions related to sales in current year 11,412 89,095 5,603 106,110

6 unchanged sentences

Balance at December 31, 2023 $ 1,607 $ 22,991 $ 6,916 $ 31,514

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

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

Chargebacks, discounts and estimated product returns are recorded as a reduction of revenue in the period the related product revenue is recognized in the consolidated statements of operations and comprehensive loss.

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

Estimated product returns on product sales that are not expected to be returned within one year are recorded as other long-term liabilities in the consolidated balance sheets.

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Accounts receivable, net related to product sales was approximately $ 35.9 million and $ 37.3 million as of December 31, 2023 and 2022, respectively.

License, Collaboration and Other Significant Agreements

During the years ended December 31, 2022, 2021 and 2020, the Company recognized the following revenues from its license, collaboration and other significant agreements and had the following deferred revenue balances as of December 31, 2022:

For the Year Ended December 31,

2022 2021 2020

LICENSE, COLLABORATION AND OTHER REVENUE

(in thousands)

MTPC Agreement $ 17,968 $ 12,438 $ 15,405

Agreement 86,773 36,588 93,446

Otsuka International Agreement 5,503 16,449 45,451

Total Proportional Performance Revenue $ 110,244 $ 65,475 $ 154,302

JT and Torii 5,291 5,814 5,681

MTPC Other Revenue — 73 6,423

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

Years Ended December 31,

Medice License and Product Supply of Vadadustat in EU

MTPC License and Product Supply of Vadadustat in Japan

JT and Torii License and royalties related to the sale of Riona in Japan

Otsuka Terminated U.S.

and International Agreements

Total License, Collaboration and Other Revenue $ 24,322 $ 115,535

December 31, 2022

Short-Term Long-Term Total

Deferred Revenue:

(in thousands)

MTPC $ 3,738 $ — $ 3,738

Vifor Agreement — 43,296 43,296

Total $ 3,738 $ 43,296 $ 47,034

The following table presents changes in the Company’s contract assets and liabilities during the years ended December 31, 2022 and 2021 (in thousands):

Period Additions Deductions Balance at End

The following table presents changes in the Company’s contract assets and liabilities related to license, collaboration and other revenue agreements (in thousands):

Twelve Months Ended December 31, 2023

Period Additions Deductions Balance at End

Contract assets:

Accounts receivable (1)

$ 1,901 $ 10,088 $ ( 8,656 ) $ 3,333

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

Contract liabilities:

Deferred revenue $ 42,380 $ 70,044 $ ( 65,390 ) $ 47,034

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

Contract liability:

Deferred revenue (current and long-term)

$ 47,034 $ — $ (3,738) $ 43,296

Twelve Months Ended December 31, 2022

Period Additions Deductions Balance at End

Contract assets:

Accounts receivable (1)

$ 19,094 $ 94,515 $ ( 111,708 ) $ 1,901

Prepaid expenses and other current assets $ 4,309 $ 9,550 $ ( 13,078 ) $ 781

Contract liabilities:

Deferred revenue $ 40,559 $ 83,491 $ ( 81,670 ) $ 42,380

Deferred revenue (current and long-term)

$ 42,380 $ 70,044 $ ( 65,390 ) $ 47,034

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

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

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

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

(1) Excludes accounts receivable from product sales of Auryxia which are included in the accompanying consolidated balance sheets as of December 31, 2023 and 2022.

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

For the Year Ended December 31,

Years Ended December 31,

Revenue Recognized in the Period from:

2022 2021 2020

Amounts included in deferred revenue at the beginning of the period $ 29,574 $ 23,364 $ 36,032

Deferred revenue - beginning of the period $ 3,738 $ 29,574

Performance obligations satisfied in previous periods $ — $ —

Mitsubishi Tanabe Pharma Corporation Collaboration Agreement

Summary of Agreement

On December 11, 2015, the Company and MTPC entered into a collaboration agreement, or the MTPC Agreement, providing MTPC with exclusive development and commercialization rights to vadadustat in Japan and certain other Asian countries, collectively, the MTPC Territory, which was amended effective as of December 2, 2022.

Medice License Agreement

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

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

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Under the Medice License Agreement, the Company received an up-front payment of $ 10.0 million and is eligible to receive the following payments:

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

(ii) 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.

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

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

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

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

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

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

808, Collaborative Arrangements , or ASC 808 .

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

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

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

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

Medice has the right to terminate the Medice License Agreement in its entirety for convenience upon twelve months ' prior written notice delivered on or after the date that is twelve months after the Medice Effective Date.

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

As of December 31, 2023, the Company and Medice have not yet entered into a supply agreement.

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

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

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

The remaining $ 1.4 million was withheld by the German Federal Tax Office and is included in other long-term assets in the consolidated balance sheet as of December 31, 2023.

Pursuant to the terms of the Medice License Agreement, the up-front payment of $ 10.0 million is non-refundable and non-creditable against any other amount due to the Company and was allocated to the License Performance Obligation, which was satisfied as of the Medice Effective Date.

As such, the Company recognized the $ 10.0 million up-front payment as License, collaboration and other revenue in the consolidated statement of operations and comprehensive loss during the year ended December 31, 2023.

In accordance with ASC 606, the Company will recognize sales-based royalties and milestone payments at the later of when the performance obligation is satisfied or the related sales occur.

Medice Letter Agreement

On December 6, 2023, the Company and Medice entered into a letter agreement, or the Medice Letter Agreement , pursuant to which the Company agreed to sell to Medice a partial batch of vadadustat in order to achieve packaging validation for the Medice Territory.

The Company recognizes revenue under this arrangement when risk of loss passes to Medice and delivery has occurred.

During the year ended December 31, 2023, the Company recognized $ 1.0 million in collaboration revenue under the Medice Side Letter.

As of December 31, 2023, there was $ 0.9 million in accounts receivable and no contract assets, payables or deferred revenue recorded in connection with the Medice Letter Agreement.

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MTPC Collaboration Agreement

On December 11, 2015, the Company and Mitsubishi Tanabe Pharma Corporation, or MTPC , entered into the MTPC Agreement, providing MTPC with exclusive development and commercialization rights to vadadustat in Japan and certain other Asian countries, collectively, the MTPC Territory , which was amended effective as of December 2, 2022.

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

The Company and MTPC agreed that, instead of including Japanese patients in the Company’s global Phase 3 program for vadadustat, MTPC would be the sponsor of a Phase 3 program for vadadustat in Japan.

MTPC was responsible for the costs of the Phase 3 program in Japan and other studies required in Japan, and made no funding payments for the global Phase 3 program for vadadustat.

In June 2020, vadadustat was approved in Japan for the treatment of anemia due to CKD, which triggered a $ 15.0 million regulatory milestone payment to the Company that was received in the third quarter of 2020.

In August 2020, MTPC launched vadadustat commercially in Japan under the trade name Vafseo TM as a treatment of anemia due to CKD for adult patients on dialysis and not on dialysis.

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

The Company and MTPC have established a joint steering committee pursuant to the MTPC Agreement to oversee development and commercialization of vadadustat in the MTPC Territory, including approval of any development or

commercialization plans.

In February 2021, the Company entered into the Royalty Agreement with HCR, whereby the Company sold its right to receive royalties and sales milestones under the MTPC Agreement, subject to certain caps and other terms and conditions.

See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties, for more information.

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

4 unchanged sentences

Either party may terminate the MTPC Agreement upon the material breach of the other party that is not cured within a specified time period or upon the insolvency of the other party.

MTPC is required to make certain milestone payments to the Company aggregating up to approximately $ 225.0 million upon the achievement of specified development, regulatory and commercial events.

More specifically, the Company received $ 10.0 million in development milestone payments and is eligible to receive up to $ 40.0 million in regulatory milestone payments, of which the Company received $ 10.0 million in relation to the Japanese NDA, or JNDA, filing in the third quarter of 2019 and earned an additional $ 15.0 million following regulatory approval of vadadustat in Japan in the second quarter of 2020, which the Company received in the third quarter of 2020, and up to $ 175.0 million in commercial milestone payments associated with aggregate sales of all products.

In consideration for the exclusive license and other rights contained in the MTPC Agreement, MTPC also made a $ 20.0 million upfront payment as well as a payment of $ 20.5 million for Phase 2 studies in Japanese patients completed by the Company and reimbursed by MTPC.

The Company is also entitled to receive tiered royalty payments ranging from 13 % to 20 % on annual net sales of vadadustat in the MTPC Territory.

Royalty payments are subject to certain reductions, including upon the introduction of competitive products in certain instances.

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

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

Due to the uncertainty of drug development and commercialization and the high historical failure rates associated therewith, although the Company has received $ 10.0 million in development milestones and $ 25.0 million in regulatory milestones, no additional milestone may ever be received from MTPC.

The Company recognizes any revenue from MTPC royalties in the period in which the sales occur.

In February 2021, the Company entered into a royalty interest acquisition agreement with HealthCare Royalty Partners IV, L.P., or the Royalty Agreement, whereby the Company sold its right to receive royalties and sales milestones under the MTPC Agreement, subject to certain caps and other terms and conditions (see Note 6).

Revenue Recognition

Under the MTPC Agreement, MTPC is required to make certain milestone payments to the Company aggregating up to approximately $ 225.0 million upon the achievement of specified development, regulatory and commercial events.

The Company has received $ 10.0 million in development milestone payments.

Of the $ 40.0 million in regulatory milestone payments the Company is eligible for, the Company received $ 10.0 million in relation to the Japanese NDA filing in the third quarter of 2019 and $ 15.0 million following regulatory approval of vadadustat in Japan in the third quarter of 2020.

The Company is also entitled to receive up to $ 175.0 million in commercial milestone payments associated with aggregate sales of all products.

In consideration for the exclusive license and other rights contained in the MTPC Agreement, MTPC made a $ 20.0 million upfront payment as well as a $ 20.5 million payment for Phase 2 studies in Japanese patients completed by the Company and reimbursed by MTPC.

Additionally, the Company is entitled to receive tiered royalty payments ranging from 13 % to 20 % on annual net sales of vadadustat in the MTPC Territory, subject to reduction in certain circumstances.

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

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

(i) license under certain of the Company’s intellectual property to develop and commercialize vadadustat in the MTPC Territory (the License Deliverable), (ii) clinical supply of vadadustat (the Clinical Supply Deliverable), (iii) knowledge transfer, (iv) Phase 2 dosing study research services (the Research Deliverable), and (v) rights to future know-how.

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

(i) License, Research and Clinical Supply Performance Obligation and (ii) Rights to Future Know-How Performance Obligation.

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

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

The transaction price was comprised of:

(i) the up-front payment of $ 20.0 million, (ii) the cost for the Phase 2 studies of $ 20.5 million, (iii) the cost of all clinical supply provided to MTPC for the Phase 3 studies, (iv) $ 10.0 million in development milestones received, (v) $ 25.0 million in regulatory milestones received and (vi) $ 5.0 million in royalties from net sales of Vafseo.

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

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

No other regulatory milestones or commercial milestones have been assessed as probable and have been fully constrained until the period in which they are achieved.

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

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

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

The transaction price at inception was comprised of:

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

No other development and no regulatory milestones were included in

the transaction price at inception, as all other milestone amounts were fully constrained.

Subsequent to inception, the transaction price also included certain development and regulatory milestones, as described below.

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

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

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

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

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

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

As of December 31, 2022, all development milestones and $ 25.0 million in regulatory milestones have been achieved.

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

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

Accordingly, the Company recognized the $ 15.0 million regulatory milestone relating to regulatory approval of vadadustat in Japan as revenue during the year ended December 31, 2020 and the $ 10.0 million regulatory milestone for the filing of the JNDA as revenue during the year ended December 31, 2019, as the regulatory milestones were both deemed probable of being achieved and the required performance obligations had been satisfied as of December 31, 2020 and 2019, respectively.

The Company recognized $ 1.8 million, $ 0.8 million, and $ 0.4 million of revenue for royalties from the net sales of Vafseo during the years ended December 31, 2022, 2021, and 2020, respectively.

As noted above, in February 2021, the Company entered into the Royalty Agreement, whereby the Company sold its right to receive these royalties and sales milestones under the MTPC Agreement, subject to certain caps and other conditions (see Note 6).

The Company recognizes any revenue from MTPC royalties in the period in which the sales occur.

The Company recognized $ 2.0 million and $ 1.8 million of revenue for royalties from the net sales of Vafseo during the years ended December 31, 2023 and 2022, respectively.

See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , for more information.

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

As of December 31, 2022, there is $ 0.6 million in accounts receivable, no deferred revenue, and no contract assets.

There were no asset or liability balances related to the MTPC Agreement classified as long-term in the consolidated balance sheet as of December 31, 2022.

As of December 31, 2023, there were no accounts receivable, contract assets, payables or deferred revenue recorded in connection with the MTPC Agreement.

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Supply of Drug Product to MTPC

In March 2020, in connection with the MTPC Agreement, the Company and MTPC executed an amendment to the MTPC Agreement pursuant to which the Company agreed to supply MTPC with certain vadadustat process validation drug product for commercial use, and MTPC agreed to reimburse the Company for certain manufacturing-related expenses.

In connection with this arrangement, the Company invoiced the upfront payment of $ 10.4 million, which it received during the three months ended June 30, 2020.

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

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

As of December 31, 2022, the Company recorded no accounts receivable, no deferred revenue, no other current liabilities and no other non-current liabilities for drug product that is subject to return by MTPC.

On July 15, 2020, the Company and its collaboration partner MTPC entered into a supply agreement, or the MTPC Supply Agreement, which was amended effective as of December 5, 2022.

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

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

The MTPC Forecast reflects MTPC’s needs for vadadustat drug product over a certain number of months, represented as a quantity of vadadustat drug product per calendar quarter.

MTPC makes an up-front payment for a certain percentage of each batch of vadadustat drug product ordered.

On July 15, 2020, the Company and MTPC entered into a supply agreement, or the MTPC Supply Agreement , under which the Company supplies vadadustat drug product to MTPC for commercial use in Japan and certain other Asian countries, as contemplated by the MTPC Agreement.

The term of the MTPC Supply Agreement extends throughout the term of the MTPC Agreement, and the termination provisions of the MTPC Agreement govern termination of the MTPC Supply Agreement.

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

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

accepted by Esteve.

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

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

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

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

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

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

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

The Company has no further obligation to take delivery of, or pay for, product delivered by Esteve.

See Note 10, Commitments and Contingencies, for more information.

During the years ended December 31, 2023 and 2022, the Company recognized $ 3.7 million and $ 16.2 million, respectively, of revenue under the MTPC Supply Agreement.

Due to the Esteve Agreement, the Company no longer records accounts receivable, deferred revenue or other current liabilities relating to the MTPC Supply Agreement.

JT and Torii Sublicense Agreement

The Company has an Amended and Restated Sublicense Agreement, which was amended in June 2013, with JT and Torii, or JT and Torii Sublicense Agreement , under which JT and Torii obtained the exclusive sublicense rights for the development and commercialization of ferric citrate hydrate in Japan.

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

The Company is eligible to receive royalty payments based on a tiered low double-digit percentage of net sales of Riona in Japan inclusive of amounts that the Company must pay to Panion on JT and Torii's net sales of Riona under the Panion License Agreement subject to certain reductions upon expiration or termination of the Amended and Restated License Agreement between the Company and Panion, pursuant to which Company in-licensed the exclusive worldwide rights, excluding certain Asian-Pacific countries, for the development and commercialization of ferric citrate.

The Company is entitled to receive up to an additional $ 55.0 million upon the achievement of certain annual net sales milestones.

The sublicense under the JT and Torii Sublicense Agreement terminates upon the expiration of all underlying patent rights.

Also, JT and Torii may terminate the JT and Torii Sublicense Agreement with or without cause upon at least six months ' prior written notice to the Company.

Additionally, either party may terminate the JT and Torii Sublicense Agreement for cause upon 60 days’ prior written notice after the breach of any uncured material provision of the JT and Torii Sublicense Agreement, or after certain insolvency events.

The Company evaluated the elements of the JT and Torii Sublicense Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, JT and Torii, is a customer.

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

(i) License and Supply Performance Obligation and (ii) Rights to Future Know-How Performance Obligation.

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

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

Additionally, as of the consummation of the Merger, the services associated with the License and Supply Performance Obligation were completed and JT and Torii had secured their own source to manufacture ferric citrate hydrate.

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

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

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

During the years ended December 31, 2023 and 2022, the Company recognized $ 5.4 million and $ 5.3 million, respectively, in license revenue related to royalties earned on net sales of Riona in Japan.

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

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Prior Collaboration and License Agreements

Collaboration and License Agreement with Otsuka Pharmaceutical Co.

Summary of Agreement

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

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

Under the terms of the Otsuka U.S.

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

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

Agreement and the Otsuka International Agreement.

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

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

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

Agreement, with Otsuka Pharmaceutical Co.

Ltd, or Otsuka .

The collaboration was focused on the development and commercialization of vadadustat in the U.S.

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

Under the terms of the Otsuka U.S.

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

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

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

Revenue Recognition

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Company recognized revenue on a proportional performance basis as the underlying services were performed.

Pursuant to the Otsuka U.S.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

During the year ended December 31, 2023, the Company recognized $ 2.2 million in collaboration revenue in connection with the Packaging Validation Transfer Agreement entered into with Otsuka on April 20, 2023.

Under the Packaging Validation Transfer Agreement, the parties agreed that responsibility for all remaining packaging validation activities would be transferred from Otsuka to the Company in consideration of payments made by Otsuka to the Company.

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

During the year ended December 31, 2022, the Company recognized collaboration revenue totaling approximately $ 86.8 million with respect to the Otsuka U.S.

The Company accounted for the joint medical affairs, commercialization and non-promotional activities elements of the Otsuka U.S.

Agreement in accordance with ASC No.

808, Collaborative Arrangements (ASC 808).

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

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

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

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

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

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

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

Furthermore, these activities were recognized for as a component of the related expense in the period incurred.

During the year ended December 31, 2023, the Company incurred no costs related to the cost-sharing provisions of the Otsuka U.S.

During the year ended December 31, 2022, the Company incurred approximately $ 7.6 million of costs related to the cost-sharing provisions of the Otsuka U.S.

Agreement of which approximately $ 3.8 million were reimbursable by Otsuka and recorded as a reduction to R&D expense during the year ended December 31, 2022.

International Collaboration and License Agreement with Otsuka Pharmaceutical Co.

Summary of Agreement

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

The collaboration was focused on the development and commercialization of vadadustat in Europe, Russia, China, Canada, Australia, the Middle East and certain other territories, collectively, the Otsuka International Territory .

Under the terms of the Otsuka International Agreement, the Company granted to Otsuka an exclusive, sublicensable license under certain intellectual property controlled by the Company to develop and commercialize vadadustat and products containing or comprising vadadustat in the Otsuka International Territory.

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

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

Revenue Recognition

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

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

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

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

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

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

best estimate of the relative standalone selling price.

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

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

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

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

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

The Company recognized revenue on a proportional performance basis as the underlying services were performed.

Pursuant to the Otsuka International Agreement, the Company received:

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

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

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

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

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

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

Janssen Pharmaceutica NV Research and License Agreement

Summary of Agreement

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

Under the terms of the Janssen Agreement, the Company made an upfront payment of $ 1.0 million in cash to Janssen and issued a warrant to purchase 509,611 shares of the Company’s common stock, which expired on February 9, 2022.

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

Cyclerion Therapeutics License Agreement

Summary of Agreement

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

Under the terms of the Cyclerion Agreement, the Company made an upfront payment of $ 3.0 million in cash to Cyclerion, which was paid during the second quarter of 2021.

Substantially all of the fair value of the assets acquired in conjunction with the Cyclerion Agreement was concentrated in the acquired license.

As a result, the Company accounted for this transaction as an asset acquisition under ASU No.

2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business .

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

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

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

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

Unless earlier terminated, the Cyclerion Agreement will expire on a product-by-product and country-by-country basis upon the expiration of the last royalty term, which ends upon the longest of (i) the expiration of the patents licensed under the Cyclerion Agreement, (ii) the expiration of regulatory exclusivity for such product, and (iii) 10 years from first commercial sale of such product.

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

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

CSL Vifor License Agreement

Summary of Agreement

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

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

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

On February 18, 2022, the Company and CSL Vifor entered into a Second Amended and Restated License Agreement, or the Vifor Second Amended Agreement, which amends and restates the Vifor First Amended Agreement.

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

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

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

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

Unless earlier terminated, the Vifor Second Amended Agreement will expire upon the later of the expiration of all patents that claim or cover vadadustat or expiration of marketing or regulatory exclusivity for vadadustat in the Territory.

CSL Vifor may terminate the Vifor Second Amended Agreement in its entirety upon 30 months' prior written notice after the first anniversary of the receipt of regulatory approval, if approved, from the FDA for vadadustat for dialysis-dependent CKD patients.

The Company may terminate the Vifor Second Amended Agreement in its entirety for convenience, following the earlier of a certain period of time elapsing or following certain specified regulatory events, and upon six months ’ prior written notice.

If the Company so terminates for convenience, subject to specified exceptions, the Company will pay a termination fee to CSL Vifor.

In addition, either party may, subject to a cure period, terminate the Vifor Second Amended Agreement in the event of the other party’s uncured material breach or bankruptcy.

Investment Agreement

In connection with the Vifor Agreement, in May 2017, the Company and CSL Vifor entered into an investment agreement, or the First Investment Agreement, pursuant to which the Company sold an aggregate of 3,571,429 shares of the Company’s common stock, or the 2017 Shares, to CSL Vifor at a price per share of $ 14.00 for a total of $ 50.0 million.

The amount representing the premium over the closing stock price of $ 12.69 on the date of the transaction, totaling $ 4.7 million, was determined by the Company to represent consideration related to the Vifor Agreement.

CSL Vifor agreed to a lock-up restriction such that it agreed not to sell the 2017 Shares for a period of time following the effective date of the First Investment Agreement as well as a customary standstill agreement.

The lock-up restriction in place as part of the First Investment Agreement has since expired.

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

The 2017 Shares have not been registered pursuant to the

Securities Act of 1933, as amended, or the Securities Act, and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder.

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

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

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

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

The 2022 Shares have not been registered pursuant to the Securities Act and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder, as the transaction did not involve any public offering within the meaning of Section 4(a)(2) of the Securities Act.

Revenue Recognition

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

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

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

The transaction price at inception was comprised of:

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

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

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

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

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

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

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

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

Refund Liability to Customer

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Priority Review Voucher Letter Agreement

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

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

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

In March 2021, the Company submitted an NDA for the treatment of anemia due to CKD in both DD-CKD and NDD-CKD adult patients.

The Company's NDA submission did not include a PRV.

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

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

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

License Agreement with Panion & BF Biotech, Inc.

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

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

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

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

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

The Panion Amended License Agreement terminates upon the expiration of each of the Company’s and Panion’s obligations to pay royalties thereunder.

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

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

During the years ended December 31, 2022, 2021 and 2020, the Company incurred approximately $ 13.8 million, $ 11.8 million and $ 11.2 million, respectively, in royalty payments due to Panion relating to the Company’s sales of Auryxia in the United States and JT and Torii’s net sales of Riona in Japan.

Sublicense Agreement with Japan Tobacco, Inc.

and its subsidiary, Torii Pharmaceutical Co., Ltd.

Summary of Agreement

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

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

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

In January 2014, JT and Torii received manufacturing and marketing approval of ferric citrate from the Japanese Ministry of Health, Labour and Welfare.

Ferric citrate hydrate, which launched in May 2014 and is being marketed in Japan by Torii under the brand name Riona, is indicated as an oral treatment for the improvement of hyperphosphatemia in patients with CKD, including NDD-CKD and DD-CKD.

In July 2019, JT and Torii, reported positive top-line results from a pivotal Phase 3 comparative study evaluating Riona for the treatment of IDA in adult patients in Japan, which was approved in March 2021.

In May 2020, JT and Torii filed an application for approval of IDA as an additional indication for Riona in Japan.

The Company is eligible to receive royalty payments based on a tiered low double-digit percentage of net sales of Riona in Japan inclusive of amounts that the Company must pay to Panion on JT and Torii's net sales of Riona under the Panion License Agreement subject to certain reductions upon expiration or termination of the Amended and Restated License Agreement between Keryx and Panion, pursuant to which Keryx in-licensed the exclusive worldwide rights, excluding certain Asian-Pacific countries, for the development and commercialization of ferric citrate.

The Company is entitled to receive up to an additional $ 55.0 million upon the achievement of certain annual net sales milestones.

The sublicense under the JT and Torii Sublicense Agreement terminates upon the expiration of all underlying patent rights.

Also, JT and Torii may terminate the JT and Torii Sublicense Agreement with or without cause upon at least six months ' prior written notice to the Company.

Revenue Recognition

The Company evaluated the elements of the JT and Torii Sublicense Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, JT and Torii, is a customer.

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

(i) exclusive license to develop and commercialize ferric citrate hydrate in Japan (the License Deliverable), (ii) supply of ferric citrate hydrate until JT and Torii could secure their own source (the Supply Deliverable), (iii) knowledge transfer, and (iv) rights to future know-how.

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

(i) License and Supply Performance Obligation and (ii) Rights to Future Know-How Performance Obligation .

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

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

The Company determined that the remaining

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

During the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 5.3 million, $ 5.8 million and $ 5.7 million, respectively, in license revenue related to royalties earned on net sales of Riona in Japan.

License Agreement with Averoa SAS

Summary of Agreement

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Restructuring and Other Charges, Net

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

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

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

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

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

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

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

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

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

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

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

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

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

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

December 31, 2022

(in thousands)

Balance at December 31, 2021 $ —

Restructuring charges 15,933

Stock-based compensation expense ( 3,197 )

Severance payments and adjustments ( 8,977 )

Balance at December 31, 2022 $ 3,758

Liability Related to Sale of Future Royalties

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

After HCR receives Royalty Interest Payments equal to the Annual Cap in a given calendar year, the Company will receive 85 % of the Royalty Interest Payments for the remainder of that year.

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

The Company received $ 44.8 million from HCR (net of certain transaction expenses) under the Royalty Agreement, and the Company is eligible to receive an additional $ 5.0 million in each year from 2021 through 2023 under the Royalty Agreement if specified annual sales milestones are achieved for vadadustat in the MTPC Territory, subject to the satisfaction of certain customary conditions.

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

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

Although the Company sold its right to receive royalties and sales milestones for vadadustat in the MTPC Territory as described above, as a result of its ongoing involvement in the cash flows related to these royalties, the Company will continue to account for these royalties as revenue.

The Company recognized the proceeds received from HCR as a liability that is being amortized using the effective interest method over the life of the arrangement.

At the transaction date, the Company recorded the net proceeds of $ 44.8 million as a liability.

In order to determine the amortization of the liability, the Company is required to estimate the total amount of future net royalty payments to be made to HCR over the term of the Royalty Agreement.

The total threshold of net royalties to be paid, less the net proceeds received, will be recorded as interest expense over the life of the liability.

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

The annual effective interest rate as of December 31, 2022 was 0 % which is reflected as interest expense in the consolidated

statements of operations and comprehensive loss.

Over the course of the Royalty Agreement, the actual interest rate will be affected by the amount and timing of royalty revenue recognized and changes in forecasted royalty revenue.

There are a number of factors that could materially affect the amount and timing of royalty payments from MTPC, none of which are within the Company's control.

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

The following table shows the activity within the liability account for the year ended December 31, 2022:

December 31, 2022

(in thousands)

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

MTPC royalties payable ( 1,777 )

Non-cash interest expense recognized 6,182

Liability related to sale of future royalties, net — ending balance $ 57,484

The Royalty Agreement requires the Company to take certain actions, including actions with respect to the Royalty Interest Payments, the MTPC Agreement, the MTPC Supply Agreement, and the Company's intellectual property.

The Royalty Agreement also contains certain representations and warranties, covenants, indemnification obligations, events of default and other provisions that are customary for a royalty monetization transaction of this nature.

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

Fair Value of Financial Instruments

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

This company is an independent, third-party vendor recognized to be an industry leader with access to market information that obtains or computes fair market values from quoted market prices, pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models.

For valuations obtained from the pricing service, the Company performs due diligence to understand how the valuation was calculated or derived, focusing on the valuation technique used and the nature of the inputs.

Based on the fair value hierarchy, the Company classifies its cash equivalents and available for sale securities within Level 1 or Level 2.

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

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

Fair Value Measurements Using

Level 1 Level 2 Level 3 Total

(in thousands)

December 31, 2022

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

$ 90,466 $ — $ — $ 90,466

Derivative liability — — $ 760 $ 760

$ — $ — $ 760 $ 760

Fair Value Measurements Using

Level 1 Level 2 Level 3 Total

(in thousands)

December 31, 2021

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

$ 149,800 $ — $ — $ 149,800

Derivative liability — — $ 1,820 $ 1,820

$ — $ — $ 1,820 $ 1,820

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

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

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

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

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

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

The potential events of default include maintaining, on an annual basis, a minimum liquidity threshold which started in 2021, and on a quarterly basis, a minimum net sales threshold for Auryxia which started in the fourth quarter of 2020.

The Company recorded a derivative liability related to the Company’s Loan Agreement with Pharmakon of $ 0.8 million and $ 1.8 million as of December 31, 2022 and 2021, respectively.

The Company classified the derivative liability as a non-current liability on the balance sheet at December 31, 2022 and 2021.

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

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

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

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

Balance at December 31, 2021 $ 1,820

Change in fair value of derivative liability, recorded as other income ( 1,060 )

Balance at December 31, 2022 $ 760

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

The components of inventory are summarized as follows:

December 31, 2022 December 31, 2021

(in thousands)

Raw materials $ 610 $ 1,763

Work in process 8,086 62,635

Finished goods 13,676 14,661

Total inventory $ 22,372 $ 79,059

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

December 31, 2022 December 31, 2021

(in thousands)

Balance Sheet Classification:

Inventory $ 21,762 $ 38,195

Other assets 610 40,864

Total inventory $ 22,372 $ 79,059

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

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

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

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

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

Intangible Assets and Goodwill

Intangible Assets

The following table presents the Company’s intangible assets (in thousands):

December 31, 2022

Value Accumulated

Amortization Total

Acquired intangible assets:

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

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

December 31, 2021

Value Accumulated

Amortization Total

Acquired intangible assets:

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

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

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

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

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

2023 $ 36,042

Auryxia Intangible Asset Impairment

In the second quarter of 2020, in connection with a routine business review, the Company reduced its short-term and long-term Auryxia revenue forecast.

This reduction was primarily driven by the compounding impact of the September 2018 CMS decision that rescinded Medicare Part D coverage of Auryxia for the IDA Indication and the related imposition by CMS of a prior authorization requirement for Auryxia for the Hyperphosphatemia Indication.

As a result, the Company determined indicators of impairment existed for the developed product rights for Auryxia and performed an undiscounted cash flow analysis pursuant to ASC 360-10, Impairment or Disposal of Long-lived Assets , to determine if the cash flows expected to be generated by the Auryxia asset group over the estimated remaining useful life of the primary assets were sufficient to recover the carrying value of the Auryxia asset group.

Based on this analysis, the undiscounted cash flows were not sufficient to recover the carrying value of the Auryxia asset group.

As a result, the Company was required to perform Step 3 of the impairment test to determine the fair value of the Auryxia asset group.

To estimate the fair value, the Company performed a business enterprise valuation for the Auryxia asset group using the income approach, which is based on a discounted cash flow analysis and calculates the fair value by estimating the after-tax cash flows attributable to the asset group and then discounting the after-tax cash flows to present value using a risk-adjusted discount rate.

Key estimates and assumptions used in the valuations included projected revenues and expenses related to the asset, estimated contributory asset charges, and a risk-adjusted discount rate of 9.5 % to calculate the present value of the future expected cash inflows.

The Company believes its assumptions are consistent with the plans and estimates that a market participant would use to manage the business.

The discount rates used are intended to reflect the risks inherent in future cash flow projections and were based on an estimate of the weighted average cost of capital, or WACC, of market participants relative to the Auryxia asset group.

As a result of this analysis, the fair value of the Auryxia asset group was below its carrying value, and the Company recorded an impairment charge of $ 115.5 million during the three months ended June 30, 2020 and made a corresponding adjustment to the estimated useful life of the developed product rights for Auryxia from nine years to seven years .

The impairment charge has been entirely allocated to the Company’s only intangible asset, the developed product rights for Auryxia, as all other long-lived assets had fair values that were either equal to or greater than their carrying value.

Per ASC 360-10, the carrying amount of a long-lived asset of the group would not be reduced below its fair value.

The Company believes its assumptions used to determine the fair value of the Auryxia asset group are reasonable.

In the event the estimates and assumptions used in the valuation of the Auryxia asset group, including the forecasted projections, change in the future, additional impairment charges could be recorded in the future.

In the fourth quarter of 2020, as part of the Company's routine forecasting process, the Company reassessed and prospectively adjusted the estimated useful life of the developed product rights for Auryxia from seven years to six years .

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

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

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

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

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

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

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

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

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

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

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

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

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

Accrued Expenses

Accrued expenses are as follows:

December 31, 2022 December 31, 2021

(in thousands)

Product revenue allowances $ 29,005 $ 26,624

Accrued clinical 5,755 14,036

Amounts due to collaboration partners — 22,654

Accrued payroll and related 11,481 15,863

Lease liability 4,744 4,802

Royalties 3,804 3,472

Professional fees 1,734 1,899

Accrued commercial manufacturing 4,310 3,843

Accrued restructuring 2,751 —

Accrued other 7,413 11,263

Total accrued expenses $ 70,997 $ 104,456

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

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

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

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

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

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

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

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

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

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

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

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

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

One of these conditions was approval of vadadustat;

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

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

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

Loans of $ 8.0 million.

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

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

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

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

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

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

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

The Loan Agreement contains customary representations, warranties, events of default and covenants of the Company and its subsidiaries, including maintaining, on an annual basis, a minimum liquidity threshold which started in 2021, and on a quarterly basis, a minimum net sales threshold for Auryxia which started in the fourth quarter of 2020.

On February 18, 2022, the Loan Agreement was amended pursuant to a First Amendment and Waiver, or the First Amendment and Waiver, which waived the provision under the Loan Agreement that required the Company to not be subject to any qualification as a going concern within the Company's 2021 Annual Report on Form 10-K.

Pursuant to the First Amendment and Waiver, the Company’s filings of Form 10-Q for fiscal quarters ending June 30, 2022 and September 30, 2022, and its future Annual Reports on Form 10-K, must not be subject to any qualification as to going concern, which requirement as to the Company's filings on Form 10-Q was waived in the Second Amendment and Waiver.

If the Company does not satisfy the covenant as to going concern, in any of these filings, the Company will be in default under the Loan Agreement.

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

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

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

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

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

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

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

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

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

(in thousands)

2023 $ 32,000

Total before unamortized discount and issuance costs 67,000

unamortized discount and issuance costs ( 922 )

Total term loans $ 66,078

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

As part of this analysis, the Company assessed the economic characteristics and risks of the Loan Agreement, including put and call features.

The terms and features assessed include a potential extension to the interest-only period dependent on both no event of default having occurred and continuing and on the Company achieving certain regulatory and revenue conditions.

The Company also assessed the acceleration of the obligations under the Loan Agreement under an event of default.

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

The fair value of the derivative liability related to the Company’s Loan Agreement was $ 0.8 million and $ 1.8 million as of December 31, 2022 and 2021, respectively.

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

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

Stockholders’ Equity

During the year ended December 31, 2023, the Company recognized no revenue with respect to the Otsuka International Agreement.

During the year ended December 31, 2022, the Company recognized revenue totaling approximately $ 5.5 million with respect to the Otsuka International Agreement.

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

CAPITAL STOCK

Authorized and Outstanding Capital Stock

3 unchanged sentences

At-the-Market Facility

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

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

During the three months ended March 31, 2021, the Company sold 5,224,278 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $ 15.9 million.

On February 25, 2021, the Company filed a prospectus relating to the sales agreement with its new shelf registration statement (which replaced the prior shelf registration statement), pursuant to which it was able to offer and sell up to $ 100.0 million of its common stock at current market prices from time to time.

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

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

On April 7, 2022, the Company entered into an at-the-market, or ATM, sales agreement with Jefferies LLC, or Jefferies , as the Company's sales agent, under which the Company may offer and sell from time to time up to $ 26.0 million of shares of the Company's common stock in negotiated transactions or transactions that are deemed to be an ATM offering.

During the year ended December 31, 2023, the Company sold 6,189,974 shares of common stock under this program for gross proceeds of $ 6.8 million ($ 6.7 million, net of offering expenses).

During January and February 2024, the Company sold 13,261,311 shares of its common stock under the ATM sales agreement with gross proceeds of $ 19.2 million, ($ 18.7 million, net of offering expenses).

The Company paid the Agent commissions for its services of acting as agent of up to 3.0 % of the gross proceeds from the sale of the common stock pursuant to the ATM.

Prior At-the-Market Facility

On March 1, 2022, the Company filed a prospectus supplement relating to the Company's sales agreement with Cantor Fitzgerald & Co., or Prior Sales Agreement , pursuant to which it was authorized to offer and sell up to $ 25.3 million of its common stock at current market prices from time to time.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Shares Reserved for Future Issuance

The Company has reserved for future issuance the following number of shares of common stock:

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

Unregistered Common Stock

In connection with the Vifor Agreement, CSL Vifor owns 7,571,429 shares of common stock that are unregistered under the Securities Act.

See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , for more information.

Warrants to Purchase Common Stock

In connection with the BlackRock Credit Agreement, described in more detail in Note 7, Indebtedness , the Company issued a warrant to purchase 3,076,923 shares of the Company’s common stock, at an exercise price per share of $ 1.30 , and upon borrowing of Tranche C, the Company will become obligated to issue additional warrants to purchase 1,153,846 shares of the Company’s common stock at an exercise price per share of $ 1.30 .

Each warrant shall be exercisable for eight years from date

Akebia Therapeutics, Inc.

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The warrants and the common stock issuable upon the exercise of such warrants were not registered under the Securities Act of 1933.

Accordingly, the holder thereof may only sell common stock issued upon exercise of such warrants pursuant to an effective registration statement under the Securities Act covering the resale of those shares, an exemption under Rule 144 under the Securities Act or another applicable exemption under the Securities Act.

STOCK-BASED COMPENSATION AND EMPLOYEE RETIREMENT PLANS

Stock-Based Compensation Plans

The Company incurred stock-based compensation expenses of $ 9.3 million and $ 17.8 million for the years ended December 31, 2023 and 2022, respectively.

Equity Incentive Plans

The following table contains information about the Company's equity incentive plans:

December 31, 2023 December 31, 2022

Common stock options, RSUs and PSUs outstanding (1)

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

Awards Outstanding Additional Awards Available for Grant

Keryx Equity Plans (1)(2)

Employees, directors and consultants Common stock options and RSUs

232,203 — 387,976 —

Shares available for issuance under Akebia equity plans (2)

Akebia Therapeutics, Inc.

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

Employees, directors and consultants Common stock options and RSUs

Akebia Therapeutics, Inc.

2014 Incentive Plan, as amended (2) (3)

( the 2014 Plan )

(replaces 2008 Plan)

Employees, directors, consultants and advisors Common stock options, RSUs, SARs and performance awards

15,311,501 — 17,018,832 5,498,984

Warrant to purchase common stock — 509,611

Shares available for issuance under the ESPP 4,837,995 5,173,141

Total 27,744,206 26,423,704

(1) Includes awards granted under the 2014 Plan and the Inducement Award Program and awards issued in connection with the Merger.

(2) On January 1, 2023, January 1, 2022 and January 1, 2021, the shares reserved for future grants under the 2014 Plan increased by 6,046,288 , 5,807,270 and 4,880,775 shares, respectively, pursuant to the 2014 Plan Evergreen Provision.

Stock-Based Compensation

Stock Options

Service-Based Stock Options

On February 28, 2022, as part of the Company’s annual grant of equity, the Company issued 2,833,500 stock options to employees.

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

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

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

Options generally expire ten years after the date of grant.

The Company recorded approximately $ 6.8 million, $ 8.9 million and $ 8.5 million of stock-based compensation expense related to stock options granted during the years ended December 31, 2022, 2021 and 2020, respectively.

The assumptions used in the Black-Scholes pricing model to estimate the grant date fair value of options granted under the 2014 Plan are as follows:

Year ended December 31,

Akebia Therapeutics, Inc.

2023 Stock Incentive Plan (3) ( the 2023 Plan )

(replaces 2014 Plan)

Employees, officers, directors, consultants and advisors Common stock options, SARs, restricted stock, unrestricted stock, RSUs, performance awards, other share-based awards and dividend equivalents

1,712,400 17,382,722 — —

Risk-free interest rate 1.69 % - 4.17 % 0.66 % - 1.37 % 0.32 % - 1.38 %

Dividend yield — % — % — %

Volatility 79.77 % - 91.57 % 77.81 % - 81.79 % 69.56 % - 75.91 %

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

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

Shares Weighted-Average

Exercise Price Weighted-Average

Contractual Life

(in years) Aggregate

Intrinsic Value

Outstanding, December 31, 2021 11,398,215 $ 7.60 $ 267,830

Granted 3,809,200 $ 1.81

Exercised ( 142,440 ) $ 0.47 $ 44,905

Forfeited ( 3,331,840 ) $ 6.43 $ 3,813

Expired/cancelled ( 407,045 ) $ 9.52

Outstanding, December 31, 2022 11,326,090 $ 6.01 7.26 $ 112,709

Options exercisable, December 31, 2022 6,239,437 $ 8.37 6.08 $ 1,904

Vested and expected to vest, December 31, 2022 11,326,090 $ 6.01

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

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

There was no intrinsic value of options exercised during the year ended December 31, 2021, as there were no options exercised in 2021.

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

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

As of December 31, 2022, there was approximately $ 8.1 million of unrecognized compensation cost related to stock options outstanding under the Company’s 2014 Plan or made pursuant to the Inducement Award Program, which is expected to be recognized over a weighted average period of 2.04 years.

Performance-Based Stock Options

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

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

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

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

2007 Incentive Plan, the Keryx Biopharmaceuticals Inc.

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

2018 Equity Incentive Plan.

(2) New awards are no longer being granted under these plans.

(3) This table includes the following inducement awards that are subject to the terms and conditions of the applicable plan but were granted as inducement awards consistent with Nasdaq Listing Rule 5635(c)(4) and not under the applicable plan:

1,616,019 options outstanding under the 2014 Plan and 794,000 options outstanding under the 2023 Plan as of December 31, 2023 and 2,513,512 options outstanding under the 2014 Plan as of December 31, 2022.

Common Stock Options and Stock Appreciation Rights

During the year ended December 31, 2023, the Company granted 2,489,500 options to employees under the 2014 Plan and 315,000 options to directors under the 2023 Plan.

During the year ended December 31, 2023, the Company granted 635,313 stock appreciate rights, or SARs , to one executive under the 2014 Plan.

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

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

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

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

During the year ended December 31, 2023, the Company granted 845,000 options to purchase shares of the Company’s common stock to new hires as inducements to such employees entering into employment with the Company, of which 842,000 options remained outstanding at December 31, 2023.

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

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

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

The performance-based stock options also generally feature a time-based vesting component.

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

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

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

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

Shares Weighted-Average

The Company did not grant any performance-based stock options under the 2023 Plan or the 2014 Plan during the year ended December 31, 2023.

The Company granted 400,000 performance-based options during the year ended December 31, 2022.

The Company had 400,000 performance-based options outstanding at December 31, 2023 and 2022.

The combined stock option activity for the year ended December 31, 2023, is as follows:

Stock Options Weighted-Average

Exercise Price Weighted-Average

Contractual Life

(in years) Aggregate

Intrinsic Value

Outstanding, December 31, 2021 99,558 $ 2.74 $ —

(years) Aggregate Intrinsic Value

(in thousands)

Outstanding, December 31, 2022 11,775,411 $ 5.82 7.26 years $ 180

Granted 4,284,813 $ 0.84

Exercised ( 2,250 ) $ 0.37

Forfeited/cancelled ( 99,558 ) $ 2.74

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

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

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

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

Expired ( 528,099 ) $ 5.16

Canceled and forfeited ( 2,217,040 ) $ 6.06

Outstanding at December 31, 2023 13,312,835 $ 4.20 7.27 years $ 2,680

Exercisable at December 31, 2023 7,354,561 $ 6.37 6.05 years $ 792

Vested and expected to vest at December 31, 2023 13,312,835 $ 4.20 $ 2,680

There was immaterial intrinsic value of options exercised during the years ended December 31, 2023 and 2022, as the value of options exercised in 2023 and 2022 was immaterial.

The fair value of options that vested during the years ended December 31, 2023 and 2022 were $ 6.4 million and $ 8.4 million, respectively.

As of December 31, 2023, there was approximately $ 5.2 million of unrecognized compensation cost related to common stock options outstanding under the Company’s 2023 Plan or the 2014 Plan or made pursuant to the Company's inducement award program, which is expected to be recognized over a weighted average period of 2.19 years.

Restricted Stock Units

Service-Based Restricted Stock Units

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

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

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

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

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

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

Performance-Based Restricted Stock Units

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

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

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

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

The Company also periodically grants performance-based restricted stock units, or PSUs , to employees under the 2023 Plan and previously granted PSUs under the 2014 Plan.

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

The PSUs also generally feature a time-based vesting component.

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

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

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

Shares Weighted-

Average Grant

Date Fair Value

Unvested balance, December 31, 2021 4,554,343 $ 5.17

The Company did not grant any PSUs under the 2023 Plan or the 2014 Plan during the year ended December 31, 2023.

The Company granted 400,000 PSUs during the year ended December 31, 2022.

RSU and PSU activity is as follows:

Akebia Therapeutics, Inc.

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2014 Plan 2023 Plan

Number of Shares Weighted Average Grant Date Fair Value

Unvested as of December 31, 2022

5,674,406 $ 2.10 — $ —

Granted 2,759,675 $ 0.68 603,400 $ 1.48

Vested ( 4,047,676 ) $ 2.06 — $ —

Forfeited ( 2,349,551 ) $ 3.33

Unvested balance, December 31, 2022 5,668,035 $ 2.09

The total fair value of RSUs and PSUs that vested during 2022, 2021 and 2020 (measured on the date of vesting) was $ 11.2 million, $ 15.4 million, and $ 9.4 million, respectively.

Forfeited and canceled ( 1,046,536 ) $ 1.06 — $ —

Unvested as of December 31, 2023

3,339,869 $ 1.30 603,400 $ 1.48

The total fair value of RSUs and PSUs that vested during 2023 and 2022 (measured on the date of vesting) was $ 8.4 million and $ 11.2 million, respectively.

As of December 31, 2023, there was approximately $ 3.0 million of unrecognized compensation cost related to RSUs and PSUs, which is expected to be recognized over a weighted average period of 1.65 years.

Employee Stock Purchase Plan

The first offering period under the ESPP opened on January 2, 2015.

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

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

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

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

As of December 31, 2023 and 2022, a total of 4,637,801 and 4,837,995 shares of the Company's common stock were available for future issuance under the ESPP, respectively.

The Company issued 200,194 shares during the year ended December 31, 2023.

The Company recorded approximately $ 0.1 million, $ 0.6 million and $ 0.8 million of stock-based compensation expense related to the ESPP during 2022, 2021 and 2020, respectively.

Compensation Expense Summary

The Company has classified its stock-based compensation expense related to share-based awards as follows:

Stock-Based Compensation Expense

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

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

Years ended December 31,

Common Stock Options

Risk-free interest rate 3.54 % - 4.81 % 1.69 % - 4.17 %

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

Expected term (years) 5.51 - 6.25 5.51 - 6.25

Expected dividend yield — % — %

Weighted average grant date fair value

$ 0.69 $ 1.27

(in thousands)

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

Years ended December 31,

Cost of goods sold $ 267 $ 448

Research and development 1,964 3,378

Selling, general and administrative 6,456 10,826

Restructuring 630 3,197

Total $ 9,317 $ 17,849

Compensation expense by type of award:

Stock-based compensation by type of award was as follows (in thousands):

Akebia Therapeutics, Inc.

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Years ended December 31,

2022 2021 2020

(in thousands)

Stock options $ 5,310 $ 8,968

3 unchanged sentences

Total $ 9,317 $ 17,849

Employee Retirement Plan

In 2008, the Company established a retirement plan, or the Plan , authorized by Section 401(k) of the Internal Revenue Code, or IRC .

In accordance with the Plan, all employees who have attained the age of 21 are eligible to participate in the Plan as of the first Entry Date, as defined, following their date of employment.

Each employee can contribute a percentage of compensation up to a maximum of the statutory limits per year.

Company contributions are discretionary and contributions in the amount of approximately $ 1.7 million and $ 2.6 million were made during the years ended December 31, 2023 and 2022, respectively.

The Company’s income tax provision was computed based on the federal statutory rate and the state statutory rates, net of the related federal benefit.

There was no current or deferred income tax expense or benefit for the years ended December 31, 2023 and 2022 due to the Company’s net losses and increases in its valuation allowance against its deferred tax assets.

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

Year ended December 31,

2022 2021 2020

The Company's effective income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2023 and 2022:

Years Ended December 31,

Federal tax at statutory rate 21.0 % 21.0 %

7 unchanged sentences

Provision to return adjustment ( 0.3 ) 0.3

Prior Period Adjustment to State NOL DTA — — ( 1.5 )

Other — ( 0.9 ) —

Effective tax rate — % — %

6 unchanged sentences

The valuation allowance increased by approximately $ 4.7 million and $ 18.2 million during the years ended December 31, 2023 and 2022, respectively.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

(in thousands)

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

Akebia Therapeutics, Inc.

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Deferred tax assets:

Accrued expenses $ 2,924 $ 3,306

Accrued expenses and other current liabilities $ 1,411 $ 2,924

Deferred revenue 9,534 1,250

1 unchanged sentence

Stock-based compensation 6,183 8,317

Research and development credits 4,827 5,034

Capitalized research and development costs 13,825 —

R&D credits 4,843 4,827

Capitalized R&D costs 18,295 13,825

Other non-current liabilities 3,434 2,754

1 unchanged sentence

ASC 842 lease liability 2,959 8,032

Inventory reserve 17,411 10,281

Inventories reserve 4,537 17,411

Return reserve 1,624 —

Refund liability 8,829 9,478

4 unchanged sentences

Deferred tax liabilities:

Fixed assets — —

Intangible assets ( 6,868 ) ( 15,981 )

Inventory — —

ASC 842 ROU asset ( 7,426 ) ( 8,486 )

481(a) adjustments ( 1,924 ) —

ROU asset (ASC 842) ( 2,734 ) ( 7,426 )

Other ( 114 ) ( 82 )

1 unchanged sentence

Net deferred tax liability $ — $ —

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

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

At December 31, 2023 and 2022, the Company had no start-up expenses capitalized for income tax purposes (after amortization of $ 1.9 million) and $ 0.1 million of start-up expenses capitalized for income tax purposes (after amortization of $ 1.7 million), respectively, with amortization available to offset future federal, state and local income tax.

As of December 31, 2023 and 2022, the Company had approximately $ 1,230.4 million and $ 1,230.7 million, respectively, of federal net operating losses, or NOLs , carry-forwards which expire through 2037.

Included in the $ 1,230.4 million of federal NOLs are losses of $ 648.3 million that will carry forward indefinitely as a result of the Tax Cuts and Jobs Act.

Additionally, at December 31, 2023 and 2022, the Company had approximately $ 1,807.8 million and $ 1,808.5 million, respectively, of state NOL carry-forwards, which expire through 2043.

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

Under the provisions of the Internal Revenue Code, the net operating losses and tax credit carry-forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

Net operating losses and tax credit carryforwards may become subject to an annual limitation under Internal Revenue Code 382 and 383 if there is more than a 50% change in ownership of the stockholders that own 5% or more of the Company’s outstanding stock over a three-year period.

The Company also has approximately $ 2.7 million of federal research and development tax credit carryforwards which expire through 2040 and $ 2.7 million of state R&D tax credit carryforwards which expire through 2036.

Under the provisions of the IRC, the NOLs and tax credit carry-forwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities.

NOLs and tax credit carryforwards may become subject to an annual limitation under IRC Sections 382 and 383 if there is more than a 50% change in ownership of the stockholders that own 5% or more of the Company’s outstanding stock over a three-year period.

The Company completed an evaluation of its ownership changes and concluded that an ownership change did occur on December 12, 2018 for both Akebia and Keryx in connection with the Merger.

As a consequence of this ownership change, the Company’s NOLs and tax credit carryforwards allocable to the tax periods preceding the ownership change became subject to limitation under Section 382.

The Company reduced its associated deferred tax assets by $ 44.9 million as a result of the limitation.

The Company completed an evaluation of its ownership changes as of March 31, 2022 and concluded that an ownership change had not occur since the previous evaluation done through December 12, 2018.

The Company may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside the Company’s control.

As a result, the Company’s ability to utilize these attributes to offset taxable income may be subject to limitations.

The Company has not conducted a full study of it’s research and development credit carryforwards.

A study may result in an adjustment to the Company’s research and development credit carryforwards;

however, until a study is completed, and any adjustment is known, no amounts will be presented as an uncertain tax position.

A full valuation allowance has been provided

Akebia Therapeutics, Inc.

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Table of Content s

against the Company’s research and development credit carryforwards and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance.

Thus, there would be no impact to the balance sheet or statement of operations at this time, if an adjustment were required.

The Company files income tax returns in the U.S.

1 unchanged sentence

For federal and state income tax purposes, the 2022, 2021 and 2020 tax years remain open for examination under the normal three-year statute of limitations.

The statute of limitations for income tax audits in the United States will commence upon utilization of net operating losses and will expire three years from the filing of the tax return the loss was utilized on.

There was no accrual for uncertain tax positions or for interest and penalties related to uncertain tax positions for 2022, 2021 and 2020.

The Company does not believe that there will be a material change in its unrecognized tax positions over the next twelve months.

The statute of limitations for income tax audits in the U.S.

will commence upon utilization of NOLs and will expire three years from the filing of the tax return the loss was utilized on.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for the years ending December 31, 2023 and 2022 are as follows (in thousands):

Balance at December 31, 2021 $ 2,513

Additions based on tax positions of current years 184

Balance at December 31, 2022 2,697

Reductions based on tax positions of current years ( 2,697 )

Balance at December 31, 2023 $ —

The Company does not believe there will be a material change in its unrecognized tax positions over the next twelve months.

All of the unrecognized tax benefits, if recognized, would be offset by the valuation allowance.

Employee Retirement Plan

In 2008, the Company established a retirement plan, or the Plan, authorized by Section 401(k) of the Internal Revenue Code.

In accordance with the Plan, all employees who have attained the age of 21 are eligible to participate in the Plan as of the first Entry Date, as defined, following their date of employment.

Each employee can contribute a percentage of compensation up to a maximum of the statutory limits per year.

Company contributions are discretionary and contributions in the amount of approximately $ 2.6 million, $ 1.8 million and $ 1.6 million were made during the years ended December 31, 2022, 2021 and 2020, respectively.

Commitments and Contingencies

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

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

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

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

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

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

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

In November 2020, the Company entered into a Sixth Amendment to the Cambridge Lease, or the Sixth Amendment, to extend the term of the Cambridge Lease with respect to the lab space from November 30, 2021 to January 31, 2025.

The Sixth Amendment includes two months of free rent starting in December 2020 and additional monthly lease payments of approximately $ 48,000 , which commenced in December 2021, and is subject to annual rent escalations, which commenced in December 2022.

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

The total monthly lease payments under the base rent are approximately $ 136,000 and are subject to annual rent escalations.

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

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

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

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

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

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

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

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

The lease agreements do not contain residual value guarantees.

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

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

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

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

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

and expired on February 27, 2023.

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

Sublease rental income is recorded to other income.

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

Keryx recorded $ 1.8 million in sublease rental income from Foundation during each of the years ended December 31, 2022, 2021 and 2020.

The Company has not entered into any material short-term leases or financing leases as of December 31, 2022.

The total security deposit in connection with the Cambridge Lease is $ 1.6 million as of December 31, 2022.

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

Both the Cambridge Lease and the Boston Lease have their security deposits in the form of a letter of credit, all of which are included as restricted cash in prepaid expenses and other current assets in the Company’s consolidated balance sheet as of December 31, 2022.

As of December 31, 2022, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter are as follows:

Leases Lease Payments

to be Received

from Sublease Net Operating

Lease Payments

(in thousands)

2023 $ 6,950 $ 307 $ 6,643

2024 8,162 — 8,162

2025 8,289 — 8,289

2026 6,132 — 6,132

2027 2,570 — 2,570

Thereafter 9,631 — 9,631

Total $ 41,734 $ 307 $ 41,427

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

As of December 31, 2022, the remaining lease terms ranged from 3.70 years to 8.59 years.

As of December 31, 2022, the following represents the difference between the remaining undiscounted minimum rental commitments under non-cancelable leases and the operating lease liabilities:

(in thousands)

Undiscounted minimum rental commitments $ 41,734

Present value adjustment using incremental borrowing rate ( 8,030 )

Operating lease liabilities $ 33,704

Manufacturing Agreements

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

Pursuant to the Manufacture and Supply Agreement with BioVectra and the Product Manufacture and Supply and Facility Construction Agreement with BioVectra, the Company agreed to purchase minimum quantities of Auryxia drug substance annually at predetermined prices.

On September 4, 2020, the Company and BioVectra entered into an Amended and Restated Product Manufacture and Supply and Facility Construction Agreement, which provided for reduced minimum quantity commitments and revised the predetermined prices.

The price per kilogram decreased with an increase in quantity above the predetermined purchase quantity tiers.

In addition, the Manufacture and Supply Agreement with BioVectra and the Amended and Restated Product Manufacture and Supply and Facility Construction Agreement with BioVectra required the Company to reimburse BioVectra for certain costs in connection with construction of a new facility for the manufacture and supply of

Auryxia drug substance.

These construction costs were recorded in other assets and amortized into drug substance as inventory was released to the Company from BioVectra.

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

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

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

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

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

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

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

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

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

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

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

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

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

Financial Statements and Supplementary Data of this Annual Report.

Certain of the Company's commercial supply agreements are executory contracts between Keryx and its contract manufacturers for Auryxia, which include future firm purchase commitments.

These executory contracts were deemed to have an off-market element related to the amount of purchase commitments that exceed the current forecast.

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

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

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

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

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

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

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

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

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

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

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

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

Pursuant to the Patheon Agreement, the Company provides Patheon a long-term forecast on an annual basis, as well as short-term forecasts on a quarterly basis, or the Patheon Forecast.

The Patheon Forecast reflects the Company’s needs

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

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

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

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

Pursuant to the Patheon Agreement, the Company has agreed to purchase a certain percentage of the global demand for vadadustat drug product from Patheon.

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

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

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

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

The WuXi STA DS Forecast reflects the Company’s needs for vadadustat drug substance produced by WuXi STA over a certain number of quarters.

The parties have agreed to a volume-based pricing structure under the WuXi STA DS Agreement.

The WuXi STA DS Agreement has an initial term of four years , beginning April 2, 2020 and ending April 2, 2024.

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

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

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

The WuXi STA DP Agreement includes the terms and conditions under which WuXi STA will manufacture and supply vadadustat drug product for commercial purposes.

Pursuant to the WuXi STA DP Agreement, the Company will provide rolling forecasts to WuXi STA on a quarterly basis, or the WuXi STA DP Forecast.

Each WuXi STA DP Forecast will reflect the quantities of vadadustat drug product that the Company expects to order from WuXi STA over a certain number of months, represented as a quantity of vadadustat drug product per calendar quarter.

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

The parties have agreed to a volume-based pricing structure under the WuXi STA DP Agreement.

The vadadustat drug product price will remain fixed for the first 12 months and thereafter shall be annually reviewed by the Company and WuXi STA.

The Company will also reimburse WuXi STA for certain reasonable expenses.

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

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

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

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

Other Third Party Contracts

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

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

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

Litigation and Related Matters

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

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

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

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

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

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

As of December 31, 2022, the Company does not have any significant legal disputes that require a loss liability to be recorded.

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

NET LOSS PER SHARE

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

For periods in which the Company reports a net loss, the weighted average number of shares outstanding used to calculate both basic and diluted net loss per share were the same.

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

Year ended December 31,

Years Ended December 31,

Outstanding common stock options

12,690,624 11,726,090

Warrants — 509,611 509,611

Outstanding stock options 11,326,090 11,398,215 9,386,517

Unvested restricted stock units 3,930,167 5,681,137

Stock appreciation rights

Total 17,256,104 17,407,227

RESTRUCTURING

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

On May 5, 2022, the Company laid off several members of management.

As a result of the restructuring, during the year ended December 31, 2022, the Company recognized $ 14.5 million of restructuring charges in the consolidated statement of operations and comprehensive loss, including $ 11.3 million of one-time termination benefits and contractual termination benefits for severance, healthcare and related benefits and $ 3.2 million of non-cash stock-based compensation expense.

On November 7, 2022, the Company further reduced its workforce by approximately 14 % of the then current headcount primarily focused on the commercial organization as a result of the Company’s decision to shift to a strategic account management focused model for its commercial efforts.

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

During the year ended December 31, 2022, the Company recognized $ 1.4 million of restructuring charges in the consolidated statement of operations and comprehensive loss, including one-time termination benefits and contractual termination benefits for severance, healthcare and related benefits and non-cash stock-based compensation expense.

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

Akebia Therapeutics, Inc.

| Form 10-K | Page 165

Table of Content s

The following table is a reconciliation of the beginning and ending restructuring liability for the year ended December 31, 2023 and 2022 respectively (in thousands):

Beginning balance $ 3,758 $ —

Restructuring accrual and adjustments

( 521 ) 12,735

Cash payments ( 2,230 ) ( 8,977 )

Ending balance $ 1,007 $ 3,758

As of December 31, 2023, $ 0.7 million and $ 0.3 million of the accrued severance, benefits and associated costs are reflected in accrued expenses and other current liabilities and other non-current liabilities, respectively.

As of December 31, 2022, $ 2.8 million and $ 1.0 million of the accrued severance, benefits and associated costs are reflected in accrued expenses and other current liabilities and other non-current liabilities, respectively.

SUBSEQUENT EVENTS

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

5 to the Siegfried Agreement, or the Amendment.

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

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

The Company has evaluated events and transactions occurring after the balance sheet date through the date of the Company's consolidated financial statements were issued and concluded that there were no events or transactions occurring during this period that required recognition or disclosure in the Company's consolidated financial statements, except for matters described in Note 7, Indebtedness , related to the entering into the BlackRock Credit Agreement and the termination of the Pharmakon Term Loans and Note 13, Capital Stock , related to warrants issued in connection with the BlackRock Credit Agreement and the offerings under the At-the-Market facility.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data