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Item 1. Financial Statements

2024-08-08 compared with 2024-05-09 · 272 added, 251 removed, 641 unchanged (45% of the section changed)

2 unchanged sentences

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts) March 31,

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

2024 December 31,

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Accrued expenses and other current liabilities 53,897 67,735

Short-term deferred revenue 695 —

Current portion of deferred revenue 43,296 —

Current portion of long-term debt — 17,500

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Long-term debt, net 38,031 17,183

Liability related to sale of future royalties 53,498 54,013

Liability related to sale of future royalties, net of current portion 53,101 54,013

Refund liability to customer 40,018 40,093

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no shares issued and

outstanding at March 31, 2024 and December 31, 2023

outstanding at June 30, 2024 and December 31, 2023

Common stock $ 0.00001 par value;

350,000,000 shares authorized at March 31, 2024 and December 31, 2023;

209,454,149 and 194,582,539 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

350,000,000 shares authorized at June 30, 2024 and December 31, 2023;

209,929,145 and 194,582,539 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital 1,601,755 1,578,358

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended March 31,

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

(dollars in thousands, except per share amounts) 2024 2023 2024 2023

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Interest expense ( 2,149 ) ( 1,642 ) ( 4,647 ) ( 3,204 )

Other income 95 282

Other (expense) income ( 39 ) ( 10 ) 56 272

Change in fair value of warrant liability 2,331 — 2,201 —

Loss on extinguishment of debt — — ( 517 ) —

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

Net loss before income taxes $ ( 8,582 ) $ ( 11,172 ) $ ( 26,567 ) $ ( 38,050 )

9 unchanged sentences

Akebia Therapeutics, Inc.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

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

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Balance at March 31, 2023 185,835,946 $ 2 $ 1,564,770 $ 6 $ ( 1,583,901 ) $ ( 19,123 )

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

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

Net income — — — — ( 11,172 ) ( 11,172 )

Balance at June 30, 2023 188,128,869 $ 2 $ 1,568,260 $ 6 $ ( 1,595,073 ) $ ( 26,805 )

Common Stock Additional Paid-In

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Deficit Total Stockholders'

Equity (Deficit)

(dollars in thousands) Shares Amount

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Balance at March 31, 2024 209,454,149 $ 2 $ 1,599,669 $ 6 $ ( 1,626,935 ) $ ( 27,258 )

Exercise of options 23,892 — 14 — — 14

Stock-based compensation expense — — 2,072 — — 2,072

Restricted stock unit vesting 451,104 — — — — —

Net loss — — — — ( 8,582 ) ( 8,582 )

Balance at June 30, 2024 209,929,145 $ 2 $ 1,601,755 $ 6 $ ( 1,635,517 ) $ ( 33,754 )

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

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(dollars in thousands) 2024 2023

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Non-cash operating lease expense 2,056 ( 955 )

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

Non-cash loss on extinguishment of debt 294 —

Write-down of inventory 1,061 612

Change in excess inventory purchase commitments 2,068 —

Stock-based compensation expense 4,432 5,979

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Investing Activities:

Purchases of equipment ( 29 ) —

Net cash used in investing activities ( 29 ) —

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, Vafseo® (vadadustat) is an oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH, inhibitor.

Vafseo (vadadustat) tablets is approved in the U.S.

Vafseo (vadadustat) Tablets were approved in the U.S.

on March 27, 2024 for the treatment of anemia due to chronic kidney disease, or CKD , in adults who have been receiving dialysis for at least three months.

The Company intends to commercialize Vafseo in the U.S.

with Vifor (International) Ltd.

(now a part of CSL Limited), or CSL Vifor .

The Company is launching Vafseo in the U.S.

Auryxia ® (ferric citrate) is 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.

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

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

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

Vafseo is marketed and sold by the Company's collaboration partners in certain countries.

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 CKD, including DD-CKD and NDD-CKD, and for the treatment of adult patients with IDA under the trade name Riona (ferric citrate hydrate).

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

As of March 31, 2024, the Company had cash and cash equivalents of approximately $ 42.0 million.

As of June 30, 2024, the Company had cash and cash equivalents of approximately $ 39.5 million.

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 fund its current operating plan for at least twelve months from the filing of this Quarterly Report on Form 10-Q, or Form 10-Q .

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company's significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2023, and notes thereto, which are included in the Company's Annual Report on Form 10-K, that was filed with the Securities and Exchange Commission, or SEC , on March 14, 2024, or 2023 Form 10-K .

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

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

Interim results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024 or any other future period.

Interim results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024 or any other future period.

The Company has experienced seasonality from quarter to quarter.

In general, the first quarter usually has lower revenues than the preceding fourth quarter, the second and third quarters have higher revenues than the first quarter, and the fourth quarter revenues are the highest in the year.

Basis of Presentation and Principles of Consolidation

Akebia Therapeutics, Inc.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Basis of Presentation and Principles of Consolidation

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

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In determining its 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 March 31, 2024, cash and cash equivalents primarily included cash on hand.

As of June 30, 2024, cash and cash equivalents primarily included cash on hand.

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 .

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

(in thousands) March 31, 2024 December 31, 2023

(in thousands) June 30, 2024 December 31, 2023

Cash and cash equivalents $ 39,499 $ 42,925

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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.

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 receivables and the overall quality and age of those invoices not specifically reviewed as well as historical payment patterns and existing

Akebia Therapeutics, Inc.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

economic factors.

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

The Company's allowance for credit losses was $ 0.6 million and $ 1.0 million as of March 31, 2024 and December 31, 2023, respectively.

Write-offs for the three months ended March 31, 2024 were $ 0.5 million.

There were no write-offs for the three months ended March 31, 2023.

The Company's allowance for credit losses was $ 0.2 million and $ 1.0 million as of June 30, 2024 and December 31, 2023, respectively.

For the six months ended June 30, 2024, net recoveries were $ 0.2 million, inclusive of an incremental allowance for credit losses of $ 0.2 million for the three months ended June 30, 2024.

Write-offs were $ 0.6 million for the three and six months ended June 30, 2023.

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.

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

In particular, the Company relies and 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.

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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):

March 31, 2024

June 30, 2024

Level 1 Level 2 Level 3 Total Fair Value

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

Warrant liability – Warrant liability is classified within Level 2 of the fair value hierarchy because they are valued using inputs which are observable either directly or indirectly.

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.

As of June 30, 2024, the Company did not have any money market funds included in cash equivalents.

Warrant liability – The warrant liability is classified within Level 2 of the fair value hierarchy because it is valued using inputs which are observable either directly or indirectly.

The fair value was calculated using the Black-Scholes option pricing model using the following key inputs:

volatility, risk-free rate, dividend yield and expected term.

As of March 31, 2024, the Company did not have any money market funds included in cash equivalents.

Akebia Therapeutics, Inc.

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Inventories consists of the following (in thousands):

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Inventories, current:

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Total inventories $ 39,070 $ 25,094

As of March 31, 2024 and December 31, 2023, inventory consisted primarily of inventory related to the Company's commercial product, Auryxia.

As of March 31, 2024 and December 31, 2023, the Company had no prepaid manufacturing costs and $ 0.5 million of prepaid manufacturing costs for Auryxia drug substance, respectively.

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 unaudited condensed consolidated statement of operations and comprehensive loss totaled approximately $ 0.6 million and $ 0.3 million during the three months ended March 31, 2024 and 2023, respectively.

For the three months ended March 31, 2024, the Company realized lower cost of product and other revenue of $ 3.7 million due to the Company's ability to commercially sell inventory previously written down to zero, its then net realizable value.

As of June 30, 2024 and December 31, 2023, inventory consisted primarily of inventory related to the Company's commercial product, Auryxia.

As of June 30, 2024 and December 31, 2023, the Company had no prepaid manufacturing costs and $ 0.5 million of prepaid manufacturing costs for Auryxia drug substance, respectively.

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 unaudited condensed consolidated statement of operations and comprehensive loss totaled approximately $ 0.5 million and $ 1.1 million during the three and six months ended June 30, 2024, respectively, and $ 0.3 million and $ 0.6 million during the three and six months ended June 30, 2023, respectively.

For the three and six months ended June 30, 2024, the Company realized lower cost of product and other revenue of $ 4.9 million and $ 8.6 million, respectively, due to the Company's ability to commercially sell inventory previously written down to zero, its then net realizable value.

Pre-Launch Inventory

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

launch and Medice Territory as prepaid manufacturing costs.

launch and the EEA, the UK, Switzerland and Australia, or the Medice Territory , as prepaid manufacturing costs.

Upon the quality release of the Vafseo batches and transfer of title to the Company from the contract manufacturing organization, or CMO , the cost of the pre-launch inventory prior to regulatory approval, including the manufacturing costs, was expensed to R&D.

As of March 31, 2024 and December 31, 2023, the Company had $ 14.0 million of prepaid manufacturing costs for Vafseo drug substance expected to be used in the U.S.

launch of Vafseo included in prepaid expenses and other current assets on the consolidated balance sheets.

As of June 30, 2024 and December 31, 2023, the Company had $ 11.6 million and $ 14.0 million, respectively, of prepaid manufacturing costs for Vafseo drug substance expected to be used in the U.S.

launch of Vafseo included in prepaid expenses and other current assets on the unaudited condensed consolidated balance sheets.

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

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Intangible Asset

Intangible asset, net of accumulated amortization, prior impairments and adjustments as of March 31, 2024 and December 31, 2023 consisted of the following (in thousands):

March 31, 2024 December 31, 2023

Intangible asset, net of accumulated amortization, prior impairments and adjustments as of June 30, 2024 and December 31, 2023 consisted of the following (in thousands):

June 30, 2024 December 31, 2023

Intangible asset:

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Developed product rights for Auryxia $ 214,705 $ ( 196,684 ) $ 18,021 $ 36,042 6 years

The Company recorded $ 9.0 million in amortization expense for each of the three months ended March 31, 2024 and 2023 related to the developed product rights for Auryxia.

As of March 31, 2024 and December 31, 2023, the Company had goodwill of $ 59.0 million in connection with the December 2018 merger with Keryx.

The Company recorded $ 9.0 million in amortization expense for each of the three months ended June 30, 2024 and 2023, and $ 18.0 million for each of the six months ended June 30, 2024 and 2023 related to the developed product rights for Auryxia.

As of June 30, 2024 and December 31, 2023, the Company had goodwill of $ 59.0 million in connection with the December 2018 merger with Keryx.

The Company has not i dentified any goodwill impairment to date.

ADDITIONAL BALANCE SHEET DETAIL

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

Akebia Therapeutics, Inc.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Description March 31, 2024 December 31, 2023

ADDITIONAL BALANCE SHEET DETAIL

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

Description June 30, 2024 December 31, 2023

Prepaid manufacturing $ 11,632 $ 14,489

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

Description March 31, 2024 December 31, 2023

Description June 30, 2024 December 31, 2023

Long-term inventories $ 15,198 $ 9,403

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Capitalization of these costs concludes once the project is substantially complete and the software is ready for the Company's intended use.

Once available for its intended use, the capitalized costs will be amortized on a straight-line basis over the term of the associated hosting arrangement including periods covered by an option to extend, and will be included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

Once available for its intended use, the capitalized costs are amortized on a straight-line basis over the term of the associated hosting arrangement including periods covered by an option to extend, and are included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.

Costs related to data conversion, overhead, general and administrative activities, and training are expensed as incurred.

Post-configuration training and maintenance costs will be expensed as incurred.

Other assets as of March 31, 2024 included approximately $ 0.6 million of capitalized implementation costs.

Other long-term assets as of June 30, 2024 included approximately $ 0.9 million of capitalized implementation costs.

There were no implementation costs capitalized as of December 31, 2023.

There was no amortization expense for the three months ended March 31, 2024 and 2023.

Amortization expense for the capitalized implementation costs was immaterial for the three and six months ended June 30, 2024.

There was no amortization expense for the three and six months ended June 30, 2023.

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

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Product revenue allowances $ 14,733 $ 22,940

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Operating lease liabilities, current portion 5,179 4,491

Royalties due to Panion 2,568 3,989

Royalties due to Panion & BF Biotech, Inc.

Professional fees 1,485 1,909

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Restructuring costs, current portion 723 737

BioVectra termination fees, current portion 10,000 7,500

BioVectra, Inc.

termination fees, current portion 10,000 7,500

Liability related to sale of future royalties, current portion 2,013 2,048

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Total accrued expenses and other current liabilities $ 53,897 $ 67,735

Entry into BlackRock Loan Facility

On January 29, 2024, or 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

Akebia Therapeutics, Inc.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of up to $ 55.0 million, or the Term Loan Facility .

Entry into BlackRock 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;

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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).

As of March 31, 2024, the Company's interest rate was 12.08 %.

The Company recognized interest expense related to the BlackRock Credit Agreement of $ 1.0 million during the three months ended March 31, 2024.

As of June 30, 2024, the Company's interest rate was 12.09 %.

The Company recognized interest expense related to the BlackRock Credit Agreement of $ 1.6 million and $ 3.8 million during the three and six months ended June 30, 2024, respectively.

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.

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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.

As of March 31, 2024, future principal payments under the BlackRock Credit Agreement are as follows (in thousands):

As of June 30, 2024, future principal payments under the BlackRock Credit Agreement are as follows (in thousands):

Principal Payments

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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 , or the Initial Warrant , and upon borrowing of Tranche C, the Company will become obligated to issue to the Warrant Holder 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 Initial Warrant is liability classified under ASC 815, Derivatives and Hedging , as it could potentially require net cash settlement outside of the Company’s control.

The Initial Warrant is measured at fair value each period with changes in fair value presented within the unaudited condensed consolidated statements of operations.

The fair value of the warrant liability

The BlackRock Credit Agreement contains certain representations and warranties, affirmative and negative covenants that limit the Company's ability to engage in specified types of transactions and other provisions typical within a credit agreement.

If an event of default occurs and is continuing under the BlackRock Credit Agreement, BlackRock is entitled to take enforcement action, including acceleration of amounts due and it could limit the Company's ability to make certain payments under the Vifor Termination Agreement (as defined below).

Akebia Therapeutics, Inc.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

was $ 5.0 million as of March 31, 2024.

On July 10, 2024, in connection with the Vifor Termination Agreement, the Company and Kreos entered into a First Amendment to the BlackRock Credit Agreement, or the BlackRock Credit Amendment , which amends certain provisions of the BlackRock Credit Agreement.

See Note 16, Subsequent Events , for further information on the BlackRock Credit Amendment.

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 , or the Initial Warrant , and upon borrowing of Tranche C, the Company would become obligated to issue to the Warrant Holder 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 Initial Warrant is liability classified under ASC 815, Derivatives and Hedging , as it could potentially require net cash settlement outside of the Company’s control.

The Initial Warrant is measured at fair value each period with changes in fair value presented within the unaudited condensed consolidated statements of operations.

The fair value of the warrant liability was $ 2.6 million as of June 30, 2024.

See Note 3, Fair Value of Financial Instruments , for information on the fair value determination.

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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 CSL Vifor which is also accounted for as a debt arrangement.

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.

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On the Closing Date, using the proceeds from the BlackRock Credit Agreement, the Company paid the then outstanding principal balance on the Pharmakon Term Loans of $ 35.0 million, plus the outstanding interest and a prepayment fee of $ 0.2 million.

During the three months ended March 31, 2024, the Company recorded a debt extinguishment loss of $ 0.5 million.

During the six months ended June 30, 2024, the Company recorded a debt extinguishment loss of $ 0.5 million.

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 .

Interest expense related to the Pharmakon Loan Agreement was immaterial for the three months ended March 31, 2024.

The Company recognized $ 1.8 million of interest expense during the three months ended March 31, 2023.

Interest expense related to the Pharmakon Loan Agreement was immaterial for the three and six months ended June 30, 2024.

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

See Note 7, Indebtedness , of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for further details.

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

The Company had the following deferred revenue balances as of March 31, 2024 (in thousands):

March 31, 2024

The Company had the following deferred revenue balances as of June 30, 2024 (in thousands):

June 30, 2024

Deferred Revenue:

Short-Term Long-Term Total

$ 695 $ — $ 695

CSL Vifor Agreement — 43,296 43,296

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

Total $ 43,296 $ — $ 43,296

See Note 12, License, Collaboration and Other Revenue , for additional information on Mitsubishi Tanabe Pharma Corporation, or MTPC, deferred revenue.

CSL Vifor License Agreement

O n 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 May 12, 2017, or the Original License Agreement .

The Vifor Agreement grants CSL Vifor an exclusive license to sell Vafseo to 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 Vafseo in the U.S., including to the Supply Group, and sell Vafseo directly to organizations outside the Supply Group.

CSL Vifor has agreed not to sell or otherwise supply Vafseo until CSL Vifor has entered a supply agreement with the applicable member of the Supply Group.

Akebia Therapeutics, Inc.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 profits, 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 condensed consolidated balance sheets.

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

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

The Vifor License Agreement granted CSL Vifor an exclusive license to sell Vafseo to 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.

The Vifor License Agreement was structured as a profit share arrangement between the Company and CSL Vifor in which the Company would receive approximately 66 % of the profits, 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 License Agreement, which was recorded as long-term deferred revenue in the accompanying unaudited condensed consolidated balance sheets.

On July 10, 2024, the Company and CSL Vifor entered into a Termination and Settlement Agreement, or the Vifor Termination Agreement , pursuant to which the Company and CSL Vifor agreed, among other things, to terminate, effective immediately, the Vifor License Agreement.

See Note 16, Subsequent Events , for further information on the Vifor Termination Agreement.

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 at 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, represents consideration related to the Vifor Agreement.

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

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.

See Note 8, Deferred Revenue, Refund Liability and Liability Related to the Sale of Future Royalties , of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for a more detailed description of the Vifor Agreement.

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 Vafseo solely to the Supply Group, (ii) sell Vafseo to Designated Wholesalers solely for resale to members of the Supply Group, (iii) conduct medical affairs with respect to Vafseo 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 Vafseo.

The transaction price of $ 43.3 million is comprised of the up-front payment of $ 25.0 million and the premiums paid by CSL Vifor for the 2017 Shares and 2022 Shares of $ 4.7 million and $ 13.6 million, respectively.

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

In addition, if the Centers for Medicare & Medicaid Services, or CMS, determines that Vafseo 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 2017 Shares and the 2022 Shares.

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

The Company identified one performance obligation under the Vifor License Agreement at inception which was the non-sublicensable, non-transferrable license under certain of the Company's intellectual property to (i) sell Vafseo solely to the Supply Group, (ii) sell Vafseo to Designated Wholesalers solely for resale to members of the Supply Group, (iii) conduct medical affairs with respect to Vafseo in the U.S.

in the field during the term of the Vifor License Agreement and (iv) use the Akebia trademark solely in connection with the sale of Vafseo.

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 for the 2017 Shares and 2022 Shares of $ 4.7 million and $ 13.6 million, respectively.

Under the Vifor License Agreement, these payments from CSL Vifor were non-refundable and non-creditable against any other amount due to the Company.

In addition, if the Centers for Medicare & Medicaid Services, or CMS, determined that Vafseo was excluded from the Transitional Drug Add-on Payment Adjustment, or TDAPA , the Company had the right to terminate the Vifor License Agreement and would then be required to repay the up-front payment and the premiums paid by CSL Vifor on the 2017 Shares and the 2022 Shares.

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

Although Vafseo was approved by the FDA in March 2024, until it is included in TDAPA by CMS, and therefore the license is delivered, the transaction price of $ 43.3 million will remain in long-term deferred revenue in the accompanying condensed consolidated balance sheets.

As a result of the Vifor Termination Agreement, there are no remaining performance obligations under the Vifor License Agreement.

Accordingly, the transaction price of $ 43.3 million was classified as short-term deferred revenue in the accompanying unaudited condensed consolidated balance sheets as of June 30, 2024.

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 Vafseo from its contract manufacturers for the supply of Vafseo 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 Vafseo and agreed upon Vafseo inventory levels held by the Company for the Vifor Territory.

The Company has determined 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

Pursuant to the Vifor License Agreement, CSL Vifor contributed $ 40.0 million to a working capital fund, or Working Capital Fund , established to partially fund the Company’s costs of purchasing Vafseo from its contract manufacturers.

Akebia Therapeutics, Inc.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

The Company determined the Working Capital Fund did 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 was considered a debt arrangement with zero coupon interest and the Company imputed 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 and a corresponding deferred gain on the condensed consolidated balance sheet.

The discount on the refund liability 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 $ 0.7 million and $ 0.8 million for the three months ended March 31, 2024 and 2023, respectively.

The amortization of the deferred gain was $ 0.9 million and $ 1.0 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, the $ 39.9 million refund liability is classified as a long-term liability based on management's estimated timing of the repayment of the refund liability to Vifor exceeding one-year.

On May 3, 2024, the Company and CSL Vifor entered into Amendment #1 to the Vifor Agreement, or the Amendment , under which the parties agreed to modify the method of repayment of the Working Capital Fund such that the Working Capital Fund will be repaid through tiered royalties ranging from a high single-digit to low double-digit percentage of the Company’s sales of Vafseo to both CSL Vifor and to third parties outside of the Vifor Agreement.

The Amendment also modified the terms of repayment of the Working Capital Fund upon termination of the Vifor Agreement.

See Note 16, Subsequent Events , for further information.

The discount on the refund liability was amortized to interest expense using the effective interest method over the expected term of the Vifor License Agreement.

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

The amortization of the discount was $ 0.9 million and $ 1.6 million for the three and six months ended June 30, 2024, respectively, and $ 0.9 million and $ 1.7 million for the three and six months ended June 30, 2023, respectively.

The amortization of the deferred gain was $ 0.8 million and $ 1.7 million for the three and six months ended June 30, 2024, respectively, and $ 1.0 million and $ 2.0 million for the three and six months ended June 30, 2023, respectively.

On May 3, 2024, the Company and CSL Vifor entered into Amendment #1 to the Vifor License Agreement, or the Amendment .

Pursuant to the Amendment, and as modified by the Vifor Termination Agreement, the Company and CSL Vifor agreed to modify the method of repayment of the Working Capital Fund such that the Working Capital Fund will be repaid through quarterly tiered royalty payments ranging from 8 % to 14 % of the Company's net sales of Vafseo in the U.S., or the WCF Royalty Payments .

The WCF Royalty Payments will commence on July 1, 2025, and will continue until the earlier of (i) the cumulative total of the WCF Royalty Payments equals $ 40.0 million, or (ii) May 31, 2028, or the WCF Royalty Term .

The WCF Royalty Payments are subject to minimum true-up milestones of $ 10.0 million, $ 20.0 million and $ 40.0 million, or the WCF Royalty True-Up Payments , on each of May 31, 2026, May 31, 2027 and May 31, 2028, respectively, or the WCF Royalty True-Up Dates .

If the cumulative total of the WCF Royalty Payments paid to CSL Vifor on any given WCF Royalty True-Up Date is less than the respective WCF Royalty True-Up Payment, the Company will pay CSL Vifor a one-time payment equal to the difference between the WCF Royalty True-Up Payment and the cumulative total of the WCF Royalty Payments paid by the Company through such WCF Royalty True-Up Date.

The Company determined that the terms of the Amendment are not substantially different than the terms of the Vifor License Agreement, and therefore the Amendment was accounted for as a modification.

The Company concluded that the 15 % discount rate remains appropriate.

The Company will reassess the effective rate at each reporting period.

As of June 30, 2024, the $ 40.0 million refund liability is classified as a long-term liability based on management's estimated timing of the repayment of the refund liability to Vifor exceeding one-year.

Liability Related to Sale of Future Royalties

8 unchanged sentences

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

The annual effective interest rate as of March 31, 2024 was 0 % and, therefore the Company did not recognize any non-cash interest expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

The annual effective interest rate as of June 30, 2024 was 0 % and, therefore the Company did not recognize any non-cash interest expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

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

A more detailed description of Royalty Agreement can be found in Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K.

During each of the three months ended March 31, 2024 and 2023, the Company paid $ 0.4 million of royalties to HCR and as of March 31, 2024 and December 31, 2023 the balances were as follows (in thousands):

Liability related to sale of future royalties March 31, 2024 December 31, 2023

Current portion (included in accrued expenses and other current liabilities) $ 1,994 $ 2,048

Long-term portion 53,498 54,013

Total liability related to sale of future royalties $ 55,492 $ 56,061

Cambridge Lease

See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for a more detailed description of the Royalty Agreement.

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The Company paid $ 0.4 million and $ 0.9 million of royalties to HCR during the three and six months ended June 30, 2024, respectively, and $ 0.4 million and $ 1.0 million during the three and six months ended June 30, 2023, respectively.

As of June 30, 2024 and December 31, 2023 the balances were as follows (in thousands):

Liability related to sale of future royalties June 30, 2024 December 31, 2023

Current portion (included in accrued expenses and other current liabilities) $ 2,013 $ 2,048

Long-term portion 53,101 54,013

Total liability related to sale of future royalties $ 55,114 $ 56,061

Cambridge Lease

Under the Cambridge Lease, the Company leases approximately 65,167 square feet of office, storage and lab space in Cambridge, Massachusetts.

The term of the Cambridge Lease with respect to the 59,216 square feet of office and storage space expires on September 11, 2026, with one five-year extension option available.

The term of the Cambridge Lease with respect to the 5,951 square feet of lab space was set to expire on January 31, 2025, with an extension option for one additional period through September 11, 2026.

On May 6, 2024, the Company extended the term of the Cambridge Lease with respect to the lab space through September 11, 2026.

See Note 16, Subsequent Events , for further information.

The term of the Cambridge Lease with respect to the 5,951 square feet of lab space expires on September 11, 2026, with one two-year extension option available.

The Cambridge Lease is non-cancelable and is classified as an operating lease.

The renewal option as it relates to the office and storage portion of the Cambridge Lease was not included in the calculation of the right-of-use asset and operating lease liability as the renewal is not reasonably certain.

However, the renewal option as it relates to the lab portion of the Cambridge Lease was included in the calculation of the right-of-use assets and operating lease liabilities as the renewal is reasonably certain.

The renewal options with respect to the office, storage and the lab space of the Cambridge Lease were not included in the calculation of the right-of-use asset and operating lease liability as the renewals are not reasonably certain.

The Cambridge Lease does not contain residual value guarantees.

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

As of March 31, 2024, the remaining lease term for the Cambridge Lease was 2.45 years.

Operating lease costs were $ 1.2 million and $ 1.8 million for the three months ended March 31, 2024 and 2023, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 1.4 million and $ 1.7 million for the three months ended March 31, 2024 and 2023, 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 condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.

As of June 30, 2024, the remaining lease term for the Cambridge Lease was 2.20 years.

Operating lease costs were $ 1.2 million and $ 2.5 million for the three and six months ended June 30, 2024, respectively, and $ 1.4 million and $ 3.2 million for the three and six months ended June 30, 2023, respectively.

Cash paid for amounts included in the measurement of operating lease liabilities was $ 1.4 million and $ 2.9 million for the three and six months ended June 30, 2024, respectively, and $ 1.4 million and $ 3.1 million for the three and six months ended June 30, 2023, 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 accompanying unaudited condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023.

Sublease and Former Boston Lease

1 unchanged sentence

The Company subleased the entire Boston Lease, effective October 2019 through February 2023.

The Company did not record any rental income for the three months ended March 31, 2024 and recorded $ 0.3 million in rental income as other income in the unaudited condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2023.

The Company did not record any rental income for the three and six months ended June 30, 2024 and recorded no rental income and $ 0.3 million in rental income as other income in the unaudited condensed consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2023, respectively.

In May 2023, pursuant to an Assignment and Assumption of Lease Agreement, or 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 unaudited condensed consolidated statement of operations and comprehensive loss of $ 0.5 million during the three months ended June 30, 2023.

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 unaudited condensed consolidated statements of operations and comprehensive loss of $ 0.5 million during the three and six months ended June 30, 2023.

Future Lease Commitments

Future commitments under the Cambridge Lease are as follows (in thousands):

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Lease Commitments

7 unchanged sentences

The Company's contractual obligations include a commercial supply agreement with Siegfried Evionnaz SA, 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

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

agreed to purchase a minimum quantity of drug substance of Auryxia at a predetermined price.

As of March 31, 2024, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 22.0 million through the end of 2026.

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 at a predetermined price.

As of June 30, 2024, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $ 21.4 million through the end of 2026.

The term of the Siegfried Agreement expires on December 31, 2026.

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

The excess firm commitment liability recorded in other long-term liabilities related to the Company's contractual purchase commitments with Siegfried was $ 1.5 million as of March 31, 2024 and December 31, 2023.

The excess firm commitment liability recorded in other long-term liabilities related to the Company's contractual purchase commitments with Siegfried was $ 3.6 million and $ 1.5 million as of June 30, 2024 and December 31, 2023, respectively.

Patheon Manufacturing

1 unchanged sentence

Under the Patheon Agreement, the Company agreed to purchase from Patheon a certain percentage of the estimated global demand for Vafseo drug product based on certain quarterly and annual forecasts provided by the Company.

As of March 31, 2024, the Company had no minimum commitments with Patheon, however, as estimated global demand fluctuates, the Company may have future obligations under the Patheon Agreement.

As of June 30, 2024, the Company had no minimum commitments with Patheon, however, as estimated global demand fluctuates, the Company may have future obligations under the Patheon Agreement.

WuXi STA Manufacturing

2 unchanged sentences

Pursuant to the WuXi STA DS Agreement, the Company has agreed to purchase a certain percentage of the global demand for Vafseo drug substance from WuXi STA.

As of March 31, 2024, the Company has committed to purchase $ 13.4 million of Vafseo drug substance from WuXi STA through the end of 2024.

As of June 30, 2024, the Company has committed to purchase $ 11.1 million of Vafseo 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 Vafseo drug product for commercial purposes under a volume-based pricing structure through February 10, 2025.

6 unchanged sentences

BioVectra - Former Manufacturing and Unconditional Purchase Commitments

Under the Manufacture and Supply Agreement with BioVectra, Inc., or 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, or B ioVectra 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.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

6 unchanged sentences

The discount on the liability balance is being amortized to interest expense using the effective interest rate method over the term of the liability.

The amortization of the discount was $ 0.5 million for each of the three months ended March 31, 2024 and March 31, 2023.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The amortization of the discount was $ 0.4 million and $ 1.0 million for the three and six months ended June 30, 2024, respectively, and $ 0.5 million and $ 0.9 million for the three and six months ended June 30, 2023, respectively.

In-Licensing - Panion License Agreement

5 unchanged sentences

See Note 10, Commitments and Contingencies , of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for a more detailed description of this license agreement.

The Company incurred royalty payments due to Panion of approximately $ 1.9 million and $ 2.6 million during the three months ended March 31, 2024 and 2023, respectively, relating to the Company’s sales of Auryxia in the U.S.

The Company incurred royalty payments due to Panion of approximately $ 2.5 million and $ 4.3 million during the three and six months ended June 30, 2024, respectively, and $ 3.2 million and $ 6.0 million during the three and six months ended June 30, 2023, respectively, 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 $ 47.9 million at March 31, 2024.

The Company contracts with various organizations to conduct R&D activities with remaining contract costs to the Company of approximately $ 46.7 million at June 30, 2024.

The scope of the services under these R&D contracts can be modified and the contracts cancelled by the Company upon written notice.

6 unchanged sentences

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.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Guarantees and Indemnifications

3 unchanged sentences

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

For the three months ended March 31, 2024 and 2023, the Company did not experience any losses related to these indemnification obligations, and no claims were outstanding as of March 31, 2024.

For the three and six months ended June 30, 2024 and 2023, the Company did not experience any losses related to these indemnification obligations, and no claims were outstanding as of June 30, 2024.

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.

2 unchanged sentences

sales of Auryxia.

Total net product revenue was $ 31.0 million and $ 34.7 million for the three months ended March 31, 2024 and 2023, respectively.

Total net product revenue was $ 41.2 million and $ 72.2 million for the three and six months ended June 30, 2024, respectively, and $ 42.2 million and $ 77.0 million for the three and six months ended June 30, 2023, respectively.

Product revenue allowance and reserve categories were as follows:

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(in thousands) Chargebacks

5 unchanged sentences

Credits/payments made ( 4,301 ) ( 27,530 ) ( 3,352 ) ( 35,183 )

Balance at March 31, 2024 $ 1,208 $ 13,564 $ 5,798 $ 20,570

Balance at June 30, 2024 $ 1,437 $ 14,733 $ 5,329 $ 21,499

(in thousands) Chargebacks

5 unchanged sentences

Credits/payments made ( 5,617 ) ( 41,474 ) ( 5,442 ) ( 52,533 )

Balance at March 31, 2023 $ 488 $ 20,142 $ 10,363 $ 30,993

Balance at June 30, 2023 $ 849 $ 23,303 $ 7,876 $ 32,028

Chargebacks, discounts and estimated product returns are recorded as a reduction of revenue in the period the related product revenue is recognized in the unaudited condensed consolidated 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 on the condensed 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 condensed consolidated balance sheets.

Accounts receivable, net related to product sales, was approximately $ 23.9 million and $ 35.9 million as of March 31, 2024 and December 31, 2023, respectively.

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 unaudited condensed consolidated balance sheets.

Accounts receivable, net related to product sales, was approximately $ 27.9 million and $ 35.9 million as of June 30, 2024 and December 31, 2023, respectively.

LICENSE, COLLABORATION AND OTHER REVENUE

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

Three Months Ended March 31,

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Entity Description 2024 2023 2024 2023

Medice License and Product Supply of Vafseo in EU $ — $ 10,000 $ — $ 10,000

MTPC License and Product Supply of Vafseo in Japan 1,169 516 1,581 4,678

$ 412 $ 4,162

JT and Torii License and royalties related to the sale of Riona in Japan 1,270 1,391 2,456 2,528

Otsuka Terminated U.S.

and International Agreements — 2,225 — 2,225

Total license and other revenue $ 2,439 $ 14,132 $ 4,037 $ 19,431

The following tables present changes in the Company’s contract assets and liabilities related to license and other revenue (in thousands):

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Three Months Ended March 31, 2024

Six Months Ended June 30, 2024

Period Additions Deductions Balance

4 unchanged sentences

Deferred revenue $ 43,296 $ 695 $ ( 695 ) $ 43,296

Three Months Ended March 31, 2023

Six Months Ended June 30, 2023

Period Additions Deductions Balance

5 unchanged sentences

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

(1) Excludes accounts receivable related to amounts due to the Company from product sales of Auryxia which are included in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2024 and 2023.

The Company recognized the following revenues as a result of changes in the contract asset and contract liability balances in the respective periods (in thousands):

Three Months Ended March 31,

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

Revenue Recognized in the Period:

2024 2023 2024 2023

Deferred revenue — beginning of the period $ — $ — $ — $ 3,738

During each of the three months ended March 31, 2024 and 2023, the Company recognized no revenue from performance obligations satisfied in previous periods.

During each of the three and six months ended June 30, 2024 and 2023, the Company recognized no revenue from performance obligations satisfied in previous periods.

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 Vafseo for the treatment of anemia in adult patients with CKD in the EEA, the UK, Switzerland and Australia, or the Medice Territory .

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 market and sell Vafseo for the treatment of anemia in adult patients with CKD in the Medice Territory.

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

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

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

If the Company develops Vafseo 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

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significant risks and rewards that are dependent on the success of the activities.

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

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

As of March 31, 2024, the Company and Medice have not yet entered into a supply agreement.

As of June 30, 2024, 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.

1 unchanged sentence

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 on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.

The remaining $ 1.4 million was withheld by the German Federal Tax Office and is included in prepaid expenses and other current assets as of June 30, 2024 and other long-term assets as of December 31, 2023 on the unaudited condensed consolidated balance sheets.

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 unaudited condensed consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 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.

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The Company recognizes revenue under this arrangement when risk of loss passes to Medice and delivery has occurred.

As of March 31, 2024, there was no accounts receivable, contract assets, payables or deferred revenue recorded in connection with the Medice Letter Agreement.

As of June 30, 2024, there were immaterial accounts receivable and no contract assets, payables or deferred revenue recorded in connection with the Medice Letter Agreement.

MTPC Collaboration 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 Vafseo in the MTPC Territory, which was amended effective as of December 2, 2022.

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effective as of December 2, 2022.

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

7 unchanged sentences

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 March 31, 2024, all development milestones and $ 25.0 million in regulatory milestones have been achieved.

As of June 30, 2024, 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.

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

3 unchanged sentences

The Company recognizes any revenue from MTPC royalties in the period in which the sales occur.

During each of the three months ended March 31, 2024 and 2023, the Company recognized $ 0.4 million of revenue from MTPC royalties.

As noted above, in February 2021, the Company entered into the Royalty Agreement, whereby the Company sold its right to receive these royalties and sales milestones under the MTPC Agreement, subject to certain caps and other terms and conditions (see Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , for additional information).

The Company recognized $ 0.5 million and $ 0.9 million of revenue from MTPC royalties during each of the three and six months ended June 30, 2024 and 2023, respectively.

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

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

As of March 31, 2024, there were no accounts receivable, payables or deferred revenue and $ 0.4 million in contract assets recorded in connection with the MTPC Agreement.

As of June 30, 2024, there were no accounts receivable, payables or deferred revenue and $ 0.5 million in contract assets recorded in connection with the MTPC Agreement.

Supply of Drug Product to MTPC

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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.

The Company recognized immaterial revenue and $ 3.7 million in revenue under the MTPC Supply Agreement during the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, there were $ 0.7 million in accounts receivable, $ 0.7 million in deferred revenue and no other current liabilities relating to the MTPC Supply Agreement.

The Company recognized $ 0.7 million in revenue under the MTPC Supply Agreement during the three and six months ended June 30, 2024, and no revenue and $ 3.7 million in revenue under the MTPC Supply Agreement during the three and six months ended June 30, 2023, respectively.

As of June 30, 2024, there were no accounts receivable, deferred revenue or other current liabilities relating to the MTPC Supply Agreement.

JT and Torii Sublicense Agreement

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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.

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As such, the Company allocated the entire transaction price to the License and Supply Performance Obligation.

The Company recognized license revenue of $ 1.2 million and $ 1.1 million during the three months ended March 31, 2024 and 2023, respectively, related to royalties earned on net sales of Riona in Japan.

The Company recognized license revenue of $ 1.3 million and $ 2.5 million during the three and six months ended June 30, 2024, respectively, and $ 1.4 million and $ 2.5 million during the three and six months ended June 30, 2023, respectively, related to royalties earned on net sales of ferric citrate hydrate in Japan under the trade name Riona.

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.

1 unchanged sentence

Authorized and Outstanding Capital Stock

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

As of March 31, 2024, the authorized capital stock of the Company included 350,000,000 shares of common stock, $ 0.00001 par value per share, of which 209,454,149 and 194,582,539 shares were issued and outstanding as of March 31, 2024 and December 31, 2023, respectively;

and 25,000,000 shares of undesignated preferred stock, $ 0.00001 par value per share, of which no shares were issued and outstanding as of March 31, 2024 and December 31, 2023.

As of June 30, 2024, the authorized capital stock of the Company included 350,000,000 shares of common stock, $ 0.00001 par value per share, of which 209,929,145 and 194,582,539 shares were issued and outstanding as of June 30, 2024 and December 31, 2023, respectively;

and 25,000,000 shares of undesignated preferred stock, $ 0.00001 par value per share, of which no shares were issued and outstanding as of June 30, 2024 and December 31, 2023.

At-the-Market Facility

1 unchanged sentence

During the year ended December 31, 2023, the Company sold 6,189,974 shares of common stock under this program with gross proceeds of $ 6.8 million ($ 6.7 million, net of offering expenses).

During the three months ended March 31, 2024, the Company sold 13,261,311 shares of its common stock under this program with gross proceeds of $ 19.2 million ($ 18.7 million, net of offering expenses).

During the six months ended June 30, 2024, the Company sold 13,261,311 shares of its common stock under this program with gross proceeds of $ 19.2 million ($ 18.7 million, net of offering expenses).

STOCK-BASED COMPENSATION AND BENEFIT PLAN

Stock-Based Compensation and Benefit Plans

The Company incurred stock-based compensation expenses of $ 2.4 million and $ 2.5 million for the three months ended March 31, 2024 and 2023, respectively.

The Company incurred stock-based compensation expenses of $ 2.1 million and $ 4.4 million for the three and six months ended June 30, 2024, respectively, and $ 3.5 million and $ 6.0 million for the three and six months ended June 30, 2023, respectively.

Equity Incentive Plans

The following table contains information about the Company's equity plans:

March 31, 2024 December 31, 2023

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June 30, 2024 December 31, 2023

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

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(3) This table includes 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:

1,525,375 options outstanding under the 2014 Plan and 1,764,950 options outstanding under the 2023 Plan as of March 31, 2024 and 1,616,019 options outstanding under the 2014 Plan and 794,000 options outstanding under the 2023 Plan as of December 31, 2023.

1,496,428 options included as outstanding under the 2014 Plan in the table and 2,374,950 options included as outstanding under the 2023 Plan in the table as of June 30, 2024 and 1,616,019 options included as outstanding under the 2014 Plan and 794,000 options included as outstanding under the 2023 Plan in the table as of December 31, 2023.

Common Stock Options and Stock Appreciation Rights

During the three months ended March 31, 2024, the Company issued 3,117,500 options to employees under the 2023 Plan.

During the six months ended June 30, 2024, the Company issued 3,432,500 options to employees under the 2023 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.

1 unchanged sentence

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

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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 three months ended March 31, 2024, the Company granted 970,950 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 970,950 options remained outstanding as of March 31, 2024.

During the six months ended June 30, 2024, the Company granted 1,604,950 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 1,604,950 options remained outstanding as of June 30, 2024.

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

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

The combined stock option activity for the three months ended March 31, 2024, is as follows:

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The combined stock option activity for the six months ended June 30, 2024, is as follows:

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

4 unchanged sentences

Canceled and forfeited ( 648,270 ) $ 3.11 — —

Outstanding at March 31, 2024 16,877,776 $ 3.61 7.69 years $ 5,655

Exercisable at March 31, 2024 7,898,693 $ 5.94 6.05 years

As of March 31, 2024, there was approximately $ 10.0 million of unrecognized compensation costs related to stock options, which is expected to be recognized over a weighted average period of 3.05 years.

Outstanding at June 30, 2024 17,278,820 $ 3.42 7.37 years $ 1,521

Exercisable at June 30, 2024 8,559,257 $ 5.40 5.59 years

As of June 30, 2024, there was approximately $ 9.3 million of unrecognized compensation costs related to stock options, which is expected to be recognized over a weighted average period of 2.94 years.

Restricted Stock Units

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RSU and PSU activity is as follows:

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2014 Plan 2023 Plan

4 unchanged sentences

Forfeited and canceled ( 210,678 ) $ 0.90 ( 48,200 ) $ 1.68

Outstanding as of March 31, 2024 2,065,933 $ 1.08 4,001,300 $ 1.65

As of March 31, 2024, there was $ 7.7 million of unrecognized compensation costs related to time-based RSUs and PSUs, which is expected to be recognized over a weighted-average period of 2.43 years.

Outstanding as of June 30, 2024 1,650,369 $ 1.07 4,313,400 $ 1.59

As of June 30, 2024, there was $ 7.3 million of unrecognized compensation costs related to time-based RSUs and PSUs, which is expected to be recognized over a weighted-average period of 2.25 years.

Employee Stock Purchase Plan

3 unchanged sentences

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

As of March 31, 2024 and December 31, 2023, a total of 4,545,480 and 4,637,801 shares of the Company’s common stock were available for future issuance under the ESPP, respectively.

The Company issued 92,321 shares under the ESPP during the three months ended March 31, 2024.

As of June 30, 2024 and December 31, 2023, a total of 4,545,480 and 4,637,801 shares of the Company’s common stock were available for future issuance under the ESPP, respectively.

The Company issued 92,321 shares under the ESPP during the six months ended June 30, 2024.

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Stock-Based Compensation Expense

1 unchanged sentence

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:

Three Months Ended March 31,

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

Stock Options 2024 2023 2024 2023

1 unchanged sentence

Expected volatility 109.98 % - 118.61 % 102.31 % - 111.71 % 109.98 % - 118.61 % 100.97 % - 111.71 %

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

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

Expected dividend yield — % — % — % — %

2 unchanged sentences

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

Three Months Ended March 31,

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

2024 2023 2024 2023

Cost of goods sold $ 83 $ 73 $ 169 $ 139

7 unchanged sentences

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:

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31,

Warrants 4,230,769 —

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

2024 2023 2024 2023

3,076,923 — 3,076,923 —

Outstanding common stock options 16,643,507 13,118,185 16,643,507 13,118,185

2 unchanged sentences

Total 26,319,512 18,350,049 26,319,512 18,350,049

(1) In the event of a drawdown of Tranche C, the Company would become obligated to issue to the Warrant Holder additional warrants to purchase 1,153,846 shares of the common stock which are excluded from this table.

SUBSEQUENT EVENTS

The Company has evaluated events and transactions occurring after the balance sheet date through the filing date of this Quarterly Report on Form 10-Q with the SEC, to ensure that the unaudited condensed consolidated financial statements include appropriate disclose of events both recognized in the accompanying unaudited condensed consolidated financial statements as of March 31, 2024, and events which occurred subsequently but were not recognized in the consolidated financial statements.

The Company has evaluated events and transactions occurring after the balance sheet date through the filing date of this Quarterly Report on Form 10-Q with the SEC, to ensure that the unaudited condensed consolidated financial statements include appropriate disclose of events both recognized in the accompanying unaudited condensed consolidated financial statements as of June 30, 2024, and events which occurred subsequently but were not recognized in the consolidated financial statements.

The Company has concluded that no subsequent events have occurred that require disclosure other than the following:

Amendment to WuXi STA DS Agreement

On April 15, 2024, the Company and WuXi STA entered into Amendment #2 to the WuXi STA DS Agreement pursuant to which the parties agreed to extend the term for an additional five years and set the expiration date to April 2, 2029.

In addition, the volume-based pricing structure under the WuXi STA DS Agreement was amended.

See Note 10, Commitments and Contingencies , for further information on the WuXi STA DS Agreement.

Drawdown of Tranche B Term Loan

On April 19, 2024, the Company drew $ 7.5 million on Tranche B, after deducting debt issuance costs, fees and expenses.

See Note 7, Indebtedness , for further information on the BlackRock Credit Agreement.

Amendment #1 to the Vifor Agreement

On May 3, 2024, the Company and CSL Vifor entered into the Amendment.

Pursuant to the Amendment, the Company and CSL Vifor agreed to modify the method of repayment of the Working Capital Fund such that the Working Capital Fund will be repaid through tiered royalties ranging from a high single-digit to low double-digit percentage of the Company’s sales of Vafseo to both CSL Vifor and to third parties outside of the Vifor Agreement, or the Vifor Royalty Payments .

The Vifor Royalty Payments will begin on July 1, 2025, and will continue until the cumulative total of the Vifor Royalty Payments reach $ 40.0 million, or through May 2028, or the Vifor Royalty Term , at which time, if the Vifor Royalty Payments have not yet reached $ 40.0 million, the Company is required to pay CSL Vifor the difference between the $ 40.0 million and the sum of any Vifor Royalty Payments paid by the Company during the Vifor Royalty Term and subject to certain minimum Vifor Royalty Payments during the Vifor Royalty Term.

In addition, upon termination of the Vifor Agreement prior to the end of the Vifor Royalty Term:

(i) if by the Company for convenience, then the Vifor Royalty Payments shall be accelerated and the Company shall be required to pay the difference between the $ 40.0 million and the sum of any Vifor Royalty Payments paid by the Company during the Vifor Royalty Term;

(ii) if by CSL Vifor for convenience, then all Vifor Royalty Payments shall cease and the Vifor Royalty Term shall end;

or (iii) for any reason other than convenience by the Company or CSL Vifor, the Vifor Royalty Term and Vifor Royalty Payments shall continue as agreed under the Amendment.

See Note 12, License, Collaboration and Other Revenue , for further information on the Vifor Agreement.

Cambridge Lease Extension - Lab Space

On May 6, 2024, the Company extended the term of the Cambridge Lease with respect to the lab space from January 31, 2025 to September 11, 2026.

The Company has an option to extend the term for an additional two year s with respect to the lab space.

See Note 9, Leases , for further information on the Cambridge Lease.

CSL Vifor Termination and Settlement Agreement

On July 10, 2024, the Company and CSL Vifor entered into the Vifor Termination Agreement, pursuant to which, the Company and CSL Vifor agreed, among other things, to terminate, effective immediately, the Vifor License Agreement, pursuant to which the Company granted to CSL Vifor an exclusive license to sell Vafseo to the Supply Group in the U.S.

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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Under the Vifor License Agreement, CSL Vifor contributed $ 40.0 million to the Working Capital Fund, established to partially fund the Company’s costs of purchasing Vafseo from its contract manufacturers.

Pursuant to the terms of the Vifor Termination Agreement, and generally consistent with the terms of the Vifor License Agreement, as amended, the Company has agreed to repay the Working Capital Fund to CSL Vifor through the WCF Royalty Payments.

The WCF Royalty Payments will commence on July 1, 2025, and will continue until the earlier of (i) the cumulative total of the WCF Royalty Payments equals $ 40.0 million, or (ii) May 31, 2028.

See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties , for further information on the repayment of the Working Capital Fund.

In addition, the Company will pay CSL Vifor decreasing quarterly tiered royalty payments ranging from a high single-digit percentage of the Company’s net sales of Vafseo up to $ 450.0 million to mid-single digit percentage of the Company’s net sales of Vafseo above $ 450.0 million, in each case, in the U.S.

during a calendar year, or the Settlement Royalty Payments .

The Settlement Royalty Payments will commence upon the first sale of Vafseo by the Company, its affiliates or third-party licensees to a third party for use in the U.S., and will continue until the later of the (i) expiration of the last-to-expire valid claim listed in the FDA Orange Book that would be infringed by the making, using, selling or importing of Vafseo in the U.S.

or (ii) the expiration of marketing or regulatory exclusivity for Vafseo in the U.S., or the Settlement Royalty Term .

Beginning on July 1, 2027 and throughout the Settlement Royalty Term, the Company has the option to make a one-time payment to CSL Vifor, or the Royalty Buy-Down Option , upon which the Settlement Royalty Payments will be adjusted as of the date of exercise of the Royalty Buy-Down Option such that the Company will then only pay CSL Vifor quarterly royalty payments based on a mid-single digit percentage of the Company’s net sales of Vafseo up to $ 450.0 million in the U.S.

during a calendar year in lieu of the above Settlement Royalty Payments.

If the Company exercises the Royalty Buy-Down Option, the WCF Royalty Payments will continue as described above.

The WCF Royalty Payments, the Settlement Royalty Payments and the Royalty Buy-Down Option are in consideration for the termination of the Vifor License Agreement and all obligations thereunder, and the covenants and agreements set forth in the Vifor Termination Agreement, including the settlement and release of all disputes and claims arising from the Vifor License Agreement.

Amendment to BlackRock Credit Agreement

On July 10, 2024, in connection with the Vifor Termination Agreement, the Company and Kreos entered into the BlackRock Credit Amendment.

The BlackRock Credit Amendment includes certain covenants of the Company related to the Vifor Termination Agreement.

See Note 7, Indebtedness , for further information about the BlackRock Credit Agreement.

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

What changed 10-Q

Item 1. Financial Statements