What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-08 · 159 added, 137 removed, 305 unchanged (49% of the section changed)

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and expect product availability in January 2025.

In October 2024, Centers for Medicare & Medicaid Services, or CMS, determined that Vafseo will be eligible for reimbursement under the Transitional Drug Add-on Payment Adjustment, or TDAPA , starting on January 1, 2025.

W e also have several lifecycle management and label expansion opportunities currently under evaluation for Vafseo, including the potential for alternative dosing and label expansion for the treatment of adult patients not on dialysis.

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Our Japanese sublicensee, Japan Tobacco, Inc., and its subsidiary, Torii Pharmaceutical Co., Ltd., collectively, JT and Torii , commercialize ferric citrate hydrate as Riona in Japan.

Averoa SAS, or Averoa , has an exclusive license to develop and commercialize ferric citrate in the EEA, Turkey, Switzerland and the UK.

Averoa SAS, or Averoa , has an exclusive license to develop and commercialize ferric citrate in the EEA, Turkey, Switzerland, UK, Turkey, Balkans and certain countries in eastern Europe and the Middle East.

In April 2024, Averoa submitted its marketing authorization application, or MAA , for ferric citrate in Europe.

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We continue to explore additional commercial and development opportunities to expand our pipeline and portfolio of novel therapeutics through both internal research and external innovation to leverage our fully integrated team.

Factors Affecting Our Performance and Results of Operations

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Factors Affecting Our Performance and Results of Operations

Financial Highlights

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 was $35.6 million and $107.8 million for the three and nine months ended September 30, 2024, respectively, and $40.1 million and $117.1 million for the three and nine months ended September 30, 2023, respectively.

We have incurred net losses in each year since inception.

Our net losses were $8.6 million and $26.6 million for the three and six months ended June 30, 2024, respectively, and $11.2 million and $38.1 million for the three and six months ended June 30, 2023, respectively.

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

Our net losses were $20.0 million and $46.6 million for the three and nine months ended September 30, 2024, respectively, and $14.5 million and $52.5 million for the three and nine months ended September 30, 2023, respectively.

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

Financial Components

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While seasonality may affect quarterly comparisons within a fiscal year, it generally is not material to our annual consolidated financial results.

However, absent further legislation or regulation, Auryxia will be included in the ESRD bundle starting in January 2025, which coupled with Auryxia's LoE in March 2025 may impact the buying patterns of our existing customers during 2024 and future years, and therefore their buying pattern in 2024 and future years may be different than their historical practices.

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

However, absent further legislation or regulation, Auryxia will be included in the end-stage renal disease, or ESRD , bundle starting in January 2025, which we believe will impact the buying patterns of some of our existing customers in the fourth quarter of 2024 and lead to lower inventory levels at certain customers in the fourth quarter of 2024.

In addition, based on these changes, and coupled with Auryxia's LoE in March 2025, the buying pattern of certain customers in future years may be different than their historical practices.

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

However, our ability to continue to generate revenue from sales of Auryxia following LoE will depend on many factors, including our ability to successfully contract with dialysis organizations, the timing and number of generics that enter the market and other products on the market that compete with Auryxia.

License, Collaboration and Other Revenue

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COGS also includes costs to manufacture drug product provided to MTPC and Medice for commercial sales of Vafseo in Japan and the Medice Territory, respectively, as well as personnel-related costs, including salaries and bonuses, employee benefits and stock-based compensation attributable to employees in particular functions and associated directly with the manufacturing of our commercial products.

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

Until we received regulatory approval for Vafseo in the U.S., we recorded costs incurred to manufacture the U.S.

pre-launch inventory, such as raw materials, drug substance and drug product conversion costs as R&D expense.

pre-launch inventory, such as raw materials, drug substance and drug product conversion costs as research and development, or R&D , expense.

Cost of goods sold - Amortization of intangible asset - In addition, COGS includes the amortization of development product rights for Auryxia through the end of 2024.

Akebia Therapeutics, Inc.

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Research and Development Expenses

Research and development, or R&D , expenses consist primarily of costs incurred for the development of Vafseo and costs associated with our pipeline which includes:

R&D expenses consist primarily of costs incurred for the development of Vafseo and costs associated with our pipeline which includes:

• personnel-related expenses, including salaries, bonuses, employee benefits, stock-based compensation and travel expenses for employees engaged in R&D functions;

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• expenses incurred under agreements with contract research organizations, or CROs , and investigative sites that conduct our clinical trials;

• the cost of acquiring, developing and manufacturing clinical trial materials through contract manufacturing organizations, or CMOs ;

• the cost of acquiring, developing and manufacturing clinical trial materials through CMOs;

• facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies associated with our laboratory space as well as our R&D team;

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We cannot determine with certainty the duration and completion costs of our R&D projects, the costs of related clinical development, or if, when, or to what extent we will generate revenue from the commercialization or sale of any of our product candidates.

From inception through June 30, 2024, we have incurred $1.7 billion in R&D expenses.

From inception through September 30, 2024, we have incurred $1.7 billion in R&D expenses.

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

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

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

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consulting fees), insurance costs, general corporate expenses and allocated facilities-related expenses, including rent and maintenance of facilities.

License Expenses

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and Riona in Japan.

Akebia Therapeutics, Inc.

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Other Income (Expense), Net

Other income (expense), net consists primarily of interest income on our interest-bearing accounts, interest expense related to our term loans, accretion of the debt discount on our term loans as well as amortization of the discount on the liability related to the termination fees associated with the termination agreement with BioVectra Inc., or BioVectra , entered into in December 2022, or the BioVectra Termination Agreement , and the amortization of the discount and deferred gain related to our refund liability to Vifor (International) Ltd.

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

See Note 10, Commitments and Contingencies, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the BioVectra Termination Agreement.

Other income (expense) also includes non-cash interest on our liability related to settlement royalties and the amortization of the discount and deferred gain related to our Working Capital Fund (as defined below) liability to Vifor (International) Ltd.

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

See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the Company's arrangements with CSL Vifor.

Change in Fair Value of Warrant Liability

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Recent Events

Approval and Reimbursement of Vafseo (vadadustat)

In March 2024, we received approval from the FDA for Vafseo (vadadustat) Tablets for the treatment of anemia due to CKD in adults who have been receiving dialysis for at least three months.

In June 2024, we applied to designate Vafseo for TDAPA reimbursement from CMS.

In October 2024, CMS determined that Vafseo met the criteria for TDAPA in the anemia management ESRD prospective payment system functional category and, as a result, we will be eligible for reimbursement beginning on January 1, 2025.

The TDAPA program provides at least two years of reimbursement for Vafseo in addition to the ESRD bundled rate to dialysis organizations.

Additionally, we received a Level II Healthcare Common Procedure Coding System code for Vafseo which will be used by dialysis organizations for billing the product for Medicare enrollees.

At-the-Market (ATM) Offering

On September 3, 2024, in connection with the filing of a new shelf registration statement on Form S-3, we filed a prospectus related to our amended and restated sales agreement with Jefferies LLC (which amended and restated the prior sales agreement), pursuant to which we are able to offer and sell up to $75.0 million of our common stock at current market prices from time to time.

During the three and nine months ended September 30, 2024, we sold 1,242,662 shares of our common stock under this program with gross proceeds of $1.7 million ($1.7 million, net of offering expenses).

Including the amount sold during the nine months ended September 30, 2024 through the date of the filing of this form 10-Q, we sold 7,741,616 shares of our common stock under the sales agreement with gross proceeds of $11.6 million ($11.3 million, net of offering expenses).

CSL Vifor Termination and Settlement Agreement

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We and CSL Vifor agreed to terminate the Vifor License Agreement for business reasons.

See Note 16, Subsequent Events , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information on the Vifor Termination Agreement.

Approval and Commercialization of Vafseo (vadadustat) Tablets

In March 2024, we received approval from the FDA for Vafseo (vadadustat) Tablets for the treatment of anemia due to CKD in adults who have been receiving dialysis for at least three months.

We are now actively engaged in launch initiatives to prepare for Vafseo’s U.S.

market entry which is expected in January 2025.

We believe that we have the right team and the organizational experience and relationships within dialysis organizations to be successful.

In June 2024, we applied to designate Vafseo for Transitional Drug Add-on Payment Adjustment reimbursement from the CMS, which we expect to begin in January 2025.

Our goal is for Vafseo to be an oral standard of care for dialysis patients.

We believe this is achievable and represents an attractive market.

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Borrowing Under BlackRock Term Loans and Repayment of Pharmakon Term Loans

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

Akebia Therapeutics, Inc.

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

See Note 7, Indebtedness, and Note 16, Subsequent Events , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

See Note 7, Indebtedness, in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Impact of Inflation

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

We do not believe these impacts were material to our net loss during the three and six months ended June 30, 2024 or will be going forward.

We do not believe these impacts were material to our net loss during the three and nine months ended September 30, 2024 or will be going forward.

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

Akebia Therapeutics, Inc.

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Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

Three Months Ended June 30, Change

Comparison of the Three Months Ended September 30, 2024 and 2023

Three Months Ended September 30, Change

(dollars in thousands) 2024 2023 $ %

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Change in fair value of warrant liability (856) — (856) *

Loss on termination of lease — (524) 524 (100) %

Net loss $ (20,039) $ (14,489) $ (5,550) 38 %

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

Net product revenue was $41.2 million for the three months ended June 30, 2024, compared to $42.2 million for the three months ended June 30, 2023.

Net product revenue was $35.6 million for the three months ended September 30, 2024, compared to $40.1 million for the three months ended September 30, 2023.

The decrease was primarily due to a reduction in volume partially offset by price increases and execution of our contracting strategy with third-party payors.

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in March 2025, which may have a negative impact on revenue.

We believe CMS's decision to include phosphate binders in the dialysis bundle could potentially lead to higher sales of Auryxia after the LoE date than in other LoE scenarios, and plan to work with third-party payors and providers to continue the use of Auryxia beyond LoE.

License, Collaboration and Other Revenue— License, collaboration and other revenue was $2.4 million for the three months ended June 30, 2024, compared to $14.1 million for the three months ended June 30, 2023.

The decrease was primarily due to a one-time $10.0 million upfront payment recognized in connection with the Medice License Agreement during the three

We believe CMS's decision to include phosphate binders in the dialysis bundle could potentially lead to higher sales of Auryxia after the LoE date than in other LoE scenarios, and plan to work with third-party payors and providers to seek to continue the use of Auryxia beyond LoE.

License, Collaboration and Other Revenue— License, collaboration and other revenue was $1.8 million for the three months ended September 30, 2024, compared to $1.9 million for the three months ended September 30, 2023.

The decrease was primarily due to lower license revenue under our agreement with JT and Torii.

Cost of Goods Sold—Cost of Product and Other Revenue— Cost of product and other revenue was $5.2 million for the three months ended September 30, 2024 compared to $9.0 million for the three months ended September 30, 2023.

The decrease was primarily due to a $3.7 million benefit that we recorded during the three months ended September 30, 2024 due to our ability to commercially sell inventory previously written-down as excess inventory and lower year-over-year sales volume.

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

Amortization of intangible asset during each of the three months ended September 30, 2024 and 2023 was $9.0 million and will continue through the end of 2024.

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months ended June 30, 2023.

We also recognized $2.2 million in revenue in connection with the Packaging Validation Transfer Agreement we entered into with Otsuka Pharmaceutical Co.

Ltd., or Otsuka , during the three months ended June 30, 2023.

Cost of Goods Sold—Cost of Product and Other Revenue— Cost of product and other revenue was $8.0 million for the three months ended June 30, 2024 compared to $8.3 million for the three months ended June 30, 2023.

The decrease was primarily due to a $4.9 million gain that we recorded during the three months ended June 30, 2024 due to our ability to commercially sell inventory previously written-down as excess inventory, which was partially offset by a charge of $2.1 million related to our firm purchase commitment liability.

During the second half of 2024, we anticipate realizing lower costs of up to $3.7 million related to our ability to commercially sell inventory previously written-down as excess inventory.

See Note 10, Commitments and Contingencies , for further information on our firm purchase commitment liability.

Amortization of intangible asset during each of the three months ended June 30, 2024 and 2023 was $9.0 million and will continue through the end of 2024.

R&D Expenses— R&D expenses were $7.6 million for the three months ended June 30, 2024, compared to $20.2 million for the three months ended June 30, 2023.

The decrease was largely due to the completion of activities related to certain clinical trials, a reduction in consulting expenses associated with pursuing Vafseo regulatory approval in the Medice Territory and lower headcount related costs.

Additionally, during the three months ended June 30, 2023, prior to receiving regulatory approval for Vafseo in the U.S., we recorded costs incurred to manufacture the U.S.

R&D Expenses— R&D expenses were $8.5 million for the three months ended September 30, 2024, compared to $13.3 million for the three months ended September 30, 2023.

The decrease was largely due to the completion of activities related to certain clinical trials, lower headcount related costs and decreased professional service and consulting expenses.

Additionally, during the three months ended September 30, 2023, prior to receiving regulatory approval for Vafseo in the U.S., we recorded costs incurred to manufacture the U.S.

pre-launch inventory as R&D expenses.

The following table summarizes our external research and development expenses by program, as well as costs not allocated to programs, for the three months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

The decrease in R&D expense was partially offset by increased costs related to the start-up of an outcomes study for Vafseo.

The following table summarizes our external research and development expenses by program, as well as costs not allocated to programs, for the three months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended September 30,

Vafseo clinical trial and other external costs $ 3,046 $ 2,224

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We expect to incur significant R&D expenses in future periods in support of ongoing or planned studies with respect to the development of our product candidates as well as Vafseo.

Selling, General and Administrative Expenses— Selling, general and administrative expenses were $26.9 million for the three months ended June 30, 2024, compared to $27.0 million for the three months ended June 30, 2023.

License Expenses— License expenses related to royalties due to Panion relating to sales of Riona in Japan were $0.8 million and $0.9 million for the three months ended June 30, 2024 and 2023, respectively.

Restructuring Expenses— There was no restructuring expenses and a $0.1 million benefit to restructuring expense for the three months ended June 30, 2024 and 2023, respectively.

Other Expense, Net— Other expense, net, was $2.2 million for the three months ended June 30, 2024, compared to $1.7 million for the three months ended June 30, 2023.

The increase of $0.5 million was primarily due to lower interest income on our interest-bearing accounts.

Change in Fair Value of Warrant Liability— Change in fair value of warrant liability was $2.3 million for the three months ended June 30, 2024.

There was no change in fair value of warrant liability for the three months ended June 30, 2023 since the warrant agreement was entered into in January 2024.

Loss on Lease Termination— On May 26, 2023 we incurred a loss on lease termination of $0.5 million in connection with the assignment of our lease for 27,924 square feet of office space in Boston, Massachusetts, or the Boston Lease .

In accordance with ASC 842, Leases , we wrote off the right-of-use asset and lease liability associated with the Boston Lease, and recognized the difference between the right-of-use asset and the lease liability offset by the payment we made to LG Chem Life Sciences Innovation Center, Inc.

in connection with the assignment of $1.3 million.

Selling, General and Administrative Expenses— Selling, general and administrative expenses were $26.5 million for the three months ended September 30, 2024, compared to $22.7 million for the three months ended September 30, 2023.

The increase was primarily due to higher headcount related costs and marketing costs in connection with the Vafseo launch expected in January 2025, as well as increased promotional expenses and registration and filing fees.

License Expenses— License expenses related to royalties due to Panion relating to sales of Riona in Japan were $0.8 million and $0.9 million for the three months ended September 30, 2024 and 2023, respectively.

Restructuring Expenses— There were no restructuring expenses and $0.2 million of restructuring expenses for the three months ended September 30, 2024 and 2023, respectively.

Other Expense, Net— Other expense, net, was $6.7 million for the three months ended September 30, 2024, compared to $1.5 million for the three months ended September 30, 2023.

The increase was primarily due to non-cash interest expense related to the settlement royalty liability in connection with the Vifor Termination Agreement.

Change in Fair Value of Warrant Liability— Change in fair value of warrant liability was $0.9 million for the three months ended September 30, 2024.

There was no change in fair value of warrant liability for the three months ended September 30, 2023 since the warrant agreement was entered into in January 2024.

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Comparison of the Six Months Ended June 30, 2024 and 2023

Six Months Ended June 30, Change

Comparison of the Nine Months Ended September 30, 2024 and 2023

Nine Months Ended September 30, Change

(dollars in thousands) 2024 2023 $ %

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

Net product revenue was $72.2 million for the six months ended June 30, 2024, compared to $77.0 million for the six months ended June 30, 2023.

Net product revenue was $107.8 million for the nine months ended September 30, 2024, compared to $117.1 million for the nine months ended September 30, 2023.

The decrease was primarily due to a reduction in volume partially offset by price increases and execution of our contracting strategy with third-party payors.

1 unchanged sentence

in March 2025, which may have a negative impact on revenue.

We believe CMS's decision to include phosphate binders in the dialysis bundle could potentially lead to higher sales of Auryxia after the LoE date than in other LoE scenarios, and plan to work with third-party payors and providers to continue the use of Auryxia beyond LoE.

License, Collaboration and Other Revenue— License, collaboration and other revenue was $4.0 million for the six months ended June 30, 2024, compared to $19.4 million for the six months ended June 30, 2023.

The decrease was primarily due to a one-time $10.0 million upfront payment recognized in connection with the Medice License Agreement during the six months ended June 30, 2023 as well as a reduction in revenue under our supply agreement with MTPC as a result of the assignment of our supply agreement with Esteve Química, S.A.

We believe CMS's decision to include phosphate binders in the dialysis bundle could potentially lead to higher sales of Auryxia after the LoE date than in other LoE scenarios, and plan to work with third-party payors and providers to seek to continue the use of Auryxia beyond LoE.

License, Collaboration and Other Revenue— License, collaboration and other revenue was $5.9 million for the nine months ended September 30, 2024, compared to $21.4 million for the nine months ended September 30, 2023.

The decrease was primarily due to a one-time $10.0 million upfront payment recognized in connection with the Medice License Agreement during the nine months ended September 30, 2023 as well as a reduction in revenue under our supply agreement with MTPC as a result of the assignment of our supply agreement with Esteve Química, S.A.

to MTPC in December 2022.

We also recognized $2.2 million in revenue in connection with the Packaging Validation Transfer Agreement we entered into with Otsuka during the six months ended June 30, 2023.

Cost of Goods Sold—Cost of Product and Other Revenue— Cost of product and other revenue was $10.6 million for the six months ended June 30, 2024 compared to $19.5 million for the six months ended June 30, 2023.

The decrease of $8.8 million was primarily due to lower year-over-year sales volume, and the realization of lower cost of product and other revenue of $8.6 million during the six months ended June 30, 2024 due to our ability to commercially sell inventory previously written-down as excess inventory, which was partially offset by a $2.1 million charge related to our firm purchase commitment liability.

See Note 10, Commitments and Contingencies , for further information on our firm purchase commitment liability.

We also recognized $2.2 million in revenue in connection with the Packaging Validation Transfer Agreement we entered into with Otsuka during the nine months ended September 30, 2023.

Cost of Goods Sold—Cost of Product and Other Revenue— Cost of product and other revenue was $15.8 million for the nine months ended September 30, 2024 compared to $28.5 million for the nine months ended September 30, 2023.

The decrease was primarily due to a $12.3 million benefit that we recorded during the nine months ended September 30, 2024 due to our

Akebia Therapeutics, Inc.

| Form 10-Q | Page 33

ability to commercially sell inventory previously written-down as excess inventory and lower year-over-year sales volume, which was partially offset by a $2.1 million charge related to our firm purchase commitment liability.

See Note 10, Commitments and Contingencies , for further information on our firm purchase commitment liability.

Amortization of intangible asset during each of the six months ended June 30, 2024 and 2023 was $18.0 million and will continue through the end of 2024.

R&D Expenses— R&D expenses were $17.4 million for the six months ended June 30, 2024, compared to $39.9 million for the three months ended June 30, 2023.

Additionally, during the six months ended June 30, 2023, prior to receiving regulatory approval for Vafseo in the U.S., we recorded costs incurred to manufacture the U.S.

Amortization of intangible asset during each of the nine months ended September 30, 2024 and 2023 was $27.0 million and will continue through the end of 2024.

R&D Expenses— R&D expenses were $25.9 million for the nine months ended September 30, 2024, compared to $53.2 million for the three months ended September 30, 2023.

Additionally, during the nine months ended September 30, 2023, prior to receiving regulatory approval for Vafseo in the U.S., we recorded costs incurred to manufacture the U.S.

pre-launch inventory as R&D expenses.

The following table summarizes our external research and development expenses by program, as well as costs not allocated to programs, for the three months ended June 30, 2024 and 2023 (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Vafseo clinical trial and other external costs $ 6,337 $ 12,843

5 unchanged sentences

We expect to incur significant R&D expenses in future periods in support of ongoing or planned studies with respect to the development of our product candidates as well as Vafseo.

Selling, General and Administrative Expenses— Selling, general and administrative expenses were $52.4 million for the six months ended June 30, 2024, compared to $52.1 million for the six months ended June 30, 2023.

License Expenses— License expenses related to royalties due to Panion relating to sales of Riona in Japan were $1.5 million for each of the six months ended June 30, 2024 and 2023.

Restructuring Expenses— Restructuring expenses were $0.1 million and immaterial for the six months ended June 30, 2024 and 2023, respectively.

Other Expense, Net— Other expense, net, was $4.6 million for the six months ended June 30, 2024, compared to $2.9 million for the six months ended June 30, 2023.

The increase of $1.7 million was primarily due to lower interest income on our interest-bearing accounts and a decrease in sublease income due to the assignment of our lease for office space in Boston, Massachusetts.

Change in Fair Value of Warrant Liability— Change in fair value of warrant liability was $2.2 million for the six months ended June 30, 2024.

There was no change in fair value of warrant liability for the six months ended June 30, 2023 since the warrant agreement was entered into in January 2024.

Loss on Extinguishment of Debt— During the six months ended June 30, 2024, we recorded $0.5 million loss on the extinguishment of debt in connection with the repayment of the Pharmakon Term Loans.

Selling, General and Administrative Expenses— Selling, general and administrative expenses were $78.9 million for the nine months ended September 30, 2024, compared to $74.8 million for the nine months ended September 30, 2023.

License Expenses— License expenses related to royalties due to Panion relating to sales of Riona in Japan were $2.2 million and $2.4 million for the nine months ended September 30, 2024 and 2023, respectively.

Restructuring Expenses— Restructuring expenses were $0.1 million and $0.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Other Expense, Net— Other expense, net, was $11.3 million for the nine months ended September 30, 2024, compared to $4.4 million for the nine months ended September 30, 2023.

The increase was primarily due to non-cash interest expense related to the settlement royalty liability in connection with the Vifor Termination Agreement and a decrease in sublease income due to the assignment of our lease for office space in Boston, Massachusetts, or the Boston Lease .

Change in Fair Value of Warrant Liability— Change in fair value of warrant liability was $1.3 million for the nine months ended September 30, 2024.

There was no change in fair value of warrant liability for the nine months ended September 30, 2023 since the warrant agreement was entered into in January 2024.

Loss on Extinguishment of Debt— During the nine months ended September 30, 2024, we recorded $0.5 million loss on the extinguishment of debt in connection with the repayment of the Pharmakon Term Loans.

Loss on Lease Termination— On May 26, 2023 we incurred a loss on lease termination of $0.5 million in connection with the assignment of our Boston Lease.

In accordance with ASC 842, Leases , we wrote off the right-of-use asset and lease liability associated with the Boston Lease, and recognized the difference between the right-of-use asset and the lease liability offset by the $1.3 million payment we made to LG Chem Life Sciences Innovation Center, Inc.

in connection with the assignment.

Liquidity and Capital Resources

As of June 30, 2024, we had cash and cash equivalents of $39.5 million and restricted cash of $1.7 million.

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

From inception through June 30, 2024, we raised approximately $838.9 million of net proceeds from the sale of equity, including $519.8 million from various underwritten public offerings, $249.1 million from at-the-market offerings pursuant to our sales

In accordance with ASC 842, Leases , we wrote off the right-of-use asset and lease liability

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agreement with Jefferies LLC and prior sales agreements with Cantor Fitzgerald & Co., and $70.0 million from the sale of 7,571,429 shares of common stock to CSL Vifor.

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 we made to LG Chem Life Sciences Innovation Center, Inc.

in connection with the assignment.

Liquidity and Capital Resources

As of September 30, 2024, we had cash and cash equivalents of $34.0 million and restricted cash of $1.7 million.

From inception through September 30, 2024, we raised approximately $840.6 million of net proceeds from the sale of equity, including $519.8 million from various underwritten public offerings, $250.8 million from at-the-market offerings pursuant to our current sales agreement with Jefferies LLC and prior sales agreements with Jefferies LLC and Cantor Fitzgerald & Co., and $70.0 million from the sale of 7,571,429 shares of common stock to CSL Vifor.

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

We incurred net operating losses of $8.6 million and $26.6 million during the three and six months ended June 30, 2024, respectively, and $11.2 million and $38.1 million during the three and six months ended June 30, 2023, respectively.

As of June 30, 2024 and December 31, 2023, we had an accumulated deficit of $1.6 billion.

We incurred net operating losses of $20.0 million and $46.6 million during the three and nine months ended September 30, 2024, respectively, and $14.5 million and $52.5 million during the three and nine months ended September 30, 2023, respectively.

As of September 30, 2024 and December 31, 2023, we had an accumulated deficit of $1.7 billion and $1.6 billion, respectively.

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

that protect us from generic drug competition until March 2025.

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

While we believe CMS's decision to include phosphate binders in the dialysis bundle could potentially lead to higher sales of Auryxia after the LoE date than in other LoE scenarios, and plan to work with payors and providers to continue the use of Auryxia beyond LoE, Auryxia product sales have not generated, and may not generate, now or following LoE in the U.S., sufficient product revenue to realize net profits from product sales to cover our current or long-term operating costs.

Following LoE in the U.S.

in March 2025, we may not be able to realize enough product revenue from sales of Auryxia to realize net profits from product sales.

While we believe CMS's decision to include phosphate binders in the dialysis bundle could potentially lead to higher sales of Auryxia after the LoE date than in other LoE scenarios, and plan to work with payors and providers to seek to continue the use of Auryxia beyond LoE, Auryxia product sales have not generated, and may not generate, now or following LoE in the U.S., sufficient product revenue to realize net profits from product sales to cover our current or long-term operating costs.

Our ability to continue to generate revenue from sales of Auryxia following LoE will depend on many factors, including our ability to successfully contract with dialysis organizations, the timing and number of generics that enter the market and other products on the market that compete with Auryxia.

We believe our existing cash resources and the cash we expect to generate from product, royalty, supply and license revenues are sufficient to fund our current operating plan for at least twenty-four months.

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On January 29, 2024, or the Closing Date , we entered into the BlackRock Credit Agreement, which provides for a senior secured term loan facility, in the aggregate principal amount of up to $55.0 million, or the Term Loan Facility .

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

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

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Pharmakon Term Loans;

(ii) Tranche B — $8.0 million was funded on April 19, 2024, and (iii) Tranche C — $10.0 million is available in a single draw through December 31, 2024, collectively, the Term Loans .

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During the continuance of any payment event of default 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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All obligations under the Term Loan Facility are secured by substantially all of our existing and after-acquired assets.

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See Note 16, Subsequent Events , in the accompanying notes to the unaudited condensed consolidated financial statements included in Part I, Item 1 of this Form 10-Q for further information.

Working Capital Fund/Refund Liability

In February 2022, we amended our agreement with CSL Vifor and they contributed $40.0 million to a working capital fund, or the Working Capital Fund , established to partially fund our costs of purchasing Vafseo from our contract manufacturers.

We have recorded the Working Capital Fund as a refund liability under ASC 606, Revenue from Contracts with Customers .

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

As of 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 CSL Vifor exceeding one-year.

Pursuant to the terms of the Vifor Termination Agreement, and generally consistent with the terms of the Vifor License Agreement, we agreed to repay the Working Capital Fund to CSL Vifor through quarterly tiered royalty payments ranging from 8% to 14% of our 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 certain minimum true-up milestones.

See Note 8, Deferred Revenue , Refund Liability and Liability Related to Sale of Future Royalties , in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.

CSL Vifor Settlement Royalty Payments

Liability Related to Settlement Royalties

Pursuant to the terms of the Vifor Termination Agreement, we will pay CSL Vifor decreasing quarterly tiered royalty payments ranging from a high single-digit percentage of our net sales of Vafseo up to $450.0 million to mid-single digit percentage of our net sales of Vafseo above $450.0 million, in each case, in the U.S.

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

See Note 16, Subsequent Events , in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.

The WCF Royalty Payments, as described below, 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.

As a result of the Vifor Termination Agreement, we concluded that CSL Vifor no longer met the definition of a customer and, therefore, the arrangement should not be considered a revenue contract with a customer under ASC 606, Revenue from

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Contracts with Customers.

We therefore determined that the $43.3 million received from Vifor in connection with the Vifor License Agreement and related investment agreement should be classified as debt and we are amortizing such amount using the effective interest method over the Settlement Royalty Term.

The liability related to settlement royalties and the amortization are based on our current estimates of future royalties expected to be paid over the life of the arrangement.

The annual effective interest rate as of September 30, 2024 was 41.0% which is reflected as interest expense in the unaudited condensed consolidated statements of operations and comprehensive loss.

The Company recognized interest expense of $4.4 million for the three and nine months ended September 30, 2024.

As of September 30, 2024, the $47.7 million liability related to settlement royalties is classified as a long-term liability based on the timing of payments.

See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.

Working Capital Fund Liability (Previously Referred to as Refund Liability to Customer)

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

As of September 30, 2024, the $40.2 million Working Capital Fund liability is classified as a long-term liability based on management’s estimated timing of the repayment of the Working Capital Fund liability to CSL Vifor exceeding one-year.

The WCF Royalty Payments are subject to certain minimum true-up milestones.

See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.

Liability Related to Sale of Future Royalties

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We amortize the liability related to the sale of future royalties using the effective interest method over the life of the arrangement.

The annual effective interest rate as of June 30, 2024 was 0%.

The annual effective interest rate as of September 30, 2024 was 0%.

We retain the right to receive all potential future regulatory milestones for Vafseo under the MTPC Agreement.

We recorded $0.5 million and $0.9 million of non-cash royalty revenue 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 , in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.

We recorded $0.5 million and $1.4 million of non-cash royalty revenue during each of the three and nine months ended September 30, 2024 and 2023, respectively.

See Note 8, Liability Related to Settlement Royalties, Working Capital Fund Liability and Liability Related to Sale of Future Royalties , in the accompanying notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for further information.

Off-Balance Sheet Arrangements

Letter of Credit

As of June 30, 2024, in connection with the Cambridge Lease (as defined below), we had $1.7 million in a letter of credit outstanding.

As of September 30, 2024, in connection with the Cambridge Lease (as defined below), we had $1.7 million in a letter of credit outstanding.

Director and Officer Indemnification

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No demands have been made upon us to provide indemnification under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated financial statements.

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Contractual Obligations and Commitments Other Than Debt Agreements

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

Certain contractual obligations are reflected on our condensed consolidated balance sheet as of June 30, 2024, while others are considered future obligations.

Our material cash requirements as of June 30, 2024, include contractual obligations and commitments arising in the normal course of business, including leases, license agreements, manufacturing agreements and unconditional purchase commitments which are described in more detail below.

Certain contractual obligations are reflected on our condensed consolidated balance sheet as of September 30, 2024, while others are considered future obligations.

Our material cash requirements as of September 30, 2024, include contractual obligations and commitments arising in the normal course of business, including leases, license agreements, manufacturing agreements and unconditional purchase commitments which are described in more detail below.

Cambridge Lease

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Unless earlier terminated, the Cyclerion Agreement will expire on a product-by-product and country-by-country basis upon the expiration of the last royalty term, which ends upon the longest of (i) the expiration of the patents licensed under the Cyclerion Agreement, (ii) the expiration of regulatory exclusivity for such product and (iii) ten years from first commercial sale of such product.

We may terminate the Cyclerion Agreement in its entirety or only with respect to a particular licensed

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compound or product upon 180 days’ prior written notice to Cyclerion.

We may terminate the Cyclerion Agreement in its entirety or only with respect to a particular licensed compound or product upon 180 days’ prior written notice to Cyclerion.

The parties also have customary termination rights, subject to a cure period, in the event of the other party’s material breach of the Cyclerion Agreement or in the event of certain additional circumstances.

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We enter into agreements in the normal course of business with various vendors, which are generally cancellable upon notice.

Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancellable obligations of service providers, up to the date of cancellation.

In addition, we contract with various organizations to conduct R&D activities with remaining contract costs to us of approximately $46.7 million as of June 30, 2024.

Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-

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cancellable obligations of service providers, up to the date of cancellation.

In addition, we contract with various organizations to conduct R&D activities with remaining contract costs to us of approximately $47.0 million as of September 30, 2024.

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

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

Six Months Ended June 30,

Nine Months Ended September 30,

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

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Operating Activities

Net cash used in operating activities was $29.5 million for the six months ended June 30, 2024.

Net cash used in operating activities for the six months ended June 30, 2024 consisted of a net loss of $26.6 million reduced by net non-cash adjustments of $25.9 million, including amortization of our intangible asset of $18.0 million, a change in excess inventory purchase commitments of $2.1 million and a change in fair value of the warrant liability of $2.2 million, offset by a reduction of $28.8 million in working capital.

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

Net cash used in operating activities consisted of a net loss of $38.1 million reduced by net non-cash adjustments of $24.5 million, including amortization of our intangible asset of $18.0 million, offset by a reduction of $0.3 million in working capital.

Net cash used in operating activities was $36.2 million for the nine months ended September 30, 2024.

Net cash used in operating activities for the nine months ended September 30, 2024 consisted of a net loss of $46.6 million reduced by net non-cash adjustments of $46.9 million, including amortization of our intangible asset of $27.0 million, a change in excess inventory purchase commitments of $2.1 million and a change in fair value of the warrant liability of $1.3 million, offset by a reduction of $36.4 million in working capital.

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

Net cash used in operating activities consisted of a net loss of $52.5 million reduced by net non-cash adjustments of $36.0 million, including amortization of our intangible asset of $27.0 million and a noncash write-off of $0.8 million related to the termination of our Boston Lease, offset by a reduction of $4.5 million in working capital.

Investing Activities

Net cash used in investing activities for the six months ended June 30, 2024 was immaterial.

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

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Net cash used in investing activities for the nine months ended September 30, 2024 was immaterial.

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

Financing Activities

Net cash provided by financing activities was $26.1 million for the six months ended June 30, 2024, which primarily consisted of proceeds of $45.0 million from the issuance of debt under the BlackRock Credit Agreement and net proceeds of $18.7 million from the sale of common stock under our ATM Facility partially offset by principal payments of debt of $37.1 million primarily related to the Pharmakon Term Loans which were repaid in January 2024.

Net cash used in financing activities was $24.0 million for the six months ended June 30, 2023, which primarily consisted of principal payments of debt related to the Pharmakon Term Loans.

Net cash provided by financing activities was $27.3 million for the nine months ended September 30, 2024, which primarily consisted of proceeds of $45.0 million from the issuance of debt under the BlackRock Credit Agreement and net proceeds of $20.4 million from the sale of common stock under our ATM facility partially offset by principal payments of debt of $37.1 million primarily related to the Pharmakon Term Loans which were repaid in January 2024.

Net cash used in financing activities was $23.9 million for the nine months ended September 30, 2023, which primarily consisted of principal payments of debt related to the Pharmakon Term Loans.

Recent Accounting Pronouncements

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On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses, other long-term liabilities, product revenues, including various rebates, returns and reserves related to product sales, inventories, classification of expenses between cost of goods sold, R&D and selling, general and administrative, long-term assets, including our right-of-use assets, intangible asset and goodwill.

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

We base our estimates on historical experience, known trends and events, and various

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other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

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

During the six months ended June 30, 2024, there were no material changes to our methodologies used for our critical accounting estimates as reported in our 2023 Form 10-K.

During the nine months ended September 30, 2024, there were no material changes to our methodologies used for our critical accounting estimates as reported in our 2023 Form 10-K.

Quantitative and Qualitative Disclosures about Market Risk.

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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 2. Management’s Discussion and Analysis