ARDELYX, INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS ARDELYX, INC. CONDENSED BALANCE SHEETS (Unaudited) (in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, ​ December 31, ​ ​ 2020 2019 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 91,009 ​ $ 181,133 ​ Short-term investments ​ 94,488 ​ 66,379 ​ Unbilled revenue ​ ​ 750 ​ ​ 750 ​ Prepaid expenses and other current assets ​ 7,546 ​ 3,800 ​ Total current assets ​ 193,793 ​ 252,062 ​ Property and equipment, net ​ 2,111 ​ 3,436 ​ Right-of-use assets ​ ​ 2,402 ​ ​ 3,970 ​ Other assets ​ 249 ​ 314 ​ Total assets ​ $ 198,555 ​ $ 259,782 ​ Liabilities and stockholders’ equity ​ ​ ​ Current liabilities: ​ ​ ​ Accounts payable ​ $ 2,490 ​ $ 2,187 ​ Accrued compensation and benefits ​ 3,722 ​ 4,453 ​ Current portion of operating lease liability ​ ​ 2,770 ​ ​ 2,608 ​ Loan payable, current portion ​ ​ — ​ ​ 1,183 ​ Deferred revenue ​ ​ 885 ​ ​ 4,541 ​ Accrued expenses and other current liabilities ​ 6,667 ​ 7,248 ​ Total current liabilities ​ 16,534 ​ 22,220 ​ Operating lease liability, net of current portion ​ ​ — ​ ​ 2,076 ​ Loan payable, net of current portion ​ ​ 50,681 ​ ​ 48,831 ​ Total liabilities ​ 67,215 ​ 73,127 ​ Commitments and contingencies (Note 11) ​ ​ ​ Stockholders’ equity: ​ ​ ​ Preferred stock, $ 0.0001 par value; 5,000,000 shares authorized; no shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively. ​ — ​ — ​ Common stock, $ 0.0001 par value; 300,000,000 shares authorized; 90,243,409 and 88,817,741 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively. ​ 9 ​ 9 ​ Additional paid-in capital ​ 657,130 ​ 647,078 ​ Accumulated deficit ​ ( 525,889 ) ​ ( 460,452 ) ​ Accumulated other comprehensive income ​ 90 ​ 20 ​ Total stockholders’ equity ​ 131,340 ​ 186,655 ​ Total liabilities and stockholders’ equity ​ $ 198,555 ​ $ 259,782 ​ ​ The accompanying notes are an integral part of these condensed financial statements. ​ 2 Table of Contents ARDELYX, INC. CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2020 2019 2020 2019 ​ Revenues: ​ ​ ​ ​ Licensing revenue ​ $ — ​ $ 3,000 ​ $ 706 ​ $ 3,000 ​ Collaborative development revenue ​ ​ 1,356 ​ ​ — ​ ​ 3,656 ​ ​ — ​ Other revenue ​ ​ 1,357 ​ ​ 13 ​ ​ 1,400 ​ ​ 31 ​ Total revenues ​ ​ 2,713 ​ ​ 3,013 ​ ​ 5,762 ​ ​ 3,031 ​ Operating expenses: ​ ​ ​ ​ ​ Cost of revenue ​ — ​ 600 ​ 141 ​ 600 ​ Research and development ​ ​ 12,240 ​ ​ 17,580 ​ ​ 46,948 ​ ​ 57,436 ​ General and administrative ​ 7,634 ​ 6,922 ​ 21,810 ​ 17,410 ​ Total operating expenses ​ 19,874 ​ 25,102 ​ 68,899 ​ 75,446 ​ Loss from operations ​ ( 17,161 ) ​ ( 22,089 ) ​ ( 63,137 ) ​ ( 72,415 ) ​ Interest expense ​ ​ ( 1,202 ) ​ ​ ( 1,443 ) ​ ​ ( 3,785 ) ​ ​ ( 4,328 ) ​ Other income, net ​ 255 ​ 294 ​ 1,485 ​ 1,896 ​ Loss before provision for income taxes ​ ( 18,108 ) ​ ( 23,238 ) ​ ( 65,437 ) ​ ( 74,847 ) ​ Provision for income taxes ​ — ​ 301 ​ — ​ 303 ​ Net loss ​ $ ( 18,108 ) ​ $ ( 23,539 ) ​ $ ( 65,437 ) ​ $ ( 75,150 ) ​ Net loss per common share, basic and diluted ​ $ ( 0.20 ) ​ $ ( 0.37 ) ​ $ ( 0.73 ) ​ $ ( 1.20 ) ​ Shares used in computing net loss per share - basic and diluted ​ 89,365,798 ​ 62,828,513 ​ 89,109,772 ​ 62,676,591 ​ Comprehensive loss: ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 18,108 ) ​ $ ( 23,539 ) ​ $ ( 65,437 ) ​ $ ( 75,150 ) ​ Unrealized (losses) gains on available-for-sale securities ​ ( 227 ) ​ ( 12 ) ​ 70 ​ 42 ​ Comprehensive loss ​ $ ( 18,335 ) ​ $ ( 23,551 ) ​ $ ( 65,367 ) ​ $ ( 75,108 ) ​ ​ The accompanying notes are an integral part of these condensed financial statements. ​ 3 Table of Contents ​ ARDELYX, INC. CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For the Three and Nine Months ended September 30, 2020 (Unaudited) (in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Comprehensive ​ Stockholders' ​ Shares Amount Capital Deficit Income Equity Balance as of June 30, 2020 ​ 89,140,563 ​ $ 9 ​ $ 653,805 ​ $ ( 507,781 ) ​ $ 317 ​ $ 146,350 Issuance of common stock under employee stock purchase plan 94,127 ​ — ​ 459 ​ — ​ — ​ 459 Issuance of common stock upon exercise of options 142,191 ​ — ​ 339 ​ — ​ — ​ 339 Issuance of common stock upon vesting of restricted stock units 866,528 ​ — ​ — ​ — ​ — ​ — Stock-based compensation ​ — ​ ​ — ​ ​ 2,527 ​ ​ — ​ ​ ​ ​ ​ 2,527 Unrealized losses on available-for-sale securities — ​ — ​ — ​ — ​ ( 227 ) ​ ( 227 ) Net loss — ​ — ​ — ​ ( 18,108 ) ​ — ​ ( 18,108 ) Balance as of September 30, 2020 90,243,409 ​ $ 9 ​ $ 657,130 ​ $ ( 525,889 ) ​ $ 90 ​ $ 131,340 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Comprehensive ​ Stockholders' ​ ​ Shares Amount Capital Deficit Income Equity Balance as of December 31, 2019 ​ 88,817,741 ​ $ 9 ​ $ 647,078 ​ $ ( 460,452 ) ​ $ 20 ​ $ 186,655 Issuance of common stock under employee stock purchase plan 169,931 ​ — ​ 834 ​ — ​ — ​ 834 Issuance of common stock for services 42,403 ​ — ​ 310 ​ — ​ — ​ 310 Issuance of common stock upon exercise of options 346,806 ​ — ​ 759 ​ — ​ — ​ 759 Issuance of common stock upon vesting of restricted stock units 866,528 ​ — ​ — ​ — ​ — ​ — Stock-based compensation — ​ — ​ 8,149 ​ — ​ — ​ 8,149 Unrealized gains on available-for-sale securities — ​ — ​ — ​ — ​ 70 ​ 70 Net loss — ​ — ​ — ​ ( 65,437 ) ​ — ​ ( 65,437 ) Balance as of September 30, 2020 90,243,409 ​ $ 9 ​ $ 657,130 ​ $ ( 525,889 ) ​ $ 90 ​ $ 131,340 ​ ​ The accompanying notes are an integral part of these condensed financial statements. ​ ​ ​ ​ ​ ​ ​ ​ 4 Table of Contents ​ ​ ​ ARDELYX, INC. CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For the Three and Nine Months ended September 30, 2019 (Unaudited) (in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Comprehensive ​ Stockholders' ​ ​ Shares Amount Capital Deficit Income Equity Balance as of June 30, 2019 ​ 62,800,869 ​ $ 6 ​ $ 485,718 ​ $ ( 417,123 ) ​ $ 16 ​ $ 68,617 Issuance of common stock under employee stock purchase plan ​ 77,698 ​ — ​ 200 ​ — ​ — ​ ​ 200 Issuance of common stock upon exercise of options ​ 4,513 ​ — ​ 13 ​ — ​ — ​ ​ 13 Stock-based compensation ​ — ​ ​ — ​ ​ 3,879 ​ ​ — ​ ​ ​ ​ ​ 3,879 Unrealized losses on available-for-sale securities ​ — ​ — ​ — ​ — ​ ( 12 ) ​ ​ ( 12 ) Net loss ​ — ​ — ​ — ​ ( 23,539 ) ​ — ​ ​ ( 23,539 ) Balance as of September 30, 2019 ​ 62,883,080 ​ $ 6 ​ $ 489,810 ​ $ ( 440,662 ) ​ $ 4 ​ $ 49,158 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ Total ​ ​ Common Stock ​ Paid-In ​ Accumulated ​ Comprehensive ​ Stockholders' ​ ​ Shares Amount Capital Deficit (Loss) Income Equity Balance as of December 31, 2018 ​ 62,516,627 ​ $ 6 ​ $ 481,357 ​ $ ( 365,512 ) ​ $ ( 38 ) ​ $ 115,813 Issuance of common stock under employee stock purchase plan 160,744 ​ — ​ 397 ​ — ​ — ​ ​ 397 Issuance of common stock for services 113,136 ​ — ​ 311 ​ — ​ — ​ ​ 311 Issuance of common stock upon exercise of options 6,964 ​ — ​ 21 ​ — ​ — ​ ​ 21 Issuance of common stock upon vesting of restricted stock units 85,609 ​ — ​ — ​ — ​ — ​ ​ — Stock-based compensation — ​ — ​ 7,724 ​ — ​ — ​ ​ 7,724 Unrealized gains on available-for-sale securities — ​ — ​ — ​ — ​ 42 ​ ​ 42 Net loss — ​ — ​ — ​ ( 75,150 ) ​ — ​ ​ ( 75,150 ) Balance as of September 30, 2019 ​ 62,883,080 ​ $ 6 ​ $ 489,810 ​ $ ( 440,662 ) ​ $ 4 ​ $ 49,158 ​ The accompanying notes are an integral part of these condensed financial statements. ​ 5 Table of Contents ARDELYX, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2020 2019 ​ Operating activities ​ ​ Net loss ​ $ ( 65,437 ) ​ $ ( 75,150 ) ​ Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ Depreciation expense ​ 1,399 ​ 1,993 ​ Amortization of deferred financing costs ​ 416 ​ 550 ​ Amortization of deferred compensation for services ​ 235 ​ 231 ​ Amortization of premium on investment securities ​ ( 241 ) ​ ( 666 ) ​ Non-cash lease expense ​ ​ 1,568 ​ ​ 1,356 ​ Stock-based compensation ​ 8,149 ​ 7,724 ​ Change in derivative liabilities ​ ​ 290 ​ ​ 246 ​ Non-cash interest associated with debt discount accretion ​ ​ 393 ​ ​ 353 ​ Changes in operating assets and liabilities: ​ ​ ​ ​ Unbilled revenue ​ — ​ 5,000 ​ Prepaid expenses and other assets ​ ( 3,748 ) ​ ( 3,068 ) ​ Accounts payable ​ 303 ​ 541 ​ Accrued compensation and benefits ​ ( 731 ) ​ 81 ​ Lease liabilities ​ ​ ( 1,914 ) ​ ​ ( 1,301 ) ​ Accrued and other liabilities ​ ( 871 ) ​ ( 3,237 ) ​ Deferred revenue ​ ( 3,656 ) ​ — ​ Net cash used in operating activities ​ ( 63,845 ) ​ ( 65,347 ) ​ Investing activities ​ ​ ​ Proceeds from maturities of investments ​ 79,402 ​ 115,484 ​ Purchases of investments ​ ( 107,200 ) ​ ( 36,325 ) ​ Purchases of property and equipment ​ ( 74 ) ​ ( 325 ) ​ Net cash (used in) provided by investing activities ​ ( 27,872 ) ​ 78,834 ​ Financing activities ​ ​ ​ Proceeds from issuance of common stock under equity incentive and stock purchase plans ​ ​ 1,593 ​ ​ 418 ​ Net cash provided by financing activities ​ 1,593 ​ 418 ​ Net (decrease) increase in cash and cash equivalents ​ ( 90,124 ) ​ 13,905 ​ Cash and cash equivalents at beginning of period ​ 181,133 ​ 78,768 ​ Cash and cash equivalents at end of period ​ $ 91,009 ​ $ 92,673 ​ Supplementary disclosure of cash flow information: ​ ​ ​ Income taxes paid ​ $ 1 ​ $ 2 ​ Supplementary disclosure of non-cash activities: ​ ​ ​ Right-of-use assets obtained in exchange for lease obligations ​ $ — ​ $ 5,810 ​ ​ The accompanying notes are an integral part of these condensed financial statements. ​ 6 Table of Contents ​ ARDELYX, INC . NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) (tabular amounts in thousands, except share and per share amounts and where otherwise noted) ​ NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION Ardelyx, Inc. (the “Company,” “we,” “us” or “our”) is a specialized biopharmaceutical company focused on developing innovative first-in-class medicines to improve treatment for people with kidney and cardiovascular diseases. The Company operates in one business segment, which is the research and development of biopharmaceutical products. Basis of Presentation These condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted. These condensed financial statements have been prepared on the same basis as the Company’s most recent annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to present fairly the Company’s financial position at September 30, 2020 and results of operations, changes in stockholders’ equity, and cash flows for the interim periods ended September 30, 2020 and 2019. The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The results for the three and nine months ended September 30, 2020 are not necessarily indicative of results to be expected for the entire year ending December 31, 2020, or for any other interim period or future year. ​ Liquidity As of September 30, 2020, the Company had cash, cash equivalents and short-term investments of approximately $ 185.5 million. The Company believes its current available cash, cash equivalents and short-term investments will be sufficient to fund the Company’s planned expenditures and meet its obligations for at least 12 months following the filing of this Report on Form 10-Q. ​ Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes thereto. On an ongoing basis, management evaluates its estimates, including those related to recognition of revenue, clinical trial accruals, contract manufacturing accruals, the fair value of assets and liabilities, income taxes and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could materially differ from those estimates. ​ ​ 7 Table of Contents Summary of Significant Accounting Policies There have been no changes to the significant accounting policies disclosed in the Company’s most recent Annual Report on Form 10-K. Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements In December 2019, as part of its initiative to reduce complexity in the accounting standards, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also clarifies and simplifies other aspects of the accounting for income taxes. The standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company early adopted ASU 2019-12 on April 1, 2020 and this adoption had no material impact on the Company’s financial position or results of operations. In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606 (“ASU 2018-18”), which clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under the FASB’s Accounting Standards Codification (“ASC”) No. 606, Revenue from Contracts with Customers (“ASC 606”) when the collaborative arrangement participant is a customer. The Company adopted ASU 2018-18 on January 1, 2020, and the adoption of this standard did not have a material impact on the Company’s financial statements. In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which considers cost and benefits and removes, modifies and adds disclosure requirements in Topic 820. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty is to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments were to be applied retrospectively to all periods presented. The Company adopted ASU 2018-13 on January 1, 2020, and the adoption of this standard did not have a material impact on the Company’s financial statements. In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides temporary optional guidance to companies impacted by the transition away from the London Interbank Offered Rate (“LIBOR”). The guidance provides certain expedients and exceptions to applying GAAP in order to lessen the potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified. This guidance was effective upon issuance and expires on December 31, 2022. The Company adopted ASU 2020-04 on April 1, 2020, and the adoption of this standard did not have a material impact on the Company’s financial statements. Recent Accounting Pronouncements Not Yet Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , an amendment which modifies the measurement and recognition of credit losses for most financial assets and certain other instruments. The amendment updates the guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the “incurred loss” model with an “expected loss” model. Accordingly, these financial assets will be presented at the net amount expected to be collected. The amendment also requires that credit losses related to available-for-sale debt securities be recorded as an allowance through net income rather than reducing the carrying amount under the current, other-than-temporary-impairment model. For smaller reporting companies the guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. Management is currently assessing the impact of this standard on the Company’s financial statements. 8 Table of Contents ​ ​ NOTE 2. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Securities classified as cash, cash equivalents and short-term investments as of September 30, 2020 and December 31, 2019 are summarized below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2020 ​ ​ ​ ​ Gross Unrealized ​ ​ ​ ​ Amortized Cost Gains Losses Fair Value Cash and cash equivalents: ​ ​ ​ ​ Money market funds ​ $ 83,011 ​ $ — ​ $ — ​ $ 83,011 Commercial paper ​ 6,499 ​ — ​ — ​ 6,499 Cash ​ ​ 1,499 ​ ​ — ​ ​ — ​ ​ 1,499 Total cash and cash equivalents ​ ​ 91,009 ​ ​ — ​ ​ — ​ ​ 91,009 Short-term investments ​ ​ ​ ​ ​ Commercial paper ​ $ 41,625 ​ $ 30 ​ $ ( 1 ) ​ $ 41,654 Corporate bonds ​ ​ 39,219 ​ ​ 58 ​ ​ ( 3 ) ​ ​ 39,274 U.S. government-sponsored agency bonds ​ ​ 9,334 ​ ​ 3 ​ ​ — ​ ​ 9,337 Asset-backed securities ​ 3,221 ​ 2 ​ — ​ 3,223 U.S. treasury notes ​ 999 ​ 1 ​ — ​ 1,000 Total short-term investments ​ ​ 94,398 ​ ​ 94 ​ ​ ( 4 ) ​ ​ 94,488 Total cash equivalents and short-term investments ​ $ 185,407 ​ $ 94 ​ $ ( 4 ) ​ $ 185,497 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ ​ ​ ​ Gross Unrealized ​ ​ ​ ​ Amortized Cost Gains Losses Fair Value Cash and cash equivalents: ​ ​ ​ ​ Money market funds ​ $ 147,208 ​ $ — ​ $ — ​ $ 147,208 Commercial paper ​ 19,357 ​ 3 ​ — ​ 19,360 Corporate bonds ​ 11,441 ​ — ​ — ​ 11,441 Cash ​ 3,124 ​ — ​ — ​ 3,124 Total cash and cash equivalents ​ ​ 181,130 ​ ​ 3 ​ ​ — ​ ​ 181,133 Short-term investments ​ ​ ​ ​ ​ Commercial paper ​ $ 36,667 ​ $ 14 ​ $ — ​ $ 36,681 Corporate bonds ​ 21,690 ​ 6 ​ ( 3 ) ​ 21,693 Asset-backed securities ​ 8,005 ​ — ​ — ​ 8,005 Total short-term investments ​ ​ 66,362 ​ ​ 20 ​ ​ ( 3 ) ​ ​ 66,379 Total cash equivalents and short-term investments ​ $ 247,492 ​ $ 23 ​ $ ( 3 ) ​ $ 247,512 ​ All available-for-sale securities held as of September 30, 2020 had contractual maturities of less than one year. The Company’s available-for-sale securities are subject to a periodic impairment review. The Company considers a debt security to be impaired when the fair value of that security is less than its carrying cost, in which case the Company would further evaluate the investment to determine whether the security is other-than-temporarily impaired. When the Company evaluates an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below cost basis, the financial condition or creditworthiness of the issuer and any changes thereto, intent to sell, and whether it is more likely than not the Company will be required to sell the investment before the recovery of its cost basis. If an investment is other-than-temporarily impaired, the Company writes the investment down through the statement of operations to its fair value and establishes that value as the new cost basis for the investment. Management has determined that none of the Company’s available-for-sale securities were other-than-temporarily impaired in any of the periods presented, and as of September 30, 2020, no investment was in a continuous 9 Table of Contents unrealized loss position for more than one year . As such, the Company believes that it is more likely than not that the investments will be held until maturity or a forecasted recovery of fair value. While our investment policy requires that we only invest in highly-rated securities and limit our exposure to any single issuer, the COVID-19 pandemic may materially affect the financial conditions of issuers, which could result in a default by one or more issuers or result in downgrades below our minimum credit rating requirements. ​ NOTE 3. FAIR VALUE MEASUREMENTS The Company’s financial instruments consist of cash and cash equivalents, short-term investments, prepaid expenses, other current assets, accounts payable, accrued expenses, and the Term Loan, as defined and discussed in Note 5. Fair value estimates of these instruments are made at a specific point in time based on relevant market information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment. The carrying amounts of financial instruments such as cash and cash equivalents, prepaid expenses, other current assets, accounts payable and accrued expenses approximate the related fair values due to the short maturities of these instruments. Based on prevailing borrowing rates available to the Company for loans with similar terms, the Company believes the fair value of the Term Loan, considering level 2 inputs, approximates this instrument’s carrying value. ​ Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ​ The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: Level 1 – Valuations are based on quoted prices in active markets for identical assets or liabilities and readily accessible by the Company at the reporting date. Level 2 – Valuations based on inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuations based on unobservable inputs for which there is little or no market data, which require the Company to develop its own assumptions. 10 Table of Contents The following table sets forth the fair value of the Company’s financial assets and liabilities that are measured or disclosed on a recurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2020 ​ Total Fair Value Level 1 Level 2 Level 3 Assets: ​ ​ ​ ​ Money market funds ​ $ 83,011 ​ $ 83,011 ​ $ — ​ $ — Commercial paper ​ 48,153 ​ — ​ 48,153 ​ — Corporate bonds ​ 39,274 ​ — ​ 39,274 ​ — U.S. government-sponsored agency bonds ​ ​ 9,337 ​ ​ 9,337 ​ ​ ​ ​ ​ ​ Asset-backed securities ​ 3,223 ​ — ​ 3,223 ​ — U.S. treasury notes ​ 1,000 ​ 1,000 ​ — ​ — Total ​ $ 183,998 ​ $ 93,348 ​ $ 90,650 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative liability for Exit Fee ​ $ 1,259 ​ $ — ​ $ — ​ $ 1,259 Total ​ $ 1,259 ​ $ — ​ $ — ​ $ 1,259 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2019 ​ Total Fair Value Level 1 Level 2 Level 3 Assets: ​ ​ ​ ​ Money market funds ​ $ 147,208 ​ $ 147,208 ​ $ — ​ $ — Commercial paper ​ 56,041 ​ — ​ 56,041 ​ — Corporate bonds ​ 33,134 ​ — ​ 33,134 ​ — Asset-backed securities ​ 8,005 ​ — ​ 8,005 ​ — Total ​ $ 244,388 ​ $ 147,208 ​ $ 97,180 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative liability for Exit Fee ​ $ 969 ​ $ — ​ $ — ​ $ 969 Total ​ $ 969 ​ $ — ​ $ — ​ $ 969 ​ Where quoted prices are available in an active market, securities are classified as Level 1. The Company classifies money market funds, U.S. government-sponsored agency bonds and U.S. treasury notes as Level 1. When quoted market prices are not available for the specific security, the Company estimates fair value by using benchmark yields, reported trades, broker/dealer quotes and issuer spreads. The Company classifies corporate bonds, commercial paper, asset-backed securities and foreign currency derivative contracts as Level 2. In certain cases, where there is limited activity or less transparency around inputs to valuation, securities or derivative liabilities such as the Exit Fee, as defined and discussed in Note 4, are classified as Level 3. ​ NOTE 4. DERIVATIVE LIABILITY ​ In May 2018, in connection with entering into the Loan Agreement, as defined and discussed in Note 5, the Company entered into an agreement pursuant to which the Company agreed to pay $ 1.5 million in cash (the “Exit Fee”) upon any change of control transaction in respect of the Company or if the Company obtains both (i) U.S. Food and Drug Administration (“FDA”) approval of tenapanor for the treatment of hyperphosphatemia in chronic kidney disease (“CKD”) patients on dialysis and (ii) FDA approval of tenapanor for the treatment of patients with irritable bowel syndrome with constipation (“IBS-C”), which was obtained on September 12, 2019 when the FDA approved IBSRELA® (tenapanor), a 50 milligram, twice daily oral pill for the treatment of IBS-C in adults (the “Exit Fee Agreement”). Notwithstanding the prepayment or termination of the Term Loan, as defined and discussed in Note 5, the Company’s obligation to pay the Exit Fee will expire on May 16, 2028. The Company concluded that the Exit Fee is a freestanding derivative which should be accounted for at fair value on a recurring basis. The estimated fair value of the Exit Fee is recorded as a derivative liability and included in accrued expenses and other current liabilities on the accompanying condensed balance sheets. 11 Table of Contents The fair value of the derivative liability was determined using a discounted cash flow analysis, and the key assumptions included in the calculation of the estimated fair value of the derivative liability include: (i) the Company’s estimates of both the probability and timing of payment of the Exit Fee to Solar Capital Ltd. and Western Alliance Bank as a result of the FDA approvals and (ii) a variable discount rate. Generally, increases or decreases in the probability of occurrence would result in a directionally similar impact in the fair value measurement of the derivative liability, and it is estimated that a 10 % increase or decrease in the probability of occurrence would result in a fair value fluctuation of approximately $ 0.1 million. Changes in fair value, which are presented as other income, net, in the Company's condensed statements of operations, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ ​ ​ 2020 ​ ​ 2019 ​ Fair value of Exit Fee derivative liability at January 1 ​ $ 969 ​ $ 533 ​ Change in estimated fair value of derivative liability ​ ​ 290 ​ ​ 246 ​ Fair value of Exit Fee derivative liability at September 30 ​ $ 1,259 ​ $ 779 ​ ​ ​ NOTE 5. BORROWING ​ Solar Capital and Western Alliance Bank Loan Agreement ​ On May 16, 2018, the Company entered into a loan and security agreement (the “Loan Agreement”), with Solar Capital Ltd. and Western Alliance Bank (collectively the “Lenders”). The Loan Agreement provides for a $ 50.0 million term loan facility with a maturity date of November 1, 2022 (the “Term Loan”). ​ On October 9, 2020, the Company and the Lenders entered into an amendment to the Loan Agreement to extend the date through which the Company is permitted to make interest-only payments on the Term Loan by twelve months. Please see Note 13 for additional information. Borrowings under the Term Loan, before the October 2020 amendment, bore interest at a floating per annum rate equal to 7.45 % plus the one -month LIBOR, and the Company was permitted to make interest-only payments on the Term Loan until December 1, 2020. ​ The Company paid a closing fee of 1 % of the Term Loan, or $ 0.5 million, upon the closing of the Term Loan, and the Company is obligated to pay a final fee equal to 3.95 % of the Term Loan upon the earliest to occur of the maturity date, the acceleration of the Term Loan, the prepayment or repayment of the Term Loan or the termination of the Loan Agreement. The Company may voluntarily prepay the outstanding Term Loan, subject to a prepayment premium of (i) 3 % of the principal amount of the Term Loan if prepaid prior to or on the first anniversary of the Closing Date, (ii) 2 % of the principal amount of the Term Loan if prepaid after the first anniversary of the Closing Date through and including the second anniversary of the Closing Date, or (iii) 1 % of the principal amount of the Term Loan if prepaid after the second anniversary of the Closing Date and prior to the maturity date. The Term Loan is secured by substantially all the Company’s assets, except for the Company’s intellectual property and certain other customary exclusions. Additionally, in connection with the Term Loan, the Company entered into the Exit Fee Agreement, as discussed in Note 4. The Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants. As of September 30, 2020, the Company was in compliance with all of the covenants set forth in the Loan Agreement. The Loan Agreement also contains customary events of default that entitle the Lender to cause the Company’s indebtedness under the Loan Agreement to become immediately due and payable, and to exercise remedies against the Company and the collateral securing the Term Loan, including the Company’s cash. Upon the occurrence and for the duration of an event of default, an additional default interest rate equal to 4.0 % per annum will apply to all amounts owed under the Loan Agreement. As of September 30, 2020, to the Company’s knowledge, there were no facts or circumstances in existence that would give rise to an event of default. ​ 12 Table of Contents ​ As of September 30, 2020, the Company’s future payment obligations related to the Term Loan, excluding interest payments and the Exit Fee, are as follows: ​ ​ ​ ​ ​ Total repayment obligations ​ $ 51,975 Less: Unamortized discount and debt issuance costs ​ ​ ( 467 ) Less: Unaccreted value of final fee ​ ​ ( 827 ) Loan payable ​ ​ 50,681 Less: Loan payable, current portion ​ ​ — Loan payable, net of current portion ​ $ 50,681 ​ ​ NOTE 6. LEASES ​ All of the Company’s leases, which primarily include the right to use office and laboratory space, are operating leases, and certain of the leases have both lease and non-lease components. The Company has elected to account for each separate lease component and the non-lease components associated with that lease component as a single lease component for all classes of underlying assets. The following table provides additional details related to our facility leases, as presented in the Company’s condensed balance sheet as of September 30, 2020: ​ ​ ​ ​ ​ ​ Facilities ​ ​ ​ ​ Right of use assets ​ $ 2,402 ​ ​ ​ ​ ​ ​ Current portion of lease liabilities ​ ​ 2,770 ​ Operating lease liability, net of current portion ​ ​ — ​ Total ​ $ 2,770 ​ ​ ​ ​ ​ ​ Weighted-average remaining life (years) ​ ​ 1.00 ​ Weighted-average discount rate ​ ​ 12.99 % ​ Other information related to the Company’s facilities leases is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ 2020 2019 ​ 2020 2019 Operating lease expense $ 648 ​ $ 648 ​ $ 1,944 ​ $ 1,944 Cash paid for operating lease $ 767 ​ $ 660 ​ $ 2,288 ​ $ 1,890 ​ The following table summarizes the Company’s undiscounted cash payment obligations for its operating lease liabilities as of September 30, 2020: ​ ​ ​ ​ ​ Remainder of 2020 ​ $ 777 2021 ​ ​ 2,183 Total undiscounted operating lease payments ​ ​ 2,960 Imputed interest expenses ​ ​ ( 190 ) Total operating lease liabilities ​ ​ 2,770 Less: Current portion of operating lease liability ​ ​ 2,770 Operating lease liability, net of current portion ​ $ — ​ ​ ​ 13 Table of Contents NOTE 7. EQUITY INCENTIVE PLANS ​ Stock Option Plan During the three and nine months ended September 30, 2020, options were granted to employees and members of the board of directors to purchase 460,167 and 3,109,683 shares, respectively, of the Company's common stock. The weighted-average grant-date estimated fair value of options granted during the three and nine months ended September 30, 2020 was $ 4.09 and $ 5.03 , respectively. During the three and nine months ended September 30, 2020, options were exercised to purchase 142,191 and 346,806 shares, respectively, of the Company's common stock, resulting in corresponding approximately $ 0.3 million and $ 0.8 million net proceeds, respectively, to the Company. During the three and nine months ended September 30, 2019, options were exercised to purchase 4,513 and 6,964 shares, respectively, of the Company's common stock, resulting in corresponding $ 13,000 and $ 21,000 net proceeds to the Company. ​ Restricted Stock Units (“RSUs”) In July 2018, the Company granted 903,374 performance-based restricted stock units (“PRSUs”) to its employees that were to vest upon the achievement of certain performance conditions, subject to the employees’ continued service relationship with the Company through the achievement date. The primary performance condition was acceptance by the FDA of the Company’s filing of its New Drug Application (“NDA”) of tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis. Additionally, during the second quarter of 2020, the Company granted 30,000 PRSUs, in aggregate, with the same performance criteria to its chief commercial officer and chief financial officer hired during that period. On September 15, 2020, the Company announced the performance conditions were achieved and 866,528 of these PRSUs that were outstanding on the achievement date were vested and issued. Based on the achievement of the performance conditions, the Company recorded stock-based compensation expense of $ 0.2 million and $ 1.6 million for the three and nine months ended September 30, 2020, respectively. The Company had recorded a one-time catch-up of stock-based compensation expense of $ 2.1 million for each of the three and nine months ended September 30, 2019 as the related performance condition had become probable as of September 30, 2019. The related compensation cost was recognized as an expense ratably over the estimated vesting period. The expense recognized for these awards was based on the grant date fair value of the Company’s common stock multiplied by the number of units granted. For each of the three and nine months ended September 30, 2020 and 2019, the Company issued zero and 85,609 shares , respectively, of its common stock upon vesting of time-based RSUs to its employees. No time-based RSUs were granted to employees during the three and nine months ended September 30, 2020 or 2019. Employee Stock Purchase Plan In August 2020, the Company sold 94,127 shares of its common stock under the Company’s employee stock purchase program (“ESPP”). The shares were purchased by employees at a purchase price of $ 4.88 per share with proceeds to the Company of approximately $ 0.4 million. In February 2020, the Company sold 75,804 shares of its common stock under the ESPP. The shares were purchased by employees at a purchase price of $ 4.95 per share with proceeds to the Company of approximately $ 0.4 million. In August 2019, the Company sold 77,698 shares of its common stock under the ESPP. The shares were purchased by employees at a purchase price of $ 2.58 per share with proceeds to the Company of approximately $ 0.2 million. In February 2019, the Company sold 83,046 shares of its common stock under the ESPP. The shares were purchased by employees at a purchase price of $ 2.39 per share with proceeds to the Company of approximately $ 0.2 million. Issuance of Common Stock for Services For the three and nine months ended September 30, 2020, the Company issued zero and 42,403 shares, respectively, of its common stock to members of the board of directors who elected to receive stock in lieu of their cash fees under the Company’s Amended and Restated Non-Employee Director Compensation Program. The shares issued were valued at 14 Table of Contents $ 0.3 million based on the fair value of the common stock on the date of grant. For the three and nine months ended September 30, 2019, the Company issued zero and 113,136 shares, respectively, of its common stock to members of the board of directors who elected to receive stock in lieu of their cash fees. The shares issued were valued at $ 0.3 million based on the fair value of the common stock on the date of grant. Stock-Based Compensation Stock-based compensation expense recognized for stock options, RSUs, PRSUs and the Company’s ESPP are recorded as operating expenses in the Company’s condensed statements of operations and comprehensive loss, as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, ​ Nine Months Ended September 30, ​ ​ 2020 2019 2020 2019 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development $ 963 ​ $ 1,670 ​ $ 3,165 ​ $ 3,197 ​ General and administrative ​ 1,564 ​ ​ 2,209 ​ ​ 4,984 ​ 4,527 ​ Total ​ $ 2,527 ​ $ 3,879 ​ $ 8,149 ​ $ 7,724 ​ ​ As of September 30, 2020, the Company’s total unrecognized stock-based compensation expense, net of estimated forfeitures, and average remaining vesting period, included the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrecognized Compensation Expense ​ Average Remaining Vesting Period (Years) Stock options $ 14,605 ​ ​ 2.8 ESPP $ 186 ​ ​ 0.2 ​ NOTE 8. STOCKHOLDERS’ EQUITY ​ Warrants ​ In June 2015, the Company sold and issued warrants to purchase 2,172,899 shares of common stock. The purchase price for the warrants was $ 0.125 per warrant. The warrants were exercisable for an exercise price of $ 13.91 per share at any time prior to the earlier of (i) 5 years from the date of issuance or (ii) certain changes in control of the Company. In June 2020, the warrants expired with none of the warrants exercised. ​ At the Market Offerings Agreement In July 2020, the Company filed a Form S-3 registration statement, which became effective in August 2020, containing (i) a base prospectus for the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $ 250,000,000 of the Company’s common stock, preferred stock, debt securities, warrants and/or units, from time to time in one or more offerings; and (ii) a prospectus supplement for the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $ 100,000,000 of the Company’s common stock that may be issued and sold, from time to time, under a sales agreement with Jefferies LLC, deemed to be “at the market offerings.” As of September 30, 2020, no shares have been offered, issued or sold pursuant to this sales agreement. 15 Table of Contents NOTE 9. NET LOSS PER SHARE Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of stock-based awards and warrants. Diluted net loss per common share is computed giving effect to all potential dilutive common shares, including common stock issuable upon exercise of stock options, and unvested restricted common stock and stock units. As the Company had net losses for the three and nine months ended September 30, 2020 and 2019, all potential common shares were determined to be anti-dilutive. The following table sets forth the computation of net loss per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ Nine Months Ended September 30, ​ ​ 2020 2019 2020 2019 Numerator: ​ ​ ​ ​ Net loss ​ $ ( 18,108 ) ​ $ ( 23,539 ) ​ $ ( 65,437 ) ​ $ ( 75,150 ) ​ Denominator: ​ ​ ​ ​ ​ Weighted average common shares outstanding - basic and diluted ​ 89,365,798 ​ 62,828,513 ​ 89,109,772 ​ 62,676,591 ​ Net loss per share - basic and diluted ​ $ ( 0.20 ) ​ $ ( 0.37 ) ​ $ ( 0.73 ) ​ $ ( 1.20 ) ​ ​ For the three and nine months ended September 30, 2020, the total number of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because the effect would have been antidilutive was 9.6 million and 10.4 million, respectively. For the three and nine months ended September 30, 2019, the total number of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because the effect would have been antidilutive was 10.5 million and 10.2 million, respectively. ​ ​ NOTE 10. COLLABORATION AND LICENSING AGREEMENTS Kyowa Kirin Co., Ltd. (“KKC”) 2019 KKC Agreement In November 2019, the Company entered into a research collaboration and option agreement with KKC (the “2019 KKC Agreement”) for research associated with identifying two pre-clinical compounds that are ready for designation as development compounds (“DCs”), with one compound inhibiting the first undisclosed target (“Program 1”), and a second inhibiting the second undisclosed target (“Program 2”). Pursuant to the 2019 KKC Agreement, upon completion of the research and designation by the research steering committee of one or more DCs, KKC has the right to execute one or more separate collaborative agreements relating to the development and commercialization of one or both DCs in certain specified territories. Under the terms of the 2019 KKC Agreement, KKC agreed to pay the Company a non-refundable, non-creditable upfront fee of $ 10.0 million, payable as follows: the first installment of $ 5.0 million within 30 days of November 11, 2019 (the “Effective Date”), and the second installment of $ 5.0 million on the first anniversary of the Effective Date, unless the 2019 KKC Agreement is earlier terminated by KKC due to material breach by the Company. The term of the 2019 KKC Agreement commenced on the Effective Date and ends on the earliest of: (i) two years following the Effective Date, (ii) the nomination of a program DC for both programs, (iii) the nomination of one program DC and the decision by the parties to cease research for the other program, or (iv) the decision by the parties to cease research for both programs. The Company assessed the 2019 KKC Agreement in accordance with ASC 606 and concluded that the contract’s counterparty, KKC, is a customer. Management also considered the modification guidance prescribed in ASC 606 and concluded that the 2019 KKC Agreement should be accounted for as a separate contract from the 2017 KKC Agreement, as defined and discussed below. 16 Table of Contents The Company identified various promises in the 2019 KKC Agreement, including: the grant of an initial research license; the Program 1 research; the Program 2 research; the right to obtain certain development and commercialization rights to a Program 1 DC in certain territories; the right to obtain development and commercialization rights to a Program 2 DC in certain territories; and participation in a joint steering committee (“JSC”). The Company determined that KKC could not benefit from either of the research programs without the research license and participation in the JSC. As such, the combined license, research programs and participation in the JSC were deemed to be the highest level of goods and services that can be deemed distinct for each of the Program 1 research and Program 2 research. The Company concluded that the options to obtain additional development and commercialization rights that are exercisable by KKC under certain circumstances are not performance obligations of the contract at inception because the option fees reflect the standalone selling price of the options, and therefore, the options are not considered to be material rights. At the outset of the 2019 KKC Agreement, the Company determined that the initial transaction price amounted to $ 10.0 million and that revenue associated with the combined performance obligations will be recognized as services are provided using an input method. Since transfer of control occurs over time, in management’s judgment this input method is the best measure of progress towards satisfying the performance obligations and reflects a faithful depiction of the transfer of goods and services. Revenue will be recognized over the Program 1 and Program 2 research periods, which are currently expected to extend through the end of 2021. Management will re-evaluate the estimates related to the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and adjust the timing of revenue recognition as necessary. During the three and nine months ended September 30, 2020, the Company recognized $ 1.4 million and $ 3.7 . million, respectively, as revenue under the 2019 KKC Agreement in the accompanying statement of operations and comprehensive loss. The aggregate amount of the transaction price allocated to the Company’s partially unsatisfied performance obligations as of September 30, 2020 was $ 5.9 million, of which $ 0.9 million is presented in the accompanying condensed balance sheet as deferred revenue. As of September 30, 2020, the Company expects to recognize the remaining transaction price allocated to the Company’s partially unsatisfied performance obligations over the remaining research terms, which, as noted above, are currently expected to extend through the end of 2021. There were no significant changes in estimates associated with the 2019 KKC Agreement during the three or nine months ended September 30, 2020. 2017 KKC Agreement In November 2017, the Company entered into an exclusive license agreement with KKC (the “2017 KKC Agreement”), for the development, commercialization and distribution of tenapanor in Japan for cardiorenal indications. The Company granted KKC an exclusive license to develop and commercialize certain sodium hydrogen exchanger 3 (“NHE3”) inhibitors including tenapanor in Japan for the treatment of cardiorenal diseases and conditions, excluding cancer. The Company retained the rights to tenapanor outside of Japan, and also retained the rights to tenapanor in Japan for indications other than those stated above. Pursuant to the 2017 KKC Agreement, KKC is responsible for all costs and expenses incurred in the development and commercialization of tenapanor for the treatment of cardiorenal diseases and conditions, excluding cancer in Japan. Under the 2017 KKC Agreement, the Company is responsible for supplying the tenapanor drug product for KKC’s use in development and during commercialization until KKC has assumed such responsibility. Additionally, the Company is responsible for supplying the tenapanor drug substance for KKC’s use in development and commercialization throughout the term of the 2017 KKC Agreement, provided that KKC may exercise an option to manufacture the tenapanor drug substance under certain conditions. ​ The Company assessed these arrangements in accordance with ASC 606 and concluded that the contract counterparty, KKC, is a customer. Under the terms of the 2017 KKC Agreement, the Company received $ 30.0 million in upfront license fees, which was recognized as revenue when the agreement was executed. Based on the Company’s assessment, management determined that the license and the manufacturing supply services were its material performance obligations at the inception of the 2017 KKC Agreement, and as such, each of the performance obligations is distinct. Additionally, the Company recorded unbilled revenue of $ 5.0 million and an increase in uncharged license fees of $ 1.0 million related to the first milestone under the 2017 KKC Agreement that KKC; this first milestone was achieved in February 2019 . In addition to the $ 30.0 million upfront license fee, the Company may be entitled to receive up to $ 55.0 million in total development milestones, of which $ 5.0 million has been received to date, and approximately $ 80.4 million in 17 Table of Contents commercialization milestones, as well as reimbursement of costs plus a reasonable overhead for the supply of product and high-teen royalties on net sales throughout the term of the agreement. The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at September 30, 2020. During each of the three and nine months ended September 30, 2020, the Company recognized $ 1.4 million as other revenue related to the manufacturing supply of tenapanor and other materials to KKC pursuant to the 2017 KKC Agreement. Similarly, for the three and nine months ended September 30, 2019, $ 13,000 and $ 31,000 , respectively, was recognized as other revenue. Xuanzhu (HK) Biopharmaceutical Limited (“XuanZhu”) In November 2019, the Company entered into a license agreement with XuanZhu (the “XuanZhu Agreement”), pursuant to which the Company granted XuanZhu a license to certain specific patent and patent applications. The Company assessed the XuanZhu Agreement in accordance with ASC 606 and concluded that the contract counterparty, XuanZhu, is a customer. Under the terms of the XuanZhu Agreement, the Company recognized $ 1.5 million in license fees, which constituted the initial transaction price, when the agreement was executed, of which $ 750,000 was received upfront in November 2019, and achievement for the second $ 750,000 payment, related to the issuance and grant of a specific patent, was determined to be not materially at risk and probable of achievement. Based on management’s assessment, the Company determined that it has one combined performance obligation, which is the license and the specific patent grant. ​ No revenue related to the XuanZhu Agreement was recorded during the three and nine months ended September 30, 2020. Shanghai Fosun Pharmaceutical Industrial Development Co. Ltd. (“Fosun Pharma”) In December 2017, the Company entered into an exclusive license agreement with Fosun Pharma ( the “ Fosun Agreement ”), for the development, commercialization and distribution of tenapanor in China for both hyperphosphatemia and IBS-C. The Company assessed these arrangements in accordance with ASC 606 and concluded that the contract counterparty, Fosun Pharma, is a customer. Under the terms of the Fosun Agreement, the Company received $ 12.0 million in upfront license fees which was recognized as revenue when the agreement was executed. Based on management’s assessment, the Company determined that the license and the manufacturing supply services represented the material performance obligations at the inception of the agreement, and as such , each of the performance obligations is distinct . The Company may be entitled to additional development and commercialization milestones of up to $ 110.0 million, as well as reimbursement of cost plus a reasonable overhead for the supply of product and tiered royalties on net sales ranging from the mid-teens to 20 % . The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at September 30, 2020. The Company has recorded no revenue during the three and nine months ended September 30, 2020 related to the Fosun Agreement. During each of the three and nine months ended September 30, 2019, $ 3.0 million licensing revenue was recorded upon the achievement of a development milestone pursuant to the Fosun Agreement. Knight Therapeutics, Inc. (“Knight“) In March 2018, the Company entered into an exclusive license agreement with Knight (the “Knight Agreement”), for the development, commercialization and distribution of tenapanor in Canada for hyperphosphatemia and IBS-C. The Company assessed this arrangement in accordance with ASC 606 and concluded that the contract counterparty, Knight, is a customer. Based on management’s assessment, the Company determined that the license and the manufacturing supply services represented the material performance obligations at the inception of the agreement, and as such, each of the performance obligations is distinct. Under the terms of the agreement, the Company received a $ 2.3 million nonrefundable, one-time upfront payment in March 2018 and is eligible to receive additional development and commercialization milestone payments worth up to 18 Table of Contents $ 16.4 million. The Company is also eligible to receive royalties throughout the term of the agreement, and a transfer price for manufacturing services . The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at September 30, 2020. In April 2020, Knight announced that it had received approval from Health Canada for IBSRELA ® (tenapanor) for the treatment of IBS-C, and in May 2020, the Company received a development milestone payment from Knight related to the achievement of the aforementioned milestone. For the three and nine months ended September 30, 2020 the Company recognized zero and $ 0.7 million, respectively, as licensing revenue, and for the three and nine months ended September 30, 2019, no revenue was recognized related to the Knight Agreement. AstraZeneca AB (“AstraZeneca”) In June 2015, the Company entered into a termination agreement with AstraZeneca (the “AstraZeneca Termination Agreement”) pursuant to which the Company has agreed to pay AstraZeneca (i) future royalties at a royalty rate of 10 % of net sales of tenapanor or other NHE3 products by the Company or its licensees, and (ii) 20 % of non-royalty revenue received from a new collaboration partner should the Company elect to license, or otherwise provide rights to develop and commercialize tenapanor or another NHE3 inhibitor, up to a maximum of $ 75.0 million in aggregate for (i) and (ii). As of September 30, 2020, to date in aggregate, the Company has recognized $ 10.6 million of the $ 75.0 million, recorded as cost of revenue, and has paid AstraZeneca $ 10.6 million. For the three and nine months ended September 30, 2020 the Company has recognized and recorded as cost of revenue zero and $ 0.1 million, respectively, related to the AstraZeneca Termination Agreement. Similarly, for each of the three and nine months ended September 30, 2019 the Company recognized $ 0.1 million as cost of revenue. The following table presents changes in the Company’s deferred revenue balance, which is attributable entirely to the 2019 KKC Agreement discussed above, during the reporting period: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred revenue Balance at December 31, 2019 $ 4,541 Increases due to cash received, excluding amounts recognized as revenue during the period ​ ​ — ​ Decreases due to revenue recognized in the period for which cash has been received ​ ​ ( 1,828 ) ​ Decreases due to revenue recognized in the period for which cash has not been received ​ ​ ( 1,828 ) ​ Balance at September 30, 2020 ​ $ 885 ​ ​ ​ ​ ​ NOTE 11. CONTINGENCIES From time to time the Company may be involved in claims arising in connection with its business. Based on information currently available, management believes that the amount, or range, of reasonably possible losses in connection with any pending actions against the Company will not be material to the Company’s financial condition or cash flows, and no contingent liabilities were accrued as of September 30, 2020 or 2019. ​ ​ ​ NOTE 12. INCOME TAXES On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act includes, among other features, provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. While the Company continues to evaluate the impact of the CARES Act, it does not expect the provisions of the legislation to have a significant impact on the effective tax rate or on the income tax provision or deferred income tax positions of the Company. ​ 19 Table of Contents ​ ​ ​ NOTE 13. SUBSEQUENT EVENT ​ On October 9, 2020, the Company and the Lenders entered into an amendment to the Loan Agreement, as defined and discussed in Note 5, to extend the date through which the Company is permitted to make interest-only payments on the Term Loan from December 1, 2020 to December 1, 2021 (the “Amended Interest Only Period”); provided that, if (a) the FDA does not approve the Company’s NDA for tenapanor for control of serum phosphorus in adult CKD patients on dialysis on or before May 31, 2021 or (b) the FDA issues a complete response letter (“CRL”) for tenapanor for the control of serum phosphorus in adult CKD patients on dialysis, then the Amended Interest Only Period will be shortened to the earlier of June 1, 2021 or the first day of the month immediately following the date that the FDA issues the CRL. In addition, the Company and the Lenders have agreed to increase the fee that is due upon the earliest to occur of the maturity date, the acceleration of the Term Loan, the prepayment or repayment of the Term Loan or the termination of the Loan Agreement from 3.95 % of the Term Loan to 4.95 % of the Term Loan and set a minimum LIBOR rate of 0.25 %. The Company paid an amendment fee of $ 125,000 , in aggregate, to the Lenders in October 2020 and November 2020. The amendment to the interest-only payments period results in the classification of the loan payable as non-current in the condensed balance sheet at September 30, 2020. ​ ​ ​