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Item 1. Business

2021-03-08 compared with 2020-03-06 · 246 added, 342 removed, 195 unchanged (75% of the section changed)

Company Overview

We are a specialized biopharmaceutical company focused on developing first-in-class medicines to improve treatment for people with cardiorenal diseases.

This includes patients with CKD on dialysis suffering from elevated serum phosphorus, or hyperphosphatemia;

We are a specialized biopharmaceutical company focused on developing first-in-class medicines to improve treatment for people with kidney and cardiorenal diseases.

This includes patients with chronic kidney disease (”CKD”) on dialysis suffering from elevated serum phosphorus, or hyperphosphatemia;

and CKD patients and/or heart failure patients with elevated serum potassium, or hyperkalemia.

Our lead program is tenapanor, a first-in-class medicine in late-stage clinical development for the control of serum phosphorus in patients with CKD on dialysis.

Our lead product candidate, tenapanor, is a first-in-class medicine for which we submitted a New Drug Application (“NDA”) to the U.S.

Food and Drug Administration (“FDA”) in June 2020 for the control of serum phosphorus in adult patients with CKD on dialysis.

In September 2020 the FDA accepted the filing of our NDA and set a Prescription Drug User Fee Act (“PDUFA”) date of April 29, 2021.

Tenapanor has a unique mechanism of action and acts locally in the gut to inhibit the sodium hydrogen exchanger 3, or NHE3.

This results in the tightening of the epithelial cell junctions, thereby significantly reducing paracellular uptake of phosphate, the primary pathway of phosphate absorption.

We have evaluated tenapanor in a Phase 3 program for the control of serum phosphorus in CKD patients on dialysis.

In December 2019, we reported statistically significant topline efficacy results from our second monotherapy Phase 3 clinical trial, the PHREEDOM trial.

The P HREEDOM trial is a one-year study with a 26-week open-label treatment period and a 12-week double-blind, placebo-controlled randomized withdrawal period followed by a 14-week open-label safety extension period.

OUR PRODUCT PIPELINE

A New Approach for The Control of Serum Phosphorus in CKD Patients on Dialysis

Our portfolio is led by the development of tenapanor, a first-in-class medicine for the control of serum phosphorus in adult patients with CKD on dialysis.

Tenapanor for the control of serum phosphorus has a unique mechanism of action and acts locally in the gut to inhibit the sodium hydrogen exchanger 3 (“NHE3”).

This results in the tightening of the epithelial cell junctions, thereby significantly reducing paracellular uptake of phosphate, the primary pathway of phosphate absorption.

On September 15, 2020 we announced that the FDA accepted the filing of our NDA for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis.

The acceptance of our NDA represents the next critical step toward bringing to market a completely new approach to the management of hyperphosphatemia.

The FDA has set a PDUFA date of April 29, 2021.

We continue to advance commercial preparations for the launch of tenapanor for this indication.

The NDA is supported by three successful Phase 3 trials involving over 1,000 patients that evaluated the use of tenapanor for the control of serum phosphorus in CKD patients on dialysis, with two trials evaluating tenapanor as monotherapy and one trial evaluating tenapanor as part of a dual mechanism approach with phosphate binders.

We have established agreements with Kyowa Kirin Co., Ltd.

(“KKC”) in Japan, Shanghai Fosun Pharmaceutical Industrial Development Co.

(“Fosun Pharma”) in China and Knight Therapeutics, Inc.

(“Knight”) in Canada for the development and commercialization of tenapanor for certain indications in their respective territories.

In December 2019, we reported statistically significant topline efficacy results from our second monotherapy Phase 3 clinical trial, the PHREEDOM trial, which evaluated tenapanor for the control of serum phosphorus in CKD patients on dialysis.

The PHREEDOM trial followed a successful monotherapy Phase 3 clinical trial completed in 2017, the BLOCK trial, which achieved statistical significance for the primary endpoint.

The only adverse event reported in these Phase 3 trials in greater than 5% of patients was diarrhea, with an incidence rate of 52% in the PHREEDOM trial and 39% in the BLOCK trial, with most incidences in each trial being mild to moderate in nature.

PHREEDOM is a one-year study with a 26-week open-label treatment period and a 12-week double-blind, placebo-controlled randomized withdrawal period followed by a 14-week open-label safety extension period.

An active safety control group, for safety analysis only, received sevelamer, open-label, for the entire 52-week study period.

Patients completing the PHREEDOM trial from both the tenapanor arm and the sevelamer active safety control arm had the option to participate in NORMALIZE, an ongoing open-label 18-month extension study.

The goal of this study is to further our understanding of the potential for the dual mechanism of tenapanor and sevelamer to reduce patients’

serum phosphorus levels towards normal (<4.6 mg/dL) while minimizing medication burden.

The PHREEDOM trial followed a successful monotherapy Phase 3 clinical trial completed in 2017, which achieved statistical significance for the primary endpoint .

In addition, in September 2019, we reported positive results from the AMPLIFY trial, a Phase 3 study evaluating tenapanor in patients with CKD on dialysis who had uncontrolled hyperphosphatemia despite phosphate binder treatment.

We are preparing to submit a New Drug Application, or NDA, to the United States Food and Drug Administration, or FDA, for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis in mid-2020.

Tenapanor, if approved, would be the first therapy for phosphate management that is not a phosphate binder.

As tenapanor is a novel, potent, small molecule there would be significantly less pill burden than with phosphate binders.

Tenapanor is dosed as a single pill, twice-daily, which we believe could greatly improve patient adherence and compliance and free patients from having to take multiple pills before every meal.

In June 2020, we announced positive results from a planned analysis from our ongoing NORMALIZE extension study evaluating tenapanor, as monotherapy or in combination with sevelamer, to achieve serum phosphorus levels in the normal range (2.5 – 4.5 mg/dL) in patients with CKD on dialysis.

The NORMALIZE extension study allowed patients from our PHREEDOM study to continue therapy with tenapanor and enabled those patients in the PHREEDOM safety control arm receiving sevelamer carbonate to transition to tenapanor.

The data from the planned interim analysis demonstrated that the foundational use of tenapanor as monotherapy or in combination with sevelamer carbonate produces a significant

phosphorus-lowering effect with a mean serum phosphorous reduction of 2.33 mg/dL, from a mean baseline phosphorus of 7.27 mg/dL at the beginning of the PHREEDOM trial to a mean of 4.94 mg/dL at the time of this analysis.

In September 2019, we reported positive results from the AMPLIFY trial, a Phase 3 study evaluating tenapanor in patients with CKD on dialysis who had uncontrolled hyperphosphatemia despite phosphate binder treatment.

In this trial, approximately twice the number of patients achieved the serum phosphorus treatment goal of less than 5.5 mg/dL with tenapanor and phosphate binders versus phosphate binders alone.

The only adverse event with a placebo-adjusted rate greater than 3% was diarrhea, with an incidence rate of 43%, with most being mild to moderate in nature.

Tenapanor, if approved, would be the first therapy for phosphate management that blocks phosphorus absorption at the primary pathway of uptake.

It is not a phosphate binder.

Tenapanor is a novel, potent, small molecule, that has been shown in our phase 3 studies to treat hyperphosphatemia as monotherapy and as part of a dual mechanism approach.

Additionally, we believe tenapanor could greatly improve patient adherence and compliance with one single pill dosed twice daily in contrast to current therapies where typically multiple pills are taken before every meal.

RDX013 Program:

Small Molecule for Treating Hyperkalemia

We are also advancing a small molecule potassium secretagogue program, RDX013, for the potential treatment of hyperkalemia.

Hyperkalemia is a common problem in patients with heart and kidney disease, particularly in patients taking common blood pressure medications known as RAAS inhibitors, which inhibit the renin-angiotensin-aldosterone system.

Similar to what we have done with tenapanor in developing a non-binder approach for the treatment of elevated serum phosphate levels, RDX013 is designed to offer a non-binder alternative to lowering elevated potassium with a much lower pill burden than potassium binders and we believe may provide significant advantages as a stand-alone agent or in combination with potassium binders.

In addition to the development of tenapanor in our cardiorenal portfolio, we have developed tenapanor for the treatment of patients with IBS-C.

On September 12, 2019, we received US FDA approval of IBSRELA®

(tenapanor) for the treatment of irritable bowel syndrome with constipation (IBS-C) in adults.

IBS-C is a burdensome gastrointestinal, or GI, disorder affecting a significant number of people.

It is characterized by significant abdominal pain, constipation, straining during bowel movements, bloating and/or gas.

By inhibiting NHE3 on the apical surface of the enterocytes, tenapanor reduces absorption of sodium from the small intestine and colon, resulting in an increase in water secretion into the intestinal lumen, which accelerates intestinal transit time and results in a softer stool consistency.

Tenapanor has also been shown to reduce abdominal pain by decreasing visceral hypersensitivity and by decreasing intestinal permeability in animal models.

In rat model of colonic hypersensitivity, tenapanor reduced visceral hyperalgesia and normalized colonic sensory neuronal excitability.

Hyperkalemia is a common problem in patients with heart and kidney disease, particularly in patients taking customary blood pressure medications known as renin-angiotensin-aldosterone system (“RAAS”) inhibitors.

Similar to what we have done with tenapanor in developing a non-binder approach for the treatment of elevated serum phosphate levels, RDX013 is designed to target the underlying biological mechanisms of potassium secretion to lower elevated potassium.

While currently available therapies are all ion exchange agents, RDX013 is a first in class secretagogue that has been shown in preclinical and Phase 1 studies to harness and amplify the body’s natural mechanism for colonic potassium secretion.

We have initiated a Phase 2 study to evaluate the safety and pharmacodynamics of RDX013 at different doses and to assess the safety and efficacy of treatment with RDX013 at the selected optimal dose in patients with hyperkalemia.

IBSRELA® (tenapanor) for Irritable Bowel Syndrome with Constipation (IBS-C)

In addition to the development of tenapanor for hyperphosphatemia, we have developed tenapanor for the treatment of patients with IBS-C.

In September 2019, we received FDA approval of IBSRELA® (tenapanor) for the treatment of IBS-C in adults.

IBS-C is a burdensome gastrointestinal (“GI”) disorder characterized by significant abdominal pain, constipation, straining during bowel movements, bloating and/or gas.

We expect to continue to incur substantial operating losses for the foreseeable future as a result of costs associated with the following activities:

our continued development of tenapanor for the control of serum phosphorus in CKD patients on dialysis;

our preparations for, and, if approved, the commercialization of tenapanor in the United States for the control of serum phosphorus in CKD patients on dialysis, including significantly increased personnel costs associated with our commercial team;

the performance of certain activities required as a result of our NDA approval of tenapanor for IBS-C;

the continued development of RDX013;

and the advancement of our research programs into the preclinical stage.

To date, we have funded our operations from the sale and issuance of common stock and convertible preferred stock, funds from our collaboration partnerships, and funds from our Loan Agreement with Solar Capital Ltd.

and Western Alliance Bank.

RDX020 Program:

Small molecule for Treating Metabolic Acidosis

We have an ongoing discovery program targeting the inhibition of bicarbonate exchange inhibitor for the treatment of metabolic acidosis, a highly prevalent comorbidity in CKD patients that is strongly correlated with disease progression and adverse outcomes.

We have identified lead compounds that are potent, selective and proprietary inhibitors of bicarbonate secretion.

Since commencing operations in October 2007, substantially all our efforts have been dedicated to our research and development (“R&D”) activities, including developing our clinical product candidate tenapanor and developing our proprietary drug discovery and design platform.

We have not generated any revenues from product sales.

As of December 31, 2020, we had an accumulated deficit of $554.8 million.

OUR COMMERCIAL STRATEGY

We aim to build a multi-product company that commercializes its cardiorenal products in the United States.

Our strategy is to leverage ex-U.S.

collaborations with established industry leaders to efficiently bring our cardiorenal medicines and tenapanor for IBS-C to patients outside the United States.

Our plan is to bring tenapanor for IBS-C to market in the United States by leveraging domestic collaborations rather than by commercializing tenapanor for IBS-C on our own.

We currently intend to build a multi-product company that commercializes its cardiorenal products in the United States.

We have executed ex-U.S.

collaborations with established industry leaders to efficiently bring tenapanor for hyperphosphatemia and IBS-C to patients in specific territories outside of the Unites States.

We continue to evaluate our strategy for the commercialization of tenapanor in other ex-U.S.

territories, as well as our U.S.

commercialization strategy for tenapanor for IBS-C.

We currently have three collaboration partnerships:

with Kyowa Kirin Co., Ltd., or KKC, for commercialization of tenapanor for the treatment of cardiorenal diseases, including hyperphosphatemia, in Japan;

with Kyowa Kirin Co., Ltd.

(“KKC”) for commercialization of tenapanor for the treatment of cardiorenal diseases, including hyperphosphatemia, in Japan;

with Shanghai Fosun Pharmaceutical Industrial Development Co.

Ltd., or Fosun Pharma, for the commercialization of tenapanor for the treatment of IBS-C and hyperphosphatemia in China;

and with Knight Therapeutics, Inc., or Knight, for commercialization of tenapanor in Canada.

OUR PROPRIETARY DRUG DISCOVERY AND DESIGN PLATFORM

We have successfully developed and expect to continue to employ our APECCS stem cell platform to emulate, in a miniaturized format, the function and structure of cells of specific segments of the intestine.

In line with our overall strategy to focus on our cardiorenal pipeline, our research supports tenapanor, RDX013 and other potential cardiorenal opportunities, and we expect to continue our efforts to develop a system, similar to APECCS for the kidney.

OUR PRODUCT PIPELINE

A New Approach for The Control of Serum Phosphorus in CKD Patients on Dialysis

Our lead product candidate in our cardiorenal portfolio is tenapanor for the control of serum phosphorus in patients with CKD on dialysis.

Hyperphosphatemia, or elevated serum phosphorus, is an independent predictor of morbidity and mortality in patients with CKD and is a significant problem among dialysis patients worldwide.

CKD is the progressive deterioration of renal function that can occur over several months or years.

The symptoms of worsening kidney function are nonspecific, and can include having less energy, reduced appetite, dry itchy skin, swollen feet and ankles or generally just not feeling well.

If the deterioration continues and is not halted by changes in lifestyle or with the assistance of pharmacological intervention, the disease will likely cause significant cardiovascular morbidity, and can progress to the final stage of CKD where kidney function will be lost entirely.

Current management of CKD includes hemodialysis and peritoneal dialysis as a means to filter toxins from the blood once kidneys have failed.

Unless this intervention occurs, kidney failure results in the accumulation of waste products that may ultimately cause death.

Hemodialysis, the most common form of dialysis, generally requires a patient to visit a dialysis center at least three times per week for a minimum three-hour session, significantly reducing quality of life.

Phosphorus, a vital element required for most cellular processes, is present in almost every food in the Western diet, and, in individuals with normal kidney function, any excess dietary phosphorus is efficiently removed by the kidneys and excreted in urine.

In adults with functioning kidneys normal serum phosphorus levels are 2.5 to 4.5 mg/dL.

With kidney failure, elevated phosphorus becomes harmful and is typically diagnosed as hyperphosphatemia when serum phosphorus levels are greater than 4.5 mg/dL, according to guidelines published by KDIGO, the global nonprofit foundation dedicated to improving the care and outcomes of kidney disease patients worldwide.

Phosphorus levels greater than 5.5 mg/dL have been shown to be an independent risk factor for cardiovascular morbidity and mortality in dialysis patients, and common treatment goals are to manage serum phosphorus to less than 5.5 mg/dL.

Although patients with CKD rely on dialysis to eliminate harmful agents, phosphorus is not readily removed by the procedure and other means of managing phosphorus levels must be employed.

Studies have shown that 95% of CKD patients on dialysis need phosphate control.

In CKD patients on dialysis, excess levels of phosphorus have been shown to lead to an increase in cardiovascular disease risk, as well as increases in serum FGF‑23, an important regulator of phosphate and vitamin D metabolism.

Highly elevated levels of FGF23 is an independent risk factor for adverse cardiac clinical outcomes as well as the development of secondary hyperparathyroidism, or SHPT, marked by elevated parathyroid hormone.

SHPT is associated with renal osteodystrophy, a condition of abnormal bone growth characterized by brittle bones.

Since dialysis is unable to efficiently eliminate excess phosphorus, CKD patients on dialysis are put on restrictive, low phosphorus diets and are currently prescribed medications called phosphate binders, the only interventions currently available for the control of serum phosphorus.

Phosphate binders, which usually need to be taken with meals and snacks, act by binding dietary phosphorus and limiting its absorption.

Phosphate binders have multiple limitations, including:

systemic excess absorption of calcium, iron or lanthanum, resulting in side effects and other unintended consequences for CKD patients on dialysis;

significant challenges with patient adherence because of the large quantity and/or mass of the binders that must be taken each day;

significant GI tolerability issues making frequent dosing difficult for patients

Safety and tolerability have also been significant concerns with many approved phosphate binders, with side effects that include long-term vascular calcification with calcium-based binders and iron-overload with iron-based binders.

Common side effects of many approved phosphate binders include GI-related adverse events such as nausea, vomiting, diarrhea, constipation, and dyspepsia as well as hypercalcemia for calcium-based binders and discolored feces for iron-based binders.

CKD patients on dialysis, who generally are severely restricted in their fluid intake, are prescribed as many as 12 or more phosphate binder pills per day, among other medications.

The amount of phosphorus a binder can remove is limited by its binding capacity, and therefore, increasing the dose, and hence the pill burden, of the binder is the only way to increase the amount of phosphorus being bound and excreted.

As a result of pill burden and mass, as well as a number of side effects, on average one out of two patients is not compliant with their prescribed treatment and two out of three patients at any point in time are not at target serum phosphorus levels.

We are developing tenapanor for the control of serum phosphorus in patients with CKD on dialysis, as we believe it has the potential to address certain of the key limitations of current treatments and offer a completely new mechanism of action.

If approved, tenapanor will be the first small molecule/non-binder treatment for the control of serum phosphorus in patients with CKD on dialysis, with a unique mechanism of action that acts by inhibiting, or blocking, the NHE3 transporter in the GI tract.

Our scientists, in collaboration with global academic experts, discovered that phosphate absorption in humans occurs primarily through a dynamically regulated paracellular pathway.

Inhibiting the NHE3 transporter with tenapanor results in the tightening of the epithelial cell junctions, thereby significantly reducing paracellular uptake of phosphate.

This pathway of phosphate flux that is inhibited by tenapanor appears largely specific for phosphate, whereas the overall absorption of other ions and large molecules appear not to be affected.

Notably, in clinical trials, tenapanor has not affected the absorption of other ions (except sodium) or nutrients.

A consequence of intestinal NHE3 inhibition is that systemic sodium absorption is reduced leading to an increase in stool sodium and water content, loosening stool consistency and increasing bowel movement frequency.

Tenapanor’s unique mechanism of action inhibiting paracellular phosphate absorption was published in the peer-reviewed journal Science Translational Medicine .

This unique mechanism of action could allow tenapanor to be active in many patients at a dose of 10 mg to 30 mg twice daily as opposed to the multiple gram quantities per day required of the phosphate binders.

Over the course of a week, the amount of tenapanor required would be less than 500 milligrams, or a total of 14 small pills, whereas the amount of phosphate binder required, based on package inserts, would be 10 to 30 grams, or up to 63 large pills, depending on the phosphate binder.

We believe this significant pill burden advantage will result in better adherence and compliance which could lead to more consistent efficacy in patients with CKD on dialysis.

Tenapanor has been specifically designed to work exclusively within the GI tract, thereby significantly reducing the amount of drug that is absorbed into the bloodstream and the potential side effects that could occur.

In human studies of orally-administered tenapanor, the drug was detected in the blood in less than 1% in thousands of collected serum samples, and even in those, at very low levels (< 1.5 ng/mL).

We have evaluated tenapanor in 24 clinical studies in over 3,100 individuals to date .

Clinical data supporting tenapanor in hyperphosphatemia

We have completed three Phase 3 trials evaluating tenapanor for the control of serum phosphorus in CKD patients on dialysis, with two trials evaluating tenapanor as monotherapy and one trial evaluating tenapanor as part of a dual mechanism approach with binders.

In December 2019, we reported positive results from the PHREEDOM trial, our long-term Phase 3 study evaluating the efficacy and safety of tenapanor as a monotherapy for the control of serum phosphorus in patients with CKD on dialysis.

The study's design, shown in Figure 1 below, includes a 26‑week open-label treatment period and a 12-week double-blind, placebo controlled randomized withdrawal period followed by a 14‑week open-label safety extension.

The PHREEDOM study met its primary endpoint demonstrating a statistically significant difference in least square (LS) mean serum phosphorus change (-1.4 mg/dL, p<0.0001), as compared to placebo.

During the 26-week treatment period, 77% of tenapanor-treated patients in the intent-to-treat population (n=408) had a decrease in serum phosphorus, with a mean reduction from baseline of 2.0 mg/dL.

Tenapanor was generally well-tolerated.

As anticipated due to the mechanism of action, the most common self-reported adverse event was loose stools/diarrhea at an incidence rate of 52.5%, with approximately 90% of these events, judged by the investigator, to be mild to moderate in nature.

The majority of the events were reported within the first five days of treatment and were transient in nature.

In the 26-week open-label treatment period, 16% of the tenapanor-treated patients discontinued treatment due to diarrhea.

During the randomized withdrawal period, only 0.8% of tenapanor-treated patients discontinued due to diarrhea.

In the safety analysis set of the 26-week open-label treatment period, which included tenapanor (n=419) and sevelamer (n=137), 17.2% of tenapanor-treated patients compared to 22.6% of sevelamer-treated patients experienced a serious adverse event.

The median dose for tenapanor was 60 milligrams per day throughout the study and the median dose for sevelamer was 4.8 grams per day after randomization and increased to 7.2 grams per day by the end of the 26-week open-label treatment period.

PHREEDOM Clinical Trial Design

The goal of this study is to further our understanding of the potential for the dual mechanism of tenapanor and sevelamer to reduce patients’

serum phosphorus levels towards normal (<4.6 mg/dL) while minimizing medication burden.

Patients entering the study from the tenapanor arm with serum phosphorus levels in the normal range are followed with no medication changes.

Patients entering the study from the tenapanor arm with serum phosphorus 

4.6 mg/dL have sevelamer tablets added incrementally to achieve normal serum phosphorus levels.

Patients entering the study from the sevelamer active safety control arm have tenapanor tablets added to their treatment regimen and have sevelamer tablets withdrawn based on their serum phosphorus value, to achieve normal serum phosphorus levels.

In December 2019, we announced initial results from NORMALIZE, noting that as of the date of the initial analysis, 96% of eligible patients had chosen to enroll into NORMALIZE.

Of the 73 patients that had been treated for more than one month of treatment as of the date of the initial analysis, 42% had achieved normal serum phosphorus of less than 4.6 mg/dL and of those, 58% had accomplished this with either tenapanor alone or with tenapanor in combination with only one to three sevelamer tablets per day.

These data represent a 45% improvement compared to current treatment practice data reported in the June 2019 Dialysis Outcomes Practice Patterns Study (DOPPS) Practice Monitor.

In September 2019, we reported statistically significant results from AMPLIFY, a Phase 3 study of tenapanor evaluating the dual mechanism of tenapanor in combination with phosphate binders in patients with CKD on dialysis whose hyperphosphatemia was not controlled with binders alone.

The AMPLIFY study design, shown in Figure 2, was a double-blind, placebo- controlled, randomized study that enrolled a total of 236 patients with CKD on dialysis who, despite a high and stable phosphate binder regime, had serum phosphorus levels greater than or equal to 5.5mg/dL and less than or equal to 10.0mg/dL at screening.

After a run-in of two to four weeks, patients were then randomized 1:1 to receive the addition of tenapanor or placebo twice daily while continuing their established phosphate binder regimen.

Baseline serum phosphorus at randomization was at a mean of 6.8mg/dL.

Tenapanor was initiated at a starting dose of 30 mg twice daily with tenapanor dose adjustments allowed based on tolerability and serum phosphorus levels.

The primary endpoint of the study was the comparison of the change from baseline in serum phosphorus levels at week 4 between placebo or tenapanor and binder arms.

The key secondary endpoints included a comparison of the proportion of patients achieving a serum phosphorus level below 5.5 mg/dL at week four and relative change from baseline in FGF23 levels between the tenapanor and binder arms at week four.

For the primary endpoint, patients in the tenapanor arm (tenapanor in combination with phosphate binders, n=116) had a statistically significant (p=0.0004) mean reduction in serum phosphorus from baseline to the end of the four-week treatment period of 0.84 mg/dL, as compared to those treated in the binder arm (placebo in combination with phosphate binders, n=119) who had a mean reduction of 0.19 mg/dL.

Patients in the tenapanor arm had statistically significant decreases in serum phosphorus during all four weeks ranging from 0.84 to 1.21 mg/dL (p-values <0.0004).

During the treatment period, up to 49.1% of patients in the tenapanor arm achieved a serum phosphorus of <5.5 mg/dL which was statistically significant compared with up to 23.5% in the binder arm (p-values≤0.0097).

In addition, over the 4-week period there were statistically significant reductions in both intact and c-terminus FGF23 levels:

22% to 24% (p-values≤0.0027) respectively.

Although exploratory in nature, we believe this is a notable result as increasing levels of FGF23 have a linear association with all-cause mortality and an increased risk of major cardiovascular events.

Tenapanor was well tolerated.

Only 4.3% of patients in the tenapanor arm discontinued treatment compared to 2.5% in the binder arm.

The single adverse event with a placebo-adjusted rate greater than 3% was loose stools/diarrhea at 36%, where most incidents were reported within the first five days of treatment, were transient in nature and the median time to resolution was four days.

Notably, only 2.6% of patients in the tenapanor arm discontinued treatment due to loose stools/diarrhea, as compared to 0.8% in the binder arm.

There were no serious adverse events related to tenapanor.

AMPLIFY Clinical Trial Design

In February 2017, we announced data from our first Phase 3 clinical trial evaluating the efficacy and safety of tenapanor as a monotherapy for the control of serum phosphorus in patients with CKD on dialysis .

The Phase 3 trial was an eight-week, double-blind, randomized trial, with a four-week placebo-controlled randomized withdrawal period.

The study demonstrated a statistically significant difference in serum phosphorus levels from the end of the eight-week treatment period to the end of the four-week randomized withdrawal between the tenapanor-treated group and the placebo-treated group in the efficacy analysis population (mean -1.01 mg/dL, median of -1.3 mg/dL) and met its primary endpoint (95% confidence interval, -1.44, -0.21, LSmean -0.82 mg/dL, p=0.01).

Tenapanor was well-tolerated in the trial.

In the eight-week treatment period, the only adverse event that affected more than five percent of patients treated with tenapanor was diarrhea (39%), a patient-reported side effect of loosened stool or increased frequency in bowel movements regardless of magnitude.

In the four-week randomized withdrawal period, there was a diarrhea rate of 1.2% for patients treated with tenapanor compared with 2.4% on placebo.

Treatment discontinuations due to diarrhea during the eight-week treatment period for patients on tenapanor was 7.8% (n=17).

There were no discontinuations due to diarrhea during in the randomized withdrawal period.

The hyperphosphatemia market

Phosphate binders are the only drugs marketed for the control of serum phosphorus in CKD patients on dialysis.

The various types of phosphate binders commercialized in the United States include the following:

Calcium carbonate (many over-the-counter brands including Tums and Caltrate);

Calcium acetate (several prescription brands including PhosLo and Phoslyra);

Lanthanum carbonate (Fosrenol);

Sevelamer hydrochloride (Renagel);

Sevelamer carbonate (Renvela);

Sucroferric oxyhydroxide (Velphoro);

Ferric citrate (Auryxia).

The hydrochloride form of sevelamer, Renagel, was launched in the United States by Genzyme Corporation in 1998 prior to its acquisition by Sanofi, and the carbonate form, Renvela, was launched in 2008.

Generic sevelamer carbonate has been approved in certain jurisdictions in Europe since 2015 and in the U.S.

market since June 2017.

In addition to the currently marketed phosphate binders, we are aware of at least two other binders in development, including fermagate (Alpharen), an iron-based binder in Phase 3 studies being developed by Opko Health, Inc., and PT20, an iron-based binder in Phase 3 being developed by Shield Therapeutics.

According to the most recent data available from the U.S.

Renal Data System, in 2016 there were 457,957 patients on hemodialysis in the United States.

Additionally, according to the European ERA-EDTA Registry 2016 Annual Report and a study in 2016 by the Japanese Society for Dialysis Therapy, there were approximately 327,000 patients on hemodialysis in Europe and about 329,000 in Japan.

We estimate, based on phosphate binder utilization, the only approved therapies for hyperphosphatemia, that there are approximately 320,000, 260,000 and 289,000 end-stage renal disease, or ESRD, patients with hyperphosphatemia in the United States, countries in Europe and Japan, respectively, resulting in approximately 869,000 ESRD patients with hyperphosphatemia in such countries.

Because many CKD patients on dialysis with hyperphosphatemia are unable to lower serum phosphorus levels to below 5.5 mg/dL with currently marketed phosphate binders, we believe there is a significant medical need for new agents with new mechanisms, demonstrated efficacy, a strong safety profile, and significantly lower pill burden.

We believe that tenapanor, if approved, has the potential to have the lowest pill burden and mass among any currently marketed hyperphosphatemia products, with milligram rather than gram quantities.

In addition, we are evaluating whether tenapanor has the potential to be used in combination with phosphate binders for those patients who cannot achieve adequate phosphate control with a single agent.

Our intention is to build a United States-focused, highly efficient, specialized sales and marketing organization focused on nephrology.

The nephrology market is a concentrated market strongly influenced by key opinion leaders.

There were 10,798 nephrologists in the United States in 2018 and 7,578 dialysis facilities in the United States that offer in-center dialysis.

Based on the experience of our management team, we believe that a specialty salesforce is appropriate for this marketplace.

We believe that tenapanor for the control of serum phosphorus could represent a market opportunity of between $500 million and $700 million in the United States.

With its significantly reduced pill burden and well-tolerated safety profile, tenapanor, if approved, would be the only non-binder treatment for the control of serum phosphorus in patients with CKD on dialysis and would address the significant pill burden challenges and intolerability that patients experience with today’s binder treatments.

In the PHREEDOM trial we demonstrated tenapanor’s ability to lower serum phosphorus as monotherapy, and in the AMPLIFY trial we demonstrated the benefits of a dual mechanism approach to lowering serum phosphorus with tenapanor plus binders in patients whose serum phosphorus was not previously controlled with binders alone.

We believe that tenapanor has a role to play in the management of all dialysis patients with hyperphosphatemia.

With the results from these clinical trials, we intend to submit a New Drug Application to the FDA in mid-2020 for tenapanor, for the control of serum phosphorus in patients with CKD on dialysis.

To bring tenapanor to patients outside the United States, we intend to establish strategic collaborations with industry leading pharmaceutical companies with established commercial infrastructures.

We currently have three collaboration partnerships:

with KKC for commercialization of tenapanor for the treatment of cardiorenal diseases, including hyperphosphatemia, in Japan;

with Fosun Pharma for the commercialization of tenapanor for the treatment of IBS-C and hyperphosphatemia in China;

and with Knight for commercialization of tenapanor in Canada .

RDX013 Program:

Small Molecule for Treating Hyperkalemia

RDX013 is our novel, small molecule program for the potential treatment of hyperkalemia.

Our RDX013 approach works by leveraging the GI tract’s natural ability to secrete potassium into the lumen of the gut to reduce serum potassium levels.

This mechanism differs significantly from the potassium binders currently on the market.

For a potassium binder to work, it must be present when dietary potassium is ingested so that the agent can bind the potassium and prevent its absorption in the gut.

This results in the need for large quantities of binder in order to bind the large

amounts of potassium in the diets of most individuals.

In contrast, we observed in our preclinical models that a small amount of drug could cause potassium to be secreted into the lumen of the gut.

In this way, we believe that with our approach in the RDX013 program, we may have the potential to lower serum potassium whether or not potassium is present in the diet and could result in a very low pill burden, potentially allowing better patient compliance, longer-term use and potentially better efficacy than potassium binders.

As described below, certain medications commonly administered to patients with CKD and/or heart failure can also cause hyperkalemia.

We believe that, if successful, our approach in the RDX013 program may provide nephrologists and cardiologists with an opportunity to treat hyperkalemia chronically without reducing the dose of these medications by utilizing an effective potassium secretagogue to treat hyperkalemia in a small, convenient pill format.

Hyperkalemia is generally defined as the presence of blood potassium levels greater than 5.0 mEq/L.

Normal levels are 3.5 to 5.0 mEq/L.

When hyperkalemia is severe, above 7.0 mEq/L, there is a significantly increased risk of death because of the potential for heart conductance problems.

Hyperkalemia can be caused by a variety of issues.

Kidney disease can result in the elevation of potassium in the blood, and certain drugs such as the common hypertension medications known as RAAS inhibitors, which inhibit the renin-angiotensin-aldosterone system, can cause hyperkalemia.

As a result, the dosage of RAAS inhibitors must often be significantly reduced in patients whose potassium levels are elevated, such as in those with CKD and heart failure.

Because of the risk of hyperkalemia, several published guidelines have suggested that physicians should reduce and possibly discontinue RAAS inhibitors in order to manage the risk of hyperkalemia in CKD and heart failure patients.

The alternative medications used to control hypertension, including diuretics and calcium channel blockers, are less effective than RAAS inhibitors, particularly in patients with failing kidneys and severe hypertension.

According to the 2015 publication Market Dynamix:

Hyperkalemia, released by Spherix Global Insights, U.S.

cardiologists reported that of the patients who would benefit from RAAS inhibition, up to 38% of patients with heart failure and up to 55% of patients with both heart failure and CKD are being administered a sub-optimal dose or none at all.

Nephrologists reported that at least one-third of patients who would benefit from RAAS inhibition receive a sub-optimal dose or none at all.

We believe there is clearly a strong medical need for new medications that control hyperkalemia in order to allow for optimal use of RAAS inhibitors to control hypertension in these patient populations .

The hyperkalemia market

Of the people with CKD and/or heart failure in the United States, we estimate that there are approximately 2.1 million people who also have occurrences of hyperkalemia.

According to a retrospective study conducted in 2005 of a national cohort of 246,000 patients cared for in the Veterans Health Administration, about 21% and 42% of patients with CKD Stage 3b and Stage 4, respectively, had a hyperkalemic event during a 12-month period, suggesting that hyperkalemia affects about 900,000 individuals with CKD Stage 3b or Stage 4 in the United States.

According to the United States Renal Data System 2014 Atlas of CKD & ESRD, over 50% of CKD Stage 3b and Stage 4 patients are prescribed RAAS inhibitors to control hypertension and to slow the course of CKD.

Additionally, the number of adults in the U.S.

living with heart failure is about 6.5 million, based on data collected in the National Health and Nutrition Examination Survey, which is taken in stages over multiple years.

Our proprietary research suggests that up to 16%, or approximately 1.0 million, of these patients had hyperkalemia during a 12-month period.

Over half of heart failure patients are prescribed RAAS inhibitors.

Our proprietary research also suggests that up to 200,000 CKD patients on dialysis in the U.S.

could benefit from an agent that treats hyperkalemia.

We are aware of at least two drugs on the market for the treatment of hyperkalemia.

Veltassa (patiromer FOS), an oral, polymer-based potassium binder, was approved for marketing by the FDA in October 2015 and was commercially launched by Relypsa, which was acquired by Galenica AG in September 2016.

Additionally, Lokelma (sodium zirconium cyclosilicate), an oral, potassium binder developed by ZS Pharma, acquired by AstraZeneca in December 2015, was approved in May 2018 and launched by AstraZeneca.

We believe that, unlike these agents which require large amounts of drug for the desired effect, RDX013 may have the potential to lower serum potassium whether or not potassium is present in the diet and could result in very low pill burden, allowing better compliance, longer-term use and potentially better efficacy than potassium binders.

If we are successful in developing RDX013 and obtaining marketing authorization from the FDA, we would expect to leverage the renal sales and marketing organization that we intend to build to support commercialization in the United States of tenapanor for treating hyperphosphatemia in dialysis patients .

IBSRELA®

(tenapanor) for Irritable Bowel Syndrome with Constipation (IBS-C)

On September 12, 2019, we received US FDA approval of IBSRELA (tenapanor) for the treatment of IBS-C in adults.

To efficiently bring this treatment to market, we are pursuing strategic collaborations for IBSRELA for IBS-C in certain territories.

We have established agreements with Fosun Pharma in China and Knight in Canada.

IBS-C is a burdensome GI disorder affecting a significant number of people.

It is characterized by significant abdominal pain, constipation, straining during bowel movements, bloating and/or gas.

IBSRELA (tenapanor) is a locally acting inhibitor of the sodium/hydrogen exchanger 3 (NHE3), an antiporter expressed on the apical surface of the small intestine and colon primarily responsible for the absorption of dietary sodium.

The IBS-C market

Numerous treatments exist for the constipation component of IBS-C, many of which are over-the-counter.

There are four prescription products marketed for IBS-C:

Linzess (linaclotide);

Amitiza (lubiprostone);

Trulance (plecanatide) and Zelnorm (tegaserod).

Within the United States, there are approximately 11 million patients that suffer from IBS-C.

There is significant unmet need for prescription medications, where, according a 2015 American Gastroenterological Association report, only one in four treated patients are very satisfied with the current FDA approved treatments in IBS-C .

(“Fosun Pharma”) for the commercialization of tenapanor for the treatment of IBS-C and hyperphosphatemia in China;

and with Knight Therapeutics, Inc.

(“Knight”) for commercialization of tenapanor for the treatment of IBS-C and hyperphosphatemia in Canada.

O UR PROPRIETARY DRUG DISCOVERY AND DESIGN PLATFORM

We have developed a proprietary drug discovery and design platform to enable the identification, screening, testing, design and development of new product candidates.

Our platform integrates two critical concepts:

(i) our proprietary chemistry capabilities that enable us to design and optimize gut-restricted compounds, and (ii) our APECCs stem cell platform developed to emulate, in a miniaturized format, the function and structure of cells of specific segments of the intestine.

In line with our overall strategy to focus on our cardiorenal pipeline, our research supports tenapanor, RDX013 and other potential cardiorenal opportunities.

OUR STRATEGIC PARTNERSHIPS

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Pursuant to the 2017 KKC Agreement, KKC is responsible for all of the development and commercialization costs for tenapanor in the KKC Field in Japan.

Under the 2017 KKC Agreement, we are 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.

Under the terms of the 2017 KKC Agreement, we received a $30.0 million upfront payment and are eligible to receive up to $55.0 million in total development milestones, of which we have received $5.0 million to date.

Additionally, under the 2017 KKC Agreement we are eligible to receive up to 8.5 billion yen in commercialization milestones, worth up to $82.4 million at the exchange rate on December 31, 2020, and royalties based on aggregate annual net sales of the licensed products at a high teens percentage, subject to certain single digit reductions under certain circumstances described in the 2017 KKC Agreement.

The 2017 KKC Agreement will continue until all of KKC’s applicable payment obligations under the 2017 KKC Agreement have been performed or have expired, or the agreement is earlier terminated.

Under the terms of the 2017 KKC Agreement, we and KKC each have the right to terminate the agreement for material breach by the other

The 2017 KKC Agreement will continue until all of KKC’s applicable payment obligations under the 2017 KKC Agreement have been performed or have expired, or the agreement is earlier terminated.

Under the terms of the 2017 KKC Agreement, we and KKC each have the right to terminate the agreement for material breach by the other party.

In addition, KKC may terminate the agreement for convenience;

for certain safety reasons or if certain primary endpoints under an applicable development plan are not met despite KKC’s commercially reasonable efforts and KKC reasonably determines that it cannot obtain regulatory approval.

KKC may also terminate the agreement if certain pivotal clinical trials conducted by us do not meet their primary endpoints.

for certain safety reasons or if certain primary endpoints under an

applicable development plan are not met despite KKC’s commercially reasonable efforts and KKC reasonably determines that it cannot obtain regulatory approval.

We may terminate the 2017 KKC Agreement if KKC challenges any patents licensed to KKC under the agreement.

Research Collaboration with KKC

In November 2019, we expanded our strategic partnership with KKC with a separate research agreement.

In the agreement, we established a two-year research collaboration, whereby we will execute a research plan, in which KKC will also join, to advance two of our ongoing research programs focused on identification and design of compounds to two undisclosed targets.

In return, KKC will pay us $10.0 million ($5.0 million a year, for two years), of which we have received $5.0 million to date, to support the ongoing research.

In November 2019, we entered into a Research Collaboration and Option Agreement “(the 2019 KKC Research Agreement”) which expanded our strategic partnership with KKC.

In the KKC Research Agreement, we established a two-year research collaboration, under which we are executing a research plan, with KKC participation, to advance two research programs focused on identification and design of compounds to two undisclosed targets.

KKC agreed to pay us $10.0 million ($5.0 million per year, for a period of two years) to support the ongoing research.

As of December 31, 2020, we have received the full $10.0 million.

Following the end of the research period, KKC will have the option to license any candidates nominated by the companies for further development and commercialization in certain specified territories, with additional commitments payable to us of up to $10.5 million in upfront payments and up to $500.0 million in development and sales milestones.

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We retained the rights to tenapanor outside of China, and also retained the rights to tenapanor in China for indications other than those in the Fosun Field.

Pursuant to the terms of the Fosun License Agreement, Fosun Pharma is responsible for all of the development and commercialization costs for tenapanor in the Fosun Field in China.

Under the terms of the Fosun License Agreement, we are responsible for supplying the tenapanor drug product for Fosun Pharma’s use in development and during commercialization until Fosun Pharma has assumed such responsibility.

Additionally, we are responsible for supplying the tenapanor drug substance for Fosun Pharma’s use in development and commercialization throughout the term of the Fosun License Agreement.

Pursuant to the terms of the Fosun License Agreement, Fosun Pharma is responsible for all development and commercialization costs for tenapanor in the Fosun Field in China.

Additionally, we are responsible for supplying the tenapanor drug substance for Fosun Pharma’s use in development and commercialization throughout the term of the Fosun License Agreement.

Under the terms of the Fosun License Agreement, we received an upfront payment of $12.0 million and are eligible to receive additional milestones of up to $113.0 million in the aggregate, of which we have recognized and received $3.0 million to date, as well as tiered royalty payments on aggregate net sales ranging from the mid-teens percent to twenty percent, subject to certain reductions under certain circumstances, as described in the Fosun License Agreement.

The Fosun License Agreement will continue until all of Fosun Pharma’s applicable payment obligations under the License Agreement have been performed or have expired, or the agreement is earlier terminated.

Under the terms of the Fosun License Agreement, we and Fosun Pharma each have the right to terminate the agreement for material breach by the other party or in the event of insolvency by the other party.

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License Agreement with Knight Therapeutics

In March 2018, we entered into a license agreement with Knight that provides Knight with exclusive rights to commercialize tenapanor in Canada.

Under the terms of the agreement, Ardelyx is eligible to receive up to CAD 25 million in total payments, worth up to $19.2 million at the currency exchange rate on December 31, 2019, including an upfront payment and development and sales milestones, as well as tiered royalties on net sales ranging from the mid-single digits to the low twenties.

Knight will have the exclusive rights to market and sell tenapanor in Canada.

In March 2018, we entered into a license agreement with Knight (“the Knight License Agreement”) that provides Knight with exclusive rights to commercialize tenapanor in Canada.

Under the terms of the Knight License Agreement, Ardelyx is eligible to receive up to CAD 25 million in total payments, worth up to $19.6 million at the currency exchange rate on December 31, 2020, including an upfront payment and development and sales milestones, as well as tiered royalties on net sales ranging from the mid-single digits to the low twenties.

As of December 31, 2020, we have recognized and

received $3.1 million to date under the Knight License Agreement.

Knight has the exclusive rights to market and sell tenapanor in Canada.

CORPORATE DEVELOPMENT

In December 2019, we completed an underwritten public offering of 23,000,000 shares of common stock, resulting in the receipt of aggregate gross proceeds of approximately $143.8 million, less underwriting discounts, commissions and offering expenses .

Additionally, in November 2019, we enhanced our strategic partnership with KKC by entering into a stock purchase agreement, pursuant to which we sold to KKC an aggregate of 2,873,563 shares of our common stock for aggregate gross proceeds of approximately $20.0 million.

As of December 31, 2019, we had cash, cash equivalents and short-term investments totaling $247.5 million.

In July 2020, we 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 $250.0 million 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 $100.0 million of our common stock that may be issued and sold, from time to time, under an Open Market Sales Agreement with Jefferies LLC, as sales agent, deemed to be “at the market offerings.” As of December 31, 2020, we had sold 3.3 million shares of our common stock for aggregate gross proceeds of $21.7 million at a weighted average price of $6.65 per share under the Open Market Sales Agreement.

From the period of January 2, 2021 through February 28, 2021, we sold an additional 4.9 million shares of our common stock for aggregate gross proceeds of $35.0 million at a weighted average price of $7.09 per share.

In aggregate during the life of the Open Market Sales Agreement, we have sold 8.2 million shares of our common stock for aggregate gross proceeds of $56.7 million at a weighted average sales price of approximately $6.91 per share.

Pursuant to the Open Market Sales Agreement, Jefferies, as sales agent, receives a commission of up to 3.0% of the gross sales price for shares of common stock sold under the Open Market Sales Agreement.

In December 2019, we completed an underwritten public offering of 23.0 million shares of common stock, resulting in the receipt of aggregate gross proceeds of approximately $143.8 million, less underwriting discounts, commissions and offering expenses totaling approximately $8.9 million, which resulted in net proceeds of approximately $134.9 million.

In November 2019, we enhanced our strategic partnership with KKC by entering into a Stock Purchase Agreement, pursuant to which we sold to KKC an aggregate of 2.9 million shares of our common stock for aggregate gross proceeds of approximately $20.0 million.

As of December 31, 2020, we had cash, cash equivalents and investments totaling $188.6 million.

INTELLECTUAL PROPERTY

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If third parties prepare and file patent applications in the United States that also claim technology or therapeutics to which we have rights, we may have to participate in interference proceedings in the U.S.

Patent and Trademark Office, or USPTO, to determine priority of invention, which would result in substantial costs to us even if the eventual outcome is favorable to us.

Patent and Trademark Office (the “USPTO”) to determine priority of invention, which would result in substantial costs to us even if the eventual outcome is favorable to us.

The term of individual patents depends upon the legal term of the patents in countries in which they are obtained.

In most countries, including the United States, the patent term is generally 20 years from the earliest date of filing a non-provisional patent application in the applicable country.

In the United States, a patent’s term may, in certain cases, be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over a commonly owned patent or a patent naming a common inventor and having an earlier expiration date.

In the U.S., a patent’s term may, in certain cases, be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over a commonly owned patent or a patent naming a common inventor and having an earlier expiration date.

In addition, in the United States, the Hatch-Waxman Act permits a patent term extension of up to five years beyond the expiration of a U.S.

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Thus, we may not be able to meaningfully protect our trade secrets.

It is our policy to require our employees, consultants, outside scientific collaboration partners, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment

or consulting relationships with us.

These agreements provide that all confidential information concerning the business or financial affairs developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances.

In the case of employees, the agreements provide that all inventions conceived by the individual, and which are related to our current or planned business or research and development or made during the normal working hours, on our premises or using our equipment or proprietary information, are our exclusive property.

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Our tenapanor patent portfolio is wholly owned by us.

This portfolio includes four issued U.S.

patents, two issued Japanese patents, two issued patents in each of Korea, Hong Kong, Israel and Mexico and one issued patent in each of the following territories:

Australia, China, and the European Union.

This portfolio includes five issued U.S.

patents, three issued Israeli patents, two issued patents in each of Japan, Korea, Hong Kong and Mexico and one issued patent in each of the following territories:

Australia, Brazil, India, China, and the European Patent Organization countries.

These issued patents cover the composition and certain methods of using tenapanor and are predicted, without extension or adjustment, to expire in December 2029.

The portfolio further includes patents covering the use of tenapanor for the control of serum phosphorus that has issued in U.S., Europe, Japan, China, Australia, Russia and Taiwan and is pending in other countries.

The portfolio further includes patents covering the use of tenapanor for the control of serum phosphorus that has issued in the U.S., Europe, Japan, China, Australia, Gulf Co-op countries, Hong Kong, Russia and Taiwan and is pending in other countries.

These patents are predicted, without extension or adjustment, to expire in April 2034.

We have related national patent applications pending in Europe, China, India, Israel and a number of other countries.

Any patents issuing from these patent applications are also predicted without extension or adjustment to expire in December 2029.

Additional U.S.

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Other Program Patents

We have patent applications pending in the United States and internationally that cover the compositions and methods of using our TGR5 agonists, our FXR agonists and compounds in our RDX013 program.

We have patent applications pending in the U.S.

and internationally that cover the compositions and methods of using compounds in our RDX013 program.

MANUFACTURING

To date, we have relied upon third-party contract manufacturing organizations, or CMOs, to manufacture both the active pharmaceutical ingredient and final drug product dosage forms of our potential drug candidates used as clinical trial material.

We expect that we will continue to rely upon CMOs for the manufacture of our clinical trial materials and for our commercial product requirements, when and if regulatory approval is received.

Our license agreements with KKC, Knight, and Fosun Pharma require us to supply final drug product dosage forms of tenapanor and/or active pharmaceutical ingredient for their use in the development of tenapanor in each of their respective territories, and we are further obligated to continue to supply active pharmaceutical ingredient to support their commercialization of tenapanor in each of their territories.

To date, we have relied upon third-party contract manufacturing organizations (“CMOs”) to manufacture both the active pharmaceutical ingredient and final drug product dosage forms of our potential drug candidates used as clinical trial material.

We expect that we will continue to rely upon CMOs for the manufacture of our clinical trial materials and for

our commercial product requirements, when and if regulatory approval is received.

Our license agreements with KKC, Knigh, and Fosun Pharma require us to supply final drug product dosage forms of tenapanor and/or active pharmaceutical ingredient for their use in the development of tenapanor in each of their respective territories, and we are further obligated to continue to supply active pharmaceutical ingredient to support their commercialization of tenapanor in each of their territories.

We expect that we will use CMOs to satisfy our supply obligations to our collaboration partners.

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These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling, and export and import of our product candidates.

In the United States, the FDA regulates drug products under the Federal Food, Drug, and Cosmetic Act, or FFDCA, and the FDA’s implementing regulations.

In the United States, the FDA regulates drug products under the Federal Food, Drug, and Cosmetic Act (the “FFDCA”) and the FDA’s implementing regulations.

If we fail to comply with applicable FDA or other requirements at any time during the drug development process, the approval process or after approval, we may become subject to administrative or judicial sanctions.

These sanctions could include the FDA’s refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, warning or untitled letters, product recalls, product

seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution.

These sanctions could include the FDA’s refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution.

Any FDA enforcement action could have a material adverse effect on us.

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The process required by the FDA before a drug may be marketed in the United States generally involves:

completion of extensive preclinical laboratory tests, preclinical animal studies and formulation studies, some performed in accordance with the FDA’s current Good Laboratory Practice, or GLP, regulations;

submission to the FDA of an Investigational New Drug, or IND, application which must become effective before human clinical trials in the United States may begin;

approval by an independent institutional review board, or IRB, or ethics committee at each clinical trial site before each trial may be initiated;

● completion of extensive preclinical laboratory tests, preclinical animal studies and formulation studies, some performed in accordance with the FDA’s current Good Laboratory Practice (“GLP”) regulations;

● submission to the FDA of an Investigational New Drug (“IND”) application which must become effective before human clinical trials in the United States may begin;

● approval by an independent institutional review board, (“IRB”) or ethics committee at each clinical trial site before each trial may be initiated;

● performance of adequate and well-controlled human clinical trials in accordance with Good Clinical Practice, or GCP, regulations to establish the safety and efficacy of the drug candidate for each proposed indication;

submission to the FDA of a new drug application, or NDA;

satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice, or cGMP, regulations;

● submission to the FDA of a new drug application (“NDA”);

● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the drug is produced to assess compliance with current Good Manufacturing Practice (“cGMP”) regulations;

● satisfactory completion of a potential review by an FDA advisory committee, if applicable;

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The preclinical and clinical testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product candidates will be granted on a timely basis, if at all.

Nonclinical tests include laboratory evaluation of product chemistry, formulation, stability and toxicity, as well as animal studies to assess the characteristics and potential safety and efficacy of the product.

Nonclinical tests include laboratory evaluation of product chemistry, formulation, stability and toxicity, as well as animal studies to

assess the characteristics and potential safety and efficacy of the product.

The results of preclinical tests, together with manufacturing information, analytical data and a proposed clinical trial protocol and other information, are submitted as part of an IND to the FDA.

Some preclinical testing may continue even after the IND is submitted.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30‑day time period, raises concerns or questions relating to the IND and places the clinical trial on a clinical hold, including concerns that human research subjects will be exposed to unreasonable health risks.

Additional preclinical testing may continue even after the IND is submitted.

The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day period, raises concerns or questions relating to the IND and places the clinical trial on a clinical hold, including concerns that human research subjects will be exposed to unreasonable health risks.

In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

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Clinical testing also must satisfy extensive GCP requirements, including the requirements for informed consent.

All clinical research performed in the United States in support of an NDA must be authorized in advance by the FDA under the IND regulations and procedures described above.

All clinical research performed in the United States in support of an NDA must be submitted in advance by the FDA under the IND regulations and procedures described above.

However, a sponsor who wishes to conduct a clinical trial outside the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND.

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Clinical trials are typically conducted when Phase 2 clinical trials demonstrate that a dose range of the product candidate is effective and has an acceptable safety profile.

Phase 3 clinical trials are commonly referred to as “pivotal”

studies, which typically denotes a study which presents the data that the FDA or other relevant regulatory agency will use to determine whether or not to approve a drug.

Phase 3 clinical trials are generally undertaken with large numbers of patients, such as groups of several hundred to several thousand, to further evaluate dosage, to provide substantial evidence of clinical efficacy and to further test for safety in an expanded and diverse patient population at multiple, geographically-dispersed clinical trial sites.

In some cases, the FDA may condition approval of an NDA for a product candidate on the sponsor’s agreement to conduct additional clinical trials after NDA approval.

Phase 3 clinical trials are commonly referred to as “pivotal” studies, which typically denotes a study which presents the data that the FDA or other relevant regulatory agency will use to determine whether or not to approve a drug.

Phase 3 clinical trials are generally undertaken with large numbers of patients, such as groups of several hundred to several thousand, to further

evaluate dosage, to provide substantial evidence of clinical efficacy and to further test for safety in an expanded and diverse patient population at multiple, geographically-dispersed clinical trial sites.

In some cases, the FDA may condition approval of an NDA for a product candidate on the sponsor’s agreement to conduct additional clinical trials after NDA approval.

In other cases, a sponsor may voluntarily conduct additional clinical trials post approval to gain more information about the drug.

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The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations.

Before approving an application, the FDA will inspect the facility or the facilities at which the finished drug product, and sometimes the active pharmaceutical ingredient, or API, is manufactured, and will not approve the drug unless cGMP compliance is satisfactory.

Before approving an application, the FDA may inspect the facility or the facilities at which the finished drug product, and sometimes the active pharmaceutical ingredient (“API”) is manufactured, and will not approve the drug unless cGMP compliance is satisfactory.

The FDA may also inspect the sites at which the clinical trials were conducted to assess their compliance and will not approve the drug unless compliance with cGCP requirements is satisfactory.

After the FDA evaluates the NDA and conducts inspections of manufacturing facilities where the drug product and/or its API will be produced, it may issue an approval letter or a Complete Response Letter.

After the FDA evaluates the NDA and conducts inspections of manufacturing facilities where the drug product and/or its API will be produced, if deemed necessary, it may issue an approval letter or a Complete Response Letter.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

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Even if such additional information is submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval.

The FDA could also approve the NDA with a Risk Evaluation and Mitigation Strategy, or REMS, to mitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

The FDA could also approve the NDA with a Risk Evaluation and Mitigation Strategy (“REMS”) to mitigate risks, which could include medication guides, physician communication plans, or elements to assure

safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

The FDA also may condition approval on, among other things, changes to proposed labeling, development of adequate controls and specifications, or a commitment to conduct one or more post-market studies or clinical trials.

Such post-market testing may include Phase 4 clinical trials and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.

The FDA has the authority to prevent or limit further marketing of a drug based on the results of these post-marketing programs.

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We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals which could delay or preclude us from marketing drugs.

The FDA may limit the

indications for use or place other conditions on any approvals that could restrict the commercial application of the drugs.

The FDA may limit the indications for use or place other conditions on any approvals that could restrict the commercial application of the drugs.

After approval, certain changes to the approved drug, such as adding new indications, manufacturing changes, or additional labeling claims are subject to further FDA review and approval.

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The FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the Internet.

A company can make only those claims relating to safety and efficacy that are approved by the FDA.

A company can make only those claims relating to safety and efficacy that are in the final label or consistent with the final label.

Failure to comply with these requirements can result in, among other things, adverse publicity, warning or untitled letters, corrective advertising and potential civil and criminal penalties.

Physicians may prescribe legally available drugs for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA.

Such off-label uses are common across medical specialties.

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The FDA does not regulate the behavior of physicians in their choice of treatments.

The FDA does, however, impose stringent restrictions on manufacturers’

communications regarding off-label use.

The FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off-label use.

Hatch-Waxman Act

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A 505(b)(2) NDA is an application that contains full reports of investigations of safety and efficacy but where at least some of the information required for approval comes from investigations that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted.

This regulatory pathway enables the applicant to rely, in part, on the FDA’s prior findings of safety and efficacy for an existing product, or published literature, in support of its application.

Section 505(j) establishes an abbreviated approval process for a generic version of approved drug products through the submission of an Abbreviated New Drug Application, or ANDA.

This regulatory pathway enables the applicant to rely, in part, on the FDA’s prior findings of safety and efficacy for an existing product, or published literature, in support of its application.

Section 505(j) establishes an abbreviated approval process for a generic version of approved drug products through the submission of an Abbreviated New Drug Application (“ANDA”).

An ANDA provides for marketing of a generic drug product that has the same active ingredients, dosage form, strength, route of administration, labeling, performance characteristics and intended use, among other things, to a previously approved product.

ANDAs are termed “abbreviated”

because they are generally not required to include nonclinical (animal) and clinical (human) data to establish safety and efficacy.

ANDAs are termed “abbreviated” because they are generally not required to include nonclinical (animal) and clinical (human) data to establish safety and efficacy.

Instead, generic applicants must scientifically demonstrate that their product is bioequivalent to, or performs in the same manner as, the innovator drug through in vitro, in vivo, or other testing.

The generic version must deliver the same amount of active ingredients into a subject’s bloodstream in the same amount of time as the innovator drug and can often be substituted by pharmacists under prescriptions written for the reference listed drug.

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims that cover the applicant’s drug or a method of using the drug.

Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book.

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims that cover the applicant’s drug or a method of using the drug.

Drugs listed in the Orange Book can, in turn, be cited by potential competitors in support of approval of an ANDA or 505(b)(2) NDA.

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The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the paragraph IV certification.

If the paragraph IV certification is challenged by an NDA holder or the patent owner(s) asserts a patent challenge to the paragraph IV certification, the FDA may not approve that application until the earlier of 30 months from the receipt of the notice of the paragraph IV certification, the expiration of the patent, when the infringement case concerning each such patent was favorably decided in the applicant’s favor or settled, or such shorter or longer period as may be ordered by a court.

This prohibition is generally referred to as the 30-month stay.

In instances where an ANDA or 505(b)(2) NDA applicant files a paragraph IV certification, the NDA holder or patent owner(s) regularly take action to trigger the 30-month stay, recognizing that the related patent litigation may take many months or years to resolve.

Thus, approval of an ANDA or 505(b)(2) NDA could be delayed for a significant period of time depending on the patent certification the applicant makes and the reference drug sponsor’s decision to initiate patent litigation.

The Hatch-Waxman Act establishes periods of regulatory exclusivity for certain approved drug products, during which the FDA cannot approve (or in some cases accept) an ANDA or 505(b)(2) application that relies on the branded reference drug.

For example, the holder of an NDA, including a 505(b)(2) NDA, may obtain five years of exclusivity upon approval of a new drug containing new chemical entities, or NCEs, that have not been previously approved by the FDA.

For example, the holder of an NDA, including a 505(b)(2) NDA, may obtain five years of exclusivity upon approval of a new drug containing new chemical entities (“NCE”) that have not been previously approved by the FDA.

A drug is a new chemical entity if the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the therapeutic activity of the drug substance.

During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA submitted by another company that contains the previously approved active moiety.

During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA submitted by another company that contains

the previously approved active moiety.

However, an ANDA or 505(b)(2) NDA may be submitted after four years if it contains a certification of patent invalidity or non-infringement.

The Hatch-Waxman Act also provides three years of marketing exclusivity to the holder of an NDA (including a 505(b)(2) NDA) for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical studies (other than bioavailability or bioequivalence studies) was essential to the approval of the application and was conducted/sponsored by the applicant.

This three-year exclusivity period protects against FDA approval of ANDAs and 505(b)(2) NDAs for the condition of the new drug’s approval.

As a general matter, the three-year exclusivity does not prohibit the FDA from approving ANDAs or 505(b)(2) NDAs for generic versions of the original, unmodified drug product.

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Fraud and Abuse Laws

In the United States, the research, manufacturing, distribution, sale and promotion of drug products and medical devices are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare & Medicaid Services, or CMS, other divisions of the U.S.

the research, manufacturing, distribution, sale and promotion of drug products and medical devices are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the Centers for Medicare & Medicaid Services (“CMS”) other divisions of the U.S.

Department of Health and Human Services (e.g., the Office of Inspector General), the U.S.

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In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

Moreover, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

The federal False Claims Act prohibits anyone from knowingly presenting, or causing to be presented, for payment to federal programs (including Medicare and Medicaid) claims for items or services, including drugs, that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services.

Although we would not submit claims directly to payors, manufacturers can be held liable under these laws if they are deemed to “cause”

the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label.

Although we would not submit claims directly to payors, manufacturers can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label.

In addition, our future activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products, are subject to scrutiny under this law.

For example, pharmaceutical companies have been prosecuted under the federal False Claims Act in connection with their off-label promotion of drugs.

Penalties for a False Claims Act violation include three times the actual damages sustained by the government, plus mandatory civil penalties of between $11,181 and $22,363 for each separate false claim, the potential for exclusion from participation in federal healthcare programs, and, although the federal False Claims Act is a civil statute, conduct that results in a False Claims Act violation may also implicate various federal criminal statutes.

Moreover, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.

Penalties for a False Claims Act violation include three times the actual damages sustained by the government, plus mandatory civil penalties for each separate false claim, the potential for exclusion from participation in federal healthcare programs.

As well, although the federal False Claims Act is a civil statute, conduct that results in a False Claims Act violation may also implicate various federal criminal statutes.

If the government were to allege that we were, or convict us of, violating these false claims laws, we could be subject to a substantial fine and may suffer a decline in our stock price.

In addition, private individuals have the ability to bring actions under the federal False Claims Act and certain states have enacted laws modeled after the federal False Claims Act.

In addition to the laws described above, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively known as the Affordable Care Act, also imposed new reporting requirements on drug manufacturers for payments made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

Failure to submit required information may result in civil monetary penalties of up to an aggregate of $165,786 per year (or up to an aggregate of $1.105 million per year for “knowing failures”), for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission.

In addition, private individuals have the ability to bring actions under the federal False Claims Act.

In addition to the laws described above, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively known as the Affordable Care Act, also imposed new reporting requirements on drug manufacturers for payments made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by such physicians

and their immediate family members.

Beginning in 2022, such obligations will include payments and other transfers of value provided in the previous year to certain other healthcare professionals, including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse midwives.

Failure to submit required information may result in significant civil monetary penalties, and additional penalties for knowing failures, for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission.

Manufacturers must submit reports by the 90th day of each subsequent calendar year.

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There has also been a recent trend of increased regulation of payments made to physicians and other healthcare providers.

Certain states mandate implementation of compliance programs, impose restrictions on drug manufacturers’

marketing practices and/or require the tracking and reporting of pricing and marketing information as well as gifts, compensation and other remuneration to physicians.

Certain states mandate implementation of compliance programs, impose restrictions on drug manufacturers’ marketing practices and/or require the tracking and reporting of pricing and marketing information as well as gifts, compensation and other remuneration to physicians.

Many of these laws contain ambiguities as to what is required to comply with such laws, which may affect our sales, marketing, and other promotional activities by imposing administrative and compliance burdens on us.

In addition, given the lack of clarity with respect to these laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent state and perhaps federal, authorities.

Because we intend to commercialize products that could be reimbursed under a federal healthcare program and other governmental healthcare programs, we plan to develop a comprehensive compliance program that establishes internal controls to facilitate adherence to the rules and program requirements to which we will or may become subject.

Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated.

Due to the breadth of these laws, the absence of guidance in the form of regulations or court decisions, and the potential for additional legal or regulatory change in this area, it is possible that our future

sales and marketing practices and/or our future relationships with physicians and other healthcare providers might be challenged under such laws.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

Violations of any of such laws or any other governmental regulations that apply may result in penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, reporting obligations and integrity oversight, exclusion from participation in federal and state healthcare programs and imprisonment.

Third-Party Coverage and Reimbursement

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A decision by a third-party payor not to cover our product candidates could reduce physician utilization of our products once approved and have a material adverse effect on our future sales, results of operations and financial condition.

Moreover, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved.

Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient to realize an appropriate return on our investment in product development.

In addition, in July 2010, CMS released its final rule to implement a bundled prospective payment system for the treatment of CKD patients on dialysis as required by the Medicare Improvements for Patients and Providers Act, or MIPPA.

The bundled payment includes all renal dialysis services furnished for outpatient maintenance dialysis, including ESRD-related drugs and biologicals.

The final rule delayed the inclusion of oral medications without intravenous equivalents in the bundled payment until January 1, 2014 and in April 2014, due to subsequent legislative amendments, CMS provided that such inclusion will remain delayed until January 1, 2025.

Unless additional Congressional action is taken, beginning in 2025 ESRD-related drugs will be included in the bundle and separate Medicare reimbursement will no longer be available for such drugs, as it is today under Medicare Part D.

While it is too early to project the full impact that bundling may have on drugs for the control of serum phosphorus, the impact could potentially cause dramatic price reductions for tenapanor, if approved.

There is increased uncertainty related to insurance coverage and reimbursement for certain drugs, like tenapanor, which, if approved, will be marketed for the control of serum phosphorus in CKD patients on dialysis.

In January 2011, CMS implemented a new prospective payment system for dialysis treatment.

Under the ESRD prospective payment system, CMS generally makes a single bundled payment to the dialysis facility for each dialysis treatment that covers all items and services routinely required for dialysis treatments furnished to Medicare beneficiaries in Medicare-certified ESRD facilities or at their home, including the cost of certain routine drugs.

The inclusion of oral medications without injectable or intravenous equivalents in the bundled payment was initially delayed until January 1, 2014 and through several subsequent legislative actions was delayed until January 1, 2025.

As a result, absent further legislation or regulation on this matter, beginning in 2025, oral ESRD-related drugs without injectable or intravenous equivalents may be included in the ESRD bundle and separate Medicare payment for these drugs will no longer be available, as is the case today under Medicare Part D.

While it is too early to project the full impact that bundling may have on tenapanor and our business should tenapanor be brought into the bundle in 2025, or at any time, we may be unable to sell tenapanor, if approved, to

dialysis providers on a profitable basis if third-party payors reduce their current levels of payment, or if our costs of production are higher than levels necessary for an appropriate gross margin after payment of all discounts, rebates and chargebacks.

Healthcare Reform

In March 2010, Congress passed, and President Obama signed into law, the Patient Protection and Affordable Care Act, a healthcare reform measure, or the Affordable Care Act.

The Affordable Care Act substantially changes the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry.

The Affordable Care Act contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, which have impacted existing government healthcare programs and have resulted in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program.

Additionally, the Affordable Care Act:

increases the minimum level of Medicaid rebates payable by manufacturers of brand-name drugs from 15.1% to 23.1%;

requires collection of rebates for drugs paid by Medicaid managed care organizations;

expands eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for

certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;

expands access to commercial health insurance coverage through new state-based health insurance marketplaces, or exchanges;

requires manufacturers to participate in a coverage gap discount program, under which they must agree to offer 50 percent point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D, beginning January 2011;

imposes a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs”

to specified federal government programs.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act.

We expect that the new presidential administration and U.S.

Congress will likely continue to seek to modify, repeal, or otherwise invalidate all or certain provisions of, the Affordable Care Act.

There is still uncertainty with respect to the impact President Trump’s administration and the U.S.

Congress may have, if any, and any changes will likely take time to unfold, and could have an impact on coverage and reimbursement for healthcare items and services covered by plans that were authorized by the Affordable Care Act.

In addition, other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted.

For example, in August 2011, the Budget Control Act of 2011, among other things, included aggregate reductions to Medicare payments to providers of 2 percent per fiscal year, which went into effect on April 1, 2013, and, due to subsequent legislative amendments, will remain in effect through 2025 unless additional Congressional action is taken.

In March 2010, Congress passed the Patient Protection and Affordable Care Act, a healthcare reform measure (the “ACA”).

The ACA was signed into law and substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacted the pharmaceutical industry.

The ACA contained a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, which have impacted existing government healthcare programs and have resulted in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program.

Additionally, the ACA:

● increased the minimum level of Medicaid rebates payable by manufacturers of brand-name drugs from 15.1% to 23.1% of the average manufacturer price;

● required collection of rebates for drugs paid by Medicaid managed care organizations;

● expanded eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;

● expanded access to commercial health insurance coverage through new state-based health insurance marketplaces, or exchanges;

● required manufacturers to participate in a coverage gap discount program, under which they must now agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

● imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs” to specified federal government programs.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted.

For example, in August 2011, the Budget Control Act of 2011, among other things, included aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect on April 1, 2013, and, due to subsequent legislative amendments, will remain in effect through 2030, with the exception of a temporary suspension from May 1, 2020 through March 31, 2021, unless additional Congressional action is taken.

In January 2013, the American Taxpayer Relief Act, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Additionally, individual states have also become increasingly active in passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and to encourage importation from other countries and bulk purchasing.

Recently, there has also been heightened governmental scrutiny over the manner in which drug manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed bills designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

These new laws and the regulations and policies implementing them, as well as other healthcare reform measures that may be adopted in the future, may have a material adverse effect on our industry generally and on our ability to successfully develop and commercialize our products.

Data Privacy and Security Laws

Numerous state, federal and foreign laws, including consumer protection laws and regulations, govern the collection, dissemination, use, access to, confidentiality and security of personal information, including health-related information.

In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws, including the Health Insurance Portability and Accountability Act of 1996, as amended, and regulations promulgated thereunder (collectively “HIPAA”), and federal and state consumer protection laws and regulations (e.g., Section 5 of the Federal Trade Commission Act), that govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.

In addition, certain state laws, such as the California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (“CPRA”) govern the privacy and security of personal data, including health-related data in certain circumstances, some of which are more stringent than HIPAA and many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Failure to comply with these laws, where applicable, can result in the imposition of significant civil and/or criminal penalties and private litigation.

Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

Other Regulations

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We may incur significant costs to comply with such laws and regulations now or in the future.

As of December 31, 2019, we had a total of 88 employees, all of which were full-time employees, including a total of 14 employees with Ph.D.

Within our workforce, 63 employees are engaged in research and development and the remaining 25 in general management and administration, including finance, legal, and market development.

None of our employees are represented by labor unions or covered by collective bargaining agreements.

We believe that we maintain good relations with our employees.

IMPACT OF COVID-19

The global COVID-19 pandemic has impacted the operational decisions of companies worldwide.

It also has created and may continue to create significant uncertainty in the global economy.

We have undertaken measures to protect our employees, partners, collaborators, and vendors, some of which impact our normal operations.

To date, we have been able to continue our operations with our workforce, most of whom are working remotely, and our pre-existing infrastructure that supports secure access to our internal systems.

If, however, the COVID-19 pandemic has a substantial impact on the productivity of our employees, our ability to successfully prepare for the commercial launch of tenapanor for the control of serum phosphorous in CKD patients on dialysis, including our ability to hire and successfully integrate into the company the new personnel required to prepare for such launch, or our ability to progress our research and development efforts, the results of our operations and overall financial performance may be adversely impacted.

The extent of the impact from the COVID-19 pandemic on our business will depend largely on future developments that are highly uncertain and cannot be predicted.

For a discussion of risks of COVID-19 relating to our business, see “Item 1A.

- Risk Factors- Risks Related to Our Business- The ongoing COVID-19 pandemic, or any other outbreak of epidemic diseases, or the perception of their effects, could have a material adverse effect on our business, financial condition, results of operations or cash flows.

” As of the date of issuance of this financial report, we are not aware of any specific event or circumstance that would require updates to our estimates and judgments or revisions to the carrying value of our assets or liabilities.

These estimates may change as new events occur and additional information is obtained.

HUMAN CAPITAL

The future success of our company depends on our ability to attract, retain, and further develop top talent.

The PDUFA date for our NDA for tenapanor for the control of serum phosphorus in CKD patients on dialysis is set for April 29, 2021, and if approved, we expect to commercialize our first product in 2021.

As a result, we are focused on building an

experienced commercial team and expanding our internal resources to support a commercial organization.

During this ongoing transition and expansion our workforce, we remain steadfastly committed to our core values, including our goal to develop and maintain an inclusive, diverse, and safe workplace with opportunities for our employees to grow and develop in their careers, supported by strong compensation and benefits.

At December 31, 2020, we had approximately 129 full-time employees, 78 of whom were engaged directly in research and development, and 51 in marketing, sales and administrative activities.

During 2020, we increased our employee base by approximately 41, or 47%.

Inclusion and Diversity

Our culture is supported by an unwavering commitment to inclusion and diversity.

As of December 31, 2020, approximately 63.5% of our workforce was female;

37% of our executive leadership team was female and 23% of our employees in managerial roles were female.

As of December 31, 2020, minorities represented approximately 59% of our workforce, of which 19% of our employees in managerial roles were minorities.

We strive to foster a culture where mutual respect, inclusive behavior, and dignity are core to our individual expectations.

We believe that our success will be significantly impacted by our ability to create and maintain a safe inclusive environment where everyone is empowered to do their best work—regardless of race, color, national origin, religion, sex, sexual orientation, gender identity and expression, age, or disability.

We are united by our desire to serve our patients, and we are proud financial sponsors of the California Life Sciences Association Racial and Social Equity Initiative, a first step in a unified effort for the life sciences industry in California to do more for the under-served and under-represented, focusing on the most critical need to address the inequality for Black, Hispanic, Native American and Pacific Islander populations in California.

Fostering and maintaining a strong, healthy culture is a key strategic focus.

Our core values reflect who we are and the way our employees interact with one another, our partners and our stockholders.

We are dedicated to our core values, recognizing that this dedication will foster an environment where we will be able to realize our vision of creating a healthier tomorrow for patients with kidney and cardiovascular disease.

We are Passionate, aware that with integrity and determination, we make a difference for patients.

We are Fearless, aware that by challenging convention, we truly innovate.

We are Dedicated, aware that working tirelessly together, we are greater than the sum of our parts.

We are Inclusive, aware that with respect, grace and humor, we are family.

We encourage our employees to live out our core values and to discuss our core values with potential candidates looking to join our team.

We believe that this is an important step in helping our culture stay strong and unique.

Health, Safety, and Wellness

The health, safety, and wellness of our employees is a priority in which we have always invested, and will continue to do so.

These investments and the prioritization of employee health, safety, and wellness took on particular significance in 2020 in light of COVID-19.

In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate, in compliance with government regulations.

This includes having the vast majority of our employees work from home, with a return to our facility for a very limited number of lab-based employees and those needed to support them.

To protect and support our team members returning to our facility, we have implemented health and safety measures that included maximizing personal workspaces, changing shift schedules, providing personal protective equipment (“PPE”), and instituting mandatory screening before accessing buildings.

We created a task force to monitor our efforts and the needs of our employees.

Compensation and Benefits

We recognize that we operate within an industry where there is significant competition for top talent, and we endeavor to provide not only a strong healthy culture, but also important compensation and benefits programs to help meet the needs of our employees.

In addition to base compensation, these programs, include annual bonuses, stock awards, an Employee Stock Purchase Plan, 401(k), healthcare and insurance benefits, health savings (funded by the Company) and flexible spending accounts, family leave, family care resources, and flexible work schedules, among many others.

As a response to the COVID-19 pandemic, we implemented payments to assist employees in paying for expenses incurred in working from home.

Ensuring fair and equitable pay is integral to our commitment to our employees.

Our executive team and Board of Directors strongly support this commitment.

We conduct pay equity reviews annually to help us understand whether our compensation structure is appropriate and to identify what improvements can be made.

CORPORATE INFORMATION

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in June 2008.

We operate in only one business segment, which is the research and development of biopharmaceutical products.

Our principal offices are located at 34175 Ardenwood Blvd., Fremont, CA 94555, and our telephone number is (510) 745‑1700.

Our website address is www.ardelyx.com.

We file electronically with the Securities and Exchange Commission, or SEC, our annual reports on Form 10‑K, quarterly reports on Form 10‑Q and current reports on Form 8‑K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.

We operate in one business segment, which is the research and development of biopharmaceutical products.

Our principal offices are located at 34175 Ardenwood Blvd., Fremont, CA 94555 and 400 Fifth Avenue, Suite 210, Waltham, Massachusetts 02415.

Our telephone number is (510) 745-1700 and our website address is www.ardelyx.com.

We file electronically with the Securities and Exchange Commission (“SEC”) our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.

We make available on our website at www.ardelyx.com, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

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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-K

Item 1. Business