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Item 1A. Risk Factors

2021-05-06 compared with 2020-11-05 · 328 added, 222 removed, 632 unchanged (47% of the section changed)

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Summary of Principal Risks Related to Our Business

• We are substantially dependent on the success of our lead product candidate, tenapanor, which may not receive regulatory approval for the control of serum phosphorus in adult patients with CKD on dialysis or for any other related indication, and if approved, may not be successfully commercialized for such indication.

On April 29, 2021, the U.S.

Food and Drug Administration (“FDA”) determined that a submission we made in response to an information request from the FDA constituted a major amendment to our New Drug Application (“NDA”) for tenapanor for the control of serum phosphorus, resulting in a three-month extension of the PDUFA date to July 29, 2021.

The FDA’s information request included a request for additional analyses of our clinical data.

The FDA may act on our application by issuing either an approval letter or a Complete Response Letter (“CRL.”).

Should we wish to pursue our application after receiving a CRL, we may, if possible, resubmit the application with information that addresses the questions or issues identified by the FDA in order to support approval.

Resubmissions are subject to review period targets, which vary depending on the underlying submission type and the content of the resubmission.

• Even if we are successful in obtaining regulatory approval for tenapanor for the control of serum phosphorus or for any other related indication, and tenapanor is ultimately commercialized for any approved indications, tenapanor may never achieve market acceptance, sufficient third-party coverage or reimbursement, or commercial success, which will depend, in part, upon the degree of acceptance among physicians, patients, patient advocacy groups, health care payors and the medical community.

Additionally, if the number of patients in the market for tenapanor for the approved indication or the price that the market can bear is not as significant as we estimate, or if we are not able to secure adequate coverage and reimbursement for tenapanor, we may not generate sufficient revenue from sales of tenapanor.

• Third-party payor coverage and reimbursement status of newly-approved products are uncertain.

Failure to obtain or maintain adequate coverage and reimbursement for tenapanor, if approved, could limit our ability to market tenapanor for the approved indication and decrease our ability to generate revenue.

For example, certain policies of the Biden

administration with respect to drug pricing or reimbursement may impact our business and industry.

While there is significant uncertainty related to the insurance coverage and reimbursement of newly approved products in general in the United States, there is additional uncertainty related to insurance coverage and reimbursement for drugs, like tenapanor, which, if approved, will be marketed for the approved indication for adult patients with CKD on dialysis.

If we are successful in obtaining regulatory approval to market tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for any other related indication, our ability to generate and sustain future revenues from sales of tenapanor for such indication, may be dependent upon whether and when tenapanor, along with other oral end-stage renal disease (“ESRD”) related drugs without an injectable or intravenous equivalent, are bundled into the ESRD prospective payment system, and the manner in which such introduction into the ESRD prospective payment system may occur.

• We have hired sales and marketing leadership and employees with technical expertise, and we are required to train, retain and incentivize those sales and marketing personnel.

The FDA has extended our PDUFA date to July 29, 2021, and there can be no assurances that we will be successful in retaining our sales and marketing leadership or other key employees necessary for commercial launch throughout this extension, or that we will be able to replace any such leadership or other sales personnel that may leave the Company.

Retaining and incentivizing our commercial personnel throughout our extended PDUFA date and thereafter will continue to be expensive and time consuming.

• We rely completely on third parties to manufacture tenapanor and our other product candidates.

If they are unable to comply with applicable regulatory requirements, unable to source sufficient raw materials, experience manufacturing or distribution difficulties or are otherwise unable to manufacture sufficient quantities to meet demand, our commercialization of tenapanor, if approved, and our development efforts for tenapanor, RDX013 and our other product candidates may be materially harmed.

• We have a limited operating history, have incurred significant losses since our inception and will incur losses in the future, which makes it difficult for us to assess our future viability.

• We have never generated any revenue from product sales and may never be profitable.

developing a sustainable and scalable manufacturing process for tenapanor, and establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate supply of product to support the market demand for tenapanor;

Our ability to generate future revenue from product sales or pursuant to milestone payments is dependent upon many factors, including, but not limited to, obtaining regulatory approvals for tenapanor for the control of serum phosphorus or for any other related indication, and establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate supply of product to support the market demand for tenapanor;

and obtaining market acceptance of tenapanor as a viable treatment option for the indications for which it is approved and commercialized.

• We are substantially dependent on the success of our lead product candidate, tenapanor, which may not receive regulatory approval for the control of serum phosphorus or be successfully commercialized for IBS-C or hyperphosphatemia.

• Even if we are successful in obtaining regulatory approval for tenapanor for the control of serum phosphorus, and tenapanor is ultimately commercialized for any approved indications, tenapanor may never achieve market acceptance, sufficient third-party coverage or reimbursement, or commercial success, which will depend, in part, upon the degree of acceptance among physicians, patients, patient advocacy groups, health care payors and the medical community.

Additionally, if the number of patients in the market for tenapanor or the price that the market can bear is not as significant as we estimate, or if we are not able to secure adequate coverage and reimbursement for tenapanor, we may not generate sufficient revenue from sales of tenapanor for the control of serum phosphorus.

• Third-party payor coverage and reimbursement status of newly-approved products are uncertain.

Failure to obtain or maintain adequate coverage and reimbursement for tenapanor, if approved, could limit our ability to market tenapanor for the control of serum phosphorus in CKD patients on dialysis and decrease our ability to generate revenue.

While there is significant uncertainty related to the insurance coverage and reimbursement of newly approved products in general in the United States, there is additional uncertainty related to insurance coverage and reimbursement for drugs, like tenapanor, which, if approved, will be marketed for the control of serum phosphorus in CKD patients on dialysis.

If we are successful in obtaining regulatory approval to market tenapanor for the control of serum phosphorus in CKD patients on dialysis, our ability to generate and sustain future revenues from sales of tenapanor for such indication, may be dependent upon whether and when tenapanor, along with other oral end-stage renal disease (“ESRD”) related drugs without an injectable or intravenous equivalent , are bundled into the ESRD prospective payment system, and the manner in which such introduction into the ESRD prospective payment system may occur.

• We will require substantial additional financing to achieve our goals, and the inability to access this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our pre-commercialization efforts for tenapanor and our other product development and platform development activities

• We currently have no sales organization.

If we are unable to establish sales capabilities on our own or through third parties, we may not be able to commercialize tenapanor or any of our other product candidates.

• We do not currently have, nor do we plan to acquire, the infrastructure or capability internally to manufacture tenapanor or any of other our product candidates on a commercial scale, or to manufacture our drug supplies for use in the conduct of our nonclinical and clinical studies.

We intend to rely on third parties to produce commercial supplies of tenapanor, if tenapanor is ultimately commercialized for any indication.

Our business would be harmed if those third parties fail to obtain approval of the U.S.

Food and Drug Administration (“FDA”) or comparable regulatory authorities, fail to provide us with sufficient quantities of drug, or fail to do so at acceptable quality levels or prices.

• We may not be successful in our efforts to develop our product candidates that are at an early stage of development, or expand our pipeline of product candidates, as a result of numerous factors, which may include the inability to access capital necessary to fund such efforts on acceptable terms.

• We may not be successful in our efforts to develop RDX013 or expand our pipeline of product candidates, as a result of numerous factors, which may include the inability to access capital necessary to fund such efforts on acceptable terms.

• We face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk if we commercialize any products.

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• The COVID-19 pandemic continues to rapidly evolve.

The extent to which the pandemic may impact our business, manufacturing, preclinical development activities, preclinical studies and planned and ongoing clinical trials will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as, the duration of the pandemic, travel restrictions and actions to contain the pandemic or treat its impact, such as social distancing, quarantines or lock-downs in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Specifically, while our Phase 3 clinical development of tenapanor for the control of serum phosphorus in CKD patients on dialysis is complete, we have ongoing and planned clinical trials for tenapanor that may be delayed as a result of the restrictions placed on access to dialysis centers during the COVID-19 pandemic.

Other potential impacts of the COVID-19 pandemic on our various clinical trials include delays or difficulties in any planned clinical site initiation, including difficulties in obtaining Institutional Review Board approvals, recruiting clinical site investigators and clinical site staff, delays or difficulties in enrolling patients, interruption of planned key clinical trial activities, such as clinical trial site data monitoring due to diversion of resources at clinical sites or limitation on travel imposed by federal or state governments.

The extent to which the pandemic may impact our business, manufacturing, preclinical development activities, preclinical studies, planned and ongoing clinical trials, as well as regulators' review of applications will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as, the duration of the pandemic, travel restrictions and actions to contain the pandemic or treat its impact, such as social distancing, quarantines or lock-downs in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Specifically, while our Phase 3 clinical development of tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication is complete, we have ongoing and planned clinical trials for tenapanor or may be required to conduct additional clinical trials, that may be delayed as a result of the restrictions placed on access to dialysis centers during the COVID-19 pandemic or regulators' review of our applications.

Other potential impacts of the COVID-19 pandemic on our various clinical trials, including our ongoing Phase 2 clinical trial for RDX013, include delays or difficulties in any planned clinical site initiation, including difficulties in obtaining Institutional Review Board approvals, recruiting clinical site investigators and clinical site staff, delays or difficulties in enrolling patients, interruption of planned key clinical trial activities, such as clinical trial site data monitoring due to diversion of resources at clinical sites or limitation on travel imposed by federal or state governments.

• Our operating activities may be restricted as a result of covenants related to the indebtedness under our loan and security agreement and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business.

Risks Related to Our Limited Operating History, Financial Condition and Capital Requirements

• Our products or product candidates may cause undesirable side effects or have other properties that could delay our clinical trials, or delay or prevent regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following any regulatory approval that is achieved.

If we or others identify undesirable side effects caused by any product candidate following receipt of marketing approval, the ability for us or a collaboration partner to achieve or maintain market acceptance of the approved product could be materially affected and could result in the loss of significant revenue to us, which would materially and adversely affect our results of operations and business.

• The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable.

If we are ultimately unable to obtain regulatory approval for our product candidates, including tenapanor for the control of serum phosphorus, or any related indication, our business will be substantially harmed.

Even if we receive regulatory approval for a product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense.

Additionally, any product candidates, if approved, could be subject to labeling and other restrictions and market withdrawal, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.

Principal Risks Related to Our Business

We are substantially dependent on the success of our lead product candidate, tenapanor, which may not receive regulatory approval for the control of serum phosphorus or for any other related indication or be successfully commercialized for hyperphosphatemia or IBS-C.

To date, we have invested a significant amount of our efforts and financial resources in the research and development of tenapanor, which is currently our lead product candidate.

The commercial success of tenapanor will depend on a number of factors, including whether tenapanor’s safety and efficacy profile is satisfactory to the FDA and foreign regulatory authorities to gain marketing approval for the control of serum phosphorus, or any other related indication.

On April 29, 2021, the FDA determined that a submission we made in response to an information request from the FDA constituted a major amendment to our NDA, resulting in a three-month extension of the PDUFA date to July 29, 2021.

The FDA’s information request included a request for additional analyses of our clinical data.

The FDA may act on our application by issuing an approval letter or a CRL.

Should we wish to pursue an application after receiving a CRL, we may, if possible, resubmit the application with information that addresses the questions or issues identified by the FDA in order to support approval.

Resubmissions are subject to review period targets, which vary depending on the underlying submission type, the content of the resubmission and regulators' ability to conduct the review.

If we are successful in obtaining approval for tenapanor for the control of serum phosphorus, or for a related indication, the commercial success of tenapanor will depend on a number of additional factors, including the following:

• the ability of the third-party manufacturers we contract with to provide an adequate (in amount and quality) supply of product to support the market demand for tenapanor for the treatment of IBS-C, and/or if approved, tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication, particularly in light of the effects of the COVID-19 pandemic;

• whether or not the content and breadth of the label approved by the FDA or foreign regulatory authorities may materially and adversely impact our ability or the ability of our collaboration partners to commercialize the product for the approved indication, or for any other indication;

• whether we will be required to conduct clinical trials in addition to those anticipated to obtain regulatory approval or adequate commercial pricing;

• the prevalence and severity of adverse side effects of tenapanor;

• the timely receipt of necessary marketing approvals from the FDA and foreign regulatory authorities;

• our ability, either alone, or with a collaboration partner, to successfully commercialize tenapanor, if approved for marketing and sale by the FDA or foreign regulatory authorities, including educating physicians and patients about the benefits, administration and use of tenapanor;

• achieving and maintaining compliance with all regulatory requirements applicable to tenapanor;

• acceptance of tenapanor as safe, effective and well-tolerated by patients and the medical community;

• our ability, alone or with collaboration partners, to manage the complex pricing and reimbursement negotiations associated with marketing the same product at different doses for separate indications for tenapanor for the treatment of IBS-C, and, if approved, for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication;

• the availability, perceived advantages, relative cost, relative safety and relative efficacy of tenapanor compared to alternative and competing treatments;

• obtaining and sustaining an adequate level of coverage and reimbursement for tenapanor by third-party payors;

• enforcing intellectual property rights in and to tenapanor;

• avoiding third-party interference, opposition, derivation or similar proceedings with respect to our patent rights, and avoiding other challenges to our patent rights and patent infringement claims;

• a continued acceptable safety and tolerability profile of tenapanor following approval.

As tenapanor is a first-in-class drug, there is a higher likelihood that approval may not be attained as compared to a class of drugs with approved products.

Although tenapanor met the primary endpoints in all of the three Phase 3 clinical trials evaluating tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis, the FDA requested additional analyses of the clinical data submitted in our NDA in order to more fully evaluate our clinical data, including as compared to approved therapies.

The submission of the new analyses was determined to be a major amendment to our NDA, and resulted in a three month extension of our PDUFA date.

There can be no assurances that we will receive regulatory approval to market tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for any other related indication.

The FDA, after consideration of our submission may issue a CRL.

Further, it may not be possible or practicable to demonstrate, or if approved, to market tenapanor on the basis of certain of the benefits we believe tenapanor possesses.

If the number of patients in the market for tenapanor based on the approved indication or the price that the market can bear is not as significant as we estimate, or if we are not able to secure adequate coverage and reimbursement for tenapanor, we may not generate sufficient revenue from sales of tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for any other related indication, if approved, or for IBS-C if commercialized.

There can be no assurance that tenapanor will ever be successfully commercialized or that we will ever generate income from sales of tenapanor.

If we are not successful in obtaining approval for tenapanor for the control of serum phosphorus or for any other related indication, or we are not successful in commercializing tenapanor, or are significantly delayed in doing so, our business will be materially harmed.

Even if we are successful in obtaining regulatory approval for tenapanor for the control of serum phosphorus or for any other related indication, and tenapanor is ultimately commercialized for any approved indications, tenapanor may never achieve market acceptance, sufficient third-party coverage or reimbursement, or commercial success, which will depend, in part, upon the degree of acceptance among physicians, patients, patient advocacy groups, health care payors and the medical community.

Market acceptance of tenapanor for IBS-C and, in the event that marketing approval is obtained, for the control of serum phosphorus or for another other related indication, depends on a number of factors, including:

• the breadth and content of the approved label, and the clinical indications for which it is approved;

• the efficacy demonstrated in our clinical trials;

• with respect to tenapanor for the control of serum phosphorus or for another other related indication, whether tenapanor, along with other oral only medications, are included in the bundled prospective payment system for the treatment of ESRD patients, and the time and manner in which such transition is achieved;

• the prevalence and severity of any side effects and overall safety and tolerability profile of the product;

• advantages over new or traditional or existing therapies, including recently approved therapies or therapies that the physician community anticipate will be approved;

• acceptance by physicians, major operators of clinics and patients of tenapanor as a safe, effective and well-tolerated treatment;

• relative convenience and ease of administration of tenapanor;

• the potential and perceived advantages of tenapanor over current treatment options or alternative treatments, including future alternative treatments;

• the cost of treatment in relation to alternative treatments and the willingness to pay for tenapanor, if approved, on the part of physicians and patients;

• the availability of alternative products and their ability to meet market demand;

• the quality of our relationships with patient advocacy groups.

Any failure of tenapanor to achieve market acceptance, sufficient third-party coverage or reimbursement, or commercial success for any approved indications would adversely affect our results of operations.

If we are not able to retain our sales and marketing leadership and other key employees during the extended PDUFA date, and we are not able to replace any lost personnel we may not be able to commercialize tenapanor or any of our other product candidates.

If approved, we currently plan to commercialize tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for another related indication, on our own.

We have hired sales leadership and sales employees with technical expertise, and we are required to train, retain and incentivize those sales personnel.

Retaining and incentivizing our commercial personnel throughout our extended PDUFA date and thereafter will continue to be expensive and time consuming.

Even if we are able to retain our key sales and marketing leadership during this extended PDUFA date, and tenapanor is approved for the control of serum phosphorus in adult patients with CKD on dialysis, or any related indication, as a company, we have no prior experience in the marketing, sale and distribution of pharmaceutical products and there are significant risks involved in managing and retaining a sales organization, including our ability to secure the capital necessary to fund such efforts on acceptable terms, provide adequate training to sales and marketing personnel, comply with regulatory requirements applicable to the marketing and sale of drug products and effectively manage a geographically dispersed sales and marketing team.

If we fail to maintain or replace our internal sales, marketing and distribution capabilities, we may need to delay the commercialization of tenapanor for the control of serum phosphorus or for another other related indication, if approved, or such commercialization could be adversely impacted.

Third-party payor coverage and reimbursement status of newly-approved products are uncertain.

Failure to obtain or maintain adequate coverage and reimbursement for our products, if approved, could limit our ability to market those products and decrease our ability to generate revenue.

The pricing, coverage and reimbursement of our product candidates, if approved, must be adequate to support a commercial infrastructure.

The availability and adequacy of coverage and reimbursement by governmental and private payors are essential for most patients to be able to afford treatments such as ours, assuming approval.

Sales of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our product candidates will be paid for by health maintenance, managed care, pharmacy benefit, and similar healthcare management organizations, or reimbursed by government authorities, private health insurers, and other third-party payors.

If coverage and reimbursement are not available, or are available only to limited levels, we, or our collaboration partners, may not be able to successfully commercialize our product candidates.

Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a return on our investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products.

In the United States, the principal decisions about coverage and reimbursement for new drugs are typically made by the Centers for Medicare & Medicaid Services (“CMS”), an agency within the United States Department of Health and Human Services responsible for administering the Medicare program, as CMS decides whether and to what extent a new drug will be covered and reimbursed under Medicare.

Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree.

It is difficult to predict what CMS will decide with respect to reimbursement for products such as ours.

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

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.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, Japan, China and other countries has and will continue to put pressure on the pricing and usage of our product candidates.

In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems.

Other countries allow companies to fix their own prices for medicinal products, but monitor and control company profits.

Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates.

Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, these caps may not cover or provide adequate payment for our product candidates.

We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, and additional legislative changes.

The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense.

As a result, increasingly high barriers are being erected to the entry of new products.

We rely completely on third parties to manufacture tenapanor and our other product candidates.

We do not currently have, nor do we plan to acquire, the infrastructure or capability internally to manufacture tenapanor or any of other our product candidates on a commercial scale, or to manufacture our drug supplies for use in the conduct of our nonclinical and clinical studies.

The facilities used by our contract manufacturers to manufacture our drug supply are subject to inspection by the FDA.

Our ability to control the manufacturing process of our product candidates is limited to the contractual requirements and obligations we impose on our contract manufacturer.

Although they are contractually required to so do, we are completely dependent on our contract manufacturing partners for compliance with the regulatory requirements, known as current Good Manufacturing Practice requirements (“cGMPs”), for manufacture of both active drug substances and finished drug products.

The manufacture of pharmaceutical products requires significant expertise and capital investment.

Manufacturers of pharmaceutical products often encounter difficulties in commercial production.

These problems may include difficulties with production costs and yields, quality control, including stability of the product and quality assurance testing, and shortages of qualified personnel, as well as compliance with federal, state and foreign regulations and the challenges associated with complex supply chain management.

Even if our contract manufacturers do not experience problems and commercial

manufacturing is achieved, their maximum or available manufacturing capacities may be insufficient to meet commercial demand.

Finding alternative manufacturers or adding additional manufacturers requires a significant amount of time and involves significant expense.

New manufacturers would need to develop and implement the necessary production techniques and processes, which along with their facilities, would need to be inspected and approved by the regulatory authorities in each applicable territory.

In addition, the raw materials necessary to make API for our products are acquired from a limited number of sources.

Any delay or disruption in the availability of these raw materials could result in production disruptions, delays or higher costs with consequent adverse effects on us.

If our contract manufacturers fail to adhere to applicable GMP or other regulatory requirements, experience delays or disruptions in the availability of raw materials or experience manufacturing or distribution problems, we may suffer significant consequences, including the inability to meet our product requirements for our clinical development programs, and if tenapanor is approved for marketing for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication, such events could result in product seizures or recalls, loss of product approval, fines and sanctions, reputational damage, shipment delays, inventory shortages, inventory write-offs and other product-related charges and increased manufacturing costs.

As a result, or if maximum or available manufacturing capacities are insufficient to meet demand, our development or our commercialization efforts for tenapanor for the control of serum phosphorus or for another other related indication, if approved, may be materially harmed.

Risks Related to our Financial Condition and Capital Requirements

We have a limited operating history, have incurred significant losses since our inception and we will incur losses in the future, which makes it difficult to assess our future viability.

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We are not profitable and have incurred losses in each year since our inception in October 2007, and we do not know whether or when we will become profitable.

We have only a limited operating history upon which to evaluate our business and prospects.

We continue to incur significant research, development and other expenses related to our ongoing operations.

As of September 30, 2020, we had an accumulated deficit of $525.9 million.

We expect to continue to incur substantial operating losses for the foreseeable future as we prepare for the potential commercialization of, and incur manufacturing and development costs for, tenapanor for the control of serum phosphorus in chronic kidney disease (“CKD”) patients on dialysis;

as we commence commercialization of tenapanor for that indication, if approved;

As of March 31, 2021, we had an accumulated deficit of $587.9 million.

We expect to continue to incur substantial operating losses for the foreseeable future as we prepare for the potential commercialization of, and incur manufacturing and development costs for, tenapanor for the control of serum phosphorus in CKD patients on dialysis or for another other related indication;

as we commence commercialization of tenapanor for that or another related indication, if approved;

as we incur development costs for RDX013;

and as we continue our discovery and research activities.

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We have never generated any revenue from product sales and may never be profitable.

We received FDA approval for our New Drug Application (“NDA”) for tenapanor for the treatment of irritable bowel syndrome with constipation (“IBS-C”) in adults in September 2019.

However, we do not currently expect to commercialize tenapanor for IBS-C ourselves in the United States and have not entered into a collaboration partnership for such commercialization.

We received FDA approval for our NDA for tenapanor for the treatment of IBS-C in adults in September 2019.

However, we have not commercialized tenapanor for IBS-C ourselves in the United States and have not entered into a collaboration partnership for such commercialization.

We have no other products approved for sale and have never generated any revenue from product sales.

Our ability to generate revenue from product sales and achieve profitability depends on our ability to obtain the regulatory and marketing approvals necessary to commercialize tenapanor for the control of serum phosphorus in CKD patients on dialysis, either on our own or with one or more collaboration partners.

On April 29, 2021, the FDA determined that a submission we made in response to an information request from the FDA related to our NDA for the control of serum phosphorus in adult patients with CKD on dialysis constituted a major amendment to our NDA, resulting in a three-month extension of the PDUFA date to July 29, 2021.

The FDA’s information request included a request for additional analyses of our clinical data.

The FDA may act on our application by

either issuing an approval letter or a CRL.

Resubmissions are subject to review period targets, which vary depending on the underlying submission type and the content of the resubmission.

There can be no assurances that our NDA for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis will be approved for such indication or any other related indication.

Our ability to generate revenue from product sales and achieve profitability depends on our ability to obtain such approval by the FDA and the ability of our collaboration partners to obtain regulatory approval to market tenapanor in their respective territories.

There can be no assurances that we will generate product revenue from sales of tenapanor, either on our own, or with a collaboration partner.

Our ability to generate future revenue from product sales or pursuant to milestone payments depends heavily on many factors, including but not limited to:

● obtaining regulatory approvals for tenapanor for the control of serum phosphorus in adult CKD patients on dialysis, either on our own or with one or more collaboration partners;

● our ability to successfully commercialize tenapanor, which has been approved by the FDA for the treatment of IBS-C in adults, and/or tenapanor for the control of serum phosphorus in adult CKD patients on dialysis, if approved, either on our own or with one or more collaboration partners;

● developing a sustainable and scalable manufacturing process for tenapanor and establishing and maintaining supply and manufacturing relationships with third parties that can provide an adequate (in amount and quality) supply of product to support the market demand for tenapanor for the treatment of IBS-C, and/or, if approved, tenapanor for the control of serum phosphorus in adult CKD patients on dialysis;

• obtaining regulatory approvals for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication, either on our own or with one or more collaboration partners;

• our ability to successfully commercialize tenapanor, which has been approved by the FDA for the treatment of IBS-C in adults, and/or tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication, if approved, either on our own or with one or more collaboration partners;

• establishing and maintaining supply and manufacturing relationships with third parties that can provide an adequate (in amount and quality) supply of product to support the market demand for tenapanor for the treatment of IBS-C, and/or, if approved, tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication;

• obtaining market acceptance of tenapanor as a viable treatment option for the indications for which it is approved and commercialized;

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• attracting, hiring, and retaining qualified personnel.

In cases where we are successful in obtaining regulatory approvals to market tenapanor for one or more indications, our revenue will be dependent, in part, upon the size of the markets in the territories for which regulatory approval is granted, the accepted price for the product, the ability to get reimbursement at any price and whether we are commercializing the product or the product is being commercialized by a collaboration partner, and in such case, whether we have royalty and/or co-promotion rights for that territory, and whether any royalty we have a right to receive from a collaboration partner is in excess of the royalty we owe AstraZeneca as a result of the termination of our License Agreement with AstraZeneca in 2015.

See NOTE 13, COLLABORATION AND LICENSING AGREEMENTS, in the notes to our financial statements, included in Part II, Item 8, of our most recent Annual Report on Form 10-K, for details on our obligations to AstraZeneca.

While there is significant uncertainty related to the insurance coverage and

reimbursement of newly approved products in general in the United States, there is additional uncertainty related to insurance coverage and reimbursement for drugs, like tenapanor, which, if approved, will be marketed for the control of serum phosphorus in CKD patients on dialysis.

If we are successful in obtaining regulatory approval to market tenapanor for the control of serum phosphorus in CKD patients on dialysis, our ability to generate and sustain future revenues from sales of tenapanor for such indication, may be dependent upon whether and when tenapanor, along with other oral end-stage renal disease (“ESRD”) related drugs without an injectable or intravenous equivalent, are bundled into the ESRD prospective payment system, and the manner in which such introduction into the ESRD prospective payment system may occur.

In cases where we are successful in obtaining regulatory approvals to market tenapanor for one or more indications, our revenue will be dependent, in part, upon the size of the markets in the territories for which regulatory approval is granted, the breadth of the indication and the label for which approval is granted, accepted price for the product, the ability to get reimbursement at any price and whether we are commercializing the product or the product is being commercialized by a collaboration partner, and in such case, whether we have royalty and/or co-promotion rights for that territory, and whether any royalty we have a right to receive from a collaboration partner is in excess of the royalty we owe AstraZeneca as a result of the termination of our License Agreement with AstraZeneca in 2015.

See Note 12, Collaboration and Licensing Agreements, in the notes to our financial statements, included in Part II, Item 8, for details on our obligations to AstraZeneca.

While there is significant uncertainty related to the insurance coverage and reimbursement of newly approved products in general in the United States, there is additional uncertainty related to insurance coverage and reimbursement for drugs, like tenapanor, which, if approved, will be marketed for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication.

If we are successful in obtaining regulatory approval to market tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication, our ability to generate and sustain future revenues from sales of tenapanor for such indication, may be dependent upon whether and when tenapanor, along with other oral end-stage renal disease (“ESRD”) related drugs without an injectable or intravenous equivalent, are bundled into the ESRD prospective payment system, and the manner in which such introduction into the ESRD prospective payment system may occur.

See “Third-party payor coverage and reimbursement status of newly-approved products is uncertain.

Failure to obtain or maintain adequate coverage and reimbursement for our products, if approved, could limit our ability to market those products and decrease our ability to generate revenue” below.

Additionally, if the number of patients suitable for tenapanor is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we expect, coverage and reimbursement for tenapanor are not available in the manner and to the extent which we expect, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from the sale of tenapanor, even if approved.

Additionally, if the number of patients for the approved indication suitable for tenapanor is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we expect, coverage and reimbursement for tenapanor are not available in the manner and to the extent which we expect, or the reasonably accepted population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from the sale of tenapanor, even if approved.

Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

Our failure to generate revenue from product sales would likely depress our market value and could impair our ability to raise capital, expand our business, discover or develop other product candidates or continue our operations.

Our failure to generate revenue from product sales would likely depress our market value and could impair our ability to raise capital, expand our business,

discover or develop other product candidates or continue our operations.

A decline in the value of our common stock could cause our stockholders to lose all or part of their investment.

We will require substantial additional financing to achieve our goals, and the inability to access this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our pre-commercialization efforts for tenapanor and our other product development and platform development activities.

We will require substantial additional financing to achieve our goals, and the inability to access this necessary capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our commercialization efforts for tenapanor for the control of serum phosphorus or for another other related indication, if approved, and our other product development and platform development activities.

Since our inception, most of our resources have been dedicated to our research and development activities, including developing our clinical product candidate tenapanor and developing our proprietary drug discovery and design platform.

We believe that we will continue to expend substantial resources for the foreseeable future, including, if approved, costs associated with the commercialization of tenapanor for the control of serum phosphorus in CKD patients on dialysis, research and development, conducting preclinical studies and clinical trials for our other programs, obtaining regulatory approvals, developing and maintaining scalable manufacturing processes for our product candidates and sales and marketing.

We believe that we will continue to expend substantial resources for the foreseeable future, including, if approved, costs associated with the commercialization of tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication, research and development, conducting preclinical studies and clinical trials for our other programs, including RDX013, obtaining regulatory approvals, scaling our manufacturing processes for our product candidates and sales and marketing.

Because the outcome of any clinical trial and/or regulatory approval process is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development, regulatory approval process and commercialization or co-promotion of any of our product candidates.

Our future funding requirements will depend on many factors, including, but not limited to:

● the FDA’s actions and decisions with respect to the NDA submitted to the FDA on June 30, 2020 to request marketing authorization for tenapanor for the control of serum phosphorus in adult CKD patients on dialysis;

● our ability to successfully commercialize tenapanor for the control of serum phosphorus in CKD patients on dialysis, if approved, either alone or with one or more collaboration partners;

• the FDA’s actions and decisions with respect to the NDA submitted to the FDA on June 30, 2020 to request marketing authorization for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis, including the FDA’s actions after the three-month extension of the PDUFA date to July 29, 2021;

• our ability to successfully commercialize tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis or for another other related indication, if approved, either alone or with one or more collaboration partners;

• the sales price and the availability of adequate third-party reimbursement for tenapanor, if approved;

• the manufacturing costs of our product candidates, and the availability of one or more suppliers for our product candidates at reasonable costs, both for clinical and commercial supply;

● the selling and marketing costs associated with tenapanor, including the cost and timing of building our sales and marketing capabilities;

• the selling and marketing costs associated with tenapanor, including the cost and timing of maintaining our sales and marketing capabilities;

• our ability to maintain our existing collaboration partnerships and to establish additional collaboration partnerships, in-license/out-license, joint ventures or other similar arrangements and the financial terms of such agreements;

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• the costs of filing, prosecuting, maintaining, defending and enforcing any patent claims and other intellectual property rights, including litigation costs and the outcome of such litigation, including costs of defending any claims of infringement brought by others in connection with the development, manufacture or commercialization of tenapanor or any of our product candidates;

● the payment of interest and principal related to our loan and security agreement entered into with Solar Capital and Western Alliance Bank in May 2018, as amended, on October 9, 2020 .

• the payment of interest and principal related to our loan and security agreement entered into with Solar Capital and Western Alliance Bank in May 2018, as amended in October 2020, March 2021 and May 2021.

Additional funds may not be available when we need them on terms that are acceptable to us, or at all.

If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate our research activities, preclinical and clinical trials for our product candidates and our establishment and maintenance of sales and marketing capabilities or other activities that may be necessary to commercialize tenapanor, either alone or with collaboration partners.

Additionally, our inability to access capital on a timely basis and on terms that are acceptable to us may force us to restructure certain aspects of our business or identify and complete one or more strategic collaborations or other transactions in order to fund the development or commercialization of tenapanor or certain of our product candidates through the use of alternative structures.

Additionally, our inability to access capital on a timely basis and on terms that are acceptable to us may force us to restructure

certain aspects of our business or identify and complete one or more strategic collaborations or other transactions in order to fund the development or commercialization of tenapanor or certain of our product candidates through the use of alternative structures.

Our operating activities may be restricted as a result of covenants related to the indebtedness under our loan and security agreement and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business.

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Our business may be adversely affected by these restrictions on our ability to operate our business.

We are permitted to make interest only payments on the loan facility through December 1, 2021, unless we have not received FDA approval for our NDA for tenapanor for the control of serum phosphorus in CKD patients on dialysis on or before May 31, 2020, or the FDA issues a complete response letter in connection with such NDA.

We are permitted to make interest only payments on the loan facility through December 1, 2021, unless we have not received FDA approval for our NDA for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis on or before July 31, 2021, or the FDA issues a complete response letter in connection with such NDA.

In either event, the period in which we are permitted to make interest only payments shall end on the earlier of June 1, 2021, or the first day of the month following the date that the FDA issues a CRL.

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We may not have enough available cash or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time any such event of default occurs.

In this case, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant to others’ rights

to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

In this case, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant to others’ rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

The Lenders could also exercise their rights as collateral agent to take possession of and to dispose of the collateral securing the term loans, which collateral includes substantially all of our property (excluding intellectual property, which is subject to a negative pledge).

Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.

Risks Related to Our Business

We are substantially dependent on the success of our lead product candidate, tenapanor, which may not receive regulatory approval for the control of serum phosphorus or be successfully commercialized for IBS-C or hyperphosphatemia.

To date, we have invested a significant amount of our efforts and financial resources in the research and development of tenapanor, which is currently our lead product candidate.

The commercial success of tenapanor will depend on a number of factors, including the following:

● whether tenapanor’s safety and efficacy profile is satisfactory to the FDA and foreign regulatory authorities to gain marketing approval for the control of serum phosphorus;

● the ability of the third-party manufacturers we contract with to successfully execute and scale up the manufacturing processes for tenapanor, which has not yet been fully demonstrated, and to manufacture supplies of tenapanor and to develop, validate and maintain commercially viable manufacturing processes that are compliant with cGMP requirements, particularly in light of the effects of the COVID-19 pandemic;

● whether or not the content of the label approved by the FDA or foreign regulatory authorities may materially and adversely impact our ability the ability of our collaboration partners to commercialize the product for the approved indication, or for any other indication;

● whether we will be required to conduct clinical trials in addition to those anticipated to obtain adequate commercial pricing;

● the prevalence and severity of adverse side effects of tenapanor;

● the timely receipt of necessary marketing approvals from the FDA and foreign regulatory authorities;

● our ability, either alone, or with a collaboration partner, to successfully commercialize tenapanor, if approved for marketing and sale by the FDA or foreign regulatory authorities, including educating physicians and patients about the benefits, administration and use of tenapanor;

● achieving and maintaining compliance with all regulatory requirements applicable to tenapanor;

● acceptance of tenapanor as safe, effective and well-tolerated by patients and the medical community;

● our ability, alone or with collaboration partners, to manage the complex pricing and reimbursement negotiations associated with marketing the same product at different doses for separate indications for tenapanor for the treatment of IBS-C, and, if approved, for the control of serum phosphorus in CKD patients on dialysis;

● the availability, perceived advantages, relative cost, relative safety and relative efficacy of tenapanor compared to alternative and competing treatments;

● obtaining and sustaining an adequate level of coverage and reimbursement for tenapanor by third-party payors;

● enforcing intellectual property rights in and to tenapanor;

● avoiding third-party interference, opposition, derivation or similar proceedings with respect to our patent rights, and avoiding other challenges to our patent rights and patent infringement claims;

● a continued acceptable safety and tolerability profile of tenapanor following approval.

As tenapanor is a first-in-class drug, there is a higher likelihood that approval may not be attained as compared to a class of drugs with approved products.

Although tenapanor met the primary endpoints in all of the three Phase 3 clinical trials evaluating tenapanor for the control of serum phosphorus in CKD patients on dialysis, there can be no assurances that we will receive regulatory approval to market tenapanor for the control of serum phosphorus in CKD patients on dialysis.

Further, it may not be possible or practicable to demonstrate, or if approved, to market tenapanor on the basis of certain of the benefits we believe tenapanor possesses.

If the number of patients in the market for tenapanor or the price that the market can bear is not as significant as we estimate, or if we are not able to secure adequate coverage and reimbursement for tenapanor, we may not generate sufficient revenue from sales of tenapanor for the control of serum phosphorus, if approved, or for IBS-C.

There can be no assurance that tenapanor will ever be successfully commercialized or that we will ever generate income from sales of tenapanor.

If we are not successful in obtaining approval for, tenapanor for the control of serum phosphorus, or we are not successful in commercializing tenapanor, or are significantly delayed in doing so, our business will be materially harmed.

Even if we are successful in obtaining regulatory approval for tenapanor for the control of serum phosphorus, and tenapanor is ultimately commercialized for any approved indications, tenapanor may never achieve market acceptance, sufficient third-party coverage or reimbursement, or commercial success, which will depend, in part, upon the degree of acceptance among physicians, patients, patient advocacy groups, health care payors and the medical community.

Market acceptance of tenapanor for IBS-C and, in the event that marketing approval is obtained, for the control of serum phosphorus, depends on a number of factors, including:

● the efficacy demonstrated in our clinical trials;

● with respect to tenapanor for the control of serum phosphorus, whether tenapanor, along with other oral only medications, are included in the bundled prospective payment system for the treatment of ESRD patients, and the time and manner in which such transition is achieved;

● the prevalence and severity of any side effects and overall safety and tolerability profile of the product;

● the clinical indications for which it is approved;

● advantages over new or traditional or existing therapies, including recently approved therapies or therapies that the physician community anticipate will be approved;

● acceptance by physicians, major operators of clinics and patients of tenapanor as a safe, effective and well-tolerated treatment;

● relative convenience and ease of administration of tenapanor;

● the potential and perceived advantages of tenapanor over current treatment options or alternative treatments, including future alternative treatments;

● the cost of treatment in relation to alternative treatments and the willingness to pay for tenapanor, if approved, on the part of physicians and patients;

● the availability of alternative products and their ability to meet market demand;

● the quality of our relationships with patient advocacy groups.

We currently have no sales organization.

If we are unable to establish sales capabilities on our own or through third parties, we may not be able to commercialize tenapanor or any of our other product candidates.

We currently plan to commercialize tenapanor for the control of serum phosphorus in CKD patients on dialysis, if approved, on our own.

In order to do so, we will need to establish an appropriate sales organization with technical expertise, as well as supporting distribution capabilities.

This will be expensive and time consuming.

As a company, we have no prior experience in the marketing, sale and distribution of pharmaceutical products and there are significant risks involved in building and managing a sales organization, including our ability to secure the capital necessary to fund such efforts on acceptable terms, hire, retain, and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel, comply with regulatory requirements applicable to the marketing and sale of drug products and effectively manage a geographically dispersed sales and marketing team.

If we fail or are delayed in the development of our internal sales, marketing and distribution capabilities, we may choose to delay the commercialization tenapanor for the control of serum phosphorus, if approved, or such commercialization could be adversely impacted.