What changed in this filing

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Item 1. Financial Statements

2021-08-13 compared with 2021-05-06 · 187 added, 110 removed, 349 unchanged (46% of the section changed)

7 unchanged sentences

Short-term investments 85,064 95,452

Accounts receivable 5,783 —

Prepaid expenses and other current assets 14,683 8,202

22 unchanged sentences

5,000,000 shares authorized;

no shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively.

no shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.

Common stock, $ 0.0001 par value;

300,000,000 shares authorized;

98,688,577 and 93,599,975 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively.

102,967,017 and 93,599,975 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.

Additional paid-in capital 750,664 680,872

Accumulated deficit ( 633,109 ) ( 554,765 )

Accumulated other comprehensive income ( 7 ) ( 4 )

Accumulated other comprehensive income (loss) 4 ( 4 )

Total stockholders’ equity 117,569 126,112

4 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended March 31,

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

2021 2020 2021 2020

Collaborative development revenue $ 1,310 $ 1,125 $ 2,764 $ 2,300

9 unchanged sentences

Interest expense ( 1,202 ) ( 1,226 ) ( 2,302 ) ( 2,583 )

Other income (expense), net ( 49 ) 753

Other income, net 847 477 798 1,230

Loss before provision for income taxes ( 45,187 ) ( 24,956 ) ( 78,341 ) ( 47,329 )

5 unchanged sentences

Net loss $ ( 45,189 ) $ ( 24,956 ) $ ( 78,344 ) $ ( 47,329 )

Unrealized (losses) gains on available-for-sale securities ( 3 ) ( 64 )

Unrealized gains on available-for-sale securities 11 361 8 297

Comprehensive loss $ ( 45,178 ) $ ( 24,595 ) $ ( 78,336 ) $ ( 47,032 )

2 unchanged sentences

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three Months ended March 31, 2021 and 2020

For the Three and Six Months ended June 30, 2021

(in thousands, except shares)

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Common Stock Additional

4 unchanged sentences

Shares Amount

Balance as of March 31, 2021 98,688,577 $ 10 $ 718,728 $ ( 587,920 ) $ ( 7 ) $ 130,811

Issuance of common stock under employee stock purchase plan — — — — — —

Issuance of common stock upon exercise of options 194,799 — 543 — — 543

Issuance of common stock upon vesting of restricted stock units 44,684 — — — — —

Issuance of common stock in at-the-market offering 4,038,957 — 28,174 28,174

Stock-based compensation — — 3,219 — — 3,219

Unrealized gains on available-for-sale securities — — — — 11 11

Net loss — — — ( 45,189 ) — ( 45,189 )

Balance as of June 30, 2021 102,967,017 $ 10 $ 750,664 $ ( 633,109 ) $ 4 $ 117,569

Six Months Ended June 30, 2021

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders'

Shares Amount

Balance as of December 31, 2020 93,599,975 $ 9 $ 680,872 $ ( 554,765 ) $ ( 4 ) $ 126,112

4 unchanged sentences

Stock-based compensation — — 6,306 — — 6,306

Unrealized losses on available-for-sale securities — — — — ( 3 ) ( 3 )

Unrealized gains on available-for-sale securities — — — — 8 8

Net loss — — — ( 78,344 ) — ( 78,344 )

Balance as of June 30, 2021 102,967,017 $ 10 $ 750,664 $ ( 633,109 ) $ 4 $ 117,569

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

ARDELYX, INC.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three and Six Months ended June 30, 2020

(in thousands, except shares)

Three Months Ended June 30, 2020

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders'

Shares Amount

Balance as of March 30, 2020 89,035,096 $ 9 $ 650,617 $ ( 482,825 ) $ ( 44 ) $ 167,757

Three Months Ended March 31, 2020

Issuance of common stock for services 42,403 — 310 — — 310

Issuance of common stock upon exercise of options 63,064 — 204 — — 204

Stock-based compensation — — 2,674 — — 2,674

Unrealized gains on available-for-sale securities — — — — 361 361

Net loss — — — ( 24,956 ) — ( 24,956 )

Balance as of June 30, 2020 89,140,563 $ 9 $ 653,805 $ ( 507,781 ) $ 317 $ 146,350

Six Months Ended June 30, 2020

Common Stock Additional

6 unchanged sentences

Issuance of common stock under employee stock purchase plan 75,804 — 375 — — 375

Issuance of common stock for services 42,403 — 310 — — 310

Issuance of common stock upon exercise of options 204,615 — 420 — — 420

2 unchanged sentences

Net loss — — — ( 47,329 ) — ( 47,329 )

Balance as of March 31, 2020 89,035,096 $ 9 $ 650,617 $ ( 482,825 ) $ ( 44 ) $ 167,757

Balance as of June 30, 2020 89,140,563 $ 9 $ 653,805 $ ( 507,781 ) $ 317 $ 146,350

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

10 unchanged sentences

Changes in operating assets and liabilities:

Accounts receivable ( 5,783 ) —

Prepaid expenses and other assets ( 7,379 ) ( 2,144 )

22 unchanged sentences

Right-of-use assets obtained in exchange for lease obligations $ 14,379 $ —

Issuance of common stock for services $ — $ 311

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

4 unchanged sentences

Ardelyx, Inc.

(the “Company,” “we,” “us” or “our”) is a specialized biopharmaceutical company focused on discovering, developing and commercializing innovative first-in-class medicines to enhance the lives of patients with kidney and cardiorenal diseases.

(the “Company,” “we,” “us” or “our”) is a biopharmaceutical company focused on the discovery, development, and commercialization of innovative first-in-class medicines to improve treatment for people with kidney and cardiorenal diseases.

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

4 unchanged sentences

GAAP have been condensed or omitted.

These condensed financial statements have been prepared on the same basis as our most recent annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to present fairly our financial position at March 31, 2021 and results of operations, changes in stockholders’ equity, and cash flows for the interim periods ended March 31, 2021 and 2020.

These condensed financial statements have been prepared on the same basis as our most recent annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary to present fairly our financial position at June 30, 2021 and results of operations, changes in stockholders’ equity, and cash flows for the interim periods ended June 30, 2021 and 2020.

The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

The results for the three months ended March 31, 2021 are not necessarily indicative of results to be expected for the entire year ending December 31, 2021, or for any other interim period or future year.

The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the entire year ending December 31, 2021, or for any other interim period or future year.

Use of Estimates

4 unchanged sentences

Actual results could materially differ from those estimates.

As of March 31, 2021, we had cash, cash equivalents and marketable securities of approximately $ 178.2 million.

As of June 30, 2021, we had cash, cash equivalents and marketable securities of approximately $ 171.8 million.

We believe our current available cash, cash equivalents marketable securities will be sufficient to fund our planned expenditures and meet our obligations for at least 12 months following the filing of this Report on Form 10-Q.

Failure to generate product revenue in a timely manner, or raise sufficient capital when needed, could have a negative impact on our financial condition and our ability to pursue our business strategies and could require us to significantly delay, scale back or discontinue one or more of our product development programs, commercialization efforts, or other aspects of our business plans, and our operating results and financial condition would be adversely affected.

On July 28, 2021, we received a Complete Response Letter ("CRL") from the U.S.

Food and Drug Administration ("FDA") regarding our New Drug Application ("NDA") for the control of serum phosphorus in adult patients with chronic kidney disease ("CKD") on dialysis in which the FDA noted additional requirements would need to be met in order to obtain approval for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis.

On July 29, 2021 we entered into a Fourth Amendment to our Term Loan Agreement which extended the period of time that we are permitted to make interest-only payments on the Term Loan to December 1, 2021, provided, however, if the FDA does not approve our NDA for tenapanor for the control of serum phosphorus in adult patients with CKD on or before October 25, 2021, then the interest-only period will expire and principal repayments will be required to begin on November 1, 2021.

Further, on July 29, 2021, our Board of Directors approved, and on August 2, 2021 we began implementing, a restructuring plan to better align our workforce and anticipated commercial and development spend with our capital resources and the needs of our business following the receipt of the CRL.

For additional information see Note 12, Subsequent Events.

Failure to raise sufficient capital when needed or generate product revenue will further impact our ability to pursue our business strategies and could require us to further delay, scale back or discontinue one or more of our product development programs, commercialization efforts, or other aspects of our business plans.

Summary of Significant Accounting Policies

11 unchanged sentences

For smaller reporting companies the guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted.

Management is currently assessing the impact of this standard on our financial statements.

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

Securities classified as cash, cash equivalents and short-term investments as of March 31, 2021 and December 31, 2020 are summarized below (in thousands):

March 31, 2021

On June 30, 2021, our public float exceeded $700 million and therefore, on December 31, 2021, we will no longer qualify as a “smaller reporting company” and will instead be considered a large accelerated filer.

We expect to adopt Topic 326 in the fourth quarter of 2021.

We do not expect the adoption of ASU 2016-13 to have a material impact on our financial statements and related disclosures.

CASH, CASH EQUIVALENTS AND INVESTMENTS

Securities classified as cash, cash equivalents and investments as of June 30, 2021 and December 31, 2020 are summarized below (in thousands):

June 30, 2021

Gross Unrealized

4 unchanged sentences

Commercial paper 1,250 — — 1,250

Corporate bonds 1,143 — — 1,143

Total cash and cash equivalents 86,745 — — 86,745

2 unchanged sentences

Corporate bonds 16,964 1 ( 1 ) 16,964

government-sponsored agency bonds 3,264 — — 3,264

Asset-backed securities 5,376 — ( 1 ) 5,375

Total short-term investments 85,059 7 ( 2 ) 85,064

Total cash equivalents and short-term investments $ 178,219 $ 3 $ ( 10 ) $ 178,212

Total cash equivalents and investments $ 171,804 $ 7 $ ( 2 ) $ 171,809

December 31, 2020

14 unchanged sentences

Corporate bonds $ 2,115 $ ( 1 ) 2,114

Total cash equivalents and short-term investments $ 188,602 $ 7 $ ( 11 ) $ 188,598

Total cash equivalents and investments $ 188,602 $ 7 $ ( 11 ) $ 188,598

We invest excess cash in marketable securities with high credit ratings.

1 unchanged sentence

treasury and agency securities and are classified as “available-for-sale.”

All available-for-sale securities held as of March 31, 2021 had contractual maturities of less than one year.

All available-for-sale securities held as of June 30, 2021 had contractual maturities of less than one year.

Our available-for-sale securities are subject to a periodic impairment review.

2 unchanged sentences

If an investment is other-than-temporarily impaired, we write the investment down through the statement of operations to its fair value and establishes that value as the new cost basis for the investment.

Management has determined that none of our available-for-sale securities were other-than-temporarily impaired in any of the periods presented, and as of March 31, 2021, no investment was in a continuous unrealized loss position for more than one year.

As such, we believe that it is more likely than not that the investments will be held until maturity or a forecasted recovery of fair value.

Management has determined that none of our available-for-sale securities were other-than-temporarily impaired in any of the periods presented, and as of June 30, 2021, no investment was in a continuous unrealized loss position for more than one year.

As such, we believe that it is more likely than not that investments in a loss position will be held until maturity or a forecasted recovery of fair value.

FAIR VALUE MEASUREMENTS

12 unchanged sentences

The following table sets forth the fair value of our financial assets and liabilities that are measured or disclosed on a recurring basis by level within the fair value hierarchy (in thousands):

March 31, 2021

June 30, 2021

Fair Value Level 1 Level 2 Level 3

2 unchanged sentences

Corporate bonds 16,964 — 16,964 —

government-sponsored agency bonds 3,264 — 3,264 —

Asset-backed securities 5,375 — 5,375 —

19 unchanged sentences

In certain cases, where there is limited activity or less transparency around inputs to valuation, securities or derivative liabilities such as the Exit Fee, as defined and discussed in Note 6, are classified as Level 3.

The carrying amounts reflected in the balance sheets for cash equivalents, short-term investments, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values at both March 31, 2021 and December 31, 2020, due to their short-term nature.

The carrying amounts reflected in the balance sheets for cash equivalents, short-term investments, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values at both June 30, 2021 and December 31, 2020, due to their short-term nature.

Fair Value of Debt

The interest rate of our term loan facility approximates the rate at which we could obtain alternative financing.

Therefore, the carrying amount of the term loan facility approximated its fair value at March 31, 2021 and December 31, 2020.

Therefore, the carrying amount of the term loan facility approximated its fair value at June 30, 2021 and December 31, 2020.

COLLABORATION AND LICENSING AGREEMENTS

3 unchanged sentences

Pursuant to the 2019 KKC Agreement, upon completion of the research and designation by the research steering committee of one or more DCs, KKC has the right to execute one or more separate collaborative agreements relating to the development and commercialization of one or both DCs in certain specified territories.

Under the terms of the 2019 KKC Agreement, KKC agreed to pay us a non-refundable, non-creditable upfront fee of $ 10.0 million, payable as follows:

the first installment of $ 5.0 million within 30 days of November 11, 2019 (the “Effective Date”), and the second installment of $ 5.0 million on the first anniversary of the Effective Date, unless the 2019 KKC Agreement is earlier terminated by KKC due to material breach by us.

Under the terms of the 2019 KKC Agreement, KKC paid us a non-refundable, non-creditable upfront fee of $ 10.0 million in two installments as follows:

the first installment of $ 5.0 million within 30 days of November 11, 2019 (the “Effective Date”), and the second installment of $ 5.0 million on the first anniversary of the Effective Date.

The term of the 2019 KKC Agreement commenced on the Effective Date and ends on the earliest of:

(i) 2 years following the Effective Date, (ii) the nomination of a program DC for both programs, (iii) the nomination of one program DC and the decision by the parties to cease research for the other program, or (iv) the decision by the parties to cease research for both programs.

During the three months ended March 31, 2021, we recognized $ 1.5 million as revenue under the 2019 KKC Agreement in the accompanying condensed statement of operations and comprehensive loss.

The aggregate amount of the transaction price allocated to our partially unsatisfied performance obligations as of March 31, 2021 was $ 2.7 million which is presented in the accompanying condensed balance sheet as deferred revenue.

As of March 31, 2021, we expect to recognize the remaining transaction price allocated to our partially unsatisfied performance obligations over the remaining research terms, which is currently expected to extend through the end of 2021.

There were no significant changes in estimates associated with the 2019 KKC Agreement during the three months ended March 31, 2021.

During the three and six months ended June 30, 2021, we recognized $ 1.3 million and $ 2.8 million, respectively, as collaborative development revenue under the 2019 KKC Agreement in the accompanying condensed statement of operations and comprehensive loss.

During the three and six months ended June 30, 2020, we recognized $ 1.1 million and $ 2.3 million, respectively, as collaborative development revenue under the 2019 KKC Agreement in the accompanying condensed statement of operations and comprehensive loss.

The aggregate amount of the transaction price allocated to our partially unsatisfied performance obligations as of June 30, 2021 and December 31, 2020 was $ 1.4 million and $ 4.2 million, respectively, which is presented in the accompanying condensed balance sheet as deferred revenue.

As of June 30, 2021, we expect to recognize the remaining transaction price allocated to our partially unsatisfied performance obligations over the remaining research terms, which is currently expected to extend through the end of 2021.

There were no significant changes in estimates associated with the 2019 KKC Agreement during the six months ended June 30, 2021.

2017 KKC Agreement

8 unchanged sentences

Based on our assessment, management determined that the license and the manufacturing supply services were its material performance obligations at the inception of the 2017 KKC Agreement, and as such, each of the performance obligations is distinct.

In addition to the up-front license fee received of $ 30.0 million, we may be entitled to receive up to $ 55.0 million in total development milestones, of which $ 10.0 million has been recognized as revenue and $ 5.0 million has been received as of March 31, 2021, and approximately ¥ 8.5 billion for commercialization milestones, or approximately $ 76.5 million at the currency exchange rate on March 31, 2021, as well as reimbursement of costs plus a reasonable overhead for the supply of product and high-teen royalties on net sales throughout the term of the agreement.

The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at March 31, 2021.

During the three months ended March 31, 2021 and 2020, we recognized $ 5.0 million and zero , respectively, as licensing revenue upon the achievement of development milestones.

The $ 5.0 million development milestone recognized during the three months ended March 31, 2021 related to the initiation by KKC of phase 3 clinical studies in Japan to evaluate tenapanor for

hyperphosphatemia.

During the three months ended March 31, 2021, we recognized $ 0.1 million as product supply revenue related to the manufacturing supply of tenapanor and other materials to KKC pursuant to the 2017 KKC Agreement.

Similarly, for the three months ended March 31, 2020, $ 13.0 thousand was recognized as product supply revenue.

During the three months ended March 31, 2021 we recorded a $ 2.9 million prepayment that is due to us from KKC for the manufacturing of tenapanor drug substance.

The prepayment is reflected within prepaid and other current assets and deferred revenue, non-current on our condensed balance sheet as of March 31, 2021.

In addition to the up-front license fee received of $ 30.0 million, we may be entitled to receive up to $ 55.0 million in total development milestones, of which $ 10.0 million has been received and recognized as revenue as of June 30, 2021, and approximately ¥ 8.5 billion for commercialization milestones, or approximately $ 76.5 million at the currency exchange rate on June 30, 2021, as well as reimbursement of costs plus a reasonable overhead for the supply of product and high-teen royalties on net sales throughout the term of the agreement.

The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at June 30, 2021.

During the three and six months ended June 30, 2021 we recognized zero and $ 5.0 million, respectively, as licensing revenue upon the achievement of development milestones.

During the three and six months ended June 30, 2020, we

recognized no licensing revenue upon the achievement of development milestones.

The $ 5.0 million development milestone recognized during the three months ended March 31, 2021 related to the initiation by KKC of phase 3 clinical studies in Japan to evaluate tenapanor for hyperphosphatemia.

During the three and six months ended June 30, 2021, we recognized zero and $ 0.1 million as product supply revenue related to the manufacturing supply of tenapanor and other materials to KKC pursuant to the 2017 KKC Agreement.

During the three and six months ended June 30, 2020, we recognized $ 5.0 thousand and $ 43.0 thousand as product supply revenue.

During the three and six months ended June 30, 2021 we received a $ 2.9 million prepayment from KKC for the manufacturing of tenapanor drug substance.

The prepayment is reflected within prepaid and other current assets and deferred revenue, non-current on our condensed balance sheet as of June 30, 2021.

Shanghai Fosun Pharmaceutical Industrial Development Co.

5 unchanged sentences

We may be entitled to additional development and commercialization milestones of up to $ 110.0 million, as well as reimbursement of cost plus a reasonable overhead for the supply of product and tiered royalties on net sales ranging from the mid-teens to 20 %.

The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at March 31, 2021.

We have recorded no revenue during the three months ended March 31, 2021 related to the Fosun Agreement.

The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at June 30, 2021.

We have recorded no revenue during the three and six months ended June 30, 2021 related to the Fosun Agreement.

Knight Therapeutics, Inc.

4 unchanged sentences

We are also eligible to receive royalties throughout the term of the agreement, and a transfer price for manufacturing services.

The variable consideration related to the remaining development milestone payments has not been included in the transaction price as they were fully constrained at March 31, 2021.

The variable consideration related to the remaining development milestone payments has not been included in the transaction price as they were fully constrained at June 30, 2021.

AstraZeneca AB (“AstraZeneca”)

In June 2015, we entered into a termination agreement with AstraZeneca (the “AstraZeneca Termination Agreement”) pursuant to which we have agreed to pay AstraZeneca (i) future royalties at a royalty rate of 10 % of net sales of tenapanor or other NHE3 products by us or our licensees, and (ii) 20 % of non-royalty revenue received from a new collaboration partner should we elect to license, or otherwise provide rights to develop and commercialize tenapanor or another NHE3 inhibitor, up to a maximum of $ 75.0 million in aggregate for (i) and (ii).

As of March 31, 2021, to date in aggregate, we have recognized $ 11.6 million of the $ 75.0 million, which has been recorded as cost of revenue, and have paid AstraZeneca $ 10.6 million.

For the three months ended March 31, 2021 we recognized and recorded as cost of revenue $ 1.0 million related to the AstraZeneca Termination Agreement.

For the three months ended March 31, 2020 we recognized no cost of revenue related to the AstraZeneca Termination Agreement.

As of June 30, 2021, to date in aggregate, we have recognized $ 11.6 million of the $ 75.0 million, which has been recorded as cost of revenue, and have paid AstraZeneca $ 10.6 million.

For the three and six months ended June 30, 2021 we recognized and recorded as cost of revenue zero and $ 1.0 million related to the AstraZeneca Termination Agreement.

For the three and six months ended June 30, 2020 we recognized $ 0.1 million cost of revenue related to the AstraZeneca Termination Agreement.

Deferred Revenue

The following tables present changes in our current and non-current deferred revenue balances during the reporting period.

The current deferred revenue balance is attributable entirely to the 2019 KKC Agreement and the non-current deferred revenue balance is attributable entirely to the 2017 KKC Agreement.

The current deferred revenue balance is attributable entirely to the 2019 KKC Agreement and the non-current deferred revenue balance is attributable entirely to the 2017 KKC Agreement (in thousands):

Deferred revenue - current

1 unchanged sentence

Decreases due to revenue recognized in the period for which cash has been received ( 2,765 )

Balance at March 31, 2021 $ 2,723

Balance at June 30, 2021 $ 1,412

Deferred revenue - non-current

Balance at December 31, 2020 $ —

Increases to amounts invoiced, for which cash has not yet been received 2,947

Balance at March 31, 2021 $ 2,947

Increases to amounts invoiced for which cash has been received 2,947

Balance at June 30, 2021 $ 2,947

Solar Capital and Western Alliance Bank Loan Agreement

3 unchanged sentences

On October 9, 2020, we and the Lenders entered into an amendment to the Loan Agreement (“the 2020 Amendment”) to extend the date through which we are permitted to make interest-only payments on the Term Loan by twelve months to December 1, 2021.

The 2020 amendment also requires that if either the FDA does not approve our New Drug Application ("NDA") for tenapanor for the control of serum phosphorus in adult patients with chronic kidney disease ("CKD") on dialysis on or before May 31, 2021 or the U.S.

Food and Drug Administration ("FDA") issues a CRL with respect to our NDA Number 213931, then we are to begin principal payments on the earlier of June 1, 2021 or the first day of the month immediately following the date that the FDA issues us a CRL.

The 2020 amendment also required that if either the FDA does not approve our NDA for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis on or before May 31, 2021 or the FDA issues a CRL with respect to our NDA Number 213931, then we are to begin principal payments on the earlier of June 1, 2021 or the first day of the month immediately following the date that the FDA issues us a CRL.

On April 29, 2021, the FDA extended the Prescription Drug User Fee Act ("PDUFA") date for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis by three months to July 29, 2021, making it unlikely that the FDA would approve our NDA for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis on or before May 31, 2021.

In May 2021, we and the Lenders entered into an additional amendment to the Loan Agreement (“the 2021 Amendment”) to extend the date by which FDA approval is required in order to continue interest-only payments through December 1, 2021.

The 2021 Amendment requires that if either the FDA does not approve our NDA Number 213931 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 (“CRL”) for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis, then we are to begin principal payments on the earlier of August 1, 2021 or the first day of the month immediately following the date that the FDA issues us a CRL.

If principal repayments are required to begin prior to December 1, 2021 under the 2021 Amendment then the first principal repayment would include all payments that would have been due if principal repayment had begun on June 1, 2021.

We paid a closing fee of 1 % of the Term Loan, or $ 0.5 million, upon the closing of the Term Loan, and $ 0.1 million upon closing of the 2020 Amendment.

In May and July 2021, we and the Lenders entered into additional amendments to the Loan Agreement (“the 2021 Amendments”) which together extended the period of time that we are permitted to make interest-only payments on the Term Loan to December 1, 2021;

provided that if we have not received FDA approval for our NDA for tenapanor for the control of serum phosphorus in adult patients with CDK on dialysis on or before October 25, 2021, the interest-only period will expire and principal repayments shall be required to begin on November 1, 2021.

If principal repayments are required to begin prior to December 1, 2021 under the 2021 Amendments, then the first such repayment shall include all payments that would have been due if monthly principal repayment had begun on June 1, 2021.

As of June 30, 2021, we have classified our loan payable, current to include all principal payments that would have been due beginning on June 1, 2021.

We paid a closing fee of 1 % of the Term Loan, or $ 0.5 million, upon the closing of the Term Loan, $ 0.1 million upon closing of the 2020 Amendment and $ 0.1 million upon closing of the 2021 Amendments.

Under the Term Loan, we are also obligated to pay a final fee equal to 4.95 % of the Term Loan upon the earliest to occur of the maturity date, the acceleration of the Term Loan, the prepayment or repayment of the Term Loan or the termination of the Loan Agreement.

2 unchanged sentences

Additionally, in connection with the Term Loan, we entered into the Exit Fee Agreement, as discussed in Note 6.

The Loan Agreement also contains customary events of default that entitle the Lender to cause us indebtedness under the Loan Agreement to become immediately due and payable, and to exercise remedies against us and the collateral securing the Term Loan, including our cash.

Upon the occurrence and for the duration of an event of default, an additional default interest

rate equal to 4 % per annum will apply to all amounts owed under the Loan Agreement.

As of March 31, 2021, to our knowledge, there were no facts or circumstances in existence that would give rise to an event of default.

As of March 31, 2021, our future payment obligations related to the Term Loan, excluding interest payments and the Exit Fee, are as follows (in thousands):

Term Loan, including our cash.

Upon the occurrence and for the duration of an event of default, an additional default interest rate equal to 4 % per annum will apply to all amounts owed under the Loan Agreement.

As of June 30, 2021, to our knowledge, there were no facts or circumstances in existence that would give rise to an event of default.

As of June 30, 2021, our future payment obligations related to the Term Loan, excluding interest payments and the Exit Fee, are as follows (in thousands):

Total repayment obligations $ 52,475

14 unchanged sentences

Generally, increases or decreases in the probability of occurrence would result in a directionally similar impact in the fair value measurement of the derivative liability and it is estimated that a 10 % increase (decrease), not to exceed 100%, in the probability of occurrence would result in a fair value fluctuation of no more than $ 0.1 million.

Changes in the fair value of recurring measurements included in Level 3 of the fair value hierarchy are presented as other income (expense), net in our statements of operations and were as follows for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended March 31,

Changes in the fair value of recurring measurements included in Level 3 of the fair value hierarchy are presented as other income, net in our statements of operations and were as follows for the six months ended June 30, 2021 and 2020 (in thousands):

Six Months Ended June 30,

Fair value of Exit Fee derivative liability at January 1 $ 1,376 $ 969

Change in estimated fair value of derivative liability ( 713 ) 152

Fair value of Exit Fee derivative liability at March 31 $ 1,412 $ 1,051

Fair value of Exit Fee derivative liability at June 30 $ 663 $ 1,121

During the three months ended June 30, 2021 we reduced the value of the derivative liability due the receipt of the CRL from the FDA regarding our NDA for the control of serum phosphorus in adult patients with CKD on dialysis.

All of our leases are operating leases and each contain customary rent escalation clauses.

1 unchanged sentence

We have elected to account for each separate lease component and the non-lease components associated with that lease component as a single lease component for all classes of underlying assets.

The following table provides additional details of our facility leases presented in the condensed balance sheet as of March 31, 2021 (dollars in thousands):

During the six months ended June 30, 2021, we entered into an amendment to the lease for our Fremont, California facility that extended the term of the lease to March 2025.

The office space consists of 72,500 square feet with the lease terminating in September 2025.

We increased the right-of-use asset and lease liability by $ 11.9 million for the Fremont lease upon commencement of the amendment.

During the six months ended June 30, 2021, we recorded a right-of-use operating lease asset for a new facility in Waltham, Massachusetts under a lease agreement entered into during December 2020 with lease commencement dates during April and May 2021.

The office space consists of 12,864 square feet with the lease terminating in June 2026.

We have an option to extend the lease term for one additional five year period.

This option to extend the lease term has not been included in the calculation since currently the exercise of the option is uncertain and therefore deemed not probable.

We recorded a $ 1.6 million right-of-use asset and lease liability for the Waltham lease upon commencement of the lease.

The following table provides additional details of our facility leases presented in the condensed balance sheet as of June 30, 2021 (dollars in thousands):

Right-of-use assets $ 14,519

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Lease costs, which are included in operating expenses in our statements of operations, were as follows (in thousands):

Three Months Ended March 31,

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

2021 2020 2021 2020

Operating lease expense $ 837 $ 648 $ 1,510 $ 1,296

Cash paid for operating leases $ 766 $ 761 $ 1,554 $ 1,521

The following table summarizes our undiscounted cash payment obligations for our operating lease liabilities as of March 31, 2021:

The following table summarizes our undiscounted cash payment obligations for our operating lease liabilities as of June 30, 2021 (in thousands):

Remainder of 2021 $ 1,978

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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 us of up to a maximum aggregate offering price of $ 250.0 million of our 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 us 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 a sales agreement with Jefferies LLC, deemed to be “at the market offerings.” During the three months ended March 31, 2021, we sold 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 under the Open Market Sales Agreement.

In aggregate during the life of the Open Market Sales Agreement, and as of March 31, 2021, we have sold 8.2 million shares of our common stock for 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.

and (ii) a prospectus supplement for the offering, issuance and sale by us 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 a sales agreement with Jefferies LLC, deemed to be “at the market offerings.” During the six months ended June 30, 2021 we sold 9.0 million shares of our common stock for aggregate gross proceeds of $ 63.8 million at a weighted average price of $ 7.10 per share under the Open Market Sales Agreement.

We sold 8.2 million shares of our common stock between the dates of November 13, 2020 through February 19, 2021 and 4.0 million shares between the dates of May 11, 2021 through June 18, 2021 for a cumulative total of 12.2 million shares and gross proceeds of $ 85.4 million at a weighted average sales price of approximately $ 6.98 per share during the life of the Open Market Sales Agreement.

Pursuant to the Open Market Sales Agreement, Jefferies, as our 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.

EQUITY INCENTIVE PLANS

Stock Option Plan

During the three months ended March 31, 2021, options were granted to employees and members of the board of directors to purchase 2.8 million shares of our common stock.

The weighted-average grant-date estimated fair value of options granted during the three months ended March 31, 2021 was $ 6.51 .

During the three months ended March 31, 2021, options were exercised to purchase 10.5 thousand shares of our common stock, resulting in net proceeds of approximately $ 0.5 million.

During the three months ended March 31, 2020, options were exercised to purchase 0.1 million shares of or common stock, resulting in net proceeds of approximately $ 0.6 million.

Restricted Stock Units

During the three months ended March 31, 2021, we granted 0.9 million restricted stock units (“RSUs”) to our employees that will vest upon employees’ continued service relationship with us.

During the three months ended March 31, 2020, we granted 0.9 million restricted stock units to our employees.

During both the three months ended March 31, 2021 and March 31, 2020, we granted no performance-based restricted stock units ("PRSUs") to our employees.

Employee Stock Purchase Plan

In February 2021, we sold 0.2 million shares of our common stock under our employee stock purchase program (the "ESPP").

The shares were purchased by employees at a purchase price of $ 5.84 per share resulting in proceeds to us of approximately $ 1.4 million.

Issuance of Common Stock for Services

Under Our Amended and Restated Non-Employee Director Compensation Program, members of our board of directors may elect to receive shares of our stock in lieu of their cash fees.

For the three months ended March 31, 2021 and 2020, we issued no shares of our common stock to members of the board of directors in accordance with the program.

Stock-Based Compensation

Stock-based compensation expense recognized for stock options, RSUs, PRSUs and the ESPP are recorded as operating expenses in our condensed statements of operations and comprehensive loss, as follows:

Three Months Ended March 31,

Stock-based compensation expense recognized for stock options, restricted stock units ("RSUs"), performance-based restricted stock units ("PRSUs") and our employee stock purchase program (the "ESPP") are recorded as operating expenses in our condensed statements of operations and comprehensive loss, as follows (in thousands):

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

2021 2020 2021 2020

Research and development $ 1,087 $ 1,144 $ 2,179 $ 2,202

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Total $ 3,219 $ 2,674 $ 6,306 $ 5,622

As of March 31, 2021, our total unrecognized stock-based compensation expense, net of estimated forfeitures, and average remaining vesting period, included the following:

As of June 30, 2021, our total unrecognized stock-based compensation expense, net of estimated forfeitures, and average remaining vesting period, included the following (dollars in thousands):

Unrecognized Compensation

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ESPP $ 151 0.2

Stock Options

A summary of our stock option activity and related information for the six months ended June 30, 2021 is as follows (in thousands, except dollar amounts):

Number of Shares Weighted Average Exercise Price

Outstanding balance at December 31, 2020 9,790 $ 6.76

Granted 3,328 $ 6.62

Exercised ( 205 ) $ 2.75

Forfeited ( 401 ) $ 7.56

Outstanding balance at June 30, 2021 12,511 $ 6.76

Exercisable at June 30, 2021 6,043 $ 7.38

Restricted Stock Units

A summary of our RSUs activity and related information for the six months ended June 30, 2021 is as follows (in thousands, except dollar amounts):

Number of RSUs Weighted Average Value at Grant

Outstanding balance at December 31, 2020 159 $ 5.64

Granted 1,088 $ 6.62

Vested ( 80 ) $ 6.43

Forfeited ( 32 ) $ 6.10

Unvested at June 30, 2021 1,135 $ 6.52

We issued no PRSUs during the six months ended June 30, 2021 and we have no PRSUs outstanding as of June 30, 2021.

Employee Stock Purchase Plan

In February 2021, we sold approximately 0.2 million shares of our common stock under the ESPP.

The shares were purchased by employees at a purchase price of $ 5.84 per share resulting in proceeds to us of approximately $ 1.4 million.

Issuance of Common Stock for Services

Under Our Amended and Restated Non-Employee Director Compensation Program, members of our board of directors may elect to receive shares of our stock in lieu of their cash fees.

During the six months ended June 30, 2021, we issued no shares of our common stock to members of the board of directors in accordance with the program.

NET LOSS PER SHARE

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Diluted net loss per common share is computed giving effect to all potential dilutive common shares, including common stock issuable upon exercise of stock options, and unvested restricted common stock and stock units.

As we had net losses for the

three months ended March 31, 2021 and 2020, all potential common shares were determined to be anti-dilutive.

The following table sets forth the computation of net loss per common share:

Three Months Ended March 31,

As we had net losses for the three and six months ended June 30, 2021 and 2020, all potential common shares were determined to be anti-dilutive.

The following table sets forth the computation of net loss per common share (in thousands, except per share amounts):

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

2021 2020 2021 2020

Net loss $ ( 45,189 ) $ ( 24,956 ) $ ( 78,344 ) $ ( 47,329 )

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Net loss per share - basic and diluted $ ( 0.45 ) $ ( 0.28 ) $ ( 0.79 ) $ ( 0.53 )

For the three months ended March 31, 2021, the total number of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because the effect would have been antidilutive was 13.0 million.

For the three months ended March 31, 2020, the total number of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because the effect would have been antidilutive was 11.9 million.

For the three and six months ended June 30, 2021, the total number of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because the effect would have been antidilutive was 13.8 million and 13.4 million, respectively.

For the three and six months ended June 30, 2020, the total number of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because the effect would have been antidilutive was 11.5 million and 11.7 million, respectively.

CONTINGENCIES

From time to time we may be involved in claims arising in connection with our business.

Based on information currently available, management believes that the amount, or range, of reasonably possible losses in connection with any pending actions against us would not be material to our financial condition or cash flows, and no contingent liabilities were accrued as of March 31, 2021 or 2020.

SUBSEQUENT EVENTS

On April 29, 2021, the FDA extended the PDUFA date for our NDA for tenapanor for control of serum phosphorus in adult patients with CKD on dialysis by three months to July 29, 2021.

In May 2021, we entered into an amendment to our loan and security agreement (the “Loan Agreement”), with Solar Capital Ltd.

and Western Alliance Bank (collectively the “Lenders”) to extend the date by which FDA approval is required in order to continue interest-only payments through December 1, 2021.

Please see Note 5.

Borrowing for additional information.

On July 28, 2021, we received a CRL from the FDA regarding our NDA for the control of serum phosphorus in adult patients with CKD on dialysis.

According to the CRL, while the FDA agrees “that the submitted data provide substantial evidence that tenapanor is effective in reducing serum phosphorus in CKD patients on dialysis,” the FDA characterizes the magnitude of the treatment effect as “small and of unclear clinical significance.” Additionally, the FDA noted that for the application to be approved, we will need “to conduct an additional adequate and well-controlled trial demonstrating a clinically relevant treatment effect on serum phosphorus or an effect on the clinical outcome thought to be caused by hyperphosphatemia in CKD patients on dialysis.” There were no safety, clinical pharmacology/biopharmaceutics, chemistry, manufacturing, and controls or non-clinical issues identified in the CRL.

We intend to request a Type A meeting as soon as possible to discuss the CRL and determine potential paths forward for the approval of tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis.

On July 29, 2021, we entered into a Fourth Amendment to the Loan Agreement (the “Amendment”) which extended the period of time that we are permitted to make interest-only payments on the Term Loan to December 1, 2021;

On July 29, 2021, our Board of Directors approved, and on August 2, 2021 we began implementing, a restructuring plan to better align our workforce and anticipated commercial and development spend with our capital resources and the needs of our business following the receipt of the CRL.

The restructuring plan is expected to be completed in August 2021.

Under the restructuring plan, we are reducing our workforce by approximately 83 employees (approximately 33 %).

Impacted employees will receive cash payments equal to their base pay for a notice period of sixty ( 60 ) days and Company funded COBRA premiums through such notice period.

In addition, impacted employees are eligible to receive severance benefits and additional Company funded COBRA premiums, contingent upon an impacted employee’s execution (and non-revocation) of a separation agreement, which includes a general release of claims against the Company.

We expect that the workforce reduction will decrease our annual cash compensation costs by approximately $ 17 million.

In connection with the restructuring, we estimate that we will incur restructuring charges of approximately $ 3.4 million, which will be recorded primarily in the third quarter of 2021, related to one-time termination notice and severance payments and other employee-related costs.

The cash payments related to the reduction in workforce will be paid primarily during the third quarter of 2021.

We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the reduction in workforce.

On July 30, 2021, a putative securities class action lawsuit was commenced in the U.S.

District Court for the Northern District of California naming as defendants Ardelyx and two current officers.

The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 thereunder, by making false and misleading statements and omissions of material fact related to tenapanor.

The plaintiff seeks to represent all persons who purchased or otherwise acquired Ardelyx securities between August 6, 2020, and July 19, 2021.

The plaintiff seeks damages and interest, and an award of costs, including attorneys’ fees.

We believe the plaintiff’s claims are without merit and we have not recorded any accrual for a contingent liability associated with these legal proceedings.

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

What changed 10-Q

Item 1. Financial Statements