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Item 1A. Risk Factors

2021-08-13 compared with 2021-05-06 · 212 added, 238 removed, 722 unchanged (38% 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 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 (the “Hyperphosphatemia Indication”), and if approved, may not be successfully commercialized for such indication.

On July 28, 2021, we received a complete response letter (“CRL”) from the FDA regarding our New Drug Application (“NDA”) for tenapanor for the Hyperphosphatemia Indication.

According to the CRL, the FDA has determined that the magnitude of the treatment effect observed in our Phase 3 clinical trials was small and unclear of clinical significance.

Additionally, in the CRL, the FDA noted that in order for the NDA 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 adult patients with CKD on dialysis.

While we intend to request a Type A meeting as soon as possible, there can be no assurances that the Type A meeting will result in a clear path to approval of our NDA that is achievable in terms of clinical endpoints, time or cost.

If following the Type A meeting we determine to pursue an additional clinical trial, there can be no assurances that results of the trial will demonstrate a clinically relevant treatment effect, noted by the FDA as being required for approval of the NDA.

If we decide to appeal the issuance of the CRL, there can be no assurances that our request for appeal will be granted, or that, if granted, we will be successful in our appeal.

As a result, the regulatory approval process for our NDA is highly uncertain.

We may not obtain approval at all, and if we are able to obtain approval, the expense and time to do so could adversely impact our ability to successfully commercialize tenapanor for the Hyperphosphatemia Indication, our business and our results of operations.

• Even if we are successful in obtaining regulatory approval for tenapanor for the Hyperphosphatemia Indication, and tenapanor is ultimately commercialized for such indication or for irritable bowel syndrome (“IBS-C”), 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 the indication for which tenapanor is commercialized 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.

• 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.

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

• 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 efforts to obtain approval for tenapanor and our other product development and platform development activities.

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

Failure to obtain or maintain adequate coverage and reimbursement for tenapanor for any indication for which it is commercialized could limit our ability to market tenapanor for the approved indication and decrease our ability to generate revenue.

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 that are marketed to the CKD on dialysis population, as would be tenapanor, if approved, for the Hyperphosphatemia Indication.

If we are successful in obtaining regulatory approval to market tenapanor for the Hyperphosphatemia 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.

With the issuance of the CRL by the FDA, the regulatory approval process for our NDA is highly uncertain.

We plan to request a Type A meeting with the FDA to obtain more clarity on the path forward for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis.

There can be no assurances that we will be successful in retaining our sales and marketing leadership or other key employees through the Type A meeting or thereafter, or that we will be able to replace any such leadership or other sales personnel that may leave the Company.

• 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 efforts for any approved product, and our development efforts for tenapanor, RDX013 and our other product candidates may be materially harmed.

• 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.

For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale.

Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, and a breach of warranties.

Claims could also be asserted under state consumer protection acts.

If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates.

Even successful defense would require significant financial and management resources.

• The COVID-19 pandemic continues to rapidly evolve.

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.

The extent to which the pandemic may impact our business, manufacturing, preclinical development activities, preclinical studies, planned and ongoing clinical trials, as well as the regulatory process 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, in order to address the deficiencies noted by the FDA in the CRL, we 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.

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.

• 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.

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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.

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.

We are a clinical-stage biopharmaceutical company with a limited operating history.

Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk.

To date, we have focused substantially all of our efforts on our research and development activities, including developing tenapanor and developing our proprietary drug discovery and design platform.

To date, we have not commercialized any products or generated any revenue from the sale of products.

In July 2021, we received a CRL from the FDA regarding our NDA for tenapanor for the Hyperphosphatemia Indication.

While we intend to request a Type A meeting as soon as possible, there can be no assurances that the Type A meeting with result in a clear path to approval of our NDA that is achievable in terms of clinical endpoints, time and cost.

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

As of June 30, 2021, we had an accumulated deficit of $633.1 million.

We expect to continue to incur substantial operating losses for the foreseeable future as we seek to determine the best way to address the deficiencies noted in the CRL regarding our NDA for tenapanor for the Hyperphosphatemia Indication;

prepare for the potential commercialization of, and incur manufacturing and development costs for, tenapanor;

commence commercialization of tenapanor for any approved indication;

incur development costs for RDX013;

and continue our discovery and research activities.

Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

Further, the net losses we incur may fluctuate significantly from quarter-to-quarter and year-to-year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance.

We have substantial net operating loss and tax credit carryforwards for Federal and California income tax purposes.

Such net operating losses and tax credits carryforwards may be reduced as a result of certain intercompany restructuring transactions.

In addition, the future utilization of such net operating loss and tax credit carryforwards and credits will be subject to limitations, pursuant to Internal Revenue Code Sections 382 and 383, as a result of ownership changes that have occurred previously and additional limitations may be applicable as a result of ownership changes that could occur in the future.

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

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 received a CRL from the FDA for tenapanor relating to our NDA for the Hyperphosphatemia Indication.

There can be no assurances that our NDA for tenapanor for the Hyperphosphatemia Indication will be approved for such indication or any other related indication.

We 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 such approval by the FDA;

our ability to successfully commercialize tenapanor for an approved indication;

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:

• our ability to address the deficiencies noted in the CRL regarding our NDA for the Hyperphosphatemia Indication and obtain regulatory approvals for tenapanor for such 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 Hyperphosphatemia 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 Hyperphosphatemia Indication;

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

• addressing any competing technological and market developments;

• maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets, and know-how, and our ability to develop, manufacture and commercialize our product candidates and products without infringing intellectual property rights of others;

• 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 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 4, 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 for the Hyperphosphatemia Indication, 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 such 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 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 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.

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, including our goal of responding to the CRL received from the FDA relating to our NDA for tenapanor for the Hyperphosphatemia Indication 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 efforts to seek and obtain approval for tenapanor for the Hyperphosphatemia Indication, our efforts to commercial tenapanor any approved indications, 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 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, costs associated with our efforts to address the deficiencies in our NDA for the Hyperphosphatemia Indication noted by the FDA in the CRL, costs associated with the commercialization of tenapanor for any approved 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 address the deficiencies in our NDA for the Hyperphosphatemia Indication noted by the FDA in the CRL.

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

• our ability to identify a path to address the deficiencies noted in the CRL regarding our NDA that is achievable in terms of clinical endpoints, time and cost;

• our ability to successfully commercialize tenapanor for any approved indication, either alone or with one or more collaboration partners;

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

• 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 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;

• the timing, receipt, and amount of sales of, or royalties on, tenapanor, if any;

• the cash requirements of any future acquisitions or discovery of product candidates;

• the number and scope of preclinical and discovery programs that we decide to pursue or initiate, and any clinical trials we decide to pursue for other product candidates, including RDX013;

• the time and cost necessary to respond to technological and market developments;

• 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 in October 2020, March 2021, May 2021 and July 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.

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.

On May 16, 2018, we entered into a loan and security agreement with Solar Capital, Ltd.

and Western Alliance Bank (collectively, the “Lenders”) pursuant to which the Lenders agreed to provide us a $50.0 million term loan facility with a maturity date of November 1, 2022.

In each of October 2020, March 2021, May 2021 and July 2021, we entered into an amendment to the loan and security agreement.

The full amount of the loan was funded on May 16, 2018.

Until we have repaid such indebtedness, the loan and security agreement subjects us to various customary covenants, including requirements as to financial reporting and insurance and restrictions on our ability to dispose of our business or property, to change our line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on our property, to pay any dividends or other distributions on capital stock other than dividends payable solely in capital stock, to redeem capital stock, to enter into licensing agreements, to engage in transactions with affiliates, and to encumber our intellectual property.

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 adult patients with CKD on dialysis on or before October 25, 2021, in which case, the period in which we are permitted to make interest only payments shall end on November 1, 2021.

However, we may be required to repay the outstanding indebtedness under the loan facility if an event of default occurs under the loan and security agreement.

An event of default will occur if, among other things, we fail to make payments under the loan and security agreement;

we breach any of our covenants under the loan and security agreement, subject to specified cure periods with respect to certain breaches;

the Lenders determine that a material adverse change has occurred;

we or our assets become subject to certain legal proceedings, such as bankruptcy proceedings;

we are unable to pay our debts as they become due;

or we default on contracts with third parties which would permit the Lenders to accelerate the

maturity of such indebtedness or that could have a material adverse change on us.

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.

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.

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;

We are substantially dependent on the success of our lead product candidate, tenapanor.

In July 2021, we received a CRL from the FDA related to our NDA for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis.

We may not receive regulatory approval for tenapanor for such indication, and if approved, we may not be able to successfully commercialize tenapanor for hyperphosphatemia.

Although we received marketing approval from the FDA for tenapanor for IBS-C in September 2019, we have not yet commercialized tenapanor for such indication, and should we elect to do so, we may not be successful in such commercialization.

To date, we have invested a significant amount of our efforts and financial resources in the research and development of tenapanor for the Hyperphosphatemia Indication and the IBS-C indication.

On July 28, 2021, we received a CRL from the FDA regarding our NDA for tenapanor for the Hyperphosphatemia Indication.

According to the CRL, the FDA has determined that the magnitude of the treatment effect observed in our Phase 3 clinical trials was small and unclear of clinical significance.

If we decide to appeal the issuance of the CRL, there can be no assurances that our request for appeal will be granted, or that, if granted, we will be successful in our appeal.

As a result, the regulatory approval process for our NDA is highly uncertain.

If we are successful in obtaining approval for tenapanor for the Hyperphosphatemia Indication, and tenapanor is commercialized for such indication or for IBS-C, 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 Hyperphosphatemia 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 scope of any clinical trials we are required to conduct to address the deficiencies noted the CRL for the Hyperphosphatemia Indication, and the timing required to conduct such clinical trials;

• 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;

• acceptance of tenapanor as safe, effective and well-tolerated by patients and the medical community, and, with respect to tenapanor for the Hyperphosphatemia Indication, the extent to which the issuance of a CRL by the FDA has impacted the potential acceptance of tenapanor as safe, effective and well-tolerated;

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

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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.

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, we received a CRL from the FDA in July 2021 indicating that the magnitude of the treatment effect observed in our Phase 3 clinical trials was small and unclear of clinical significance.

We intend to request a Type A meeting as soon as possible.

However, there can be no assurances that we will receive regulatory approval to market tenapanor for the Hyperphosphatemia Indication.

Further, even if approved, it may not be possible 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 Hyperphosphatemia 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:

If we are not successful in obtaining approval for tenapanor for the Hyperphosphatemia Indication, or we are not successful in commercializing tenapanor for any approved indication, or are significantly delayed in doing so, our business will be materially harmed.

Even if we determine to commercialize tenapanor for IBS-C, or are successful in obtaining regulatory approval for tenapanor for the Hyperphosphatemia 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 Hyperphosphatemia 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;

• with respect to tenapanor for the Hyperphosphatemia 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;

• acceptance by physicians, major operators of clinics and patients of tenapanor as a safe, effective and well-tolerated treatment, and, with respect to tenapanor for the Hyperphosphatemia Indication, the extent to which the issuance of a CRL by the FDA has impacted the potential acceptance of tenapanor as safe, effective and well-tolerated;

• relative convenience and ease of administration of tenapanor;

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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 hired sales and marketing leadership and other key employees in anticipation of the receipt of marketing approval by the FDA for tenapanor for the Hyperphosphatemia Indication.

If we are not able to redeploy and retain those employees while we seek to address the deficiencies identified by the FDA in the CRL received in July 2021, and we are not able to replace any lost personnel we may not be able to commercialize tenapanor for the Hyperphosphatemia Indication, if approved, or such commercialization may be delayed.

If approved, we currently plan to commercialize tenapanor for the Hyperphosphatemia 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.

Following from the receipt of a CRL from the FDA in July 2021, we executed a reduction in force during which we eliminated a portion of the sales positions that had been filled during the preceding months.

Despite the receipt of the CRL and the reduction in force, we continue to employ sales leadership and sales employees with technical expertise.

Even if we are successful in addressing the deficiencies noted in the CRL and we obtain regulatory approval to market tenapanor for the Hyperphosphatemia Indication, the commercialization of tenapanor for such indication will be substantially delayed from the time we expected when we hired our sales and marketing leadership and other key employees.

There can be no assurances that we will be able to redeploy and retain our existing sales and marketing leadership or other key employees necessary for commercial launch of tenapanor for the Hyperphosphatemia Indication throughout this delay, or that we will be able to replace any such leadership or other sales personnel that may leave the Company.

Redeploying, retaining and incentivizing our commercial personnel throughout this period and thereafter will continue to be expensive and time consuming.

Even if we are able to redeploy and retain our key sales and marketing leadership during this delay, and tenapanor is approved for the Hyperphosphatemia Indication, 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 redeploy, maintain or replace our internal sales, marketing and distribution capabilities, we may need to delay the commercialization of tenapanor for the Hyperphosphatemia Indication, if approved, or such commercialization could be adversely impacted.

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

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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.

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 tenapanor for the Hyperphosphatemia Indication, assuming approval, or tenapanor for IBS-C.

In the event that tenapanor is commercialized, sales will depend substantially, both domestically and abroad, on the extent to which the costs of tenapanor 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.

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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.

There is increased uncertainty related to insurance coverage and reimbursement for drugs, like tenapanor for the Hyperphosphatemia Indication, 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.

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

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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.

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 for the Hyperphosphatemia Indication, 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.

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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 for any approved indication and our development efforts for tenapanor, RDX013 and our other product candidates may be materially harmed.

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.

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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.

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.

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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.

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.

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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.

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 commercialized for any 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.