What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-05 compared with 2021-11-12 · 280 added, 290 removed, 302 unchanged (65% of the section changed)

3 unchanged sentences

(in thousands, except share and per share amounts)

September 30,

2022 December 31,

3 unchanged sentences

Accounts receivable 4,394 502

Inventory 3,487 —

Prepaid expenses and other current assets 16,640 16,458

Total current assets 114,225 133,649

Right-of-use assets 11,910 12,752

Property and equipment, net 2,045 2,362

Long-term investments — 2,114

Right-of-use assets, net 13,580 2,274

Other assets 1,228 1,150

4 unchanged sentences

Accrued compensation and benefits 6,304 5,422

Current portion of long-term debt 26,139 32,264

Current portion of operating lease liability 3,592 3,492

Loan payable, current portion 44,444 4,167

Deferred revenue 527 4,177

Accrued expenses and other current liabilities 6,778 7,366

1 unchanged sentence

Operating lease liability, net of current portion 8,812 9,748

Loan payable, net of current portion 7,032 46,621

Deferred revenue, non-current 8,563 4,727

4 unchanged sentences

5,000,000 shares authorized;

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

no shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

Common stock, $ 0.0001 par value;

300,000,000 shares authorized;

106,771,584 and 93,599,975 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively.

136,330,360 and 130,182,535 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.

Additional paid-in capital 805,265 795,540

Accumulated deficit ( 741,001 ) ( 712,930 )

Accumulated other comprehensive income (loss) 3 ( 4 )

Accumulated other comprehensive loss ( 88 ) ( 6 )

Total stockholders’ equity 64,190 82,617

4 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Collaborative development revenue $ 886 $ 1,356 $ 3,650 $ 3,656

Three Months Ended March 31,

Product sales, net $ 450 $ —

Product supply revenue 14 126

Licensing revenue 4 5,002

Collaborative development revenue — 1,454

Total revenues 468 6,582

2 unchanged sentences

Research and development 8,851 20,456

General and administrative 19,714 7,634 56,969 21,810

Selling, general and administrative 19,339 17,131

Total operating expenses 28,275 38,587

1 unchanged sentence

Interest expense ( 746 ) ( 1,100 )

Other (expense) income, net ( 134 ) 255 664 1,485

Other income (expense), net 484 ( 49 )

Loss before provision for income taxes ( 28,069 ) ( 33,154 )

5 unchanged sentences

Net loss $ ( 28,071 ) $ ( 33,155 )

Unrealized (losses) gains on available-for-sale securities ( 1 ) ( 227 ) 7 70

Unrealized losses on available-for-sale securities ( 82 ) ( 3 )

Comprehensive loss $ ( 28,153 ) $ ( 33,158 )

2 unchanged sentences

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three and Nine Months ended September 30, 2021

For the Three Months ended March 31, 2022 and 2021

(in thousands, except shares)

Three Months Ended September 30, 2021

Three Months Ended March 31, 2022

Common Stock Additional

4 unchanged sentences

Shares Amount

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

Balance as of December 31, 2021 130,182,535 $ 13 $ 795,540 $ ( 712,930 ) $ ( 6 ) $ 82,617

Issuance of common stock under employee stock purchase plan 127,100 — 83 — — 83

Issuance of common stock for services 25,989 — 190 — — 190

Issuance of common stock upon exercise of options 126,004 — 21 — — 21

Issuance of common stock upon vesting of restricted stock units 113,469 — — — — —

Taxes paid related to net share settlement of equity awards — — ( 106 ) — — ( 106 )

Issuance of common stock in at the market offering 5,907,256 1 5,920 — — 5,921

2 unchanged sentences

Net loss — — — ( 28,071 ) — ( 28,071 )

Balance as of September 30, 2021 106,771,584 $ 11 $ 758,114 $ ( 676,696 ) $ 3 $ 81,432

Nine Months Ended September 30, 2021

Balance as of March 31, 2022 136,330,360 $ 14 $ 805,265 $ ( 741,001 ) $ ( 88 ) $ 64,190

Three Months Ended March 31, 2021

Common Stock Additional

6 unchanged sentences

Issuance of common stock under employee stock purchase plan 102,208 — 478 — — 478

Issuance of common stock for services 25,989 — 190 — — 190

Issuance of common stock upon exercise of options 10,507 — 20 — — 20

Issuance of common stock upon vesting of restricted stock units 35,100 — — — — —

Taxes paid for net share settlement of equity awards — — ( 106 ) — — ( 106 )

Issuance of common stock in at the market offering 4,940,787 1 34,271 34,272

Stock-based compensation — — 3,087 — — 3,087

Unrealized gains on available-for-sale securities — — — — 7 7

Net loss — — — ( 121,931 ) — ( 121,931 )

Balance as of September 30, 2021 106,771,584 $ 11 $ 758,114 $ ( 676,696 ) $ 3 $ 81,432

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 Nine Months ended September 30, 2020

(in thousands, except shares)

Three Months Ended September 30, 2020

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders'

Shares Amount

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

Issuance of common stock under employee stock purchase plan 94,127 — 459 — — 459

Issuance of common stock upon exercise of options 142,191 — 339 — — 339

Issuance of common stock upon vesting of restricted stock units 866,528 — — — — —

Stock-based compensation — — 2,527 — — 2,527

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

Net loss — — — ( 33,155 ) — ( 33,155 )

Balance as of September 30, 2020 90,243,409 $ 9 $ 657,130 $ ( 525,889 ) $ 90 $ 131,340

Nine Months Ended September 30, 2020

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders'

Shares Amount

Balance as of December 31, 2019 88,817,741 $ 9 $ 647,078 $ ( 460,452 ) $ 20 $ 186,655

Issuance of common stock under employee stock purchase plan 169,931 — 834 — — 834

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

Issuance of common stock upon exercise of options 346,806 — 759 — — 759

Issuance of common stock upon vesting of restricted stock units 866,528 — — — — —

Stock-based compensation — — 8,149 — — 8,149

Unrealized gains on available-for-sale securities — — — — 70 70

Net loss — — — ( 65,437 ) — ( 65,437 )

Balance as of September 30, 2020 90,243,409 $ 9 $ 657,130 $ ( 525,889 ) $ 90 $ 131,340

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

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

2 unchanged sentences

(in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities

8 unchanged sentences

Change in derivative liabilities 15 36

Debt refinancing costs 102 —

Gain on sale of equipment ( 710 ) —

Non-cash interest associated with debt discount accretion 109 70

1 unchanged sentence

Accounts receivable ( 3,892 ) ( 5,783 )

Inventory ( 3,487 ) —

Prepaid expenses and other assets ( 307 ) ( 13,662 )

8 unchanged sentences

Purchases of investments ( 25,763 ) ( 32,107 )

Proceeds from sale of equipment 795 —

Purchases of property and equipment — ( 778 )

Net cash provided by (used in) investing activities 28,852 ( 27,872 )

Net cash provided by investing activities 2,332 2,485

Financing activities

Proceeds from 2022 Loan, net of issuance costs 26,971 —

Repayment of 2018 Loan, net of settlement costs ( 33,038 ) —

Proceeds from issuance of common stock in at the market offering, net of issuance costs 5,921 34,272

Proceeds from issuance of common stock under equity incentive and stock purchase plans 83 498

Payments for taxes related to net share settlement of equity awards ( 106 ) —

Net cash provided by financing activities 68,486 1,593

Net cash provided by (used in) financing activities ( 63 ) 34,770

Net decrease in cash and cash equivalents ( 25,351 ) ( 6,962 )

6 unchanged sentences

Right-of-use assets obtained in exchange for lease obligations $ — $ 450

Issuance of common stock for services $ 190 $ 310

Issuance of derivative in connection with issuance of loan payable $ 375 $ —

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 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.

(the “Company,” “we,” “us” or “our”) is a biopharmaceutical company founded with a mission to discover, develop and commercialize innovative first-in-class medicines that meet significant unmet medical needs.

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

Basis of Presentation

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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, 2021.

The results for the three and nine months ended September 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.

The results for the three months ended March 31, 2022 are not necessarily indicative of results to be expected for the entire year ending December 31, 2022, or for any other interim period or future year.

Use of Estimates

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Actual results could materially differ from those estimates.

As of September 30, 2021, we had cash, cash equivalents and marketable securities of approximately $ 141.7 million.

We believe our current available cash, cash equivalents and 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.

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, the amendment provided that if the FDA did 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 would expire and principal repayments would be required to begin on November 1, 2021.

Further, on July 29, 2021, our Board of Directors approved, and on August 2, 2021, we implemented 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.

On October 8, 2021, our Board of Directors approved, and on October 12, 2021 we began implementing, an additional restructuring plan to further reduce operating costs and better align our workforce with the needs of our business following the

subsequent conclusion of an End of Review Type A Meeting ("End of Review Meeting") with the FDA on October 1, 2021.

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

During November 2021, in compliance with the terms of our Loan Agreement as discussed in Note 5, we paid the first principal repayment on the Term Loan in the amount of $ 16.7 million.

For additional information see Note 13, 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.

As of March 31, 2022, we had cash and investments of approximately $ 89.7 million.

We have incurred operating losses since inception and our accumulated deficit as of March 31, 2022 is $ 741.0 million.

Our current level of cash and investments alone is not sufficient to meet our plans for the next twelve months following the issuance of these financial statements.

These factors raise substantial doubt regarding our ability to continue as a going concern for a period of one year from the issuance of these financial statements.

We plan to address our operating cash flow requirements with our current cash and investments, cash generated from sales of IBSRELA, our potential receipt of anticipated milestones from our collaboration partners, our ability to access the capital markets, as well as through the implementation of cash preservation activities to reduce or defer discretionary spending.

There are no assurances that our efforts to meet our operating cash flow requirements will be successful.

If our current cash and investments as well as our plans to meet our operating cash flow requirements are not sufficient to fund necessary expenditures and meet our obligations for at least the next twelve months following the issuance of these financial statements, our liquidity, financial condition and business prospects will be materially affected.

These financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event that we can no longer continue as a going concern.

Summary of Significant Accounting Policies

There have been no changes to the significant accounting policies disclosed in our most recent Annual Report on Form 10-K other than the following:

Restructuring

We recognize restructuring charges related to reorganization plans that have been committed to by management and when liabilities have been incurred.

In connection with these activities, we record restructuring charges at fair value for, a) contractual employee termination benefits when obligations are associated to services already rendered, rights to such benefits have vested, and payment of benefits is probable and can be reasonably estimated, b) one-time employee termination benefits when management has committed to a plan of termination, the plan identifies the employees and their expected termination dates, the details of termination benefits are complete, it is unlikely changes to the plan will be made or the plan will be withdrawn and communication to such employees has occurred, and c) contract termination costs when a contract is terminated before the end of its term.

One-time employee termination benefits are recognized in their entirety when communication has occurred and future services are not required.

If future services are required, the costs are recorded ratably over the remaining period of service.

Contract termination costs to be incurred over the remaining contract term without economic benefit are recorded in their entirety when the contract is canceled.

The recognition of restructuring charges requires us to make certain judgments and estimates regarding the nature, timing and amount of costs associated with the planned reorganization plan.

To the extent our actual results differ from our estimates and assumptions, we may be required to revise the estimates of future accrued restructuring liabilities, requiring the recognition of additional restructuring charges or the reduction of accrued restructuring liabilities already recognized.

Such changes to previously estimated amounts may be material to the consolidated financial statements.

Changes in the estimates of the restructuring charges are recorded in the period the change is determined.

At the end of each reporting period, we evaluate the remaining accrued restructuring balances to ensure that no excess accruals are retained, and the utilization of the provisions are for their intended purpose in accordance with developed restructuring plans.

Our significant accounting policies are described in Note 1 to our audited financial statements for the fiscal year ended December 31, 2021, included in our Annual Report on Form 10-K.

Our significant accounting policies for the three months ended March 31, 2022 also included the policies discussed below related to accounts receivable, inventory, revenue and cost of

revenue for commercial product sales.

With the exception of those noted below, there have been no material changes in our significant accounting policies as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Accounts Receivable

Accounts receivable is reported net of allowances for returns, chargebacks and contractual discounts offered to our customers.

Our estimate of the allowance for doubtful accounts is based on an evaluation of the aging of our receivables.

Trade receivable balances are written off against the allowance when it is probable that the receivable will not be collected.

To date, we have determined that an allowance for doubtful accounts is not required.

As of March 31, 2022 our accounts receivable balance is comprised of $ 3.8 million from our collaborators and $ 0.6 million from commercial customers.

As of December 31, 2021 our accounts receivable balance was comprised of $ 0.5 million from our collaborators.

Prior to the regulatory approval of drug product candidates, we incurred expenses for the manufacture of drug product that could potentially be available to support the commercial launch of our products.

We began to capitalize inventory costs associated with IBSRELA during the fourth quarter of 2021, when our intent to commercialize IBSRELA was established and we commenced preparation for the commercial launch of IBSRELA, which was when it was determined that the inventory had a probable future economic benefit.

Inventory is stated at the lower of cost or estimated net realizable value with cost determined under the first-in first-out method.

Inventory costs include third-party contract manufacturing, third-party packaging services, freight, labor costs for personnel involved in the manufacturing process, and indirect overhead costs.

We primarily use actual costs to determine the cost basis for inventory.

The determination of whether inventory costs will be realizable requires management review of the expiration dates of IBSRELA compared to our forecasted sales.

If actual market conditions are less favorable than projected by management, write-downs of inventory may be required, which would be recorded as cost of goods sold in the condensed statement of operations and comprehensive loss.

Product Sales, Net

We account for our commercial product sales, net in accordance with Topic 606 - Revenue from Contracts with Customers .

We received approval from the U.S.

Food and Drug Administration (“FDA”) in September 2019 to market IBSRELA, the first and only sodium hydrogen exchanger 3 (“NHE3”) inhibitor for the treatment of irritable bowel syndrome with constipation ("IBS-C") in adults, in the United States ("U.S.").

We began selling IBSRELA in the U.S.

in March 2022.

We distribute our products principally through a limited number of distributors and specialty pharmacy providers (collectively, our "Customers").

Our Customers subsequently sell our products to pharmacies and patients.

Separately, we enter into arrangements with third parties that provide for government-mandated and privately-negotiated rebates, chargebacks and discounts.

Revenue from product sales is recognized when our performance obligations are satisfied, which is when Customers obtain control of our product and occurs upon delivery.

Reserves for Variable Consideration

Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration, including rebates, discounts, patient copay assistance programs, and estimated product returns.

These estimates are based on the amounts earned or to be claimed for related sales and are classified as reductions of accounts receivable if the amount is payable to our Customers or a current liability if the amount is payable to a party other than a Customer.

Where appropriate, these estimates are based on factors such as industry data and forecasted customer buying and payment patterns, our historical experience, current contractual and statutory requirements, specific known market events and trends.

Overall, these reductions to gross sales reflect our best estimates of the amount of consideration to which we are entitled based on the terms of the contract.

Variable consideration is included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Actual amounts of consideration ultimately received may differ from our estimates.

If actual results in the future vary from our estimates, we adjust these estimates, which would affect product revenue and earnings in the period such variances become known.

As we gain more historical experience, estimates will be more heavily based on the expected utilization from historical data we have accumulated since the IBSRELA product launch.

Rebates include mandated discounts under the Medicaid Drug Rebate Program ("Medicaid") and the Medicare Coverage Gap Program ("Medicare").

Rebates are amounts owed after the final dispensing of products to a benefit plan

participant and are based upon contractual agreements or legal requirements with the public-sector benefit providers.

These estimates for rebates are recorded in the same period the related gross revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses on the condensed balance sheets.

We estimate our Medicaid and Medicare rebates based upon the estimated payor mix, and statutory discount rates.

Our estimates for payor mix are guided by payor information received from specialty pharmacies, expected utilization for specialty distributor sales to pharmacies, and available industry payor information.

Chargebacks are discounts that occur when contracted purchasers purchase directly from our specialty distributors at a discounted price.

The specialty distributor, in turn, charges back the difference between the price initially paid to us by the specialty distributor and the discounted price paid to the specialty distributor by the contracted purchaser.

Amounts for estimated chargebacks are established in the same period that the related gross revenue is recognized, resulting in a reduction of product revenue and accounts receivable.

The accrual for specialty distributor chargebacks is estimated based on known chargeback rates, known sales to specialty distributors, and estimated utilization by types of contracted purchasers.

Discounts and Fees:

Our payment terms are generally 30 to 60 days.

Specialty distributors and specialty pharmacies are offered various forms of consideration, including service fees and prompt pay discounts for payment within a specified period.

We expect these Customers will earn prompt pay discounts and therefore, we deduct the full amount of these discounts and service fees from product sales when revenue is recognized, resulting in a reduction of product revenue and accounts receivable.

Other Reserves:

Patients who have commercial insurance may receive co-pay assistance when product is dispensed by pharmacies to patients.

We estimate the amount of co-pay assistance provided to eligible patients based on the terms of the program and redemption information provided by third-party claims processing organizations and are recorded in accounts payable, accrued expenses and other current liabilities on the condensed balance sheets.

Cost of Revenue

Cost of revenue consists of the cost of commercial goods sold to our Customers, international partners under product supply agreements, and royalty expense based on sales of tenapanor.

We capitalize inventory costs associated with the production of our products after regulatory approval or when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized.

Otherwise, such costs are expensed as research and development.

A portion of the costs of IBSRELA units recognized as revenue during the three months ended March 31, 2022 were expensed prior to the fourth quarter of 2021, at which time our intent to commercialize IBSRELA was established and we commenced preparation for the commercial launch of IBSRELA.

Cost of revenue includes payments due to AstraZeneca, which under the terms of a termination agreement entered into in 2015 (the "AZ Termination Agreement") is entitled to (i) future royalties at a 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 our collaboration partners as a result of the development and commercialization of tenapanor or certain other NHE3 inhibitors.

We have agreed to pay AstraZeneca up to a maximum of $ 75.0 million in the aggregate for (i) and (ii).

We recognize these expenses as cost of revenue when we recognize the corresponding revenue that gives rise to payments due to AstraZeneca.

To date, we have recognized an aggregate of $ 11.7 million as cost of revenue under the AZ Termination Agreement.

Recent Accounting Pronouncements

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Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , an amendment which modifies the measurement and recognition of credit losses for most financial assets and certain other instruments.

The amendment updates the guidance for measuring and recording credit losses on financial assets measured at amortized cost by replacing the “incurred loss” model with an “expected loss” model.

Accordingly, these financial assets will be presented at the net amount expected to be collected.

The amendment also requires that credit losses related to available-for-sale debt securities be recorded as an allowance through net income rather than reducing the carrying amount under the current, other-than-temporary-impairment model.

For smaller reporting companies the

guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

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.

There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows.

CASH, CASH EQUIVALENTS AND INVESTMENTS

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

September 30, 2021

Securities classified as cash, cash equivalents and investments as of March 31, 2022 and December 31, 2021 are summarized below (in thousands):

March 31, 2022

Gross Unrealized

7 unchanged sentences

Commercial paper $ 28,409 $ — $ ( 52 ) $ 28,357

government-sponsored agency bonds 10,777 — ( 22 ) 10,755

Corporate bonds 2,521 — ( 10 ) 2,511

8 unchanged sentences

Money market funds 71,175 — — 71,175

Commercial paper 2,100 — — 2,100

Total cash and cash equivalents 72,428 — — 72,428

2 unchanged sentences

Corporate bonds 7,025 — ( 3 ) 7,022

government-sponsored agency bonds 9,277 2 — 9,279

treasury notes 1,000 — — 1,000

Asset backed securities 5,306 — ( 2 ) 5,304

Total short-term investments 44,267 1 ( 7 ) 44,261

Long-term investments:

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

Total cash equivalents and investments $ 116,695 $ 1 $ ( 7 ) $ 116,689

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

These securities consist primarily of money market funds, commercial paper, corporate bonds, asset-backed securities, and U.S.

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

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

Cash equivalents consist of money market funds and other debt securities with original maturities of three months or less at the time of purchase, and the carrying amount is a reasonable approximation of fair value.

We invest our cash in high quality securities of financial and commercial institutions.

These securities are carried at fair value, which is based on readily available market information, with unrealized gains and losses included in accumulated other comprehensive income (loss) within stockholders’ equity on our balance sheets.

We use the specific identification method to determine the amount of realized gains or losses on sales of marketable securities.

Realized gains or losses have been insignificant and are included in other income (expense), net, in the statement of operations and comprehensive loss.

All short-term available-for-sale securities held as of March 31, 2022 had contractual maturities of less than one year .

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

We consider a debt security to be impaired when the fair value of that security is less than its carrying cost, in which case we would further evaluate the investment to determine whether the security is other-than-temporarily impaired.

When we evaluate an investment for other-

than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below cost basis, the financial condition or creditworthiness of the issuer and any changes thereto, intent to sell, and whether it is more likely than not we will be required to sell the investment before the recovery of its cost basis.

If an investment is other-than-temporarily impaired, we write the investment down through the statement of operations to its fair value and establish 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 September 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.

We consider a debt security to be impaired when its fair value is less than its carrying cost, in which case we would further review the investment to determine whether it is other-than-temporarily impaired.

When we evaluate an investment for other-than-temporary impairment, we review factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto, intent to sell, and whether it is more likely than not we will be required to sell the investment before the recovery of its cost basis.

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

We did no t identify any of our available-for-sale securities as other-than-temporarily impaired in any of the periods presented.

As of March 31, 2022 no

investment was in a continuous unrealized loss position for more than one year and we believe that it is more likely than not that the investments will be held until maturity or a forecasted recovery of fair value.

FAIR VALUE MEASUREMENTS

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Valuations are based on quoted prices in active markets for identical assets or liabilities and readily accessible by us at the reporting date.

Examples of assets and liabilities utilizing Level 1 inputs are certain money market funds, U.S.

treasuries and trading securities with quoted prices on active markets.

Valuations based on inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities;

1 unchanged sentence

or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Examples of assets and liabilities utilizing Level 1 inputs are certain money market funds, U.S.

treasuries and trading securities with quoted prices on active markets.

Valuations based on unobservable inputs for which there is little or no market data, which require us to develop our own assumptions.

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):

September 30, 2021

March 31, 2022

Fair Value Level 1 Level 2 Level 3

1 unchanged sentence

Commercial paper 33,355 — 33,355 —

government-sponsored agency bonds 10,755 — 10,755 —

Corporate bonds 2,511 — 2,511 —

1 unchanged sentence

Total $ 82,149 $ 34,524 $ 47,625 $ —

Derivative liability for Exit Fee $ 680 $ — $ — $ 680

Derivative liability for exit fees $ 1,088 $ — $ — $ 1,088

Total $ 1,088 $ — $ — $ 1,088

4 unchanged sentences

Corporate bonds 7,022 — 7,022 —

government-sponsored agency bonds 9,279 — 9,279 —

treasury notes 1,000 — 1,000 —

Asset-backed securities 5,304 — 5,304 —

Total $ 115,436 $ 71,175 $ 44,261 $ —

6 unchanged sentences

government-sponsored agency bonds, U.S.

treasury notes, corporate bonds, commercial paper, asset-backed securities and foreign currency derivative contracts as Level 2.

treasury notes, corporate bonds, commercial paper, and asset-backed securities as Level 2.

In certain cases, where there is limited activity or less transparency around inputs to valuation, securities or derivative liabilities, such as the Exit Fee, as defined and discussed in Note 8, 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 September 30, 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 March 31, 2022 and December 31, 2021, 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 September 30, 2021 and December 31, 2020.

Therefore, the carrying amount of the term loan facility approximated its fair value at March 31, 2022 and December 31, 2021.

We began capitalizing inventory during the fourth quarter of 2021, at which time our intent to commercialize IBSRELA was established and we commenced preparation for the commercial launch of IBSRELA.

Inventory consisted of the following (in thousands):

March 31, 2022

Raw materials $ 460

Work in process 2,507

Finished goods 520

Total $ 3,487

PRODUCT REVENUE, NET

We received approval from the FDA in September 2019 to market IBSRELA, the first and only sodium hydrogen exchanger 3 (“NHE3”) inhibitor for the treatment of irritable bowel syndrome with constipation ("IBS-C") in adults, in the U.S.

We began selling IBSRELA in the U.S.

in March 2022.

We recorded net revenue for IBSRELA of $ 0.5 million during the three months ended March 31, 2022.

Sales to Cardinal Health, AmerisourceBergen Drug Corporation, and McKesson Corporation made up 17.9 %, 17.1 %, and 15.4 % of our gross product revenue during the three months ended March 31, 2022.

The activities and ending reserve balances for each significant category of discounts and allowances, which constitute variable consideration, were as follows (in thousands):

Discounts and Chargebacks Rebates Other Fees, Copay and Returns Total

Balance as of December 31, 2021 $ — $ — $ — $ —

Activity related to 2022 sales 24 40 90 154

Balance as of March 31, 2022 $ 24 $ 40 $ 90 $ 154

There were no product sales or gross-to-net accruals during the three months ended March 31, 2021.

COLLABORATION AND LICENSING AGREEMENTS

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(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 and nine months ended September 30, 2021, we recognized $ 0.9 million and $ 3.7 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 nine months ended September 30, 2020, we recognized $ 1.4 million and $ 3.7 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 September 30, 2021 and December 31, 2020 was $ 0.5 million and $ 4.2 million, respectively, which is presented in the accompanying condensed balance sheet as deferred revenue.

As of September 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 nine months ended September 30, 2021.

We have no material future obligations under the 2019 KKC Agreement and recorded no revenue under the 2019 KKC Agreement during the three months ended March 31, 2022.

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

2017 KKC Agreement

In November 2017, we entered into an exclusive license agreement with KKC (the “2017 KKC Agreement”), for the development, commercialization, and distribution of tenapanor in Japan for cardiorenal indications.

We granted KKC an exclusive license to develop and commercialize certain sodium hydrogen exchanger 3 (“NHE3”) inhibitors including tenapanor in Japan for the treatment of cardiorenal diseases and conditions, excluding cancer.

We granted KKC an exclusive license to develop and commercialize certain NHE3 inhibitors including tenapanor in Japan for the treatment of cardiorenal diseases and conditions, excluding cancer.

We retained the rights to tenapanor outside of Japan, and also retained the rights to tenapanor in Japan for indications other than those stated above.

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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 received and recognized as revenue as of September 30, 2021, and approximately ¥ 8.5 billion for commercialization milestones, or approximately $ 76.1 million at the currency exchange rate on September 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 September 30, 2021.

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

During the three and nine months ended September 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 nine months ended September 30, 2021, we recognized $ 0.3 million and $ 0.4 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 nine months ended September 30, 2020, we recognized $ 1.4 million and $ 1.4 million as product supply revenue.

During the three months ended March 31, 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 September 30, 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 March 31, 2022, and approximately ¥ 8.5 billion for commercialization milestones, or approximately $ 69.7 million at the currency exchange rate on March 31, 2022, as well as reimbursement of costs plus a reasonable overhead for the supply of product and 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, 2022.

As discussed in Note 14 - Subsequent events , on April 11, 2022, we entered into a second amendment (the "Amendment") to the 2017 KKC Agreement.

Under the terms of the Amendment, the parties have agreed to a reduction in the royalty rate payable to us by KKC upon net sales of tenapanor in Japan.

The royalty rate will be reduced from the high teens to low double digits for a two-year period of time following the first commercial sale in Japan, and then to mid-single digits for the remainder of the royalty term.

As consideration for the reduction in the royalty rate, KKC has agreed to pay us up to an additional U.S.

$ 40.0 million payable in two tranches, with the first payment due following KKC's filing with the Japanese Ministry Health, Labour and Welfare (MHLW) of its application for marketing approval for tenapanor and the second payment due following KKC’s receipt of regulatory approval to market tenapanor for hyperphosphatemia in Japan.

During the three months ended March 31, 2022 we recognized no licensing revenue upon the achievement of development milestones.

During the three months ended March 31, 2021, we recognized $ 5.0 million licensing revenue upon the initiation of phase 3 clinical studies by KKC in Japan to evaluate tenapanor for hyperphosphatemia.

During the three months ended March 31, 2022, we recognized $ 14 thousand 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 months ended March 31, 2021, we recognized $ 0.1 million as product supply revenue pursuant to the 2017 KKC Agreement.

As detailed below under the heading Deferred revenue - non-current , we have received prepayments from KKC for the manufacturing of tenapanor drug substance that will be used to satisfy KKC needs.

We also have recorded certain unbilled prepayments from KKC for the manufacturing of tenapanor drug product reflected within prepaid and other current assets.

Both amounts are reflected within our deferred revenue, non-current on our condensed balance sheet as of March 31, 2022.

The prepayment is reflected within prepaid and other current assets and deferred revenue, non-current on our condensed balance sheet as of March 31, 2022.

Shanghai Fosun Pharmaceutical Industrial Development Co.

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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 September 30, 2021.

We have recorded no revenue during the three and nine months ended September 30, 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 March 31, 2022.

We have recorded no revenue during the three months ended March 31, 2022 or 2021 related to the Fosun Agreement.

Knight Therapeutics, Inc.

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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 September 30, 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 March 31, 2022.

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 September 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 $ 11.6 million.

For the three and nine months ended September 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 nine months ended September 30, 2020 we recognized zero and $ 0.1 million, respectively, as cost of revenue related to the AstraZeneca Termination Agreement.

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 licensee of tenapanor or another NHE3 inhibitor, up to a maximum of $ 75.0 million in aggregate for (i) and (ii).

As of March 31, 2022, to date in aggregate, we have recognized $ 11.7 million of the $ 75.0 million, which has been recorded as cost of revenue, and have paid AstraZeneca $ 11.6 million.

During the three months ended March 31, 2022 we recognized and recorded as cost of revenue $ 0.1 million related to the AstraZeneca Termination Agreement.

During the three months ended March 31, 2021 we recognized $ 1.0 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 (in thousands):

The March 31, 2021 current deferred revenue balance is attributable entirely to the 2019 KKC Agreement and the non-current deferred revenue balances at March 31, 2022 and 2021 are attributable entirely to the 2017 KKC Agreement (in thousands):

Deferred revenue - current 2022 2021

Balance at December 31, 2020 $ 4,177

Balance at January 1, $ — $ 4,177

Decreases due to revenue recognized in the period for which cash has been received — ( 1,454 )

Balance at September 30, 2021 $ 527

Balance at March 31, $ — $ 2,723

Deferred revenue - non-current 2022 2021

Balance at December 31, 2020 $ —

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

Balance at September 30, 2021 $ 2,947

Balance at January 1, $ 4,727 $ —

Increases to amounts invoiced, for which cash has not yet been received 3,829 2,947

Increase due to unbilled prepayments recorded during the period 7 —

Balance at March 31, $ 8,563 $ 2,947

Solar Capital and Western Alliance Bank Loan Agreement

On May 16, 2018, we entered into a loan and security agreement (the “Loan Agreement”), with Solar Capital Ltd.

On May 16, 2018, we entered into a loan and security agreement (as amended on October 9, 2020, March 1, 2021, May 5, 2021, and July 29, 2021) (the "2018 Loan Agreement") with Solar Capital Ltd.

and Western Alliance Bank (collectively the “2018 Lenders”).

The Loan Agreement provides for a $ 50.0 million term loan facility with a maturity date of November 1, 2022 (the “Term Loan”).

On October 9, 2020, 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 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 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 September 30, 2021, we have classified our loan payable, current to include all principal payments that would have been due beginning on June 1, 2021.

During November 2021, in compliance with the terms of our Loan Agreement, we paid the first principal repayment on the Term Loan in the amount of $ 16.7 million.

For additional information see Note 13, Subsequent Events.

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.

We may voluntarily prepay the outstanding Term Loan, subject to a prepayment premium of (i) 3 % of the principal amount of the Term Loan if prepaid prior to or on the first anniversary of the Closing Date, (ii) 2 % of the principal amount of the Term Loan if prepaid after the first anniversary of the Closing Date through and including the second anniversary of the Closing Date, or (iii) 1 % of the principal amount of the Term Loan if prepaid after the second anniversary of the Closing Date and prior to the maturity date.

The Term Loan is secured by substantially all our assets, except for our intellectual property and certain other customary exclusions.

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 Lenders 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 September 30, 2021 and as of the date of filing this Quarterly Report on Form 10-Q, to our knowledge, there were no facts or circumstances in existence that would give rise to an event of default.

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

The 2018 Loan Agreement provided for a $ 50.0 million loan facility with a maturity date of November 1, 2022 (the “2018 Loan”).

As of the Closing Date for the 2022 Loan, as discussed below, we owed $ 25.0 million in principal payments from the 2018 Loan, which we repaid in full at that time.

As discussed in Note 8.

Derivative Liability , in connection with entering into the 2018 Loan Agreement, we entered into an agreement pursuant to which we agreed to pay $ 1.5 million in cash upon the occurrence of certain conditions (the "2018 Exit Fee").

Our obligations for the 2018 Exit Fee remain outstanding following the full repayment of the 2018 Loan in February 2022.

SLR Investments Loan Agreement

On February 23, 2022 (the “Closing Date”), we entered into a loan and security agreement (the “2022 Loan Agreement”) with SLR Investment Corp.

as collateral agent (the “Agent”), and the lenders listed in the 2022 Loan Agreement (collectively the “2022 Lenders”).

The 2022 Loan Agreement provides for a senior secured loan facility, with $ 27.5 million (the “Term A Loan”) funded on the Closing Date and an additional $ 22.5 million that we may borrow on or prior to July 25, 2023;

provided that (i) we have received approval by the FDA for our NDA for the control of serum phosphorus in chronic kidney disease patients on dialysis by December 31, 2022, and (ii) we have achieved certain product revenue milestone targets described in the 2022 Loan Agreement (the “Term B Loan”, and collectively, the Term A Loan and the Term B Loan, the “2022 Loan”).

The 2022 Term A Loan funds were used to repay the 2018 Loan with the 2018 Lenders.

The 2022 Loan has a maturity date of March 1, 2027.

Borrowings under the 2022 Loan bear interest at a floating per annum rate equal to 7.95 % plus the greater of (i) one tenth percent ( 0.10 %) and (ii) the one-month rate published by the Intercontinental Exchange Benchmark Administration Ltd or its successor.

We are permitted to make interest-only payments on the 2022 Loan through March 31, 2024.

Accordingly, beginning on April 1, 2024, we will be required to make monthly payments of interest plus repay the 2022 Loan in consecutive equal monthly installments of principal.

We were obligated to pay $ 0.2 million, upon the closing of the Term A Loan, and we are obligated to pay $ 0.1 million on the earliest of (i) the funding date of the Term B Loan, (ii) July 25, 2023, and (iii) the prepayment, refinancing, substitution, or replacement of the Term A Loan on or prior to July 25, 2023.

We are obligated to pay a final fee equal to 4.95 % of the aggregate original principal amount of the 2022 Loan funded upon the earliest to occur of the maturity date, the acceleration of the 2022 Loan, and the prepayment, refinancing, substitution, or replacement of the 2022 Loan.

We may voluntarily prepay the outstanding 2022 Loan balance, subject to a prepayment premium of (i) 3 % of the

outstanding principal amount of the 2022 Loan if prepaid prior to or on the first anniversary of the Closing Date, (ii) 2 % of the outstanding principal amount of the 2022 Loan if prepaid after the first anniversary of the Closing Date through and including the second anniversary of the Closing Date, or (iii) 1 % of the outstanding principal amount of the 2022 Loan if prepaid after the second anniversary of the Closing Date and prior to the maturity date.

The 2022 Loan is secured by substantially all of our assets, except for our intellectual property and certain other customary exclusions.

Additionally, in connection with the 2022 Loan, we entered into an agreement, whereby we agreed to pay an exit fee in the amount 2 % of the 2022 Loan funded (the “2022 Exit Fee”) upon (i) any change of control transaction or (ii) our achievement of net revenue from the sale of any products equal to or greater than $ 100.0 million, measured on a six (6) months basis, tested monthly at the end of each month.

Notwithstanding the prepayment or termination of the 2022 Loan, the 2022 Exit Fee will expire 10 years from the Closing Date.

The 2022 Loan Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, 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 or to redeem capital stock.

We have agreed to not allow our cash and cash equivalents to be less than the eighty percent ( 80 %) of the outstanding 2022 Term Loan balance for any period in which our net revenue from the sale of any products, calculated on a trailing six (6) month basis and tested monthly, is less than sixty percent ( 60 %) of the outstanding 2022 Loan balance.

In addition, the 2022 Loan Agreement contains customary events of default that entitle the Agent to cause our indebtedness under the 2022 Loan Agreement to become immediately due and payable, and to exercise remedies against us and the collateral securing the 2022 Term Loan, including our cash.

Under the 2022 Loan Agreement, an event of default will occur if, among other things, we fail to make payments under the 2022 Loan Agreement, we breach any of our covenants under the 2022 Loan Agreement, subject to specified cure periods with respect to certain breaches, certain 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 holder of indebtedness to accelerate the maturity of such indebtedness or that could have a material adverse change on us.

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 obligations owed under the 2022 Loan Agreement.

We have classified the 2022 Loan balance as a current liability as of March 31, 2022 due to the determination of the existence of substantial doubt about our ability to continue operating as a going concern discussed in Note 1.

Organization and Basis of Presentation:

Liquidity and our assessment that the material adverse change clause under the 2022 Loan Agreement is not within our control.

The lenders have not invoked the material adverse change clause as of the date of issuance of these financial statements.

As of March 31, 2022, our future payment obligations related to the 2022 Loan, excluding interest payments and the 2022 final fee, are as follows (in thousands):

Total repayment obligations $ 28,862

Unamortized discount and debt issuance costs ( 307 )

Unamortized discount ( 1,399 )

Unaccreted value of final fee ( 1,324 )

Loan payable 51,476

Loan payable, current portion ( 44,444 )

Loan payable, net of current portion $ 7,032

Long-term debt 26,139

Current portion of long-term debt ( 26,139 )

Long-term debt, net of current portion $ —

DERIVATIVE LIABILITY

In May 2018, in connection with entering into the Loan Agreement, as defined and discussed in Note 5, we entered into an agreement pursuant to which we agreed to pay $ 1.5 million in cash (the “Exit Fee”) upon any change of control transaction in respect of the Company or if we obtain both (i) FDA approval of tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis and (ii) FDA approval of tenapanor for the treatment of patients with irritable bowel syndrome with constipation (“IBS-C”), which was obtained on September 12, 2019 when the FDA approved IBSRELA® (tenapanor), a 50 milligram, twice daily oral pill for the treatment of IBS-C in adults (the “Exit Fee Agreement”).

Notwithstanding the prepayment or termination of the Term Loan, as defined and discussed in Note 5, our obligation to pay the Exit Fee will expire on May 16, 2028.

We concluded that the Exit Fee is a freestanding derivative which should be accounted for at fair value on a

recurring basis.

2018 Exit Fee

In May 2018, in connection with entering into the 2018 Loan Agreement, we entered into an agreement pursuant to which we agreed to pay $ 1.5 million in cash (the “2018 Exit Fee”) upon any change of control transaction in respect of the Company or if we obtain both (i) FDA approval of tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis and (ii) FDA approval of tenapanor for the treatment of patients with IBS-C, which was obtained on September 12, 2019 when the FDA approved IBSRELA® (tenapanor), a 50 milligram, twice daily oral pill for the treatment of IBS-C in adults (the “2018 Exit Fee Agreement”).

Notwithstanding the February 2022 prepayment of the 2018 Loan our obligation to pay the 2018 Exit Fee will expire on May 16, 2028.

We concluded that the 2018 Exit Fee is a freestanding derivative which should be accounted

for at fair value on a recurring basis.

The estimated fair value of the 2018 Exit Fee is recorded as a derivative liability and included in accrued expenses and other current liabilities on the accompanying condensed balance sheets.

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Specifically, the key assumptions included in the calculation of the estimated fair value of the 2018 derivative liability include:

(i) our estimates of both the probability and timing of a potential $ 1.5 million payment to Solar Capital Ltd.

and Western Alliance Bank as a result of the FDA approvals and (ii) a discount rate which was derived from our estimated cost of debt, adjusted with current LIBOR (or a comparable successor rate if LIBOR no longer exists).

(i) our estimates of both the probability and timing of a potential $ 1.5 million payment to the 2018 Lenders as a result of the FDA approvals and (ii) a discount rate which was derived from our estimated cost of debt, adjusted with current LIBOR (or a comparable successor rate if LIBOR no longer exists).

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 10.0 % 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, net in our statements of operations and were as follows for the nine months ended September 30, 2021 and 2020 (in thousands):

Nine Months Ended September 30,

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

Change in estimated fair value of Exit Fee derivative liability ( 696 ) 290

Fair value of Exit Fee derivative liability at September 30 $ 680 $ 1,259

During the nine months ended September 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.

2022 Exit Fee

On February 23, 2022, in connection with entering into the 2022 Loan Agreement, we entered into an agreement, whereby we agreed to pay an exit fee in the amount of 2 % of the 2022 Loan funded (the “2022 Exit Fee”) upon (i) any change of control transaction or (ii) our achievement of net revenue from the sale of any products equal to or greater than $ 100.0 million, measured on a six (6) months basis (the "Revenue Milestone"), tested monthly at the end of each month.

Notwithstanding the prepayment or termination of the 2022 Loan, the 2022 Exit Fee will expire on February 23, 2032.

We concluded that the 2022 Exit Fee is a freestanding derivative which should be accounted for at fair value on a recurring basis.

The estimated fair value of the 2022 Exit Fee is recorded as a derivative liability and included in accrued expenses and other current liabilities on the accompanying condensed balance sheets.

The fair value of the derivative liability was determined using a discounted cash flow analysis and is classified as a Level 3 measurement within the fair value hierarchy since our valuation utilized significant unobservable inputs.

Specifically, the key assumptions included in the calculation of the estimated fair value of the 2022 derivative liability include:

(i) our estimates of both the probability and timing of achieving the Revenue Milestone and (ii) the probability and timing of funding the Term B Loan, which is dependent upon (a) approval by the FDA for our NDA for the control of serum phosphorus in chronic kidney disease patients on dialysis by December 31, 2022, and (b) achievement of certain product revenue milestone targets.

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 10.0 % increase (decrease) in the probability of occurrence would not result in a material fair value fluctuation.

Changes in the fair value of our exit fee derivative liabilities 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 three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

Beginning balance $ 698 $ 1,376

2022 Exit Fee addition at fair value 375 —

Changes in estimated fair value 15 36

Ending balance $ 1,088 $ 1,412

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

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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.

During May 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 April 2021 and May 2021, we recorded right-of-use operating lease assets 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 September 30, 2021 (dollars in thousands):

The following table provides additional details of our facility leases presented in our condensed balance sheets as of March 31, 2022 and December 31, 2021 (dollars in thousands):

Facilities March 31, 2022 December 31, 2021

Right-of-use assets $ 11,910 $ 12,752

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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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Operating lease expense $ 1,064 $ 673

Cash paid for operating leases $ 829 $ 767 $ 2,383 $ 2,288

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

Cash paid for operating lease $ 1,058 $ 1,565

The following table summarizes our undiscounted cash payment obligations for our operating lease liabilities as of March 31, 2022 (in thousands):

Remainder of 2022 $ 3,234

Thereafter 252

Total undiscounted operating lease payments 13,836

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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 ("Jefferies"), deemed to be “at the market offerings” (the "2020 Open Market Sales Agreement").

Pursuant to the 2020 Open Market Sales Agreement, Jefferies, as our sales agent, received a commission of up to 3.0 % of the gross sales price for shares of common stock sold under the 2020 Open Market Sales Agreement.

During the nine months ended September 30, 2021 we sold 12.3 million shares of our common stock for aggregate gross proceeds of $ 68.7 million at a weighted average price of $ 5.58 per share under the 2020 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, 4.0 million shares between the dates of May 11, 2021 through June 18, 2021 and 3.3 million shares between the dates of August 24, 2021 and September 10, 2021 for a

cumulative total of 15.6 million shares and gross proceeds of $ 90.3 million at a weighted average sales price of approximately $ 5.80 per share during the life of the 2020 Open Market Sales Agreement.

The 2020 Open Market Sales Agreement was fully utilized as of December 31, 2021.

During the three months ended March 31, 2021 we sold 4.9 million shares and received gross proceeds of $ 35.0 million at a weighted average sales price of approximately $ 7.09 per share under the 2020 Open Market Sales Agreement.

In August 2021, we filed an additional prospectus supplement under the Registration Statement for the offering, issuance and sale by us of up to a maximum aggregate offering price of $ 150.0 million of our common stock that may be issued and sold, from time to time, under an additional sales agreement we entered into with Jefferies (the "2021 Open Market Sales Agreement"), pursuant to which we may, from time to time, sell up to $ 150.0 million in shares of our common stock through Jefferies.

We are not required to sell shares under the 2021 Open Market Sales Agreement.

Pursuant to the 2021 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 2021 Open Market Sales Agreement.

As of September 30, 2021 we had sold no shares of our common stock under the 2021 Open Market Sales Agreement.

Pursuant to the 2021 Open Market

Sales Agreement, Jefferies, as our sales agent, receives a commission of up to 3 % of the gross sales price for shares of common stock sold under the 2021 Open Market Sales Agreement.

During the three months ended March 31, 2022 we sold 5.9 million shares and received gross proceeds of $ 6.0 million at a weighted average sales price of approximately $ 1.02 per share under the 2021 Open Market Sales Agreement.

We sold 8.3 million shares of our common stock pursuant to the 2021 Open Market Sales Agreement which were settled between the dates of April 1, 2022 through April 27, 2022 for gross proceeds of $ 9.0 million at a weighted average sales price of approximately $ 1.09 per share.

We did not sell any additional shares of our common stock after April 25, 2022 and through the date of filing this Quarterly Report on Form 10-Q.

EQUITY INCENTIVE PLANS

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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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Research and development $ 1,214 $ 1,092

General and administrative 1,532 1,564 5,659 4,984

Selling, general and administrative 2,508 1,995

Total $ 3,722 $ 3,087

As of September 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

Expense Average Remaining

Vesting Period (Years)

Stock options $ 19,546 2.6

RSUs $ 4,839 3.3

As of March 31, 2022, our total unrecognized stock-based compensation expense, net of estimated forfeitures, and average remaining vesting period, included the following (dollars in thousands):

Unrecognized Compensation Expense Average Remaining Vesting Period (Years)

Stock option grants $ 14,865 3.0

RSU grants $ 4,894 1.3

ESPP $ 53 0.8

Stock Options

A summary of our stock option activity and related information for the nine months ended September 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 3,410 $ 6.60

Exercised ( 331 ) $ 1.96

Forfeited ( 1,481 ) $ 6.01

Outstanding balance at September 30, 2021 11,387 $ 6.95

Exercisable at September 30, 2021 6,434 $ 7.51

A summary of our stock option activity and related information for the three months ended March 31, 2022 is as follows (in thousands, except dollar amounts):

Number of Shares Weighted-Average

Exercise Price per

Balance at December 31, 2021 10,417 $ 7.00

Options granted 3,535 $ 0.98

Options exercised — $ —

Options forfeited or canceled ( 1,006 ) $ 7.18

Balance at March 31, 2022 12,946 $ 5.34

Exercisable at March 31, 2022 6,476 $ 7.16

Restricted Stock Units

A summary of our RSUs activity and related information for the nine months ended September 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

A summary of our RSUs activity and related information for the three months ended March 31, 2022 is as follows (in thousands, except dollar amounts):

RSUs Weighted-Average

Grant Date Fair

Value Per Share

Non-vested restricted stock units at December 31, 2021 3,529 $ 2.04

Granted 1,120 $ 0.98

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Forfeited ( 88 ) $ 2.02

Unvested at September 30, 2021 820 $ 6.42

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

Non-vested restricted stock units at March 31, 2022 4,448 $ 1.73

Employee Stock Purchase Plan

In August 2021, we sold approximately 0.5 million shares of our common stock under the ESPP.

In February 2022, we sold approximately 0.1 million shares of our common stock under the ESPP.

The shares were purchased by employees at a purchase price of $ 0.65 per share resulting in proceeds to us of approximately $ 0.1 million.

1 unchanged sentence

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 nine months ended September 30, 2021, we issued approximately 25,989 shares of our common stock to members of the board of directors in accordance with the program.

RESTRUCTURING

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.

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

Impacted employees received 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 were 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 us.

In connection with the restructuring, we have incurred restructuring charges of $ 3.6 million, which were recorded during the quarter ended September 30, 2021, related to one-time termination notice and severance payments and other employee-related costs.

Of this charge, $ 1.2 million was recorded in research and development expenses, and $ 2.4 million was recorded in general and administrative expense in the accompanying condensed statements of operations and comprehensive loss.

The cash payments related to the reduction in workforce were disbursed during the quarter ended September 30, 2021.

As discussed in Note 13, on October 8, 2021, our Board of Directors approved an additional restructuring plan subsequent to the conclusion of an End of Review Meeting with the FDA on October 1, 2021.

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

During the three months ended March 31, 2022, 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 and nine months ended September 30, 2021 and 2020, all potential common shares were determined to be anti-dilutive.

As we had net losses for the three months ended March 31, 2022 and 2021, 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Three Months Ended March 31,

Net loss $ ( 28,071 ) $ ( 33,155 )

1 unchanged sentence

Net loss per share - basic and diluted $ ( 0.21 ) $ ( 0.34 )

For the three and nine months ended September 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 13.2 million and 13.4 million, respectively.

For the three and nine months ended September 30, 2020, the total number of securities that could potentially dilute basic net loss per share in the future that were not included in the computation of diluted net loss per share because the effect would have been antidilutive was 9.6 million and 10.4 million, respectively.

For the three months ended March 31, 2022, 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 13.3 million.

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.

CONTINGENCIES

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.

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 September 30, 2021 or 2020.

Based on information currently available, management believes that the amount, or range, of reasonably possible losses in connection with any pending actions against us will not be material to our financial condition or cash flows, and no contingent liabilities were accrued as of March 31, 2022 or 2021.

SUBSEQUENT EVENTS

Restructuring

On October 8, 2021, our Board of Directors approved, and on October 12, 2021 we began implementing, a restructuring plan to reduce operating costs and better align our workforce with the needs of our business following the receipt of a CRL from the FDA on July 28, 2021 regarding our NDA for the control of serum phosphorus in CKD patients on dialysis, and the subsequent conclusion of an End of Review Meeting with the FDA on October 1, 2021.

The restructuring plan actions are expected to be completed in December 2021.

Under the restructuring plan, we are reducing our workforce by approximately 100 employees (approximately 60 %).

Impacted employees received notice that their positions will be eliminated on December 15, 2021.

The restructuring plan will result in the elimination of all positions in our research organization as well as the cessation of all research activities.

At the time of departure from the Company, either on December 15, 2021, or earlier, impacted employees are eligible to receive severance benefits and 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.

In connection with the restructuring, we estimate that we will incur aggregate restructuring charges of approximately $ 4 million, which will be recorded primarily in the fourth quarter 2021, related to severance payments and other employee-related costs.

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.

In addition, on October 8, 2021, the Board determined that it is in the best interests of the Company and its stockholder to put in place arrangements designed to provide that the Company will have the continued dedication and commitment of those employees, including executives, determined to be key to the restructuring and planned future operations of the Company, and

thus, not impacted by the reduction in force.

The Board approved, and management has implemented a retention program consisting of cash payments and grants of RSUs to the Company’s employees not impacted by the reduction in force.

As part of the retention plan we have entered into retention agreements with the retained employees, including the following named executive officers:

Mike Raab, our Chief Executive Officer, Justin Renz, our Chief Financial Officer and Susan Rodriguez, our Chief Commercial Officer.

Under those retention arrangements, each of Messrs.

Raab and Renz and Ms.

Rodriguez have received an RSU grant for 300 thousand, 250 thousand and 150 thousand shares, respectively.

The RSUs will vest in full on June 1, 2022.

Additionally, the retention agreements provide Messrs.

Raab and Renz and Ms.

Rodriguez the opportunity to earn cash bonuses upon the achievement of certain milestones in the amounts of $ 300 thousand, $ 250 thousand and $ 150 thousand, respectively.

During November 2021, in compliance with the terms of our Loan Agreement as discussed in Note 5, we made the first principal repayment on the Term Loan in the amount of $ 16.7 million.

At the Market Offerings Agreement

We sold 6.0 million shares of our common stock pursuant to the 2020 Open Market Sales Agreement between the dates of October 21, 2021 and November 5, 2021 for gross proceeds of $ 7.4 million at a weighted average sales price of approximately $ 1.23 per share.

We did not sell any additional shares of our common stock after November 5, 2021 and through the date of filing this report on Form 10-Q.

On April 11, 2022, we entered into a second amendment (the "Amendment") to the 2017 KKC Agreement.

Under the terms of the Amendment, the parties have agreed to a reduction in the royalty rate payable to us by KKC upon net sales of tenapanor in Japan.

As consideration for the reduction in the royalty rate, KKC has agreed to pay us up to an additional U.S.

$ 40.0 million payable in two tranches, with the first payment due following KKC's filing with the Japanese Ministry Health, Labour and Welfare (MHLW) of its application for marketing approval for tenapanor and the second payment due following KKC's receipt of regulatory approval to market tenapanor for hyperphosphatemia in Japan.

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