What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 196 added, 128 removed, 454 unchanged (42% of the section changed)

9 unchanged sentences

Inventory 4,529 —

Prepaid commercial manufacturing 17,793 9,406

Prepaid expenses and other current assets 5,150 7,052

14 unchanged sentences

Deferred revenue, non-current 12,421 4,727

Deferred royalty obligation 9,591 —

Total liabilities 78,568 67,296

3 unchanged sentences

5,000,000 shares authorized;

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

no shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

Common stock, $ 0.0001 par value;

300,000,000 shares authorized;

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

153,797,834 and 130,182,535 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.

Additional paid-in capital 821,075 795,540

7 unchanged sentences

(in thousands, except share and per share amounts)

Three Months Ended March 31,

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

2022 2021 2022 2021

Product sales, net $ 1,564 $ — $ 2,014 $ —

10 unchanged sentences

Interest expense ( 787 ) ( 1,202 ) ( 1,533 ) ( 2,302 )

Other income (expense), net 484 ( 49 )

Other income, net 70 847 554 798

Loss before provision for income taxes ( 26,932 ) ( 45,187 ) ( 55,001 ) ( 78,341 )

10 unchanged sentences

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the Three Months ended March 31, 2022 and 2021

For the Three and Six Months ended June 30, 2022 and 2021

(in thousands, except shares)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Common Stock Additional

4 unchanged sentences

Shares Amount

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

Issuance of common stock upon vesting of restricted stock units 2,882,673 — — — — —

Issuance of common stock in at the market offering 14,584,801 1 12,556 — — 12,557

Stock-based compensation — — 3,254 — — 3,254

Unrealized losses on available-for-sale securities — — — — ( 21 ) ( 21 )

Net loss — — — ( 26,938 ) — ( 26,938 )

Balance as of June 30, 2022 153,797,834 $ 15 $ 821,075 $ ( 767,939 ) $ ( 109 ) $ 53,042

Six Months Ended June 30, 2022

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders'

Shares Amount

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

5 unchanged sentences

Net loss — — — ( 55,009 ) — ( 55,009 )

Balance as of June 30, 2022 153,797,834 $ 15 $ 821,075 $ ( 767,939 ) $ ( 109 ) $ 53,042

Three Months Ended June 30, 2021

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Stockholders'

Shares Amount

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

Three Months Ended March 31, 2021

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

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

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

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

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

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

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

Six Months Ended June 30, 2021

Common Stock Additional

10 unchanged sentences

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

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

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

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

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

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

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

4 unchanged sentences

Amortization of deferred compensation for services 105 145

Amortization of (discount) premium on investment securities 15 157

Amortization of premium on investment securities 16 274

Non-cash lease expense 1,698 1,318

7 unchanged sentences

Inventory ( 4,529 ) —

Prepaid commercial manufacturing ( 12,197 ) ( 8,481 )

Prepaid expenses and other assets 1,848 1,102

8 unchanged sentences

Purchases of investments ( 25,762 ) ( 48,314 )

Proceeds from sale of equipment 795 —

Proceeds from sale of property and equipment 1,268 —

Purchases of property and equipment — ( 1,517 )

3 unchanged sentences

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

Proceeds from the sale of future royalties, net of issuance costs 9,581 —

Proceeds from issuance of common stock in at the market offering, net of issuance costs 18,478 62,446

Proceeds from issuance of common stock under equity incentive and stock purchase plans 83 1,041

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

Net cash provided by financing activities 22,075 63,487

Net decrease in cash and cash equivalents ( 19,020 ) ( 4,287 )

22 unchanged sentences

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 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.

The results for the three and six months ended June 30, 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

4 unchanged sentences

Actual results could materially differ from those estimates.

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.

As of June 30, 2022, we had cash and investments of approximately $ 81.0 million.

We have incurred operating losses since inception and our accumulated deficit as of June 30, 2022 is $ 767.9 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.

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 potential receipt of anticipated payments from our Japanese collaboration partner under the second amendment to our License Agreement, 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.

3 unchanged sentences

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.

Our significant accounting policies for the three and six months ended June 30, 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.

4 unchanged sentences

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 June 30, 2022 our accounts receivable balance is comprised of $ 4.1 million from our collaborators and $ 1.5 million from commercial customers.

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

12 unchanged sentences

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.

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

Our Customers subsequently sell IBSRELA to pharmacies and patients.

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

2 unchanged sentences

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.

These estimates are based on the amounts earned or to be claimed for related sales and are classified as reductions of gross 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.

5 unchanged sentences

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.

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.

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

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

The wholesaler, in turn, charges back the difference between the price initially paid to us by the wholesaler and the discounted price paid to the wholesaler 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.

The accrual for wholesaler chargebacks is estimated based on known chargeback rates, known sales to wholesalers, 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.

Wholesalers and specialty pharmacies are offered various forms of consideration, including service fees.

Wholesalers may also receive prompt pay discounts for payment within a specified period.

We expect prompt pay discounts to be earned when offered 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.

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 and accrued expenses and other current liabilities on the condensed balance sheets.

Cost of Revenue

2 unchanged sentences

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.

A portion of the costs of IBSRELA units recognized as revenue during the three and six months ended June 30, 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.

2 unchanged sentences

To date, we have recognized an aggregate of $ 11.9 million as cost of revenue under the AZ Termination Agreement.

Non-cash Interest Expense on Deferred Royalty Obligation

The net proceeds we receive from the sale of certain future royalties are amortized to non-cash interest expense over the estimated life of the associated agreement using the effective interest method.

As we earn royalties and remit those royalties pursuant to the agreement, the balance of the deferred royalty obligation will be effectively repaid over the life of agreement.

To determine the amortization of our deferred royalty obligation, we are required to estimate the total amount of future royalty payments we expect to earn.

There are a number of factors that could materially affect the amount and timing of royalty payments, most of which are not within our control.

We periodically assess the amount of royalty payments we expect to receive which are subject to the agreement and, to the extent that the amount or timing of such payments is materially different than our original estimates, we prospectively adjust the imputed interest rate and the related amortization of the deferred royalty obligation.

Recent Accounting Pronouncements

4 unchanged sentences

CASH, CASH EQUIVALENTS AND INVESTMENTS

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

Securities classified as cash, cash equivalents and investments as of June 30, 2022 and December 31, 2021 are summarized below (in thousands):

June 30, 2022

Gross Unrealized

3 unchanged sentences

Money market funds 50,433 — — 50,433

Commercial paper 4,999 — ( 1 ) 4,998

Total cash and cash equivalents 53,408 — — 53,408

24 unchanged sentences

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 .

All short-term available-for-sale securities held as of June 30, 2022 had contractual maturities of less than one year .

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

2 unchanged sentences

If an investment is other-than-temporarily impaired, we write 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.

We did not identify any of our available-for-sale securities as other-than-temporarily impaired in any of the periods presented.

As of June 30, 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

8 unchanged sentences

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

March 31, 2022

June 30, 2022

Fair Value Level 1 Level 2 Level 3

5 unchanged sentences

Total $ 78,037 $ 50,433 $ 27,604 $ —

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

Derivative liabilities for exit fees $ 1,091 $ — $ — $ 1,091

Total $ 1,091 $ — $ — $ 1,091

14 unchanged sentences

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 March 31, 2022 and December 31, 2021, due to their short-term nature.

In certain cases, where there is limited activity or less transparency around inputs to valuation, securities or derivative liabilities, such as the 2018 Exit Fee and 2022 Exit Fee, as defined and discussed in Note 9.

Derivative Liability , 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 June 30, 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 March 31, 2022 and December 31, 2021.

The interest rates of our deferred royalty obligation and term loan facility approximate the rate at which we could obtain alternative financing.

Therefore, the carrying amount of the deferred royalty obligation and the term loan facility approximated their fair values at June 30, 2022 and December 31, 2021.

Deferred Royalty Obligation and Note 8.

Borrowing for a description of the Level 3 inputs used to estimate the fair value of each respective liability.

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

June 30, 2022

Raw materials $ 460

2 unchanged sentences

Total $ 4,529

Prepaid commercial manufacturing of $ 17.8 million and $ 9.4 million as of June 30, 2022 and December 31, 2021, respectively, consist of prepayments to third party contract manufacturing organizations for the manufacture of IBSRELA for production orders which we expect work to commence within the next 12 months.

Prepayments for commercial manufacturing of $ 3.8 million as of June 30, 2022 that are expected to be converted into inventory after 12 months are included in other assets on our Condensed Balance Sheets.

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 received approval from the FDA in September 2019 to market IBSRELA, the first and only NHE3 inhibitor for the treatment of 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.

We recorded net revenue for IBSRELA of $ 1.6 million and $ 2.0 million during the three and six months ended June 30, 2022, respectively.

Sales to AmerisourceBergen Drug Corporation, Cardinal Health, and McKesson Corporation made up 40.2 %, 22.7 %, and 24.6 % of our gross product revenue during the three months ended June 30, 2022 and 35.1 %, 21.7 %, and 22.5 % during the six months ended June 30, 2022.

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

2 unchanged sentences

Activity related to 2022 sales 84 329 322 735

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.

Credits/deductions issued ( 41 ) ( 15 ) ( 133 ) ( 189 )

Balance as of June 30, 2022 $ 43 $ 314 $ 189 $ 546

There were no product sales or gross-to-net accruals during the three and six months ended June 30, 2021.

COLLABORATION AND LICENSING AGREEMENTS

5 unchanged sentences

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

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

The original term of the 2019 KKC Agreement commenced on the Effective Date and was to end on the earliest of:

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

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.

We entered into three amendments to the 2019 KKC Agreement, which have resulted in the extension of the original term.

Under the third amendment to the 2019 KKC Agreement entered into on June 28, 2022, the current term will end on February 28, 2023.

We have no material future obligations under the 2019 KKC Agreement and recorded no revenue under the 2019 KKC Agreement during the three and six months ended June 30, 2022.

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

2017 KKC Agreement

8 unchanged sentences

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

In addition to the up-front license fee received of $ 30.0 million, we may be entitled to receive up to $ 55.0 million in total development milestones, of which $ 10.0 million has been 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.

Under the terms of the 2017 KKC Agreement, KKC paid us an up-front license fee of $ 30.0 million.

We may be entitled to receive up to $ 55.0 million in total development and regulatory milestones, of which $ 10.0 million has been received and recognized as revenue as of June 30, 2022.

We may also be eligible to receive approximately ¥ 8.5 billion for commercialization milestones, or approximately $ 62.3 million at the currency exchange rate on June 30, 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.

As discussed in Note 7.

Deferred Royalty Obligation , the future royalties and commercial milestone payments we may receive under the 2017 KKC Agreement will be remitted to HealthCare Royalty Partners IV, L.P.

pursuant to a Royalty and Sales Milestone Interest Acquisition Agreement.

The variable consideration related to the remaining milestone payments has not been included in the transaction price as these were fully constrained at June 30, 2022.

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

Under the terms of the Amendment, we and KKC 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 discussed in Note 7.

Deferred Royalty Obligation , the future commercial milestones and royalties we may receive under the 2017 KKC Agreement will be remitted to HealthCare Royalty Partners IV, L.P.

pursuant to a Royalty and Sales Milestone Interest Acquisition Agreement.

As consideration for the reduction in the royalty rate, KKC has agreed to pay us up to an additional $ 40.0 million payable in two tranches, with the first payment due following KKC's filing with the Japanese Ministry of Health, Labour and Welfare 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.

The variable consideration related to the reduction in the royalty rate has not been included in the transaction price as these were fully constrained at June 30, 2022.

During the three and six months ended June 30, 2022 we recognized no licensing revenue upon the achievement of development milestones.

During the three and six months ended June 30, 2021, we recognized zero and $ 5.0 million respectively, as licensing revenue upon the initiation of phase 3 clinical studies by KKC in Japan to evaluate tenapanor for hyperphosphatemia.

During the three and six months ended June 30, 2022, we recognized $ 952 thousand and $ 966 thousand, respectively, as product supply revenue related to the manufacturing supply of tenapanor and other materials to KKC pursuant to the 2017 KKC Agreement.

During the three and six months ended June 30, 2021, we recognized zero and $ 126 thousand, respectively, 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.

1 unchanged sentence

In December 2017, we entered into an exclusive license agreement with Fosun Pharma (the “Fosun Agreement”), for the development, commercialization and distribution of tenapanor in China for both hyperphosphatemia and IBS-C.

We assessed these arrangements in accordance with ASC 606 and concluded that the contract counterparty, Fosun Pharma, is a customer.

Under the terms of the Fosun Agreement, we received $ 12.0 million in upfront license fees which was recognized as revenue when the agreement was executed.

Based on management’s assessment, we determined that the license and the manufacturing supply services represented the material performance obligations at the inception of the agreement, and as such, each of the performance obligations is distinct.

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

The variable consideration related to the remaining development milestone payments has not been included in the transaction price as these were fully constrained at March 31, 2022.

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

Under the terms of the Fosun Agreement, Fosun paid us a $ 12.0 million upfront license fee.

We may be entitled to receive development and commercialization milestones of up to $ 113.0 million, of which $ 3.0 million has been received and recognized as revenue as of June 30, 2022, 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 June 30, 2022.

We have recorded no revenue during the three and six months ended June 30, 2022 or 2021 related to the Fosun Agreement.

Knight Therapeutics, Inc.

In March 2018, we entered into an exclusive license agreement with Knight (the “Knight Agreement”) for the development, commercialization and distribution of tenapanor in Canada for hyperphosphatemia and IBS-C.

We assessed this arrangement in accordance with ASC 606 and concluded that the contract counterparty, Knight, is a customer.

Under the terms of the agreement, we received a $ 2.3 million nonrefundable, one-time upfront payment in March 2018 and are eligible to receive additional development and commercialization milestone payments worth up to $ 17.8 million.

Under the terms of the Knight Agreement, Knight paid us a $ 2.3 million upfront payment.

We may also be eligible to receive approximately CAD 22.2 million for development and commercialization milestones, or approximately $ 17.2 million at the currency exchange rate on June 30, 2022, of which $ 0.7 million has been received and recognized as revenue as of June 30, 2022.

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

The variable consideration related to the remaining development milestone payments has not been included in the transaction price as they were fully constrained at March 31, 2022.

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

As of June 30, 2022, to date in aggregate, we have recognized $ 11.9 million of the $ 75.0 million, which has been recorded as cost of revenue, and have paid AstraZeneca $ 11.6 million.

During the three and six months ended June 30, 2022 we recognized and recorded as cost of revenue $ 0.2 million and $ 0.3 million, respectively, related to the AstraZeneca Termination Agreement.

During the three and six months ended June 30, 2021 we recognized zero and $ 1.0 million, respectively, as 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 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):

The June 30, 2022 and 2021 current deferred revenue balance is attributable entirely to the 2019 KKC Agreement and the non-current deferred revenue balances are attributable entirely to the 2017 KKC Agreement (in thousands):

Deferred revenue - current 2022 2021

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

Balance at March 31, $ — $ 2,723

Balance at June 30, $ — $ 1,412

Deferred revenue - non-current 2022 2021

Balance at January 1, $ 4,727 $ —

Increases due to cash received during the period 3,829 2,947

Increases to amounts invoiced, for which cash has not yet been received 3,865 —

Increase due to unbilled prepayments recorded during the period 7 —

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

Balance at June 30, $ 12,421 $ 2,947

DEFERRED ROYALTY OBLIGATION

On June 28, 2022, we and HealthCare Royalty Partners IV, L.P.

(“HCR”) entered into a Royalty and Sales Milestone Interest Acquisition Agreement (the “HCR Agreement”).

Under the terms of the HCR Agreement, HCR has agreed to pay us up to $ 20.0 million in exchange for the royalty payments and commercial milestone payments (collectively the “Royalty Interest Payments”) that we may receive under our 2017 License Agreement with KKC based upon KKC's net sales of tenapanor in Japan.

As consideration for the sale of the Royalty Interest Payments, HCR paid to us a $ 10.0 million upfront payment, and we are eligible to receive a $ 5.0 million payment following KKC's receipt of regulatory approval to market tenapanor for hyperphosphatemia in Japan, and another $ 5.0 million payment in the event net sales by KKC in Japan exceed a certain annual target level by the end of 2025.

The HCR Agreement is effective until terminated by the mutual agreement of the parties and contains customary representations and warranties and customary affirmative and negative covenants, including, among others, requirements as to prosecution, maintenance, defense and enforcement of certain patent rights in Japan, restrictions regarding our ability to forgive, release or reduce any Royalty Interest Payments due to us under the 2017 KKC Agreement, to create or incur any liens with respect to the Royalty Interest Payments, the 2017 KKC Agreement or certain patents, or to sell, license or transfer certain patents in the field and territory described in the 2017 KKC Agreement.

In addition, the HCR Agreement contains customary events of default with respect to which we may incur indemnification obligations to HCR for any losses incurred by HCR and related parties as a result of the event of default, subject to a specified limitation of liability cap.

Under the HCR Agreement, an event of default will occur if, among other things, any of the representations and warranties included in the HCR Agreement proves not to have been true and correct in all material respects, at the time it was made, we breach any of our covenants under the HCR Agreement, subject to specified cure periods with respect to certain breaches, we are in breach or default under the 2017 KKC Agreement in any manner which is likely to cause a material adverse effect on the Royalty Interest Payments, the occurrence of a termination of the 2017 KKC Agreement under certain circumstances or we or our assets become subject to certain legal proceedings, such as bankruptcy proceedings, or we are unable to pay our debts as they become due.

We received the $ 10.0 million upfront payment from HCR during June 2022 and recorded it as a deferred royalty obligation on our condensed balance sheet.

As part of the sale, we incurred approximately $ 0.4 million in transaction costs, which, along with the deferred royalty obligation, will be amortized to non-cash interest expense over the estimated life of the HCR Agreement using the effective interest method.

As future royalties are remitted to us by KKC, and subsequently from us to HCR, the balance of the deferred royalty obligation will be effectively repaid over the life of the HCR Agreement.

To determine the amortization of the deferred royalty obligation, we are required to estimate the total amount of future royalty payments to be received from KKC for sales of tenapanor in Japan.

There are a number of factors that could materially affect the amount and timing of royalty payments from KKC, most of which are not within our control.

We will periodically assess the estimated royalty payments from KKC and, to the extent that the amount or timing of such payments is materially different than our original estimates, we will prospectively adjust the imputed interest rate and the related amortization of the deferred royalty obligation.

As of June 30, 2022, our effective interest rate used to amortize the liability is 34.4 %.

During the three and six months ended June 30, 2022, we did not recognize a material amount of non-cash interest expense for the amortization of the deferred royalty obligation.

Solar Capital and Western Alliance Bank Loan Agreement

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

SLR Investments Loan Agreement

SLR Investment Corp.

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.

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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”).

On August 1, 2022, we entered into an amendment to the 2022 Loan Agreement with SLR Investment Corp.

that extends the date by which we must receive approval by the FDA for our NDA for the control of serum phosphorus in chronic kidney disease patients on dialysis in order to borrow the additional $ 22.5 million from December 31, 2022 to March 31, 2023.

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

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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.

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 over 36 months.

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.

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.

Additionally, in connection with the 2022 Loan, 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, 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.

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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.

We have classified the 2022 Loan balance as a current liability as of June 30, 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:

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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):

As of June 30, 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

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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.

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.

As of both June 30, 2022 and December 31, 2021, the estimated fair value of the 2018 Exit Fee was $ 0.7 million.

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.

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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.

As of June 30, 2022, the estimated fair value of the 2022 Exit Fee is $ 0.4 million.

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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

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 and six months ended June 30, 2022 and 2021 (in thousands):

Balance at January 1, $ 698 $ 1,376

2022 Exit Fee addition at fair value 375 —

Changes in estimated fair value:

Ending balance $ 1,088 $ 1,412

2018 Exit Fee $ ( 29 ) $ ( 713 )

2022 Exit Fee $ 47 $ —

Balance at June 30, $ 1,091 $ 663

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.

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

The following table provides additional details of our facility leases presented in our condensed balance sheets (dollars in thousands):

Facilities June 30, 2022 December 31, 2021

Right-of-use assets $ 11,054 $ 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 March 31,

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

2022 2021 2022 2021

Operating lease expense $ 1,064 $ 837 $ 2,128 $ 1,510

Cash paid for operating lease $ 1,064 $ 766 $ 2,122 $ 1,554

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

The following table summarizes our undiscounted cash payment obligations for our operating lease liabilities as of June 30, 2022 (in thousands):

Remainder of 2022 $ 2,170

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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.

During the six months ended June 30, 2021 we sold 9.0 million shares and received gross proceeds of $ 63.8 million at a weighted average sales price of approximately $ 7.10 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 % 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.

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 six months ended June 30, 2022 we sold 20.5 million shares and received gross proceeds of $ 18.9 million at a weighted average sales price of approximately $ 0.92 per share under the 2021 Open Market Sales Agreement.

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 March 31,

Research and development $ 1,214 $ 1,092

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

2022 2021 2022 2021

Selling, general and administrative $ 2,220 $ 2,132 $ 4,728 $ 4,127

Research and development 973 1,087 2,096 2,179

Total $ 3,193 $ 3,219 $ 6,824 $ 6,306

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):

As of June 30, 2022, the balance of inventory included in our condensed balance sheet includes $ 0.2 million stock-based compensation.

During the three and six months ending June 30, 2022, the amount of stock-based compensation released from inventory into cost of revenue was not material.

As of June 30, 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)

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Stock Options

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):

A summary of our stock option activity and related information for the six months ended June 30, 2022 is as follows (in thousands, except dollar amounts):

Number of Shares Weighted-Average

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Options forfeited or canceled ( 1,190 ) $ 7.04

Balance at March 31, 2022 12,946 $ 5.34

Exercisable at March 31, 2022 6,476 $ 7.16

Balance at June 30, 2022 14,000 $ 4.91

Exercisable at June 30, 2022 7,085 $ 6.91

Restricted Stock Units

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):

A summary of our RSUs activity and related information for the six months ended June 30, 2022 is as follows (in thousands, except dollar amounts):

RSUs Weighted-Average

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Forfeited ( 121 ) $ 2.85

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

Non-vested restricted stock units at June 30, 2022 1,674 $ 2.26

Employee Stock Purchase Plan

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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 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.

During the six months ended June 30, 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 months ended March 31, 2022 and 2021, all potential common shares were determined to be anti-dilutive.

As we had net losses for the six months ended June 30, 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 March 31,

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

2022 2021 2022 2021

Net loss $ ( 26,938 ) $ ( 45,189 ) $ ( 55,009 ) $ ( 78,344 )

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Net loss per share - basic and diluted $ ( 0.19 ) $ ( 0.45 ) $ ( 0.40 ) $ ( 0.79 )

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.

For the periods presented, all common stock equivalents are excluded from the computation of diluted loss per share, as the result would be anti-dilutive, including the following (in thousands):

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

2022 2021 2022 2021

Options to purchase common stock $ 13,099 $ 12,447 $ 13,182 $ 12,211

Restricted stock units 3,520 1,125 3,963 1,006

ESPP shares issuable 200 230 176 188

Total $ 16,819 $ 13,802 $ 17,321 $ 13,406

CONTINGENCIES

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

Based on information currently available, management believes that the amount, or range, of reasonably possible losses in connection with any pending actions against us 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

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