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Item 9A. Controls and Procedures

2023-03-02 compared with 2022-02-28 · 88 added, 92 removed, 154 unchanged (54% of the section changed)

1 unchanged sentence

Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

As of December 31, 2021, management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

As of December 31, 2022, management, with the participation of our Chief Executive Officer ("CEO") and Chief Financial and Operations Officer ("CFOO"), performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the CEO and the CFOO, to allow timely decisions regarding required disclosures.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2021, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.

Based on this evaluation, our CEO and CFOO concluded that, as of December 31, 2022, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

9 unchanged sentences

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Attestation Report of Independent Registered Public Accounting Firm

Our independent registered public accounting firm, Ernst & Young LLP, has audited our Financial Statements included in Item 8 of this Annual Report on Form 10-K and have issued a report on our internal control over financial reporting as of December 31, 2021.

Their report on the audit of internal control over financial reporting appears below.

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Ardelyx, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Ardelyx, Inc.’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (“the COSO criteria”).

In our opinion, Ardelyx, Inc.

(“the Company”) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the balance sheets of the Company as of December 31, 2021 and 2020, the related statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and our report dated February 28, 2022 expressed an unqualified opinion thereon that included an explanatory paragraph regarding the Company’s ability to continue as a going concern.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Redwood City, California

February 28, 2022

OTHER INFORMATION

2 unchanged sentences

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by this item will be contained in our definitive proxy statement to be filed with the Securities and Exchange Commission on Schedule 14A in connection with our 2022 Annual Meeting of Stockholders (the “Proxy Statement”), which will be filed not later than 120 days after the end of our fiscal year ended December 31, 2021, under the headings “Executive Officers,” “Election of Directors,” “Corporate Governance,” and “ Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

Information required by this item will be contained in our definitive proxy statement to be filed with the Securities and Exchange Commission on Schedule 14A in connection with our 2023 Annual Meeting of Stockholders (“Proxy Statement”), which will be filed not later than 120 days after the end of our fiscal year ended December 31, 2022, under the headings “Executive Officers,” “Election of Directors,” “Corporate Governance,” and “ Section 16(a) Beneficial Ownership Reporting Compliance,” and is incorporated herein by reference.

We have adopted a Code of Business Conduct and Ethics that applies to our officers, directors and employees which is available on our website at www.ardelyx.com.

The Code of Business Conduct and Ethics is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K.

In addition, we intend to promptly disclose (1) the nature of any amendment to our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and (2) the nature of any waiver, including an implicit waiver, from a provision of our code of ethics that is granted to one of these specified officers, the name of such person who is granted the waiver and the date of the waiver on our website in the future.

If we make any amendment to, or waiver from, a provision of our Code of Conduct that we are required to disclose under SEC rules, we intend to satisfy that disclosure requirement by posting such information to our website at www.ardelyx.com.

The contents of our websites are not intended to be incorporated by reference into this Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

EXECUTIVE COMPENSATION

26 unchanged sentences

10-K 3/8/2021 10.31

10.1 Termination Agreement, dated June 2, 2015, by and between AstraZeneca AB and Ardelyx, Inc.

10.1(a) Termination Agreement, dated June 2, 2015, by and between AstraZeneca AB and Ardelyx, Inc.

10-Q 8/12/2015 10.1

10.2 Amendment No.

10.1(b) Amendment No.

1 to Termination Agreement and to Manufacturing and Supply Agreement, dated November 2, 2015 by and between AstraZeneca AB and Ardelyx, Inc.

10 unchanged sentences

10-Q 8/8/2016 10.3

10.3(e) Fifth Amendment to Lease, dated May 25, 2021, by and between Ardelyx, Inc.

10.2(e) Fourth Amendment to Lease, dated May 25, 2021, by and between Ardelyx, Inc.

and 34175 Ardenwood Venture, LLC

10.2(f) Fifth Amendment to Lease, dated May 25, 2021, by and between Ardelyx, Inc.

and 34175 Ardenwood Venture, LLC

8-K 6/1/2021 10.1

10.3 Lease Agreement, dated December 30, 2020, by and between Ardelyx, Inc.

and Prospect Fifth Ave, LLC.

10-K 3/8/2021 10.31

10.4(a)# Ardelyx, Inc.

1 unchanged sentence

S-1 5/19/2014 10.5(a)

Number Incorporated by Reference Filed

Exhibit Description Form Date Number

10.4(b)# Form of Stock Option Grant Notice and Stock Option Agreement under the 2008 Stock Incentive Plan, as amended

5 unchanged sentences

S-8 7/14/2014 99.3

Number Incorporated by Reference Filed

Exhibit Description Form Date Number

10.5(b)# Form of Stock Option Grant Notice and Stock Option Agreement under the 2014 Equity Incentive Award Plan

2 unchanged sentences

S-1/A 6/9/2014 10.6(c)

10.6# Ardelyx, Inc.

2014 Employee Stock Purchase Plan

S-8 7/14/2014 99.6

10.7(a)# Ardelyx, Inc.

2016 Employment Commencement Incentive Plan

S-8 11/10/2016 99.1

10.7(b)# Form of Stock Option Grant Notice and Stock Option Agreement under the 2016 Employment Commencement Incentive Plan

S-8 11/10/2016 99.2

10.7(c)# Form of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement under the 2016 Employment Commencement Incentive Plan

S-8 11/10/2016 99.3

10.7(d)# Form of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement under the 2016 Employment Commencement Incentive Plan

S-8 11/10/2016 99.4

10.8 Registration Rights Agreement by and among Ardelyx, Inc.

and the investors signatory thereto, dated June 2, 2015

S-3 7/13/2015 99.1

10.9 Registration Rights Agreement by and among Ardelyx, Inc.

and the investors signatory thereto, dated July 14, 2016

10-Q 8/8/2016 10.2

10.10# Form of Indemnification Agreement for directors and officers

3 unchanged sentences

S-1/A 6/9/2014 10.8

10.8# Retention Agreement, dated October 25, 2021, by and between Ardelyx, Inc.

and Mike Raab

10.12# Offer Letter, dated December 28, 2009, by and between Ardelyx, Inc.

1 unchanged sentence

S-1/A 6/9/2014 10.13

10.11# Second Amended and Restated Change in Control and Severance Agreement by and between Ardelyx, Inc.

10.13(a)# Second Amended and Restated Change in Control and Severance Agreement by and between Ardelyx, Inc.

Rosenbaum, Ph.D.

10-Q 5/8/2018 10.1

10.13(b)# Amendment Number One to Second Amended and Restated Change in Control Severance Agreement and Retention Agreement dated December 1, 2021 between Ardelyx, Inc.

and David Rosenbaum

10-K 2/28/2022 10.20

10.14# Offer Letter, dated November 21, 2012, by and between Ardelyx, Inc.

10 unchanged sentences

10-Q 8/6/2020 10.2

10.16# Retention Agreement, dated October 25, 2021, by and between Ardelyx, Inc.

and Susan Rodriguez

10.18# Offer Letter, dated June 2, 2020, by and between Ardelyx, Inc.

4 unchanged sentences

10-Q 8/6/2020 10.4

10.19# Retention Agreement, dated October 25, 2021, by and between Ardelyx, Inc.

and Justin Renz

10.20# Amendment Number One to Second Amended and Restated Change in Control Severance Agreement and Retention Agreement dated December 1, 2021 between Ardelyx, Inc.

and David Rosenbaum

10.21# Form of Executive Retention Agreement Version 1

10.22# Form of Executive Retention Agreement Version 2

10.23# Ardelyx, Inc.

2014 Employee Stock Purchase Plan

S-8 7/14/2014 99.6

10.20(a)# Non-Employee Director Compensation Program

4 unchanged sentences

10-Q 5/7/2019 10.1

10.25 Registration Rights Agreement by and among Ardelyx, Inc.

and the investors signatory thereto, dated June 2, 2015

S-3 7/13/2015 99.1

10.26 Registration Rights Agreement by and among Ardelyx, Inc.

and the investors signatory thereto, dated July 14, 2016

10-Q 8/8/2016 10.2

10.27(a)# Ardelyx, Inc.

2016 Employment Commencement Incentive Plan

S-8 11/10/2016 99.1

10.27(b)# Form of Stock Option Grant Notice and Stock Option Agreement under the 2016 Employment Commencement Incentive Plan

S-8 11/10/2016 99.2

10.27(c)# Form of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement under the 2016 Employment Commencement Incentive Plan

S-8 11/10/2016 99.3

Number Incorporated by Reference Filed

Exhibit Description Form Date Number

10.27(d)# Form of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement under the 2016 Employment Commencement Incentive Plan

S-8 11/10/2016 99.4

10.28†† License Agreement, dated November 27, 2017, by and between Kyowa Hakko Kirin Co.

10.20(d)# Second Amended and Restated Non-Employee Director Compensation Program

10-Q 8/4/2022 10.3

10.21(a)†† License Agreement, dated November 27, 2017, by and between Kyowa Hakko Kirin Co.

and Ardelyx, Inc.

10-K 3/14/2018 10.35

10.21(b) Amendment Number 1 to License Agreement, dated as of November 27, 2017, by and among Ardelyx, Inc., and Kyowa Kirin Co., Ltd.

10.21(c)†† Amendment Number 2 to License Agreement, dated as of April 11, 2022, by and among Ardelyx, Inc., and Kyowa Kirin Co., Ltd.

8-K 4/11/2022 10.1

10.22†† License Agreement, dated December 11, 2017, by and between Shanghai Fosun Pharmaceutical Industrial Development Co.

1 unchanged sentence

10-K 3/14/2018 10.36

10.23†† Royalty and Sales Milestone Interest Acquisition Agreement dated June 29, 2022, by and between Ardelyx, Inc.

and Healthcare Royalty Partners IV, L.P.

10-Q 8/4/2022 10.1

10.24(a) Loan and Security Agreement dated February 23, 2022, by and between Ardelyx, Inc.

and SLR Investment Corp.

10-Q 5/5/2022 10.1

10.24(b) First Amendment to the Loan and Security Agreement dated August 1, 2022, by and between Ardelyx, Inc.

and SLR Investment Corp.

10-Q 8/4/2022 10.2

10.24(c) Second Amendment to the Loan and Security Agreement dated February 9, 2023, by and between Ardelyx, Inc.

and SLR Investment Corp.

10.25 Exit Fee Agreement dated February 23, 2022, by and between Ardelyx, Inc.

and SLR Investment Corp.

10-Q 5/5/2022 10.2

10.26 Exit Fee Agreement, dated May 16, 2018, by and between the Company and Solar Capital Ltd.

1 unchanged sentence

10-Q 8/7/2018 10.2

10.31†† Manufacturing Services Agreement, dated May 18, 2020, between Ardelyx, Inc.

10.27(a)†† Manufacturing Services Agreement, dated May 18, 2020, between Ardelyx, Inc.

and Patheon Pharmaceuticals Inc.

10-Q 8/6/2020 10.5

10.32 Lease Agreement, dated December 30, 2020, by and between Ardelyx, Inc.

and Prospect Fifth Ave, LLC.

10-K 3/8/2021 10.31

10.27(b)†† First Amendment to the Manufacturing Services Agreement dated February 27, 2023, between Ardelyx, Inc.

and Patheon Pharmaceuticals Inc.

10.29 Open Market Sales Agreement, dated August 31, 2021 between Ardelyx, Inc.

1 unchanged sentence

8-K 8/13/2021 10.1

10.30 Open Market Sales Agreement, dated January 18, 2023 between Ardelyx, Inc.

and Jefferies LLC.

S-3 1/19/2023 1.2

23.1 Consent of Independent Registered Public Accounting Firm

10 unchanged sentences

The confidential portions of this Exhibit have been omitted and are marked by asterisks.

†† Certain portions have been omitted pursuant to a confidential treatment request.

Omitted information has been filed separately with the Securities and Exchange Commission.

†† Certain portions of this exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K.

A copy of the omitted portions will be furnished supplementally to the Securities and Exchange Commission upon request.

# Indicates management contract or compensatory plan.

1 unchanged sentence

Ardelyx, Inc.

February 28, 2022 By:

/s/ Michael Raab

President Chief Executive Officer and Director

(Principal Executive Officer)

March 2, 2023 By:

/s/ Robert Felsch

Robert Felsch

Senior Vice President and Chief Accounting Officer

(Principal Accounting Officer)

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and appoints Michael Raab and Justin Renz, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this annual report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Each person whose individual signature appears below hereby authorizes and appoints Michael Raab, Justin Renz, and Robert Felsch, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this annual report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

2 unchanged sentences

(Principal Executive Officer)

February 28, 2022

/s/ Justin Renz Chief Financial Officer

(Principal Financial and Accounting Officer)

February 28, 2022

/s/ David Mott Chairman of the Board of Directors February 28, 2022

/s/ Robert Bazemore Director February 28, 2022

March 2, 2023

/s/ Justin Renz Chief Financial and Operations Officer

(Principal Financial Officer)

March 2, 2023

/s/ Robert Felsch Chief Accounting Officer

(Principal Accounting Officer)

March 2, 2023

Robert Felsch

/s/ David Mott Chairman of the Board of Directors March 2, 2023

/s/ Robert Bazemore Director March 2, 2023

Robert Bazemore

/s/ William Bertrand, Jr.

Director February 28, 2022

Director March 2, 2023

William Bertrand, Jr., J.D.

/s/ Muna Bhanji Director February 28, 2022

/s/ Muna Bhanji Director March 2, 2023

Muna Bhanji, R.Ph

/s/ Geoffrey A.

Block Director February 28, 2022

/s/ Onaiza Cadoret-Manier Director February 28, 2022

Block Director March 2, 2023

/s/ Onaiza Cadoret-Manier Director March 2, 2023

Onaiza Cadoret-Manier

Lundberg Director February 28, 2022

Lundberg Director March 2, 2023

Lundberg, Ph.D.

/s/ Richard Rodgers Director February 28, 2022

/s/ Richard Rodgers Director March 2, 2023

Richard Rodgers

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-K

Item 9A. Controls and Procedures