What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-22 compared with 2023-03-02 · 378 added, 379 removed, 770 unchanged (50% of the section changed)

12 unchanged sentences

We have audited the accompanying balance sheets of Ardelyx, Inc.

(“Company”) as of December 31, 2022 and 2021, 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, 2022, and the related notes (collectively referred to as the “financial statements”).

(the “Company”) as of December 31, 2023 and 2022, 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, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

The Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has stated that substantial doubt exists about the Company’s ability to continue as a going concern.

Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 2.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated February 22, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Our responsibility is to express an opinion on the Company‘s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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.

1 unchanged sentence

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Estimates of Reserves for Variable Consideration

Estimates of Reserves for Variable Consideration Impacted by Estimated Payor Mix

Description of the Matter As described in Note 2 to the financial statements, the Company recognizes revenues from product sales at the net sales price (transaction price), which includes estimates of variable consideration relating to off-invoice discounts, chargebacks or rebates, wholesaler fees, group purchasing organization administrative fees, patient copay assistance programs, and estimated product returns.

These estimates are based on the amounts earned or to be claimed for related sales which may not be known at the point of sale.

The variable consideration is based on the amounts earned or to be claimed for related sales which may not be known at the point of sale.

Government-mandated rebates under the Medicaid Drug Rebate Program (“Medicaid”) and the Medicare Coverage Gap Program (“Medicare”) are estimated based on estimated payor mix and statutory discount rates.

Patient copay assistance program amounts are estimated based on terms of the program and redemption information provided by third-party claims processing organizations.

Product returns are estimated based on the Company’s experience and specific known market events and trends.

Patient copay assistance program amounts are estimated based on payor mix consideration, the terms of the program and redemption information provided by third-party claims processing organizations.

The Company’s total estimate of reserves for variable consideration was $8.6 million as of December 31, 2023.

During 2023, the Company recorded $31.3 million in total reductions to gross commercial product sales as a result of reserves for variable consideration.

Auditing the Company’s estimates of reserves for variable consideration relating to Medicaid and Medicare claims, patient copay assistance and product returns involved evaluation of management’s subjective judgments regarding the reasonableness of various assumptions used.

The Company has a limited history upon which to base such estimates, and changes in these estimated assumptions may have a material effect on the amount of reserves recorded for variable consideration.

How We Addressed the Matter in Our Audit To test the Company’s estimates of reserves for variable consideration relating to Medicaid and Medicare claims, patient copay assistance and product returns, our audit procedures included, among others, evaluating the methodologies and assumptions used and testing the accuracy and completeness of the underlying data used in the Company’s analysis.

We evaluated the assumptions used by management against third-party industry data and actual trends, evaluated the reasonableness of changes in estimated reserves during the year, and assessed the accuracy of the Company’s estimates against actual results.

We also performed sensitivity analyses to determine the effect of changes in management’s assumptions on the amount of reserves recorded for variable consideration, where appropriate.

Auditing the Company’s estimates of reserves for variable consideration relating to Medicaid and Medicare claims and patient copay assistance was especially challenging as it involved evaluation of management’s subjective judgments with respect to payor mix that is developed based on various data sources.

The Company has a limited history upon which to base its assumptions, and changes in these assumptions could have a material impact on the amount of reserves recorded for variable consideration.

How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the Company’s process to determine the reserves for variable consideration that are impacted by the payor mix.

For example, we tested controls over management’s review of the completeness and accuracy of the data used to determine the estimate.

To test the Company’s estimates of reserves for variable consideration relating to Medicaid and Medicare claims and patient copay assistance, our audit procedures included, among others, evaluating the methodologies and assumptions used and testing the accuracy and completeness of the underlying data used in the Company’s payor mix analysis.

We compared the assumptions used by management to third-party industry data and actual trends.

We also evaluated the reasonableness of changes in estimated reserves during the year, and assessed the accuracy of the Company’s estimates against actual results.

We also performed sensitivity analyses to determine the effect of changes in management’s assumptions on the amount of reserves recorded for variable consideration impacted by the payor mix, where appropriate.

Further, we evaluated the appropriateness of classification and disclosure of the Company’s reserves for variable consideration in the financial statements.

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We have served as the Company’s auditor since 2009.

San Mateo, California

March 2, 2023

February 22, 2024

ARDELYX, INC.

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Inventory, non-current 37,039 25,064

Prepaid commercial manufacturing, non-current 4,235 —

Right-of-use assets 5,589 9,295

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Operating lease liability, net of current portion 1,725 5,855

Long-term debt, net of current portion 49,822 —

Deferred revenue, non-current 8,644 9,025

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5,000,000 shares authorized;

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

no shares issued and outstanding

Common stock, $ 0.0001 par value;

300,000,000 shares authorized;

500,000,000 and 300,000,000 shares authorized;

232,453,190 and 198,575,016 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively.

1 unchanged sentence

Accumulated deficit ( 846,204 ) ( 780,137 )

Accumulated other comprehensive loss ( 54 ) ( 6 )

Accumulated other comprehensive income (loss) 224 ( 54 )

Total stockholders’ equity 166,816 98,329

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Product sales, net $ 82,526 $ 15,600 $ —

Product supply revenue 1,527 907 1,501

Licensing revenue 35,809 35,031 5,013

Product supply revenue 6,121 1,527 907

Collaborative development revenue — — 4,177

Total revenues 124,456 52,158 10,097

Cost of goods sold:

Cost of product sales 2,323 566 —

Other cost of revenue 15,472 3,551 1,000

Total cost of goods sold 17,795 4,117 1,000

Operating expenses:

Cost of revenue 4,117 1,000 145

Research and development 35,536 35,201 91,140

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Net loss $ ( 66,067 ) $ ( 67,207 ) $ ( 158,165 )

Unrealized losses on available-for-sale securities ( 48 ) ( 2 ) ( 24 )

Unrealized gains (losses) on available-for-sale securities 278 ( 48 ) ( 2 )

Comprehensive loss $ ( 65,789 ) $ ( 67,255 ) $ ( 158,167 )

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Issuance of common stock upon vesting of restricted stock units 167,158 — — — — —

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

Issuance of common stock in at the market offering 35,671,439 4 101,142 — — 101,146

Stock-based compensation — — 12,039 — — 12,039

Unrealized losses on available-for-sale securities — — — — ( 2 ) ( 2 )

Issuance of common stock in at the market offering 3,257,430 — 21,047 — — 21,047

Net loss — — — ( 158,165 ) — ( 158,165 )

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Issuance of common stock upon vesting of restricted stock units 3,243,828 — — — — —

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

Issuance of common stock in at the market offering 64,114,542 7 71,618 — — 71,625

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Stock-based compensation — — 13,530 — — 13,530

Unrealized losses on available-for-sale securities — — — — ( 48 ) ( 48 )

Unrealized gains on available-for-sale securities — — — — 278 278

Net loss — — — ( 66,067 ) — ( 66,067 )

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(in thousands)

Year Ended December 31,

2023 2022 2021

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Stock-based compensation 13,530 10,750 12,039

Change in derivative liabilities 583 ( 678 ) 407

Debt refinancing costs 102 — —

Gain on sale of equipment ( 1,260 ) — —

Non-cash interest expense 4,220 1,962 283

Gain on sale of equipment — ( 1,260 ) —

Other, net ( 2,930 ) 685 ( 678 )

Changes in operating assets and liabilities:

Unbilled revenue — — 750

Accounts receivable ( 14,298 ) ( 7,231 ) ( 502 )

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Purchases of property and equipment ( 344 ) ( 55 ) ( 1,867 )

Net cash provided by (used in) investing activities 18,415 50,948 ( 31,442 )

Net cash (used in) provided by investing activities ( 131,248 ) 18,415 50,948

Financing activities

Proceeds from issuance of common stock in at the market offering, net of issuance costs 119,236 71,625 101,146

Proceeds from 2022 Loan, net of issuance costs 22,386 26,971 —

Payments for 2018 Loan, net of costs ( 33,038 ) ( 19,444 ) ( 125 )

Proceeds from the sale of future royalties, net of issuance costs 5,000 9,581 —

Proceeds from issuance of common stock in at the market offering, net of issuance costs 71,625 101,146 21,047

Proceeds from issuance of common stock under equity incentive and stock purchase plans 1,173 202 1,403

Payment of the 2018 Exit Fee ( 1,500 ) — —

Payments for the 2018 Loan, net of costs — ( 33,038 ) ( 19,444 )

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

Net cash provided by financing activities 146,295 75,341 82,999

Net increase (decrease) in cash and cash equivalents 23,712 ( 18,604 ) ( 90,101 )

Net (decrease) increase in cash and cash equivalents ( 74,670 ) 23,712 ( 18,604 )

Cash and cash equivalents at beginning of period 96,140 72,428 91,032

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We developed a unique and innovative platform that enabled the discovery of new biological mechanisms and pathways to develop potent and efficacious therapies that minimize the side effects and drug-drug interactions frequently encountered with traditional, systemically absorbed medicines.

The first molecule we discovered and developed was tenapanor, a targeted, first-in-class, oral, small molecule therapy.

The first molecule we discovered and developed was tenapanor, a minimally absorbed, first-in-class, oral, small molecule therapy.

Tenapanor, branded as IBSRELA ® , is approved in the U.S.

for the treatment of adults with irritable bowel syndrome with constipation (IBS-C).

Tenapanor is in development for the control of serum phosphorus in adult patients with chronic kidney disease (“CKD”) on dialysis under the brand name XPHOZAH.

Tenapanor, branded as XPHOZAH ® , was approved by the U.S.

Food and Drug Administration (U.S.

FDA) on October 17, 2023, to reduce serum phosphorus in adults with chronic kidney disease (CKD) on dialysis as add-on therapy in patients who have an inadequate response to phosphate binders or who are intolerant of any dose of phosphate binder therapy.

We also have a development stage asset, RDX013 for adult patients with CKD and/or heart failure with hyperkalemia, or elevated serum potassium, and a discovery phase asset, RDX020 for adult patients with metabolic acidosis, a serious electrolyte disorder, in patients with CKD.

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GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes thereto.

On an ongoing basis, management evaluates its estimates, including those related to recognition of revenue, clinical trial accruals, contract manufacturing accruals, fair value of assets and liabilities, income taxes and stock-based compensation.

On an ongoing basis, management evaluates its estimates, including those related to recognition of revenue, clinical trial accruals, contract manufacturing accruals, expected demand for inventory, fair value of assets and liabilities, income taxes and stock-based compensation.

Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances.

Actual results could materially differ from those estimates.

As of December 31, 2022, we had cash and short-term investments of approximately $ 123.9 million.

As of December 31, 2023, we had cash, cash equivalents and short-term investments of approximately $ 184.3 million.

We have incurred operating losses since inception in 2007 and our accumulated deficit as of December 31, 2023 is $ 846.2 million.

Our current level of cash and short-term investments alone is not sufficient to meet our plans for the next twelve months following the issuance of these financial statements on March 2, 2023.

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 short-term investments, cash generated from product sales of IBSRELA, and if approved, cash generated from sales of XPHOZAH, our potential receipt of anticipated milestones payments from our collaboration partners, our potential receipt of anticipated payments from our Japanese collaboration partner under the second amendment to our License Agreement, with additional financing sources and 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 short-term 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.

Since December 31, 2021 and prior to September 30, 2023, our liquidity position raised substantial doubt about our ability to continue as a going concern.

We have addressed our operating cash flow requirements through cash generated from product sales of IBSRELA and XPHOZAH, proceeds from the sale of shares of our common stock under our at-the-market offering, from the receipt of milestones payments from our collaboration partners and payments from our Japanese collaboration partner under the second amendment to our License Agreement, and through funds from our loan agreements with SLR Investment Corp.

(SLR), as amended.

We believe our available cash, cash equivalents and short-term investments as of December 31, 2023 will be sufficient to fund our planned operations for at least a period of one year from the issuance of these financial statements.

Cash and Cash Equivalents

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Short-term investments are carried at fair value based upon quoted market prices.

Unrealized gains and losses on available-for-sale securities are included in accumulated other comprehensive loss on our balance sheets.

Unrealized gains and losses on available-for-sale securities are included in accumulated other comprehensive income (loss) on our balance sheets.

The cost of available-for-sale securities sold is based on the specific-identification method.

1 unchanged sentence

Financial instruments that potentially subject us to significant concentrations of credit risk consist primarily of cash, cash equivalents, short-term investments and accounts receivable.

We are exposed to credit risks in the event of default by the counterparties to the extent of the amount recorded in its balance sheet.

We are exposed to credit risks in the event of default by the counterparties to the extent of the amount recorded in our balance sheet.

Cash, cash equivalents and short-term investments are invested through banks and other financial institutions in the U.S.

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Impairment of Long-Lived Assets

The carrying value of long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the asset may not be recoverable.

The carrying values of long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the asset may not be recoverable.

An impairment loss is recognized when the total of estimated future undiscounted cash flows, expected to result from the use of the asset and its eventual disposition, are less than the asset’s carrying amount.

Impairment, if any, would be assessed using discounted cash flows or other appropriate measures of fair value.

For the years ending December 31, 2022, 2021 and 2020 we have recognized no impairment losses.

We use the asset and liability method of accounting for income taxes.

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Accounts Receivable

Accounts receivable is reported net of allowances for returns, chargebacks and contractual off-invoice and prompt-pay 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.

Accounts receivable are stated at amortized cost less allowance for credit losses.

The allowance for credit losses reflects the best estimate of future losses over the contractual life of outstanding accounts receivable and is determined on the basis of historical experience, specific allowances for known troubled accounts, other currently available information including customer financial condition and both current and forecasted economic conditions.

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

As of December 31, 2023 our accounts receivable balance was comprised of $ 4.9 million from our collaboration agreements and $ 17.1 million from commercial customers.

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

As of December 31, 2022 our accounts receivable balance was comprised of $ 0.7 million from our collaboration agreements and $ 7.0 million from commercial customers.

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.

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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.

We began to capitalize inventory costs associated with XPHOZAH during the fourth quarter of 2023, following approval by the U.S.

FDA to market XPHOZAH in the U.S., 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 specific identification method.

Inventory costs include the cost of materials, 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.

The determination of whether inventory costs will be realizable requires management review of the expiration dates of IBSRELA and XPHOZAH 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 revenue in the statement of operations and comprehensive loss.

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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 in the U.S..

We began selling IBSRELA in the U.S.

in March 2022.

We distribute IBSRELA principally through major wholesalers, specialty pharmacies and group purchasing organizations ("GPOs") (collectively, our "Customers").

Our Customers subsequently sell IBSRELA to pharmacies and patients.

We received approval from the FDA to market IBSRELA in the U.S.

in September 2019 and to market XPHOZAH in the U.S.

in October 2023.

We began selling IBSRELA and XPHOZAH in the U.S.

in March 2022 and November 2023, respectively.

We distribute IBSRELA principally through major wholesalers, specialty pharmacies and group purchasing organizations (GPOs) (collectively, our IBSRELA Customers).

XPHOZAH is principally distributed through a specialty wholesaler (XPHOZAH Customer) to select specialty pharmacies (collectively, IBSRELA Customers and XPHOZAH Customers, “Customers”).

Our Customers subsequently sell IBSRELA and XPHOZAH to pharmacies and patients.

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

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Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration which may be settled in the form of off-invoice discounts, chargebacks, or rebates.

Variable consideration includes discounts to customers and government programs, wholesaler fees, group purchasing organization administrative fees, 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 gross accounts receivable if settlement is expected to occur through a reduction in the amounts paid by our Customers or a current liability if settlement is expected to occur through a payment from us.

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

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

Changes in estimates recorded through December 31, 2023 have not been material.

Rebates include wholesaler fees, GPO fees, as well as mandated discounts under the Medicaid Drug Rebate Program (Medicaid) and the Medicare Coverage Gap Program (Medicare).

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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 wholesaler sales to pharmacies, and available industry payor information.

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 and, therefore, require the most estimation and judgment of our gross to net deductions.

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

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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 wholesaler chargebacks is estimated based on known chargeback rates, known sales to wholesalers, 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 known sales from wholesalers to their chargeback-eligible customers.

Discounts and Fees:

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

We estimate the amount of copay 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 balance sheets.

We estimate the amount of copay assistance provided to eligible patients based on the terms of the program, and redemption information provided by third-party claims processing organizations.

We also estimate the amount of copay assistance that will be provided to patients associated with product which we have sold but which has not yet been dispensed to commercial patients, which requires significant estimation and judgment.

Our estimates are recorded in accounts payable and accrued expenses and other current liabilities on the balance sheets.

Other reserves include estimated product returns which are recorded in the same period the related gross revenue is recognized, resulting in a reduction of product revenue as well as accounts receivable.

We estimate our product returns reserve based upon our experience and specific known market events and trends.

As we have experienced limited product returns, establishing the appropriate level of returns reserve require estimation and judgment.

Collaboration Revenue Recognition

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We recognize collaboration revenue by measuring the progress toward complete satisfaction of the performance obligation using an input measure.

In order to recognize revenue over the research and

development period, we measure actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation.

In order to recognize revenue over the research and development period, we measure actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation.

Revenues are recognized as the program costs are incurred.

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Amounts received prior to satisfying the revenue recognition criteria are recorded as contract liabilities in our balance sheets.

If the related performance obligation is expected to be satisfied within the next twelve months it will be classified in current liabilities.

If the related performance obligation is expected to be satisfied within the next twelve months, this will be classified in current liabilities.

Amounts recognized as revenue prior to receipt are recorded as contract assets in our balance sheets.

If we expect to have an unconditional right to receive the consideration in the next twelve months, it will be classified in current assets.

If we expect to have an unconditional right to receive the consideration in the next twelve months, this will be classified in current assets.

A net contract asset or liability is presented for each contract with a customer.

Milestone Payments:

At the inception of each arrangement that includes development milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method.

At the inception of each arrangement that includes research and development milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method.

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

Milestone payments that are not within our control or the control of the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

Milestone payments that are not within the control of us or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.

The transaction price is then allocated to each performance obligation on a relative standalone selling price basis, for which we recognize revenue as or when the performance obligations under the contract are satisfied.

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Manufacturing supply services:

Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the customer’s discretion are generally considered as options.

Arrangements that include a promise for the future supply of drug substance or drug product for either clinical development or commercial supply at the customer’s discretion are generally considered as options.

We assess if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations.

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For licenses that are bundled with other promises, we apply judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, to conclude upon the appropriate method of measuring progress for purposes of recognizing revenue related to consideration allocated to the performance obligation.

Customer options, such as options granted to allow a licensee to choose to research, develop and commercialize licensed compounds are evaluated at contract inception in order to determine whether those options provide a material right (i.e., an optional good or service offered for free or at a discount) to the customer.

e., an optional good or service offered for free or at a discount) to the customer.

If the customer options represent a material right, the material right is treated as a separate performance obligation at the outset of the arrangement.

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or (iii) a combination of the preceding treatments.

A contract modification is accounted for as a separate contract if the scope of the contract increases because of the addition of promised goods or services that are distinct and the price of the contract increases by an amount of consideration that reflects

our standalone selling prices of the additional promised goods or services.

When a contract modification is not considered a separate contract and the remaining goods or services are distinct from the goods or services transferred on or before the date of the contract modification, we account for the contract modification as a termination of the existing contract and a creation of a new contract.

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Upfront payments and fees are recorded as deferred revenue upon receipt or when due and may require deferral of revenue recognition to a future period until we perform our obligations under these arrangements.

Where applicable, amounts are recorded as accounts receivable or unbilled revenue when our right to consideration is unconditional.

Where applicable, amounts are recorded as unbilled revenue when our right to consideration is unconditional.

We do not assess whether a contract with a customer has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees and the transfer of the promised goods or services to the licensees will be one year or less.

Cost of Revenue

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

Cost of Goods Sold

Cost of product sales consists of the cost of commercial goods sold to our Customers.

Other cost of revenue consists of the cost of materials sold to our international partners under product supply agreements, as well as payments due to AstraZeneca AB (AstraZeneca) based on sales of tenapanor.

Otherwise, such costs are expensed as research and development.

A portion of the costs of IBSRELA units recognized as revenue during the twelve months ended December 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 ("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.

A portion of the costs of IBSRELA and XPHOZAH units recognized as revenue during the years ended December 31, 2023 and 2022 were expensed in periods prior to the commencement of capitalization of inventory costs for each respective product.

As of December 31, 2023 and December 31, 2022, we had approximately $ 21.8 million and $ 28.0 million, respectively, of inventory on hand that was previously expensed as research and development expense and will not be reported as cost of goods sold in future periods when sales of IBSRELA and XPHOZAH are recognized as revenue.

Other cost of revenue includes payments due to AstraZeneca, which under the terms of a termination agreement entered into in 2015 (AstraZeneca 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 in connection with the development and commercialization of tenapanor or other NHE3 products.

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 $ 15.3 million as cost of revenue under the AZ Termination Agreement.

We recognize these expenses as other 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 $ 27.6 million as other cost of revenue under the AstraZeneca Termination Agreement.

See details in Note 7, Collaboration and Licensing Agreements , under AstraZeneca, in the notes to our financial statement of this Annual Report on Form 10-K.

Research and Development Costs

Research and development costs are charged to expense as incurred and consisted of costs incurred to further our research and development activities and include salaries and related employee benefits, costs associated with clinical trials, costs related to pre-commercialization manufacturing activities such as manufacturing process validation activities and the manufacturing of clinical drug supply, nonclinical research and development activities, regulatory activities, research-related overhead expenses and fees paid to external service providers and contract research and manufacturing organizations that conduct certain research and development activities on our behalf.

Accrued Research and Development Expenses

We are required to estimate our accrued expenses at the end of each reporting period.

This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual costs.

The majority of our service providers submit invoices in arrears for services performed or when contractual milestones are met.

Accrued Expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued expenses.

The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met.

We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time.

We periodically confirm the accuracy of our estimates with our service providers and make adjustments if necessary.

Examples of estimated accrued research and development expenses include fees paid to:

• contract research organizations ("CROs") in connection with clinical studies;

• investigative sites in connection with clinical studies;

• vendors related to product manufacturing, development and distribution of clinical supplies;

• vendors in connection with preclinical development activities.

We record expenses related to clinical studies and manufacturing development activities based on our estimates of the services received and efforts expended pursuant to contracts with multiple CROs and manufacturing vendors that conduct and manage these activities on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract, and may result in uneven payment flows.

There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense.

Payments under some of these contracts depend on factors such as the successful enrollment of subjects and the completion of clinical trial milestones.

In accruing service fees, we estimate the time period over which services will be performed, enrollment of subjects, number of sites activated and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from our estimate, we will adjust the accrued or prepaid expense balance accordingly.

In accruing service fees, we estimate the time period over which each component of a service will be performed, and estimate, with vendor input if appropriate.

If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrued or prepaid expense balance accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed, we may report amounts that are too high or too low in any particular period.

Stock-Based Compensation

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Non-cash Interest Expense on Deferred Royalty Obligation

The net proceeds we receive from the sale of certain future royalties are recorded as deferred royalty obligation related to the sale of future royalties on our balance sheets.

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 and non-cash interest expense related to the sale of future royalties is recorded using the effective interest method.

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.

Non-cash interest expense related to the sale of future royalties represents the imputed interest expense on our deferred royalty obligation related to the sale of future royalties using the effective interest method.

As further described in Note 8.

Deferred Royalty Obligation Related to the Sale of Future Royalties , in June 2022, we and HealthCare Royalty Partners IV, L.P.

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

Under the terms of the HCR Agreement, HCR 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 Kyowa Kirin, as amended, based upon Kyowa Kirin's net sales of tenapanor in Japan for hyperphosphatemia.

As part of the HCR Agreement, we received a $ 10.0 million upfront payment from HCR in June 2022 and recorded it as a deferred royalty obligation on our balance sheet.

In September 2023, we announced that Kyowa Kirin received approval from the Japanese MHLW for the New Drug Application for tenapanor for the improvement of hyperphosphatemia in adult patients with chronic kidney disease on dialysis, which entitled us to a $ 5.0 million payment under the terms of the HCR Agreement, which we received in October 2023.

Non-cash interest expense will be recognized over the life of the HCR Agreement using the effective interest method based on the imputed interest rate derived from estimated amounts and timing of future royalty payments to be received from Kyowa Kirin.

We determine if an arrangement is a lease at the inception of the arrangement.

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We have elected not to separate lease and non-lease components, such as common area maintenance charges, and instead it accounts for these as a single lease component.

Restructuring

We recognize restructuring charges related to reorganization plans that have been committed to by management 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.

Net Loss per Share

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New Accounting Pronouncements - Recently Adopted

We adopted Accounting Standards Update 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"), as of December 1, 2021 under the modified retrospective approach.

ASU 2016-13 requires an entity to measure and recognize expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred.

For available-for-sale debt securities with unrealized credit losses, the standard requires allowances to be recorded through net income instead of directly reducing the amortized cost of the investment under the previous other-than-temporary impairment model.

The adoption of this standard did not have a material impact on our financial statements or a significant impact on our internal controls.

In July 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-03, Presentation of Financial Statements (Topic 205), Income Statement - Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505), and Compensation - Stock Compensation (Topic 718) Presentation of Financial Statements (ASU 2023-03).

ASU 2023-03 amends the FASB Accounting Standards Codification to include Amendments to SEC Paragraphs pursuant to SEC Staff Accounting Bulletin No.

120, SEC Staff Announcement at the March 24, 2022 EITF Meeting, and SEC Staff Accounting Bulletin Topic 6.B, Accounting Series Release 280 - General Revision of Regulation S-X:

Income or Loss Applicable to Common Stock.

As the ASU does not provide any new guidance, there is no transition or effective date associated with its adoption.

Accordingly, we adopted ASU 2023-03 immediately upon its issuance.

The adoption of ASU 2023-03 did not have any impact on our financial statement presentation or related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

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.

In October 2023, the FASB issued ASU No.

2023-06, Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

The amendments in this Update modify the disclosure or presentation requirements of a variety of Topics in the Codification.

The amendments are in response to the U.S.

Securities and Exchange Commission's (SEC) Release No.

33-10532, Disclosure Update and Simplification , in which the SEC referred certain of its disclosure requirements that overlap with, but require incremental information to, generally accepted accounting principles to the FASB for potential incorporation into the Codification.

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited.

For all other entities, the amendments will be effective two years later.

For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity.

Management is currently assessing the impact of this standard on the Company’s financial statements.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures .

The amendments in this Update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments in this update improve financial reporting by requiring disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses.

The amendments in this update are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Management is currently assessing the impact of this standard on the Company’s financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures , an amendment which modifies the measurement and recognition of credit losses for most financial assets and certain other instruments.

The amendments in this Update provide more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024.

Early adoption is permitted on a prospective basis for annual financial statements that have not yet been issued or made available for issuance.

Management is currently assessing the impact of this standard on the Company’s financial statements.

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

CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

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Short-term investments:

Commercial paper $ 25,336 $ 6 $ ( 51 ) $ 25,291

Corporate bonds 1,000 — ( 1 ) 999

government-sponsored agency bonds $ 101,892 $ 235 $ ( 34 ) $ 102,093

Commercial paper $ 49,630 $ 41 $ ( 17 ) $ 49,654

Asset-backed securities 8,628 2 ( 5 ) 8,625

treasury securities 2,455 2 — 2,457

Total short-term investments 162,605 280 ( 56 ) 162,829

Total cash equivalents and investments $ 123,963 $ 6 $ ( 60 ) $ 123,909

Total cash, cash equivalents and investments $ 184,075 $ 280 $ ( 56 ) $ 184,299

December 31, 2022

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Money market funds 84,313 — — 84,313

Commercial Paper — — — —

Corporate bonds — — — —

Total cash and cash equivalents 96,140 — — 96,140

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Corporate bonds 1,000 — ( 1 ) 999

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

government-sponsored agency bonds 1,487 — ( 8 ) 1,479

Total short-term investments 27,823 6 ( 60 ) 27,769

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

Total cash, cash equivalents and investments $ 123,963 $ 6 $ ( 60 ) $ 123,909

Cash equivalents consist of money market funds 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 loss within stockholders’ equity on our balance sheets.

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.

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

Based on our procedures under the expected credit loss model, including an assessment of unrealized losses in our portfolio, we concluded that any unrealized losses on our marketable securities were not attributable to credit and, therefore, we have no t recorded an allowance for credit losses for these securities as of December 31, 2023 and 2022.

FAIR VALUE MEASUREMENTS

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Money market funds $ 18,641 $ 18,641 $ — $ —

Commercial paper 25,291 — 25,291 —

government-sponsored agency bonds 102,093 — 102,093 —

Corporate bonds 999 — 999 —

Commercial paper 49,654 — 49,654 —

Asset-backed securities 8,625 — 8,625 —

treasury securities 2,457 — 2,457 —

Total $ 181,470 $ 18,641 $ 162,829 $ —

Derivative liabilities for exit fees $ 1,656 $ — $ — $ 1,656

Derivative liabilities for exit fee $ 675 $ — $ — $ 675

Total $ 675 $ — $ — $ 675

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Commercial paper 25,291 — 25,291 —

government-sponsored agency bonds 1,479 — 1,479 —

Corporate bonds 999 — 999 —

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

Total $ 112,082 $ 84,313 $ 27,769 $ —

Derivative liability for exit fee $ 698 $ — $ — $ 698

Derivative liability for exit fees $ 1,656 $ — $ — $ 1,656

Total $ 1,656 $ — $ — $ 1,656

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government-sponsored agency bonds, U.S.

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

treasury securities, 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 2018 Exit Fee and 2022 Exit Fee, as defined and discussed in Note 10.

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Borrowings for a description of the Level 2 inputs used to estimate the fair value of the liability.

The carrying value of the deferred royalty obligation related to the sale of future royalties approximates its fair value as of December 31, 2022 and is based on our current estimates of future royalties and commercialization milestones expected to be

paid to us by Kyowa Kirin Co., Ltd.

The carrying value of the deferred royalty obligation related to the sale of future royalties approximates its fair value as of December 31, 2023 and is based on our current estimates of future royalties and commercialization milestones expected to be paid to us by Kyowa Kirin Co., Ltd.

(KKC) over the life of the agreement.

Deferred Royalty Obligation Related to the Sale of Future Royalties for a description of the Level 3 inputs used to estimate the fair value of the 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 as of December 31, 2021 was not material.

Inventory as of December 31, 2022 consisted of the following (in thousands):

December 31, 2022

Inventory as of December 31, 2023 and 2022 consisted of the following (in thousands):

December 31, 2023 December 31, 2022

Raw materials $ 22,920 $ 22,299

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Total $ 49,487 $ 28,346

Prepaid commercial manufacturing of $ 13.6 million and $ 9.4 million as of December 31, 2022 and 2021, respectively, consisted 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.

PRODUCT REVENUE, NET

We received approval from the FDA in September 2019 to market IBSRELA in the U.S.

We began selling IBSRELA in the U.S.

in March 2022.

We recorded net revenue for IBSRELA of $ 15.6 million during the twelve months ended December 31, 2022.

Sales to AmerisourceBergen Drug Corporation, Cardinal Health, and McKesson Corporation made up 26.8 %, 23.1 %, and 21.6 %, respectively, of our gross product revenue during the twelve months ended December 31, 2022.

In addition to inventory, we had prepaid commercial manufacturing of $ 23.2 million and $ 13.6 million as of December 31, 2023 and 2022, respectively, which consisted of prepayments to third party contract manufacturing organizations, including prepayments of $ 4.2 million and zero as of December 31, 2023 and 2022, respectively, that are expected to be converted into inventory after 12 months.

Total revenues during the years ended December 31, 2023, 2022, and 2021 were as follows (in thousands):

Year Ended December 31,

2023 2022 2021

Product sales, net:

IBSRELA $ 80,062 $ 15,600 $ —

XPHOZAH 2,464 — —

Total product sales, net 82,526 15,600 —

Licensing revenue 35,809 35,031 5,013

Product supply revenue 6,121 1,527 907

Collaborative development revenue — — 4,177

Total revenues $ 124,456 $ 52,158 $ 10,097

Revenue from the following Customers who contributed greater than 10% of our gross product revenue during the years ended December 31, 2023 and 2022 as a percentage of total gross product revenue was as follows:

Year Ended December 31,

BioRidge Pharma, LLC 26.3 % — %

Cardinal Health 21.6 % 23.1 %

AmerisourceBergen Drug Corporation 20.9 % 26.8 %

McKesson Corporation 17.2 % 21.6 %

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

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

Activity related to 2022 sales 825 2,721 2,502 6,048

Credits/deductions issued ( 683 ) ( 1,277 ) ( 1,244 ) ( 3,204 )

Provisions 825 2,721 2,502 6,048

Credits/payments ( 683 ) ( 1,277 ) ( 1,244 ) ( 3,204 )

Balance as of December 31, 2022 142 1,444 1,258 2,844

There were no product sales or gross-to-net accruals during the twelve months ended December 31, 2021 or 2020.

Provisions 5,341 15,365 10,629 31,335

Credits/payments ( 5,005 ) ( 12,575 ) ( 7,971 ) ( 25,551 )

Balance as of December 31, 2023 $ 478 $ 4,234 $ 3,916 $ 8,628

Adjustments to prior period provisions recorded in the current period were not material.

COLLABORATION AND LICENSING AGREEMENTS

Kyowa Kirin Co., Ltd.

2019 KKC Agreement

In November 2019, we entered into a research collaboration and option agreement with KKC ("2019 KKC Agreement”), to undergo research to identify two preclinical study-ready compounds for designation as development compounds, with one compound inhibiting the first undisclosed target (“Program 1”) and a second inhibiting the second undisclosed target (“Program

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

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

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

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

(i) two 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 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 2019 KKC Agreement ended on February 28, 2023.

We assessed the 2019 KKC Agreement in accordance with ASC 606 and concluded that the contract’s counterparty, KKC, is a customer.

We also considered the modification guidance prescribed in ASC 606 and concluded that the 2019 KKC Agreement should be accounted for as a separate contract from the 2017 KKC Agreement, as defined and discussed below.

We identified various promises in the 2019 KKC Agreement, including the grant of an initial research license, the Program 1 research, the Program 2 research, the right to obtain certain development and commercialization rights with Program 1 in certain territories and the right to obtain development and commercialization rights with Program 2 in certain territories, and participation in a joint steering committee (“JSC”) and determined that KKC could not benefit from either of the research programs without the research license and participation in the JSC.

As such, the combined license, research programs and participation in the JSC were deemed to be the highest level of goods and services that can be deemed distinct for each of the Program 1 research and Program 2 research.

We concluded that the options to obtain additional development and commercialization rights that are exercisable by KKC under certain circumstances are not performance obligations of the contract at inception because the option fees reflect the standalone selling price of the options, and therefore, the options are not considered to be material rights.

At the outset of the 2019 KKC Agreement, we determined that the initial transaction price was $ 10.0 million and that revenue associated with the combined performance obligations should be recognized as services are provided using the input method.

Since transfer of control occurs over time, in management’s judgment this input method is the best measure of progress towards satisfying the performance obligations and reflects a faithful depiction of the transfer of goods and services.

Revenue was recognized over the Program 1 and Program 2 research periods which concluded in 2021.

During the years ended December 31, 2022 and 2021, we recognized zero and $ 4.2 million, respectively, as revenue under the 2019 KKC Agreement in the statement of operations and comprehensive loss.

The transaction price had been fully allocated to revenue as of December 31, 2021 and there was no associated deferred revenue presented on the balance sheet as of December 31, 2022 or 2021.

As of December 31, 2022 and 2021, we had no material future obligations under the 2019 KKC Agreement.

2017 KKC Agreement

In November 2017, we entered into an exclusive license agreement with KKC (“2017 KKC Agreement”), under which 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.

(Kyowa Kirin)

In November 2017, we entered into an exclusive license agreement with Kyowa Kirin (2017 Kyowa Kirin Agreement), under which we granted Kyowa Kirin 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.

Pursuant to the 2017 KKC Agreement, KKC is responsible for all costs and expenses incurred in the development and commercialization of tenapanor for all licensed indications in Japan.

We are responsible for supplying the tenapanor drug substance for KKC’s use in development and commercialization throughout the term of the 2017 KKC Agreement, provided that KKC may exercise an option to manufacture the tenapanor drug substance under certain conditions.

In October 2022, we entered into a Commercial Supply Agreement with KKC to further define the obligations of the parties with respect to the commercial supply of tenapanor drug substance (“2022 KKC Supply Agreement”).

As detailed below under the heading “Deferred revenue’ we have received advanced payments from KKC for the manufacturing of tenapanor drug substance that will be used to satisfy KKC needs.

Pursuant to the 2017 Kyowa Kirin Agreement, Kyowa Kirin is responsible for all costs and expenses incurred in the development and commercialization of tenapanor for all licensed indications in Japan.

We are responsible for supplying the tenapanor drug substance for Kyowa Kirin’s use in development and commercialization throughout the term of the 2017 Kyowa Kirin Agreement, provided that Kyowa Kirin may exercise an option to manufacture the tenapanor drug substance under certain conditions.

In October 2022, we entered into a Commercial Supply Agreement with Kyowa Kirin to further define the obligations of the parties with respect to the commercial supply of tenapanor drug substance (2022 Kyowa Kirin Supply Agreement).

As detailed below under the heading Deferred Revenue we have received advanced payments from Kyowa Kirin for the manufacturing of tenapanor drug substance that will be used to satisfy Kyowa Kirin needs.

We assessed these arrangements in accordance with Accounting Standards Update (ASU) No.

2014-09, Revenue from Contracts with Customers (Topic 606) and related amendments (“ASC 606”) and concluded that the contract counterparty, KKC, is a customer.

Under the terms of the 2017 KKC Agreement, we received $ 30.0 million in up-front license fees, which was recognized as revenue when the agreement was executed.

Based on our assessment, management determined that the

license and the manufacturing supply services were the material performance obligations at the inception of the 2017 KKC Agreement and, as such, each of the performance obligations is distinct.

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

2014-09, Revenue from Contracts with Customers (Topic 606) and related amendments (ASC 606) and concluded that the contract counterparty, Kyowa Kirin, is a customer.

Under the terms of the 2017 Kyowa Kirin Agreement, we received $ 30.0 million in upfront license fees, which was recognized as revenue when the agreement was executed.

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 Kyowa Kirin Agreement, and as such, each of the performance obligations is distinct.

We may be entitled to receive up to $ 55.0 million in total development and regulatory milestones, of which $ 35.0 million has been received and recognized as revenue as of December 31, 2023.

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As discussed in Note 8.

Deferred Royalty Obligation Related to the Sale of Future Royalties , 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.

Deferred Royalty Obligation Related to the Sale of Future Royalties , the future royalties and commercial milestone payments we may receive under the 2017 Kyowa Kirin 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 was fully constrained at December 31, 2022 and 2021.

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

Under the terms of the 2022 Amendment, we and KKC have agreed to a reduction in the royalty rate payable to us by KKC upon net sales of tenapanor for hyperphosphatemia in Japan.

The variable consideration related to the remaining milestone payments was fully constrained at December 31, 2023.

In April 2022, we entered into a second amendment to the 2017 Kyowa Kirin Agreement (2022 Amendment).

Under the terms of the 2022 Amendment, we and Kyowa Kirin agreed to a reduction in the royalty rate payable to us by Kyowa Kirin upon net sales of tenapanor for hyperphosphatemia 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 discussed in Note 8.

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

Deferred Royalty Obligation Related to the Sale of Future Royalties , the future commercial milestones and royalties we may receive under the 2017 Kyowa Kirin 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 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.

In October 2022, we announced that KKC submitted an NDA to the Japanese Ministry of Health, Labour and Welfare for tenapanor for the improvement of hyperphosphatemia in adult patients with CKD on dialysis, which resulted in payment to us from KKC for an aggregate of $ 35.0 million for milestone payments and payments under the 2022 Amendment.

We received these payments during the fourth quarter of 2022 and recorded them as licensing revenue on our statement of operations and comprehensive loss.

The remaining variable consideration related to the reduction in the royalty rate was fully constrained at December 31, 2022.

For the year ended December 31, 2021, $ 5.0 million of licensing revenue was recorded upon the initiation of phase 3 clinical studies by KKC in Japan to evaluate tenapanor for hyperphosphatemia.

For the years ended December 31, 2022 and 2021, $ 1.5 million and $ 0.9 million, respectively, of product supply revenue was recorded for manufacturing supply of tenapanor and other materials to KKC for product development and clinical trials in Japan, in accordance with our agreement with the 2017 KKC Agreement.

For the years ended December 31, 2022 and 2021, $ 35.0 million and $ 5.0 million, respectively, of licensing revenue was recorded.

The 2022 licensing revenue was earned upon KKC's submission of an NDA to the Japanese Ministry of Health, Labour and Welfare for tenapanor for the improvement of hyperphosphatemia in adult patients with CKD on dialysis.

The 2021 licensing revenue was recorded upon the initiation of Phase 3 clinical studies by KKC in Japan to evaluate tenapanor for hyperphosphatemia.

As consideration for the reduction in the royalty rate, Kyowa Kirin agreed to pay us up to an additional $ 40.0 million payable in two tranches, with the first payment due following Kyowa Kirin's filing with the Japanese Ministry of Health, Labour and Welfare (MHLW) of its application for marketing approval for tenapanor and the second payment due following Kyowa Kirin’s receipt of regulatory approval to market tenapanor for hyperphosphatemia in Japan, both of which occurred as of September 30, 2023.

In October 2022, we announced that Kyowa Kirin submitted a New Drug Application (NDA) to the Japanese MHLW for tenapanor for the improvement of hyperphosphatemia in adult patients with CKD on dialysis, which resulted in payment to us from Kyowa Kirin for an aggregate of $ 35.0 million for milestone payments and payments under the 2022 Amendment.

We received these payments during the fourth quarter of 2022 and recorded them as licensing revenue on our statement of operations and comprehensive income (loss).

In September 2023, we announced that Kyowa Kirin received approval from the Japanese MHLW for the NDA for tenapanor for the improvement of hyperphosphatemia in adult patients with CKD on dialysis, which resulted in payment to us from Kyowa Kirin for an aggregate of $ 30.0 million for milestone payments and payments under the 2022 Amendment.

We received these payments in October 2023 and recorded them as licensing revenue on our statement of operations and comprehensive income (loss) when earned during the three months ended September 30, 2023.

During the years ended December 31, 2023, 2022, and 2021, we recognized $ 30.0 million, $ 35.0 million, and $ 5.0 million of licensing revenue pursuant to the 2017 Kyowa Kirin Agreement, as amended.

During the years ended December 31, 2023, 2022, and 2021, we recognized $ 6.1 million, $ 1.5 million, and $ 0.9 million respectively, of product supply revenue pursuant to the 2017 Kyowa Kirin Agreement.

Shanghai Fosun Pharmaceutical Industrial Development Co.

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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 up-front license fees which was recognized as revenue when the agreement was executed.

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 our 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 are 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 was fully constrained at December 31, 2022 and 2021.

We recorded no revenue related to the Fosun Agreement during the years ended December 31, 2022 and 2021.

We may be entitled to receive development and commercialization milestones of up to $ 113.0 million, of which $ 8.0 million has been recognized as revenue and $ 5.0 million has been received as of December 31, 2023 and $ 3.0 million was received in January 2024, 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 was fully constrained at December 31, 2023.

In July 2023, we announced that an NDA for tenapanor had been accepted for review by China’s Center for Drug Evaluation of the National Medical Products Administration (NMPA) for the control of serum phosphorus in adult patients with CKD on hemodialysis.

This acceptance triggered a $ 2.0 million milestone payment to us under the terms of the Fosun Agreement.

We received this payment during the third quarter of 2023 and recorded it as licensing revenue on our statement of operations and comprehensive loss when earned during the three months ended September 30, 2023.

In October 2023, we announced that the U.S.

FDA has approved XPHOZAH to reduce serum phosphorus in adults with CKD on dialysis as add-on therapy in patients who have an inadequate response to phosphate binders or who are intolerant of any dose of phosphate binder therapy.

This triggered an additional $ 3.0 million milestone payment to us under the terms of the Fosun Agreement, which was received during the first quarter of 2024.

Also, in October 2023, we announced that Fosun Pharma received approval from the Hong Kong Department of Health for the marketing application for tenapanor for the treatment of irritable bowel syndrome with constipation (IBS-C).

During the year ended December 31, 2023, we recognized $ 5.0 million of licensing revenue pursuant to the Fosun Agreement.

During the years ended December 31, 2022, and 2021, we did not recognize a material amount of revenue pursuant to the Fosun Agreement.

Knight Therapeutics, Inc.

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Based on our assessment, we determined that the license and the manufacturing supply services were the material performance obligations at the inception of the agreement and, as such, each of the performance obligations are distinct.

Under the terms of the Knight Agreement, we received a $ 2.3 million non-refundable, one-time upfront payment in March 2018 and may be eligible to receive additional development and commercialization milestone payments worth up to CAD 22.2 , or approximately $ 16.3 million at the currency exchange rate on December 31, 2022.

Under the terms of the Knight Agreement, we received a $ 2.3 million non-refundable, one-time upfront payment in March 2018 and may be eligible to receive additional development and commercialization milestone payments worth up to CAD 22.2 million, or approximately $ 16.7 million at the currency exchange rate on December 31, 2023, of which $ 0.7 million has been received and recognized as revenue as of December 31, 2023.

We are also eligible to receive royalties ranging from the mid-single digits to the low twenties throughout the term of the agreement, and a transfer price for manufacturing services.

The variable consideration related to the remaining development milestone payments were fully constrained at December 31, 2022 and 2021.

For the years ended December 31, 2022 and 2021, $ 31 thousand and $ 13 thousand of licensing revenue was recorded, respectively, related to the Knight Agreement.

For the years ended December 31, 2022 and 2021, no product supply revenue was recorded, respectively, related to the Knight Agreement.

The variable consideration related to the remaining development milestone payments was fully constrained at December 31, 2023.

During the years ended December 31, 2023, 2022, and 2021, we did not recognize a material amount of revenue pursuant to the Knight Agreement.

METiS Therapeutics Inc.

In April 2023, we entered into an exclusive, worldwide license agreement with METiS Therapeutics Inc., (METiS Agreement) for the development and commercialization of a portfolio of TGR5 agonist compounds that were discovered and developed by Ardelyx for all therapeutic areas.

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

Based on our assessment, we determined that the license was the material performance obligation at the inception of the agreement.

Under the terms of the METiS Agreement, we received a $ 0.8 million non-refundable, one-time upfront payment in April 2023 and may be eligible to receive additional development and commercialization milestone payments worth up to $ 243.0 million.

We are also eligible to receive royalties ranging within the mid-single digits throughout the term of the agreement.

The variable consideration related to the remaining development and commercialization milestone payments was fully constrained at December 31, 2023.

During the year ended December 31, 2023, we recognized $ 0.8 million of licensing revenue pursuant to the METiS Agreement upon delivery of the license.

AstraZeneca AB (AstraZeneca)

In June 2015, we entered into a termination agreement with AstraZeneca ("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).

For the years ended December 31, 2022 and 2021, we recognized $ 3.6 million and $ 1.0 million, respectively, as cost of revenue related to the AstraZeneca Termination Agreement.

To date in aggregate, we have recognized $ 15.3 million of the $ 75.0 million aggregate maximum related to the AstraZeneca Termination Agreement.

In June 2015, we entered into a termination agreement with AstraZeneca (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 other NHE3 products, up to a maximum of $ 75.0 million in aggregate for (i) and (ii).

As of December 31, 2023, to date in aggregate, we have recognized $ 27.6 million of the $ 75.0 million, which has been recorded as other cost of revenue on our statements of operations and comprehensive income (loss).

During the years ended December 31, 2023, 2022, and 2021, we recognized $ 12.4 million and $ 3.6 million, and $ 1.0 million, respectively, as other 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 December 31, 2022 deferred revenue current and non-current balances are attributable entirely to prepayments for product supply under the 2017 KKC Agreement, while the December 31, 2021 current deferred revenue balance is attributable to the 2019 KKC Agreement and the December 31, 2021 non-current deferred revenue balance is attributable prepayments for product supply under the 2017 KKC Agreement (in thousands):

Deferred revenue - current 2022 2021

Balance at Balance at January 1, $ — $ 4,177

Increases due to cash received, excluding amounts recognized as revenue during the period 42 —

Increases due to amounts reclassified from non-current, to be recognized in the next twelve months 3,961 —

Increases to amounts invoiced, for which cash has not yet been received 208 —

Decreases due to revenue recognized in the period for which cash has been received — ( 4,177 )

Balance at December 31, $ 4,211 $ —

Deferred revenue - non-current 2022 2021

Balance at Balance at January 1, $ 4,727 $ —

Increases due to cash received during the period 7,794 3,242

Increases to amounts invoiced, for which cash has not yet been received 465 —

Increase due to unbilled prepayments recorded during the period — 1,485

Decreases due to amounts reclassified as current, to be recognized in the next twelve months ( 3,961 ) —

The following tables present changes in our current and non-current deferred revenue balances during the reporting period, which are all attributable to the 2017 Kyowa Kirin Agreement (in thousands):

Current Non-Current Current Non-Current

Balance at January 1, $ 4,211 $ 9,025 $ — $ 4,727

Amounts invoiced as prepayments for product supply 1,547 5,629 250 8,259

Decrease for revenue recognized for product supply ( 4,586 ) — — —

Reclassify amounts to be recognized in the next twelve months 6,010 ( 6,010 ) 3,961 ( 3,961 )

Balance at December 31, $ 7,182 $ 8,644 $ 4,211 $ 9,025

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(HCR) entered into a Royalty and Sales Milestone Interest Acquisition Agreement (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 for hyperphosphatemia.

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.

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 Kyowa Kirin, as amended, based upon Kyowa Kirin's net sales of tenapanor in Japan for hyperphosphatemia.

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

We received the payment in October 2023.

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 Kyowa Kirin Agreement, to create or incur any liens with respect to the Royalty Interest Payments, the 2017 Kyowa Kirin Agreement or certain patents, or to sell, license or transfer certain patents in the field and territory described in the 2017 Kyowa Kirin 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 related to the sale of future royalties ("deferred royalty obligation") on our balance sheet.

Due to our ongoing manufacturing obligations under the 2017 KKC Agreement, we account for the proceeds as imputed debt and therefore will recognize royalties received under the arrangement as non-cash royalty revenue.

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 Kyowa Kirin 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 Kyowa Kirin 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.

The $ 10.0 million upfront payment from HCR received in June 2022 and the $ 5.0 million payment received in October 2023 have been recorded as a deferred royalty obligation related to the sale of future royalties (deferred royalty obligation) on our balance sheets.

Due to our ongoing manufacturing obligations under the 2017 Kyowa Kirin Agreement, we account for the proceeds as imputed debt and therefore will recognize royalties earned under the arrangement as non-cash royalty revenue.

As part of the sale, we incurred approximately $ 0.4 million in transaction costs, which, along with the deferred royalty obligation, are being 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.

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

There are a number of factors that could materially affect the fair value of the deferred royalty obligation.

Such factors include, but are not limited to, the amount and timing of potential future royalty payments to be received from KKC under the 2017 KKC agreement, changing standards of care, the introduction of competing products, manufacturing or other delays, intellectual property matters, adverse events that result in governmental health authority imposed restrictions on the use of the drug products, significant changes in foreign exchange rates as the royalties remitted to HCR are made in U.S.

dollars while the underlying sales of the products by KKC are made in Japanese yen, and other events or circumstances that could result in reduced royalty payments from KKC, which are not within our control, and all of which would result in a reduction of non-cash royalty revenues and the non-cash interest expense over the life of the deferred royalty obligation.

We 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 prospectively adjust the imputed interest rate and

the related amortization of the deferred royalty obligation.

Such factors include, but are not limited to, the amount and timing of potential future royalty payments to be received from Kyowa Kirin under the 2017 Kyowa Kirin agreement, changing standards of care, the introduction of competing products, manufacturing or other delays, intellectual property matters, adverse events that result in governmental health authority imposed restrictions on the use of the drug products, significant changes in foreign exchange rates as the royalties remitted to HCR are made in U.S.

dollars while the underlying sales of the products by Kyowa Kirin are made in Japanese yen, and other events or circumstances that could result in reduced royalty payments from Kyowa Kirin, which are not within our control, and all of which would result in a reduction of non-cash royalty revenues and the non-cash interest expense over the life of the deferred royalty obligation.

We periodically assess the estimated royalty payments from Kyowa Kirin 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.

As of December 31, 2023, our effective interest rate used to amortize the liability is 34.7 %.

During the twelve months ended December 31, 2022, we recognized approximately $ 1.7 million of non-cash interest expense for the amortization of the deferred royalty obligation.

As of December 31, 2022, we have received no royalty payments from KKC and, therefore, the deferred royalty obligation has not begun to be reduced.

During the years ended December 31, 2023 and 2022, we recognized approximately $ 3.9 million and $ 1.7 million, respectively, of non-cash interest expense related to the deferred royalty obligation.

As of December 31, 2023, we have received no royalty payments from Kyowa Kirin and, therefore, the deferred royalty obligation has not begun to be reduced.

Solar Capital and Western Alliance Bank Loan Agreement

In May 2018, we entered into a loan and security agreement ("2018 Loan Agreement"), with Solar Capital Ltd.

and Western Alliance Bank ("Lenders”).

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

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

We received net proceeds from the loan of approximately $ 49.3 million, after deducting the closing fee, legal expenses and issuance costs.

In October 2020, we and the Lenders entered into an amendment to the 2018 Loan Agreement (“2020 Amendment”) to extend the date through which we were permitted to make interest-only payments on the 2018 Term Loan by twelve months to December 1, 2021 subject to the repayment terms noted below.

Borrowings under the 2018 Term Loan bore interest at a floating per annum rate equal to 7.45 % plus the one-month London Inter-bank Offered Rate ("LIBOR").

We were permitted to make interest-only payments on the 2018 Term Loan through June 1, 2020, or until we achieved our primary endpoint in the Phase 3 study of tenapanor for the treatment of hyperphosphatemia in end-stage renal disease patients on dialysis prior to June 1, 2020, in which case we would have been permitted to make interest-only payments on the 2018 Term Loan through December 1, 2020.

In December 2019, we reported positive topline results for PHREEDOM, a long-term Phase 3 study evaluating the efficacy and safety of tenapanor as monotherapy for the treatment of hyperphosphatemia in adult patients with CKD on dialysis.

The Lenders were in agreement that these positive data from the Phase 3 PHREEDOM study achieve the “Phase 3 Endpoint” required by the 2018 Term Loan to extend the interest only period by six months to December 1, 2020.

Subsequent to the 2020 Amendment, the interest only period was extended an additional twelve months to December 1, 2021.

Accordingly, beginning on December 1, 2021 through the maturity date, we would have been required to make monthly payments of interest plus repayment of the 2018 Term Loan in consecutive equal monthly installments of principal.

If however, either the FDA did not approve our NDA for tenapanor for control of serum phosphorus in adult patients with CKD on dialysis on or before May 31, 2021 or the FDA issued a Complete Response Letter ("CRL") for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis, then we would begin principal payments on the earlier of June 1, 2021 or the first day of the month immediately following the date that the FDA issued a CRL to us.

In May and July 2021, we and the Lenders entered into additional amendments to the 2018 Loan Agreement (“the 2021 Amendments”) which together extended the period of time that we were permitted to make interest-only payments on the 2018 Term Loan to December 1, 2021;

provided that if we had 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 would expire and principal repayments would be required to begin on November 1, 2021.

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

Accordingly, during November 2021, in compliance with the terms of our 2018 Loan Agreement, we began to repay principal on the 2018 Term Loan.

In May 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) (2018 Loan Agreement) with Solar Capital Ltd.

and Western Alliance Bank (collectively, the 2018 Lenders).

The 2018 Loan Agreement provided for a loan facility for up to $ 50.0 million with a maturity date of November 1, 2022 (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 10.

Derivative Liabilities , 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 (2018 Exit Fee).

Our obligations for the 2018 Exit Fee remained outstanding following the full repayment of the 2018 Loan in February 2022 until October 2023 when we received approval from the U.S.

FDA for XPHOZAH to reduce serum phosphorus in adults with CKD on dialysis as add-on therapy in patients who have an inadequate response to phosphate binders or who are intolerant of any dose of phosphate binder therapy.

This triggered our obligation to pay the 2018 Exit Fee to the 2018 Lenders and we subsequently paid the 2018 Exit Fee in October 2023.

SLR Investment Corp.

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as collateral agent (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 (“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 XPHOZAH by December 31, 2022, and (ii) we have achieved certain product revenue milestone targets described in the 2022 Loan Agreement (“Term B Loan”, and collectively, the Term A Loan and the Term B Loan, the “2022 Loan”).

On February 9, 2023, 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 adult patients with CKD on dialysis in order to borrow the additional $ 22.5 million from December 31, 2022 to November 30, 2023 and extended the period during which we are permitted to make interest only payments until March 31,

2025 if we receive approval by the FDA for our NDA for XPHOZAH on or prior to November 30, 2023 or achieve a defined net product revenue threshold for 2023.

The 2022 Loan Agreement was subsequently amended in August 2022 (the First Amendment) and February 2023 (the Second Amendment).

We concluded that the First Amendment and the Second Amendment were modifications to the 2022 Loan Agreement.

The 2022 Loan Agreement, as amended by the First Amendment and the Second Amendment, provided for a senior secured loan facility, with $ 27.5 million (Term A Loan) funded on the Closing Date and an additional $ 22.5 million which we may borrow on or prior to December 20, 2023;

provided that (i) we have received approval by the U.S.

FDA for our NDA for XPHOZAH by November 30, 2023, and (ii) we have achieved certain product revenue milestone targets described in the 2022 Loan Agreement (Term B Loan, and together with the Term A Loan, the 2022 Original Loans).

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 or if certain conditions described above are achieved, through March 31, 2025.

Accordingly, beginning on April 1, 2024 or April 1, 2025, 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 or 24 months, respectively.

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 of 2 % of the 2022 Loan funded (“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.

On October 17, 2023, we entered into a Third Amendment (the Third Amendment) to the 2022 Loan Agreement by and between us and the 2022 Lenders.

The Third Amendment, among other things, (1) provides us with the option to draw an additional $ 50.0 million of committed capital by March 15, 2024 (the Term C Loan) provided we have drawn the Term B Loan;

and (2) provides us with the option to draw up to an additional $ 50.0 million of uncommitted capital by December 31, 2026, subject to approval by the Agent’s investment committee (the Term D Loan and together with the Term A, B, and C Loans, the Four 2022 Loans).

We concluded that the Third Amendment was a modification to the 2022 Loan Agreement and is accounted for accordingly.

We expect to provide the Agent with notice of our decision to draw the Term C Loan prior to the expiry of the option on March 15, 2024 to further support the commercial launch of XPHOZAH.

Under the Third Amendment, the maturity date for the Four 2022 Loans is March 1, 2027.

The interest rate for each of the Term A Loan and the Term B Loan is 7.95 % plus a SOFR value equal to 0.022 % plus the 1-month CME Term SOFR reference rate as published by the CME Term SOFR Administrator on the CME Term SOFR Administrator’s Website, subject to a SOFR floor of one percent.

The interest rate for each of the Term C Loan and the Term D Loan is 4.25 % plus a SOFR value equal to 0.022 % plus the 1-month CME Term SOFR reference rate as published by the CME Term SOFR Administrator on the CME Term SOFR Administrator’s Website, subject to a SOFR floor of 4.7 %.

In addition, the period under which we are permitted to make interest-only payments on the Four 2022 Loans was extended to December 31, 2026, effective upon our decision to draw the Term B Loan in the amount of $ 22.5 million.

In October 2023, we provided the Agent with notice of our decision to draw the Term B Loan to support the commercial launch of XPHOZAH and received the proceeds of the Term B Loan.

We were obligated to pay $ 0.2 million, upon the closing of the Term A Loan, and we were obligated to pay $ 0.1 million on the funding date of the Term B Loan.

We are obligated to pay $ 0.3 million on the earliest of (1) the funding date of the Term C Loan, (2) March 15, 2024, and (3) the prepayment, refinancing, substitution or replacement of the Term B Loans on or prior to March 15, 2024.

In addition, we will be obligated to pay 0.5 % of the aggregate original principal amount of the Term D Loan commitment, if requested by us and approved by the Agent’s investment committee, which shall be due on the earliest of (1) the funding of the Term D Loan, (2) if we request and the 2022 Lenders provide the Term D Loan commitment, the day immediately preceding the amortization date, and (3) if we request and the 2022 Lenders provide the Term D Loan commitment, the prepayment, refinancing, substitution or replacement of the Term C Loan on or prior to the date immediately preceding the amortization date.

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

We may voluntarily prepay all amounts outstanding under the Four 2022 Loans, subject to a prepayment premium of (i) 3 % of the outstanding principal amount of the Four 2022 Loans if prepaid prior to or on October 17, 2024, (ii) 2 % of the outstanding principal amount of the Four 2022 Loans if prepaid after October 17, 2024 through and including October 17, 2025, or (iii) 1 % of the outstanding principal amount of the Four 2022 Loans if prepaid after October 17, 2025 and prior to the maturity date.

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

Additionally, as discussed in Note 10.

Derivative Liabilities , in connection with the 2022 Original Loans, we entered into an agreement whereby we agreed to pay an exit fee in the amount of 2 % of the 2022 Original Loans funded (2022 Exit Fee).

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.

The 2022 Loan Agreement, as amended, 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 Four 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 Four 2022 Loan balance.

In addition, the 2022 Loan Agreement, as amended, 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 Four 2022 Term Loans, 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 December 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 2.

Summary of Significant Accounting Policies:

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 discussed in Note 21.

Subsequent Events , on February 9, 2023, we entered into a second amendment (“Second Amendment”) to our Loan Agreement with the Lenders.

The Second Amendment extends the interest-only term of the loan by twelve months to March 31, 2025 provided that we either (i) receive approval from the FDA for our NDA for the control of serum phosphorus in adult patients with CKD on dialysis on or prior to November 30, 2023 or (ii) achieve certain product revenue milestone targets as described in the Second Amendment for the year ending December 31, 2023.

The Second Amendment also extends the period under which we may draw the Term B Loan from July 25, 2023 to December 20, 2023, and amends the milestone that we must achieve in order to draw the Term B Loan by extending the time period for the receipt of approval by the FDA of the NDA for the control of serum phosphorus in adult patients with CKD on dialysis until November 30, 2023.

In addition, the Second Amendment replaces the floating per annum interest rate with 7.95 % plus the greater of (a) one percent ( 1.00 %) per annum and (b)(i) 0.022 % plus (ii) 1-month CME Term SOFR reference rate as published by the CME Term SOFR Administrator on the CME Term SOFR Administrator’s Website.

As of December 31, 2022, our future payment obligations related to the 2022 Loan, excluding interest payments and the 2022 final fee, were as follows (in thousands) and may be condensed to the 24 months ending March 1, 2027 if certain conditions noted above to extend the interest-only period are achieved:

We have classified the 2022 Original Loan balance as a non-current liability as of December 31, 2023 due to principal repayments beginning in January 2027.

We have concluded that the provisions that could cause acceleration of the principal repayments are remote.

As of December 31, 2023, our future payment obligations related to the 2022 Loan, excluding interest payments and the 2022 final fee, were as follows (in thousands):

Total repayment obligations 52,475

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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 ("2018 Exit Fee") upon any change of control transaction in respect of the Company or if we obtain both (i) FDA approval of XPHOZAH and (ii) FDA approval of IBSRELA, which was obtained on September 12, 2019 (“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 expense and other current liabilities on the accompanying balance sheets.

As of December 31, 2022 and 2021, the estimated fair value of the 2018 Exit Fee was $ 1.2 million and $ 0.7 million, respectively.

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 derivative instrument 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.

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

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 (2018 Exit Fee) upon any change of control transaction in respect of the Company or if we obtain both (i) U.S.

FDA approval of XPHOZAH and (ii) U.S.

FDA approval of IBSRELA, which was obtained on September 12, 2019 (2018 Exit Fee Agreement).

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

We concluded that the 2018 Exit Fee was a freestanding derivative which should be accounted for at fair value on a recurring basis.

In October 2023, we received approval from the U.S.

FDA for XPHOZAH to reduce serum phosphorus in adults with chronic kidney disease (CKD) on dialysis as add-on therapy in patients who have an inadequate response to phosphate binders or who are intolerant of any dose of phosphate binder therapy.

This triggered our obligation to pay the 2018 Exit Fee to the 2018 Lenders, which we subsequently paid in October 2023.

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

As of December 31, 2023 and December 31, 2022, the estimated fair value of the 2018 Exit Fee was zero and $ 1.2 million, respectively.

The fair value of the derivative liability at December 31, 2022 was determined using a discounted cash flow analysis and was 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 derivative instrument included:

(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 U.S.

FDA approvals, and (ii) a discount rate which was derived from our estimated cost of debt, adjusted with current LIBOR.

2022 Exit Fee

In February 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 (“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 ("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.

In February 2022, in connection with entering into the 2022 Original Loans, we entered into an agreement, whereby we agreed to pay an exit fee in the amount of 2 % of the 2022 Original Loan funded (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 (Revenue Milestone), tested monthly at the end of each month.

The Term C and Term D Loans do not result in payment of an additional exit fee.

Notwithstanding the prepayment or termination of the 2022 Original Loans, 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 balance sheets.

As of December 31, 2022, the estimated fair value of the 2022 Exit Fee is $ 0.4 million.

As of December 31, 2023 and December 31, 2022, the estimated fair value of the 2022 Exit Fee was $ 0.7 million and $ 0.4 million, respectively.

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 adult patients with CKD on dialysis by December 31, 2022, and (b) achievement of certain product revenue milestone targets.

Specifically, the key assumptions included in the calculation of the estimated fair value of the 2022 Exit Fee 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 was dependent upon (a) approval by the U.S.

FDA for our NDA for the control of serum phosphorus in adult patients with CKD on dialysis by November 30, 2023, and (b) achievement of certain product revenue milestone targets.

As of December 31, 2023, uncertainty around two of the noted valuation estimates had been removed, as the Term B Loan had been funded and the U.S.

FDA had approved our NDA for the control of serum phosphorus in adult patients with CKD on dialysis prior to November 30, 2023.

Generally, increases or decreases in the probability of occurrence would result in a directionally similar impact in the fair value measurement of the derivative liability and it is estimated that a 10 % increase (decrease) in the probability of occurrence would not result in a material fair value fluctuation.

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 years ended December 31, 2022, 2021 and 2020 (in thousands):

2022 2021 2020

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 comprehensive income (loss) and were as follows for the years ended December 31, 2023, 2022, and 2021 (in thousands):

Balance at January 1, $ 1,656 $ 698

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2022 Exit Fee 227 73

2018 Exit Fee payment $ ( 1,500 ) $ —

Fair value of exit fee derivative liabilities at December 31, $ 675 $ 1,656

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We have performed an evaluation of our other contracts with suppliers and collaborators in accordance with Topic 842 and have determined that, except for the facility leases described below, none of our contracts contain a lease.

We have recorded a right-of-use operating lease asset located in Fremont, California under a lease agreement entered into in September 2008 that was amended multiple times to add space and to extend the lease term through March 2025.

We recorded right-of-use operating lease assets for our facility in Waltham, Massachusetts under a lease agreement entered into during December 2020 with lease commencement dates during April and May 2021.

In August 2023, we entered into an amendment to the lease agreement to expand the leased premises to include an additional 4,247 square feet of office space.

As of December 31, 2023, the Waltham office space consists of 17,111 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 of the right-of-use asset and lease liability since 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 and an additional $ 0.3 million right-of-use asset and lease liability upon commencement of the lease amendment.

We have also recorded a right-of-use operating lease asset for our facility located in Fremont, California under a lease agreement entered into in September 2008 that was amended multiple times to add space and to extend the lease term through March 2025.

The office space consists of 72,500 square feet.

We do not have an option to renew the lease at our current Fremont location beyond March 2025.

We have recorded a right-of-use operating lease asset located in Waltham, Massachusetts under a lease agreement entered into in October 2018.

The office space consisted of 3,520 square feet with the lease terminating in September 2021.

We did not renew the lease at our original Waltham, Massachusetts facility.

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.

We have recorded a right-of-use operating lease asset located in Milwaukee, Wisconsin under a lease agreement entered into in October 2020 with a lease commencement date in November 2020.

In March 2023, we entered into a sub-lease Agreement (Sub-lease) with Chronus Health, Inc.

We have sub-leased to Chronus approximately 21,644 square feet of the 72,500 square foot building's interior space, plus corresponding exterior support space and parking.

The term of the Sub-lease expires on February 1, 2025.

In accordance with the Sub-lease, we recognized an impairment of long-lived assets totaling $ 0.4 million during the three months ended March 31, 2023, which consisted primarily of impairment to the Fremont facility right-of-use asset, as determined by measuring the undiscounted future cash flows from the sub-leased space.

The Sub-lease commenced in April 2023 and we recognized $ 0.8 million of income from the Sub-lease during the year ended December 31, 2023.

We have recorded a right-of-use operating lease asset for our facility located in Milwaukee, Wisconsin under a lease agreement entered into in October 2020 with a lease commencement date in November 2020.

The office space consists of 4,768 square feet with the lease terminating in February 2026.

We have an option to extend the lease term by 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 $ 0.4 million right-of use asset and lease liability for the Milwaukee lease upon commencement of the lease.

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Operating lease liability, net of current portion 1,725 5,855

Total $ 9,749 $ 13,240

Total lease liabilities $ 6,160 $ 9,749

Weighted-average remaining life (years) 1.6 2.4

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Pursuant to the 2020 Open Market Sales Agreement, Jefferies, as 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.

As of December 31, 2021, we had sold 23.3 million shares and received the maximum gross proceeds of $ 100.0 million pursuant to the 2020 Open Market Sales Agreement.

As of December 31, 2021, we had sold 23.3 million shares and received the maximum gross proceeds of $ 100.0 million pursuant to the 2020 Open Market Sales Agreement at a weighted average share prices of $ 4.30 per share.

In August 2021, we filed an additional prospectus supplement under the 2020 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 (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.

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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.

During the twelve months ended December 31, 2022, we sold 64.1 million shares and received gross proceeds of $ 73.1 million at a weighted average sales price of approximately $ 1.14 per share under the 2021 Open Market Sales Agreement.

As of December 31, 2022 we sold a total of 79.8 million shares and received gross proceeds of $ 98.1 million at a weighted average sales price of approximately $ 1.23 per share under the 2021 Open Market Sales Agreement.

During the period January 1, 2023 to January 12, 2023, we received additional gross proceeds of $ 20.0 million for the sale of an additional 7.7 million shares which were sold at a weighted average sales price of approximately $ 2.60 per share under the 2021 Open Market Sales Agreement.

There have been no other sales under the 2021 Open Market Sales Agreement after December 31, 2022.

As of March 2023, we had received the maximum gross proceeds of $ 150.0 million under the 2021 Open Market Sales Agreement at a weighted average share price of approximately $ 1.57 per share, which included 15.5 million shares of our common stock for which we received gross proceeds of $ 51.9 million at a weighted average share price of approximately $ 3.35 during the quarter ended March 31, 2023.

In January 2023, we filed a Form S-3 registration statement, which became effective in January 2023 (2023 Registration Statement), containing (i) a base prospectus for the offering, issuance and sale by us of up to a maximum aggregate offering price of $ 250.0 million of our common stock, preferred stock, debt securities, warrants and/or units, from time to time in one or more offerings;

and (ii) a prospectus supplement for the offering, issuance and sale by us of up to a maximum aggregate offering price of $ 150.0 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” ("2023 Open Market Sales Agreement").

and (ii) a prospectus supplement for the offering, issuance and sale by us of up to a maximum aggregate offering price of $ 150.0 million of our common stock that may be issued and sold, from time to time, under a sales agreement with Jefferies, deemed to be “at-the-market offerings” (2023 Open Market Sales Agreement).

Pursuant to the 2023 Open Market Sales Agreement, Jefferies, as sales agent, may receive a commission of up to 3.0 % of the gross sales price for shares of common stock sold under the 2023 Open Market Sales Agreement.

There have been no sales of our common stock under the 2023 Open Market Sales Agreement.

During the year ended December 31, 2023, we sold 16.8 million shares of our common stock and received gross proceeds of $ 70.0 million at a weighted average sales price of approximately $ 4.17 per share under the 2023 Open Market Sales Agreement.

EQUITY INCENTIVE PLANS

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In addition, 35 thousand shares that had been available for future awards under the 2008 Plan as of June 18, 2014, were added to the initial reserve available under the 2014 Plan, bringing the total reserve upon the effective date of the 2014 Plan to 1.5 million shares.

The number of shares initially reserved for

issuance or transfer pursuant to awards under the 2014 Plan will be increased by (i) the number of shares represented by awards outstanding under 2008 Plan on June 18, 2014, that are either forfeited or lapse unexercised or that are repurchased for the original purchase price thereof, up to a maximum of 1.2 million shares, and (ii) if approved by the administrator of the 2014 Plan, an annual increase on the first day of each fiscal year ending in 2024 equal to the lesser of (A) four percent ( 4.0 %) of the shares of stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of stock as determined by our board of directors;

The number of shares initially reserved for issuance or transfer pursuant to awards under the 2014 Plan will be increased by (i) the number of shares represented by awards outstanding under 2008 Plan on June 18, 2014, that are either forfeited or lapse unexercised or that are repurchased for the original purchase price thereof, up to a maximum of 1.2 million shares, and (ii) if approved by the administrator of the 2014 Plan, an annual increase on the first day of each fiscal year ending in 2024 equal to the lesser of (A) four percent ( 4.0 %) of the shares of stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of stock as determined by our board of directors;

provided, however, that no more than 10.7 million shares of stock may be issued upon the exercise of incentive stock options.

As of December 31, 2023, approximately 2.5 million shares of our common stock were available for future issuance under the 2014 Plan.

In November 2016, our board of directors approved the 2016 Employment Commencement Incentive Plan (Inducement Plan) under which 1.0 million shares were reserved.

In January 2021, January 2022 and December 2022, 0.5 million, 2.0 million and 3.0 million shares, respectively, were added to the Inducement Plan.

In January 2021, January 2022, December 2022 and January 2024, 0.5 million, 2.0 million, 3.0 million and 5.8 million shares, respectively, were added to the Inducement Plan.

As of December 31, 2023, 6.0 million shares of our common stock were subject to inducement grants that were issued pursuant to the Inducement Plan.

As of December 31, 2023, approximately 0.9 million shares of our common stock were available for future issuance under the 2016 Plan.

Stock Options

A summary of our stock option activity and related information during the twelve months ended December 31, 2022 is as follows (in thousands, except per share dollar amounts and years):

Shares Available for Grant Options Issued and Outstanding Weighted

A summary of our stock option activity and related information during the year ended December 31, 2023 is as follows (in thousands, except per share dollar amounts and years):

Options Issued and Outstanding Weighted

Contractual Term

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Balance at December 31, 2022 13,963 $ 4.83

Options authorized 10,207 — $ —

Options granted 8,914 $ 3.14

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Options canceled ( 483 ) $ 3.83

Issuance of common stock for services ( 712 ) — $ —

Balance at December 31, 2023 22,168 $ 4.20 7.3 $ 58,606

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The aggregate intrinsic value represents the difference between the total pre-tax value (i.e., the difference between our stock price and the exercise price) of stock options outstanding as of December 31, 2023, based on our common stock closing price of $ 6.20 per share, which would have been received by the option holders if all their in-the-money options had been exercised as of that date.

The intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020, was $ 30 thousand, $ 1.7 million, and $ 2.7 million, respectively.

The intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021, was $ 1.1 million, $ 30 thousand, and $ 1.7 million, respectively.

The weighted-average grant-date estimated fair value of options granted during the years ended December 31, 2023, 2022 and 2021 was $ 2.36 , $ 0.63 and $ 3.92 per share, respectively.

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treasury instruments on the date of grant with a maturity date consistent with the expected term of our stock option grants.

Dividend Yield —To date, we have not declared or paid any cash dividends and does not have any plans to do so in the future.

Dividend Yield —To date, we have not declared or paid any cash dividends and do not have any plans to do so in the future.

Therefore, we use an expected dividend yield of zero .

Restricted Stock Units

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

A summary of our RSUs activity and related information for the year ended December 31, 2023 is as follows (in thousands, except per share dollar amounts):

RSUs Weighted-Average

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Non-vested restricted stock units at December 31, 2023 3,646 $ 3.09

The total estimated fair value of RSUs vested during the years ended December 31, 2022, 2021 and 2020 was $ 2.6 million, $ 0.8 million and zero , respectively.

In July 2018, we granted 0.9 million PRSUs to our employees that vested upon the achievement of certain performance conditions, subject to the employees’ continued service relationship with us through the achievement date.

During 2020, we granted an additional 30 thousand PRSUs subject to the same performance conditions.

All 0.9 million of these PRSUs vested in September 2020.

The total estimated fair value of RSUs vested during the years ended December 31, 2023, 2022 and 2021 was $ 3.5 million, $ 2.6 million and $ 0.8 million, respectively.

Issuance of Common Stock for Services

During the years ended December 31, 2022, 2021 and 2020, we issued approximately 0.7 million, 26 thousand and 42 thousand shares, respectively, of common stock to members of the board of directors who elected to receive stock in lieu of their cash fees under our Non-Employee Director Compensation Program.

During the years ended December 31, 2023, 2022 and 2021, we issued approximately 0.1 million, 0.7 million and 26 thousand shares, respectively, of common stock to members of the board of directors who elected to receive stock in lieu of

their cash fees under our Non-Employee Director Compensation Program.

The shares issued during the years ended December 31, 2023, 2022 and 2021 were valued at $ 0.3 million, $ 0.4 million and $ 0.2 million for each year, respectively, based on the fair value of the common stock on the date of grant.

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provided, however, no more than 2.2 million shares of our common stock may be issued under the ESPP.

A summary of our ESPP activity during the twelve months ended December 31, 2022 is as follows (in thousands, except per share dollar amounts):

Shares Available

for Grant Number of Shares

Purchased Average Purchase Price

per Share Gross Proceeds

Balance at December 31, 2021 899 1,048

Shares purchased ( 308 ) 308 $ 0.63 $ 195

Balance at December 31, 2022 591 1,356

During the years ended December 31, 2023, 2022 and 2021, we issued approximately 436 thousand, 308 thousand and 387 thousand shares, respectively, at an average share price of $ 1.85 , $ 0.63 and $ 2.12 , respectively, pursuant to the ESPP.

As of December 31, 2023, approximately 1.1 million shares of our common stock were available for future issuance under the ESPP.

The following table illustrates the weighted-average assumptions for the Black-Scholes option-pricing model used in determining the fair value of ESPP purchase rights granted to our employees:

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Stock-based Compensation Expense

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

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

Year Ended December 31,

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Unrecognized Compensation Expense Average Remaining Vesting Period (Years)

Stock options grant $ 9,434 2.55

Stock option grants

$ 19,960 2.75

RSU grants $ 10,579 3.03

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During 2021, we implemented restructuring plans in August and October following the receipt of a Complete Response Letter (CRL) from the U.S.

FDA relating to our new drug application (“NDA”) for XPHOZAH and following the conclusion of an End of Review Type A meeting with the FDA, respectively.

FDA relating to our NDA for XPHOZAH and following the conclusion of an End of Review Type A meeting with the U.S.

FDA, respectively.

Both restructuring plans were substantially completed in December 2021 and most of the cash payments related to the reduction in workforce were disbursed prior to December 31, 2021.

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 included a general release of claims against us.

In connection with restructuring, we incurred restructuring charges of $ 6.2 million, which were recorded during the twelve months ended December 31, 2021, related to one-time termination notice and severance payments and other employee-related costs.

In connection with restructuring, we incurred restructuring charges of $ 6.2 million, which were recorded during the year ended December 31, 2021, related to one-time termination notice and severance payments and other employee-related costs.

We did not incur any significant contract termination costs pursuant to restructuring.

charges, $ 2.7 million was recorded in research and development expenses, and $ 3.5 million was recorded in selling, general and administrative expense in the accompanying statements of operations and comprehensive loss.

Most of the cash payments related to the reduction in workforce were disbursed during the twelve months ended December 31, 2021.

We reported the remaining estimated restructuring liability of zero and $ 0.5 million as accrued compensation and benefits in our balance sheet as of December 31, 2022 and 2021, respectively.

In addition, in October, 2021, our Board approved, and management has implemented a retention program consisting of cash payments and grants of RSUs to our employees, including our executives, not impacted by the reduction in force.

Of the charges, $ 2.7 million was recorded in research and development expenses, and $ 3.5 million was recorded in selling, general and administrative expense in the accompanying statements of operations and comprehensive loss.

PROPERTY AND EQUIPMENT, NET

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Accrued contract manufacturing expenses 1,946 1,657

Derivative liability for exit fees 1,656 698

Accrued non-clinical research and development expenses 1,188 265

Accrued professional and consulting services 808 597

Accrued sales and marketing expenses 3,223 587

Accrued professional and consulting services 486 808

Derivative liability for exit fees 675 1,656

Accrued clinical expenses 377 223

Accrued non-clinical research and development expenses 30 1,188

Other 1,366 885

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Tax credits 1.7 1.5 1.0

Executive compensation disallowed under IRC Sec 162(m) ( 1.6 ) ( 1.1 ) ( 0.5 )

Stock based compensation 0.1 ( 2.3 ) ( 1.3 )

Foreign withholding tax ( 0.8 ) — —

Executive compensation disallowed under IRC Sec 162(m) ( 1.9 ) ( 1.6 ) ( 1.1 )

Other — ( 0.8 ) —

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Stock-based compensation 6,946 5,244

Deferred royalty obligation

Other 6,707 4,909

4 unchanged sentences

Right-of-use asset ( 1,359 ) ( 2,129 )

Other — ( 5 )

Net deferred tax assets $ — $ —

2 unchanged sentences

A significant component of objective negative evidence evaluated was our cumulative loss incurred over the three-year period ended December 31, 2023.

Such objective evidence limits the

ability to consider other subjective evidence, such as our projections for future growth.

On the basis of this evaluation, as of December 31, 2022, December 31, 2021 and December 31, 2020, a full valuation allowance has been recorded against our net deferred tax asset.

Such objective evidence limits the ability to consider other subjective evidence, such as our projections for future growth.

On the basis of this evaluation, as of December 31, 2023, 2022 and 2021, a full valuation allowance has been recorded against our net deferred tax asset.

The valuation allowance increased by $ 20.5 million in 2023 primarily due to increases in net operating losses.

1 unchanged sentence

As of December 31, 2023, we had net operating loss carryforwards for federal income tax purposes of approximately $ 479.0 million, of which approximately $ 328.8 million can be carried forward indefinitely and the remaining net operating losses expire beginning in 2030, if not utilized.

Federal research and development tax credit carryforwards of approximately $ 17.2 million that expire beginning in 2027, if not utilized, and foreign tax credit carryforwards of approximately $ 1.2 million that expire in 2027, if not utilized.

Federal research and development tax credit carryforwards of approximately $ 17.8 million that expire beginning in 2027, if not utilized, and foreign tax credit carryforwards of approximately $ 1.7 million that begin to expire in 2027, if not utilized.

In addition, we had net operating loss carryforwards for California income tax purposes of approximately $ 92.9 million that expire beginning of 2030, if not utilized, and state research and development tax credit carryforwards of approximately $ 8.9 million which can be carried forward indefinitely.

11 unchanged sentences

Additions based on tax positions related to current year 262 460 1,613

Subtractions related to lapse of statute of limitation ( 811 ) — —

Additions based on tax positions related to prior year 99 — —

Subtractions based on tax positions related to prior year ( 811 ) ( 811 ) ( 811 )

12 unchanged sentences

GEOGRAPHIC INFORMATION AND CONCENTRATIONS

Revenues are attributed to geographical areas based on the location at which we earned revenue for product sales of IBSRELA or the domicile of our collaboration partners.

Revenues are attributed to geographical areas based on the location at which we earned revenue for product sales of IBSRELA and XPHOZAH or the domicile of our collaboration partners.

A summary of our revenue by geographic areas for the years ended December 31, 2023, 2022 and 2021, is as follows (in thousands):

6 unchanged sentences

Total revenue $ 124,456 $ 52,158 $ 10,097

(1) Revenues from the United States are comprised of amounts earned from sales of IBSRELA.

(2) Revenues from Asia Pacific are primarily comprised of amounts earned in accordance with the 2017 KKC Agreement and the 2019 KKC Agreement.

(1) Revenues from the United States are primarily comprised of amounts earned from sales of IBSRELA and XPHOZAH, as well as the upfront license fee from the METiS Agreement.

(2) Revenues from Asia Pacific are primarily comprised of amounts earned in accordance with the 2017 Kyowa Kirin Agreement, the 2019 Kyowa Kirin Agreement and the Fosun Agreement.

(3) Revenues from North America are comprised of amounts earned from Canada in accordance with the Knight Agreement.

2 unchanged sentences

2023 2022 2021

KKC 70.0 % 100 % 89 %

Knight 0.1 % — % 11 %

Kyowa Kirin 29.0 % 70.0 % 100.0 %

Bioridge Phama 24.0 % 3.2 % — %

Cardinal 19.8 % 9.6 % — %

AmerisourceBergen Drug Corporation 19.1 % 11.1 % — %

Historically, we have not experienced credit losses from our accounts receivable.

We have not recorded a reserve for credit losses as of December 31, 2022 and 2021.

McKesson 15.7 % 8.9 % — %

NET LOSS PER SHARE

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of stock-based awards and warrants.

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period and excludes any dilutive effects of stock-based awards and warrants.

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.

12 unchanged sentences

ESPP shares issuable 249 166 207

Warrants to purchase common stock — — 932

Total 24,212 16,382 13,680

5 unchanged sentences

The maximum amount of potential future indemnification is unlimited;

however, we currently hold director and officer liability insurance, which allows the transfer of risk associated with our exposure and may enable us to recover a portion of any future amounts paid.

however, we currently hold director and officer liability insurance, which allows the transfer of risk associated with our exposure and may enable us to recover a portion of any

future amounts paid.

We believe that the fair value of these indemnification obligations is minimal.

8 unchanged sentences

The complaints allege 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 plaintiffs seek to represent all persons who purchased or otherwise acquired Ardelyx securities between August 6, 2020, and July 19, 2021.

The plaintiffs seek damages and interest, and an award of costs, including attorneys’ fees.

2 unchanged sentences

Defendants filed a motion to dismiss the amended complaint on December 2, 2022.

In January and February 2023, in lieu of filing a response to defendant’s motion to dismiss, plaintiffs filed a motion seeking leave to further amend their compliant and defendants filed an opposition to the motion for leave to further amend the complaint.

A hearing on the motion for leave to further amend the complaint is scheduled for mid-May 2023.

In January and February 2023, in lieu of filing a response to defendant’s motion to dismiss, plaintiffs filed a motion seeking leave to further amend their complaint and defendants filed an opposition to the motion for leave to further amend the complaint.

On April 6, 2023, the court granted plaintiff’s motion for leave to further amend the complaint.

With the second amended complaint, the plaintiffs seek to represent all persons who purchased or otherwise acquired Ardelyx securities between March 6, 2020 and July 19, 2021.

Defendants filed a motion to dismiss the amended complaint on June 2, 2023.

On August 22, 2023, the court cancelled the hearing scheduled for September 14, 2023 on the motion to dismiss the amended complaint and indicated its decisions to instead rule on the filed briefs.

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.

8 unchanged sentences

On January 19, and April 27, 2022, the court granted the parties’ stipulation to stay the Go and Morris actions, respectively, until resolution of the anticipated motion(s) to dismiss in the Securities Class Actions.

On October 25, 2022, the parties filed a stipulation to consolidate and stay the Go and Morris actions,

and on October 27, 2022, the court consolidated the Go and Morris action and stayed the consolidated action pending resolution of the anticipated motion(s) to dismiss in the Securities Class Action.

On October 25, 2022, the parties filed a stipulation to consolidate and stay the Go and Morris actions, and on October 27, 2022, the court consolidated the Go and Morris action and stayed the consolidated action pending resolution of the anticipated motion(s) to dismiss in the Securities Class Action.

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.

1 unchanged sentence

As of December 31, 2023, there is no litigation pending that would reasonably be expected to have a material adverse effect on our results of operations and financial condition, and no contingent liabilities were accrued as of December 31, 2023.

SUBSEQUENT EVENTS

In January 2023, we filed a Form S-3 registration statement, which became effective in January 2023 ("2023 Registration Statement"), containing (i) a base prospectus for the offering, issuance and sale by us of up to a maximum aggregate offering price of $ 250.0 million of our common stock, preferred stock, debt securities, warrants and/or units, from time to time in one or more offerings;

On February 9, 2023, we entered into a second amendment (“Second Amendment”) to our Loan Agreement with the Lenders.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data