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Item 7. Management’s Discussion and Analysis

2025-02-21 compared with 2024-02-20 · 168 added, 187 removed, 316 unchanged (53% of the section changed)

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Our approach centers on advancing our innovative pipeline with multiple late-stage clinical programs targeting rare diseases with significant unmet medical needs.

Upon approval of any of our late-stage programs, we intend to leverage the skills of our talented commercial organization which has successfully identified, supported and treated patients prescribed our approved products over the last ten years.

FILSPARI® (sparsentan)

On February 17, 2023, the FDA granted accelerated approval of FILSPARI® (sparsentan) to reduce proteinuria in adults with primary IgAN at risk of rapid disease progression, generally a UPCR ≥1.5 gram/gram.

FILSPARI became commercially available in the U.S.

beginning the week of February 27, 2023, and we are providing a comprehensive patient support program throughout the patient’s treatment journey.

This indication was granted under accelerated approval based on reduction in proteinuria.

The continued approval of FILSPARI may be contingent upon confirmation of a clinical benefit in the Phase 3 PROTECT Study.

As described in more detail below, in September 2023, we announced topline two-year confirmatory secondary endpoint results from the PROTECT Study, and in December 2023, we announced the completion of a successful pre-NDA meeting with the FDA for FILSPARI in IgAN.

Following our regulatory engagement, we plan to submit a supplemental New Drug Application (sNDA) in the first quarter 2024 for conversion of the existing U.S.

accelerated approval of FILSPARI to full approval.

FILSPARI, a once-daily, oral medication is designed to selectively target two critical pathways in the disease progression of IgAN (endothelin 1 and angiotensin-II) and is the first and only non-immunosuppressive therapy approved for the treatment of this condition.

On September 5, 2024, the FDA granted full approval of FILSPARI® (sparsentan) to slow kidney function decline in adults with primary Immunoglobulin A nephropathy (IgAN) who are at risk of disease progression.

FILSPARI had previously been granted accelerated approval in February 2023 based on the surrogate marker of proteinuria.

Full approval was based on positive long-term confirmatory results from the PROTECT Study demonstrating that FILSPARI significantly slowed kidney function decline over two years compared to irbesartan.

FILSPARI is the only oral, once-daily, non-immunosuppressive medication that directly targets glomerular injury in the kidney by blocking two critical pathways of IgAN disease progression (endothelin-1 and angiotensin II).

The two-year efficacy data contained in the FDA-approved label is a modified intention to treat (ITT) analysis and evaluates data from all patients regardless of treatment discontinuation.

In the final analysis of the 404 randomized patients, FILSPARI significantly reduced the rate of decline in kidney function from baseline to Week 110 compared to irbesartan.

In the ITT analysis included in the label, the mean eGFR slope from baseline to Week 110 was -3.0 mL/min/1.73 m 2 /year for FILSPARI and -4.2 mL/min/1.73 m 2 /year for irbesartan, corresponding to a statistically significant treatment effect of 1.2 mL/ min/1.73 m 2 /year (p=0.0168).

The positive treatment effects on proteinuria compared to the active control irbesartan that were observed at Week 36 were durable out to the two-year measurement period.

Additional results from the PROTECT Study demonstrated the benefit of FILSPARI on absolute eGFR accrued over time and by Week 110 resulted in a 3.8 mL/min/1.73 m 2 difference in the mean change from baseline between FILSPARI and irbesartan.

Results from the PROTECT Study showed that FILSPARI was well tolerated with a clearly defined safety profile that has been consistent across all clinical trials conducted to date.

FILSPARI is a dual endothelin angiotensin receptor antagonist (DEARA).

Pre-clinical data have shown that blockade of both endothelin type A and angiotensin II type 1 pathways in forms of rare chronic kidney disease, reduces proteinuria, protects podocytes and prevents glomerulosclerosis and mesangial cell proliferation.

Sparsentan has been granted Orphan Drug Designation for the treatment of IgAN in the U.S.

and the EEA and FILSPARI has been granted seven years of Orphan Drug Exclusivity in the U.S.

for the reduction of proteinuria in adults with primary IgAN at risk of rapid disease progression.

FILSPARI has been granted seven years of Orphan Drug Exclusivity in the U.S.

(running from the date of accelerated approval) for the reduction of proteinuria in adults with primary IgAN at risk of rapid disease progression, and has been granted a separate seven years of Orphan Drug Exclusivity in the U.S.

(running from the date of full approval) to slow kidney function decline in adults with primary IgAN who are at risk for disease progression, excluding the use provided for in the aforementioned Orphan Drug Exclusivity granted in connection with the accelerated approval.

IgAN is characterized by hematuria, proteinuria, and variable rates of progressive renal failure.

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Most patients are diagnosed between the ages of 16 and 35, with up to 40% progressing to kidney failure within 15 years.

FILSPARI is the first and only non-immunosuppressive therapy approved for this condition.

We estimate approximately 30,000 to 50,000 patients in the United States to be addressable under FILSPARI's accelerated approval indication statement.

Data to support the accelerated approval of FILSPARI was generated from the Phase 3 PROTECT Study, the largest head-to-head interventional study to date in IgAN.

It is a global, randomized, multicenter, double-blind, parallel-arm, active-controlled clinical trial that evaluated the safety and efficacy of 400mg of sparsentan, compared to 300mg of irbesartan, in 404 patients ages 18 years and up with IgAN and persistent proteinuria despite available ACE or ARB therapy, and is currently ongoing in the open label extension phase of the study.

The PROTECT Study protocol provided for an unblinded analysis of at least 280 patients to be performed after 36 weeks of treatment to evaluate the primary efficacy endpoint - the change in proteinuria (UPCR) at week 36 from baseline.

Secondary efficacy endpoints include the rate of change in estimated glomerular filtration rate (eGFR) following the initiation of randomized treatment over 58-week and 110-week periods, as well as the rate of change in eGFR over 52-week and 104-week periods following the first six weeks of randomized treatment in approximately 380 patients.

In August 2021, we announced positive topline interim results from the ongoing Phase 3 PROTECT Study.

The PROTECT Study met its pre-specified interim primary efficacy endpoint with statistical significance.

After 36 weeks of treatment, patients receiving FILSPARI achieved a mean reduction in proteinuria from baseline of 49.8 percent, compared to a mean reduction in proteinuria from baseline of 15.1 percent for irbesartan-treated patients (p<0.0001).

Results from the interim assessment in the PROTECT Study showed that FILSPARI was well tolerated with a clearly defined safety profile that has been consistent across all clinical trials conducted to date.

In PROTECT, at the interim assessment, the most common adverse reactions (≥ 5%) were peripheral edema, hypotension (including orthostatic hypotension), dizziness, hyperkalemia, and anemia.

FILSPARI is available only through a risk evaluation and mitigation strategy (REMS) approved by the FDA.

Per request from the FDA, the efficacy data contained in the FDA-approved label under accelerated approval is a post-hoc sensitivity analysis that evaluates the first 281 randomized patients, a subset of the full trial population.

The mean reduction in proteinuria from baseline in the post-hoc sensitivity analysis is 45% for FILSPARI versus 15% for the active control, irbesartan.

Both the pre-specified and post-hoc sensitivity analyses have demonstrated that FILSPARI achieves a rapid and sustained reduction in proteinuria, with statistically significant and clinically meaningful improvement compared to the active comparator irbesartan.

In September 2023, we announced topline two-year confirmatory secondary endpoint results from the PROTECT Study;

eGFR total and chronic slope are the secondary confirmatory endpoints for the U.S.

and the EU, respectively.

FILSPARI demonstrated long-term kidney function preservation and achieved a clinically meaningful difference in eGFR total and chronic slope versus irbesartan, narrowly missing statistical significance in eGFR total slope while achieving statistical significance in eGFR chronic slope for purposes of regulatory review in the EU.

All topline efficacy endpoints favored FILSPARI as compared to irbesartan.

A preliminary review of the safety results through 110 weeks of treatment indicates FILSPARI was generally well-tolerated and the overall safety profile in the study has been consistent between treatment groups.

In December 2023, we announced the completion of a successful pre-NDA meeting with the FDA for FILSPARI in IgAN.

Following our regulatory engagement, we plan to submit a supplemental New Drug Application (sNDA) in the first quarter of 2024 for conversion of the existing U.S.

accelerated approval of FILSPARI to full approval.

In August 2022, we and Vifor (International) Ltd.

("CSL Vifor"), with whom we entered into a license and collaboration agreement ("License Agreement") in September 2021, announced that the EMA had accepted for review the conditional marketing authorization ("CMA") application of sparsentan for the treatment of IgAN in the EU.

We anticipate an opinion by the Committee for Medicinal Products for Human Use (the "CHMP") in the first quarter of 2024.

FILSPARI is the first non-immunosuppressive therapy approved for IgAN and is the only oral, once-daily, non-immunosuppressive therapy approved for this condition that directly targets glomerular injury in the kidney by blocking two critical pathways of IgAN disease progression (endothelin-1 and angiotensin II).

We estimate more than 70,000 patients in the United States to be addressable under FILSPARI's full approval indication.

Data to support the approval of FILSPARI was generated from the Phase 3 PROTECT Study, the largest head-to-head interventional study to date in IgAN.

It is a global, randomized, multicenter, double-blind, parallel-arm, active-controlled clinical trial that evaluated the safety and efficacy of 400mg of sparsentan, compared to 300mg of irbesartan, in 404 patients ages 18 years and up with IgAN and persistent proteinuria despite available angiotensin converting enzyme (ACE) inhibitor or angiotensin receptor blockers (ARB) therapy, and is currently ongoing in the open label extension phase of the study.

FILSPARI is available only through a risk evaluation and mitigation strategy (REMS) approved by the FDA, regarding mandatory birth control for patients of child-bearing potential regarding risk of embryo-fetal toxicity, as has been required for other approved endothelin antagonists, and a REMS for liver monitoring regarding potential risk of hepatotoxicity, as has been required for certain other approved endothelin antagonists.

As part of the liver monitoring REMS, monthly monitoring of each patient is required for the first year the patient is on treatment, and quarterly thereafter.

The Company submitted an sNDA for a potential modification to the frequency of liver monitoring for FILSPARI;

the sNDA has been accepted for review by the FDA and assigned a PDUFA target action date of August 28, 2025.

In April 2024, we and our partner CSL Vifor announced that the European Commission has granted conditional marketing authorization (“CMA”) for FILSPARI (sparsentan) for the treatment of adults with primary IgAN with a urine protein excretion ≥1.0 g/day (or urine protein-to-creatinine ratio ≥0.75 g/g).

The CMA is granted for all member states of the European Union, as well as in Iceland, Liechtenstein and Norway.

The European Commission's decision follows the positive opinion from the Committee for Medicinal Products for Human Use (“CHMP”) in February 2024, based on results from the pivotal Phase 3 PROTECT Study of FILSPARI in IgAN.

Under the terms of our license agreement with CSL Vifor, we will be entitled to receive a regulatory milestone payment of $17.5 million upon receipt of full regulatory approval by the European Commission for IgAN, and we anticipate receiving an additional milestone payment upon achievement of market access initiatives in certain countries.

CSL Vifor submitted an application for full regulatory approval in the second quarter of 2024.

The decision on full regulatory approval, if positive, will convert the CMA to a standard Marketing Authorization (“MA”).

FILSPARI became commercially available in Europe under the CMA in August 2024, with an initial launch in Germany and Austria.

In October 2024, we and CSL Vifor announced that Swissmedic has granted temporary marketing authorization for FILSPARI for the treatment of adults with primary IgAN with a urine protein excretion ≥1.0 g/day (or urine protein-to-creatinine ratio ≥0.75 g/g).

In November 2024, the Medicines and Healthcare products Regulatory Agency (MHRA) approved FILSPARI in the United Kingdom.

In January 2024, we announced our entry into an exclusive licensing agreement with Renalys Pharma, Inc.

("Renalys"), to bring sparsentan to patients in Japan and other countries in Asia, for the treatment of IgAN.

("Renalys"), to bring sparsentan for the treatment of IgAN to patients in Japan and other countries in Asia.

Renalys will hold regional rights to sparsentan for Japan, South Korea, Taiwan, Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

Following successful meetings with the Pharmaceuticals and Medical Devices Agency (PMDA) in 2023, Renalys plans to initiate an open label registrational study of sparsentan in Japan in the second quarter of 2024 to support potential approval of sparsentan in Japan.

Following successful meetings with the Pharmaceuticals and Medical Devices Agency (PMDA) in 2023, in the second quarter of 2024 Renalys initiated an open label registration study of sparsentan in Japan to support potential approval of sparsentan in Japan.

In July 2024, Renalys announced that the first patient was dosed in the study, and in January 2025, Renalys announced achievement of full enrollment in the study.

Results from the urine protein/creatinine ratio (UP/C) endpoint in the study are expected in the second half of 2025 to support a submission for approval to PMDA.

In December 2024, Renalys announced that sparsentan received Orphan Drug Designation from the Japanese Ministry of Health, Labour and Welfare for the indication of primary IgA nephropathy as of November 27, 2024.

Under the terms of the licensing agreement, Renalys will be responsible for development, regulatory matters, and commercialization in the licensed territories.

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The DUPLEX Study is a global, randomized, multicenter, double-blind, parallel-arm, active-controlled clinical trial evaluating the safety and efficacy of sparsentan in 371 patients.

The DUPLEX Study protocol provided for an unblinded analysis of at least 190 patients to be performed after 36 weeks of treatment to evaluate the interim efficacy endpoint - the proportion of patients achieving a FSGS partial remission of proteinuria endpoint (FPRE), which is defined as urine protein-to-creatinine ratio (UPCR) ≤1.5 g/g and a >40% reduction in UPCR from baseline, at week 36.

as urine protein-to-creatinine ratio (UPCR) ≤1.5 g/g and a >40% reduction in UPCR from baseline, at week 36.

In February 2021, we announced that the ongoing Phase 3 DUPLEX Study achieved its pre-specified interim FSGS partial remission of proteinuria endpoint following the 36-week interim period.

After 36 weeks of treatment, 42.0 percent of patients receiving sparsentan achieved FPRE, compared to 26.0 percent of irbesartan-treated

patients (p=0.0094).

After 36 weeks of treatment, 42.0 percent of patients receiving sparsentan achieved FPRE, compared to 26.0 percent of irbesartan-treated patients (p=0.0094).

Following engagement with the FDA on the interim proteinuria analysis and a subsequent eGFR data-cut, we elected to forego the previously planned submission for accelerated approval and pursue a potential traditional approval upon completion of the DUPLEX Study.

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After 108 weeks of treatment, sparsentan achieved a mean reduction in proteinuria from baseline of 50%, compared to 32% for irbesartan.

Although the DUPLEX Study did not achieve its two-year primary endpoint with statistical significance over the active control irbesartan, we are encouraged by the results, including the secondary endpoints on proteinuria and topline exploratory endpoints, including renal outcomes, which trended favorably for sparsentan.

Although the DUPLEX Study did not achieve its two-year primary endpoint with statistical significance over the active control irbesartan, we are encouraged by the results, including the pre-specified secondary endpoints on proteinuria and exploratory endpoints, including renal outcomes, which trended favorably for sparsentan.

In addition, a review of the safety results through 108 weeks of treatment indicate sparsentan was generally well-tolerated and the overall safety profile in the study to date was generally consistent between treatment groups.

In December 2023, we announced that we completed our planned Type C meeting with the FDA to discuss previously reported results from the Phase 3 DUPLEX Study of sparsentan in FSGS.

The FDA acknowledged the high unmet need for approved therapies as well as the challenges in studying FSGS but indicated that the two-year results from the Phase 3 DUPLEX Study alone are not sufficient to support an sNDA submission.

In December 2023, we announced that we completed a planned Type C meeting with the FDA to discuss results from the Phase 3 DUPLEX Study of sparsentan in FSGS.

The FDA acknowledged the work being done by the larger nephrology community to better understand proteinuria and eGFR as endpoints in clinical trials of FSGS and indicated a willingness to continue to engage with us on a potential path forward for sparsentan in FSGS following our consideration of additional evidence.

Together with CSL Vifor, we also plan to engage with the EMA to determine the potential for a subsequent variation to the Conditional Marketing Authorization (CMA) of sparsentan for the treatment of FSGS, if the MAA of sparsentan in IgA nephropathy is approved.

Given the high unmet need of FSGS patients, with no medicines currently approved for the condition, and the challenges associated with studying FSGS due to its heterogeneity and other attributes, we are conducting additional analyses of FSGS data and intend to engage with regulators to evaluate potential regulatory pathways for a sparsentan FSGS indication.

If sparsentan receives marketing authorization in any of the licensed territories covered by the exclusive license to CSL Vifor, CSL Vifor will be responsible for all commercialization activities in such licensed territories.

Subsequently, a collaborative international effort referred to as the PARASOL project was initiated with a goal to define the quantitative relationships between short-term changes in biomarkers (proteinuria and GFR) and long-term outcomes in order to support the use of alternative proteinuria-based endpoints as a basis for accelerated and traditional approval.

The PARASOL project is led by several patient advocacy organizations focused on glomerular diseases, with participation from regulators and industry representatives.

The principal finding from PARASOL was that in FSGS, reduction in proteinuria over 24 months is strongly associated with a reduction in the risk of kidney failure, and responder definitions based on thresholds of proteinuria are both biologically plausible and strongly supported by epidemiological data.

Following the recent PARASOL public workshop in which a multi-stakeholder group of rare kidney disease experts aligned around a potential proteinuria-based clinical trial endpoint for FSGS, we scheduled a Type C meeting with the FDA to discuss a potential regulatory pathway for a sparsentan FSGS indication.

In February 2025, we announced that we had completed a Type C meeting with the FDA and that we plan to submit an sNDA around the end of the first quarter of 2025 seeking traditional approval of FILSPARI for FSGS.

The sNDA will be based on existing data from the Phase 3 DUPLEX and Phase 2 DUET studies of FILSPARI.

Under the terms of our exclusive license to CSL Vifor, CSL Vifor is responsible for all commercialization activities in its licensed territories.

We remain responsible for the clinical development of sparsentan in the applicable territories.

If sparsentan receives marketing authorization in any of the territories covered by the exclusive license to Renalys, Renalys will be responsible for all development, regulatory matters, and commercialization activities in such licensed territories.

We remain responsible for the clinical development of sparsentan in the applicable territories and we will retain all rights to sparsentan in the United States and rest of world outside of the territories licensed to CSL Vifor and Renalys, provided that CSL Vifor has a right of negotiation to expand the licensed territories into Canada, China, Brazil and/or Mexico.

We will retain all rights to sparsentan in the United States and rest of world outside of the territories licensed to CSL Vifor and Renalys, provided that CSL Vifor has a right of negotiation to expand the licensed territories into Canada, China, Brazil and/or Mexico.

Pegtibatinase

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Classical HCU is a rare metabolic disorder characterized by elevated levels of plasma homocysteine that can lead to vision, skeletal, circulatory and central nervous system complications.

It is estimated that there are approximately 7,000 to 10,000 people living with HCU globally.

We estimate that there are approximately 7,000 to 10,000 addressable HCU patients globally.

Pegtibatinase has been granted Rare Pediatric Disease, Fast Track and Breakthrough Therapy designations by the FDA, as well as orphan drug designation in the United States and European Union.

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In December 2023, we initiated the pivotal Phase 3 HARMONY Study to support the potential approval of pegtibatinase for the treatment of classical HCU.

The HARMONY Study is a global, randomized, multi-center, double-blind, placebo-controlled Phase 3 clinical trial designed to evaluate the

efficacy and safety of pegtibatinase as a novel treatment to reduce total homocysteine (tHcy) levels.

Topline results from the HARMONY Study are expected in 2026.

The HARMONY Study is a global, randomized, multi-center, double-blind, placebo-controlled Phase 3 clinical trial designed to evaluate the efficacy and safety of pegtibatinase as a novel treatment to reduce total homocysteine (tHcy) levels.

In the beginning of 2024, the first patients were dosed in the HARMONY Study.

In September 2024, we announced a voluntary pause of enrollment in the Phase 3 HARMONY Study.

The voluntary enrollment pause enables us to work to address necessary process improvements in manufacturing scale-up to support commercial scale manufacturing as well as full enrollment in the HARMONY Study.

Patients currently enrolled in pegtibatinase studies continue to receive study medication from small scale batches which are unaffected by the scale-up process.

Currently enrolled patients will be able to continue on study medication as scheduled for the duration of the trials they are participating in.

The voluntary enrollment pause was enacted following our determination that the desired drug substance profile was not achieved in the recent scale-up process.

We are making progress on necessary process improvements in manufacturing scale-up and currently anticipate that we should be in position to restart enrollment in the Phase 3 HARMONY Study in 2026.

We acquired pegtibatinase as part of the November 2020 acquisition of Orphan Technologies Limited.

Preclinical Programs:

We are a participant in a Cooperative Research and Development Agreement (CRADA), which forms a multi-stakeholder approach to pool resources with leading experts and incorporate the patient perspective early in the therapeutic identification and development process.

We are partnering with the National Institutes of Health’s National Center for Advancing Translational Sciences (NCATS) and a leading patient advocacy organization, Alagille Syndrome Alliance, aimed at the identification of potential small molecule therapeutics for Alagille syndrome (ALGS).

There are no treatment options currently approved for ALGS.

Preclinical Program:

We are party to a collaboration agreement with PharmaKrysto Limited and their early-stage cystinuria discovery program, whereby we are responsible for funding all research and development expenses for the pre-clinical activities associated with the cystinuria program.

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Recurring stone formation can cause loss of kidney function in addition to substantial pain and loss of productivity associated with renal colic and stone passage.

While a portion of people living with the disease are able to manage symptoms through diet and fluid intake, the prevalence of cystinuria in the US is estimated to be 10,000 to 12,000, indicating that there may be as many as 4,000 to 5,000 affected individuals with cystinuria in the US that would be candidates for Thiola or Thiola EC.

While a portion of people living with the disease are able to manage symptoms through diet and fluid intake, the prevalence of cystinuria in the U.S.

is estimated to be 10,000 to 12,000, indicating that there may be as many as 4,000 to 5,000 affected individuals with cystinuria in the U.S.

that would be candidates for Thiola or Thiola EC.

In June 2019 we announced that the FDA approved 100mg and 300mg tablets of Thiola EC, an enteric-coated formulation of Thiola, to be used for the treatment of cystinuria.

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These generic versions of the original formulation of Thiola have impacted our sales, and these or additional generic versions of either formulation could have a material adverse impact on sales.

During 2023, two generic versions of Thiola EC (100 mg and 300 mg) were approved by the FDA.

Following receipt of paragraph IV certification notices from these manufacturers, we and our licensor Mission Pharmacal entered into agreements with these manufacturers in order to settle disputes around patent validity and infringement, providing for a license entry date of April 1, 2026 of these generic versions of Thiola EC (100mg and 300mg), or earlier under certain circumstances.

On January 30, 2024, the FDA approved an additional generic version of Thiola EC (100mg and 300mg).

Accordingly, Thiola EC is subject to immediate generic competitio n, which could impact our sales of Thiola EC.

As of December 31, 2024, several generic options for the 100mg and 300mg versions of Thiola EC have been approved by the FDA and become available.

Accordingly, Thiola EC is subject to generic competitio n.

Sale of Bile Acid Product Portfolio

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In December 2023, we implemented an approximate 20% workforce reduction focused on non-field-based employees in an effort to align our resources on the ongoing FILSPARI launch and the pivotal Phase 3 HARMONY Study to support the potential approval of pegtibatinase as the first potential disease-modifying treatment for HCU.

These restructuring adjustments are expected to result in an estimated annualized savings of approximately $25.0 million beginning in 2024, and an estimated non-recurring charge of approximately $12.0 million to $14.0 million, of which $11.4 million was recognized in the fourth quarter 2023.

We expect that we will incur the remaining estimated restructuring costs during 2024.

These restructuring adjustments are expected to result in an estimated annualized savings of approximately $25.0 million beginning in 2024.

As of December 31, 2024, we have incurred total non-recurring charges of $13.8 million in connection with the restructuring, and are no longer incurring restructuring expenses.

Critical Accounting Estimates

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If actual results in the future vary from the provisions, we will adjust the provision, which would affect net product revenue and earnings in the period such variances become known.

For the years ended December 31, 2023, 2022 and 2021, the Company recorded a net product revenue increase of $0.4 million, $0.2 million, and $0.2 million, respectively, related to performance obligations satisfied in previous periods.

For the years ended December 31, 2024 and 2023, the Company recorded adjustments to net product revenue of $0.5 million and $0.4 million, respectively, related to performance obligations satisfied in previous periods.

Government Rebates:

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We accrue for the calculated prompt pay discount based on the gross amount of each invoice for those customers at the time of sale.

We pay service fees to certain customers based on a contractually fixed percentage of the wholesale acquisition cost and fees for data.

Other fees are recorded as an offset to revenue based on contractual terms at the time revenue from the sale is recognized.

Product Returns:

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The stand-alone selling price for clinical development performance obligations is based on forecasted expected costs of satisfying a performance obligation plus an appropriate margin.

In 2023, there were no new collaboration and licensing agreements with customers which required an estimate of the stand-alone selling price for an underlying performance obligation.

If the licenses to intellectual property are determined to be distinct from the other performance obligations identified in the arrangement, we recognize revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the licensee and the licensee is able to benefit from the license.

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Expenses related to clinical trials are accrued based on our estimates of the progress of services performed, including actual level of patient enrollment, completion of patient studies and progress of the clinical trials or the delivery of goods.

We currently have one Phase 1/2 clinical trial and three Phase 3 clinical trials in process that are in varying stages of activity, with ongoing non-clinical support trials that are significant and changes in estimates could have a material impact on expenses we recognize.

Stock-Based Compensation

We account for share-based compensation arrangements in accordance with ASC 718, Compensation – Stock Compensation , which requires the measurement and recognition of compensation expense for all share-based payment awards to be based on estimated fair values.

We use the Black-Scholes option valuation model to estimate the fair value of our stock options at the date of grant.

The Black-Scholes option valuation model

requires the input of subjective assumptions to calculate the value of stock options.

For restricted stock units, the value of the award is based on our stock price at the grant date.

For performance-based restricted stock unit awards, the value of the award is based on our stock price at the grant date, with consideration given to the probability of the performance condition being achieved.

We use historical data and other information to estimate the expected price volatility for stock option awards and the expected exercise activity for all awards.

Expense is recognized over the vesting period for all awards and commences at the grant date for time-based awards and upon our determination that the achievement of such performance conditions is probable for performance-based awards.

The valuation, including the assumptions, require significant judgment by management.

The following weighted average assumptions were used in the Black-Scholes options pricing model to estimate the fair value of stock options for the specified reporting periods:

Year Ended December 31,

2023 2022 2021

Risk free rate 3.9 % 1.7 % 0.6 %

Expected volatility 50 % 50 % 59 %

Expected life (in years) 6.4 6.4 6.4

Expected dividend yield — — —

For the years ended December 31, 2023, 2022 and 2021, non-cash stock-based compensation expense totaled $44.2 million, $38.1 million and $29.6 million, respectively.

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

Until the date at which regulatory approval has been received, costs related to the production of inventory are recorded as research and development expenses as incurred.

We periodically analyze our inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value, and write down such inventory as appropriate.

In addition, our products are subject to strict quality control and monitoring which our suppliers and manufacturers perform throughout their manufacturing process.

If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, we record a charge to write down such inventory to its estimated realizable value.

We currently have four Phase 3 clinical trials in

process that are in varying stages of activity, with ongoing non-clinical support trials that are significant and changes in estimates could have a material impact on expenses we recognize.

Impairment of Intangible Assets subject to amortization

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We are subject to generic competition, and if additional generic versions of Thiola and Thiola EC, any generic versions of FILSPARI following the expiration of patent or regulatory exclusivity for the product, or any of our current or future products, are approved, sales of that product likely would be negatively impacted, which could have a material adverse impact on the recoverability of certain related intangible assets.

Generic versions of Thiola and Thiola EC have been approved and have impacted sales, and these or additional generic versions of either formulation could have a material adverse impact on sales and the recoverability of the intangible assets depending on the timing of the market entry and the related impact on net sales.

Generic versions of Thiola and Thiola EC have been approved, and these or additional generic versions of either formulation could have a material adverse impact on sales and the recoverability of the intangible assets depending on the timing of the market entry and the related impact on net sales.

Recently Issued Accounting Pronouncements

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The following table provides information regarding revenue, including net product sales and license and collaboration revenue ( in thousands ):

Year Ended December 31, Year Ended December 31,

2023 2022 Change 2022 2021 Change

Tiopronin products $ 98,329 $ 97,970 $ 359 $ 97,970 $ 115,122 $ (17,152)

Year Ended December 31,

2024 2023 Change

FILSPARI $ 132,222 $ 29,208 $ 103,014

Tiopronin products 94,485 98,329 (3,844)

Total net product sales 226,707 127,537 99,170

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Net product sales

The $29.6 million increase in total net product revenues for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily due the launch of FILSPARI in February 2023 and subsequent sales throughout the year.

The $17.2 million decrease in total net product revenues for the year ended December 31, 2022 as compared to the year ended December 31, 2021, which consisted of Thiola net sales, was a result of generic competition.

The $99.2 million increase in total net product revenues for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to growth in sales of FILSPARI, including a full twelve months of sales in 2024, following the February 2023 launch.

The decrease in net sales of our tiopronin products was a driven by increased competition.

License and collaboration revenue

The increase in license and collaboration revenue for the year ended December 31, 2023 compared to the year ended December 31, 2022 was due to a $3.3 million sale of active pharmaceutical ingredients to CSL Vifor in March 2023 in preparation for a potential European Union approval and subsequent commercial launch, along with a $2.9 million increase in amortization of deferred revenue under the cost-to-cost model, which saw total costs for clinical development activities decrease as a result of the restructuring announced in December 2023.

The decrease in license and collaboration revenue for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to a $8.5 million decrease in collaboration revenue associated with the CSL Vifor License Agreement due to a decrease in amortization of deferred revenue, and the $3.3 million sale of active pharmaceutical ingredients to CSL Vifor in March 2023.

We estimate that the remainder of the deferred revenue balance associated with these clinical development activities, $2.8 million, will be fully realized by mid-2025.

We recognize costs for clinical development activities in research and development;

costs related to sale of active pharmaceutical ingredients are recognized in cost of goods sold.

The decrease in license and collaboration revenue for the year ended December 31, 2022 as compared to the year ended December 31, 2021 was primarily due to the recognition of $12.0 million in license revenue upon entering into the CSL Vifor License Agreement in September 2021, offset by an increase in collaboration revenue associated with the CSL Vifor License Agreement.

Collaboration revenue, derived from the performance of clinical development activities and based upon the ratio of costs incurred to total estimated costs, increased by $6.8 million from $4.7 million in 2021 to $11.5 million in 2022, primarily due to a full year of performance in 2022 as compared to a partial year of performance in 2021.

Operating Expenses

The following table provides information regarding operating expenses ( in thousands ):

Year Ended December 31, Year Ended December 31,

2023 2022 Change 2022 2021 Change

Year Ended December 31,

2024 2023 Change

Cost of goods sold - product sales $ 7,446 $ 8,406 $ (960)

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Selling, general and administrative 264,119 265,542 (1,423)

In-process research and development 65,205 — 65,205

Restructuring 2,438 11,394 (8,956)

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Cost of goods sold

Cost of goods sold includes the cost of inventory sold, third party manufacturing and supply chain costs, product shipping, tracking and handling costs, and provisions for excess and obsolete inventory.

Prior to the February 2023 FDA accelerated approval of FILSPARI (sparsentan), we recognized approximately $7.5 million in research and development expenses related to the production of active pharmaceutical ingredients to support the commercial launch of FILSPARI.

For the year ended December 31, 2023, sales of FILSPARI primarily consisted of zero-cost inventories.

As of December 31, 2023, we had $7.2 million of zero-cost inventory remaining.

We expect to continue to benefit from the sale of previously expensed inventories through at least 2025.

Cost of goods sold includes the cost of inventory sold, third party manufacturing and supply chain costs, product shipping and handling costs, and provisions for excess and obsolete inventory.

Prior to the February 2023 FDA accelerated approval of FILSPARI (sparsentan), we expensed the production of active pharmaceutical ingredients purchased to support the commercial launch of FILSPARI in research and development expenses.

For the year ended December 31, 2024, sales of FILSPARI primarily consisted of zero-cost inventories, and therefore cost of goods sold did not increase proportionally to the increase in product sales.

As of December 31, 2024, we had $2.3 million of zero-cost inventory remaining, the majority of which we expect will be consumed in 2025.

We began capitalizing inventory costs associated with FILSPARI (sparsentan) following the February 2023 approval for treatment in IgAN.

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The charge to cost of goods sold included a $2.1 million write-down of inventory balances and $1.1 million accrued for firm purchase commitments.

For the year ended December 31, 2023 compared to the year ended December 31, 2022, our cost of goods sold - license and collaboration increased by $3.0 million due to the sale of active pharmaceutical ingredients to CSL Vifor in March 2023.

For the year ended December 31, 2024 compared to the year ended December 31, 2023, our cost of goods sold - license and collaboration decreased by $2.7 million, primarily due to the sale of active pharmaceutical ingredients to CSL Vifor in the first quarter of 2023.

Research and development expenses

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These consist of internal shared resources related to the development and maintenance of systems and processes applicable to all of our programs.

We currently have one Phase 1/2 clinical trial and three Phase 3 clinical trials in process that are in various stages of activity, with ongoing non-clinical support trials.

We currently have four Phase 3 clinical trials in process that are in various stages of activity, with ongoing non-clinical support trials.

As such, clinical trial expenses will vary depending on the all the factors set forth above and may fluctuate significantly from quarter to quarter and year to year.

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For the Year Ended December 31,

2023 2022 2021

2024 2023 Change

External service provider costs:

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Total research and development $ 217,496 $ 244,990 $ (27,494)

For the year ended December 31, 2023 compared to the year ended December 31, 2022, our research and development expenses increased by $17.7 million.

Internal personnel costs to support all programs increased by $9.0 million, reflecting increased headcount along with rising labor costs driven in part by inflation.

External service provider costs increased by $8.7 million, which was largely driven by increases in investment toward the December 2023 initiation of the Phase 3 HARMONY Study for pegtibatinase.

While costs associated with the development of sparsentan have been decreasing throughout the year as our Phase 3 programs advance towards completion, we observed a year over year increase as a result of increased investment in Medical Affairs initiatives supporting the IgAN program.

For the year ended December 31, 2022 compared to the year ended December 31, 2021, our research and development costs increased by $26.2 million due to increases in clinical trial expenses, chemistry manufacturing and control costs, and related expenses associated with the advancement of our programs in development.

Internal personnel costs to support all programs increased by $15.2 million, reflecting increased headcount along with rising labor costs.

External service provider costs increased by $11.0 million, which included a $14.3 million increase in such costs for the development of pegtibatinase along with a $12.5 million increase in other general research and development costs, offset by a $15.8 million decrease in external service provider costs associated with the development of sparsentan as the program progresses through the development cycle.

For the year ended December 31, 2024 compared to the year ended December 31, 2023, our research and development expenses decreased by $27.5 million.

Internal personnel costs to support all programs decreased by $10.8 million, primarily as a result of restructuring initiatives.

External service provider costs decreased by $16.7 million, which was largely driven by a decrease in costs associated with the development of sparsentan as our Phase 3 programs advance towards completion, offset by an increase in costs associated with the development of pegtibatinase following the December 2023 initiation of the Phase 3 HARMONY Study.

Selling, general and administrative expenses

Selling, general and administrative expenses consist of salaries and bonuses, benefits, non-cash share-based compensation, legal and other professional fees, rent, depreciation and amortization, travel, insurance, business development, sales and marketing programs, and other operating expenses.

For the year ended December 31, 2023 compared to the year ended December 31, 2022, our selling, general and administrative expenses increased by $68.0 million due to the onboarding of the dedicated sales force and other related commercial preparations and activity to support the U.S.

launch of FILSPARI.

Increases include an increase in combined employee compensation and stock compensation costs of $22.0 million, an increase in commercial support expenses of $19.1 million, an increase in various professional services expenses of $2.0 million, and an increase in various legal expenses of $5.0 million, along with incremental increases in information technology expense, legal fees, travel expense, and depreciation and amortization.

A change in the estimated useful life of the Thiola intangible asset and the accelerated amortization recognized in connection with the change also contributed to the increase in expense.

For the year ended December 31, 2022 compared to the year ended December 31, 2021 our selling, general and administrative expenses increased by $71.2 million due to increased headcount as a result of operational growth, including rising labor costs, and commercial launch preparations in anticipation of the U.S.

launch of FILSPARI.

Increases include combined employee compensation and stock compensation costs of $31.9 million, increases in commercial support expenses of $15.6 million and increases in various professional services expenses of $12.0 million.

Incremental increases in information technology expense, legal fees, travel expense, and depreciation and amortization also contributed to the increase in selling, general and administrative expenses.

In-process research and development expense

In March 2024, we recognized a non-recurring $65.2 million charge in in-process research and development (IPR&D) expense upon the achievement of a development milestone associated with our treatment candidate pegtibatinase, which was paid during the second quarter of 2024 and recorded within investing activities in the Consolidated Statements of Cash Flows.

We acquired pegtibatinase as part of the November 2020 acquisition of Orphan Technologies Limited.

Restructuring expenses

In December 2023, we initiated a restructuring plan that resulted in a reduction of our workforce by approximately 20%, primarily impacting non-field-based employees.

Restructuring adjustments are expected to result in an estimated annualized savings of approximately $25.0 million beginning in 2024, and a total estimated non-recurring charge of approximately $12.0 million to $14.0 million.

For the year ended December 31, 2023, we recognized restructuring costs of $11.4 million, comprised of one-time termination benefits, including severance, continuation of health insurance coverage, and other benefits for a specified period of time.

These restructuring initiatives were expected to result in an estimated non-recurring charge of approximately $12.0 million to $14.0 million, the majority of which was recognized in the fourth quarter of 2023.

Of the $13.8 million recognized to date, $2.4 million was recognized during the year ended December 31, 2024, including $1.2 million related to impairment and disposal costs and initial direct costs to obtain a sublease.

Restructuring costs were primarily comprised of one-time termination benefits, including severance, continuation of health insurance coverage, and other benefits for a specified period of time.

In 2024, we recognized charges for impairment of operating lease right-of-use assets and related leasehold improvements, as well as disposal costs on furniture and fixtures associated with available office space that we decided to sublease as a result of the reduction in occupancy.

As of December 31, 2024, we are no longer incurring restructuring expenses.

Other Income/Expenses

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The following table provides information regarding other income (expenses) ( in thousands ):

Year Ended December 31, Year Ended December 31,

2023 2022 Change 2022 2021 Change

Year Ended December 31,

2024 2023 Change

Interest income $ 17,817 $ 21,768 $ (3,951)

Interest expense (11,182) (11,334) 152

Other income, net 1,594 974 620 974 231 743

Loss on extinguishment of debt — (7,578) 7,578 (7,578) — (7,578)

Other (expense) income, net (3,318) 1,594 (4,912)

Total other income (expense), net $ 3,317 $ 12,028 $ (8,711)

The $23.4 million change in our total other income (expense), net for the year ended December 31, 2023 compared to the year ended December 31, 2022, is primarily attributable to a $15.5 million increase in interest income in 2023, which was due to increases in short-term interest rates and higher average balances on our interest-bearing security investments, and the $7.6 million loss on extinguishment of debt that was recognized in 2022 in connection with the partial repurchase of the Convertible Senior Notes due 2025.

For the year ended December 31, 2023, we also recognized other income of $1.0 million in connection with the transition services agreement entered into with Mirum as part of our sale of the bile acid business.

The $6.1 million change in our total other income (expense), net for the year ended December 31, 2022 compared to the year ended December 31, 2021 was primarily due to loss on extinguishment of debt in connection with the partial repurchase in 2022 of the Convertible Senior Notes due 2025, offset by reduced interest expense due to adoption of ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06") as debt discount is no longer amortized.

In 2021, we recognized $10.3 million in interest expense for the amortization of the debt discount in accordance with the previous accounting guidance.

The increase in interest income was driven by the impact of increases in short-term interest rates on our interest-bearing security investments.

Income Tax Benefit (Provision)

The tax provision was $0.2 million for fiscal 2023 compared to $0.3 million for fiscal 2022, a decrease of $0.1 million.

The tax provision was $0.4 million for fiscal 2021.

The $8.7 million change in our total other income (expense), net for the year ended December 31, 2024 compared to the year ended December 31, 2023, is primarily attributable to a $4.0 million decrease in interest income in 2024.

Additionally, for the year ended December 31, 2024, we recognized $3.4 million in other expense in connection with our equity investment in Renalys, related to its characterization as IPR&D as measured at inception.

Discontinued Operations

Results of discontinued operations are as follows ( in thousands ):

Year Ended December 31, Year Ended December 31,

2023 2022 Change 2022 2021 Change

Income from discontinued operations, net of tax $ 264,934 $ 52,986 $ 211,948 $ 52,986 $ 37,201 $ 15,785

The $211.9 million increase in income from discontinued operations, net of tax for the year ended December 31, 2023 compared to the year ended December 31, 2022 is primarily due to the August 31, 2023 sale of our bile acid business, which resulted in a gain, net of tax, of $226.0 million.

Year Ended December 31,

2024 2023 Change

(Loss) income from discontinued operations, net of tax $ (915) $ 264,934 $ (265,849)

The $265.8 million change in (loss) income from discontinued operations, net of tax for the year ended December 31, 2024 compared to the year ended December 31, 2023 is primarily due to the August 31, 2023 sale of our bile acid business, which resulted in a gain, net of tax, of $226.0 million.

The gain consists of net consideration, including the upfront payment and the deduction of investment banker fees owed upon the Closing, plus the derecognition of the carrying value of the net liabilities included in the transaction and the immaterial tax due on the sale.

The increase arising from the gain was offset by four months less of bile acid business operations as a result of the divestiture on August 31, 2023.

The $15.8 million increase in income from discontinued operations, net of tax for the year ended December 31, 2022 compared to the year ended December 31, 2021 was due in part to a $6.9 million increase in net sales of our bile acid products.

The remainder of the increase in income from discontinued operations, net of tax, was primarily due to changes in the fair value of contingent consideration arising from updated revenue projections and changes in market driven discount rates.

See Note 19 to our Consolidated Financial Statements for further discussion.

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These restructuring adjustments are expected to result in an estimated annualized savings of approximately $25.0 million beginning in 2024.

We believe that our available cash and short-term investments as of the date of this filing, together with anticipated cash generated from operations, will be sufficient to fund our anticipated level of operations beyond the next 12 months.

We expect that our operating results will vary from quarter-to-quarter and year-to-year depending upon various factors including revenues, selling, general and administrative expenses, and research and development expenses, particularly with respect to our clinical and preclinical development activities.

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As of December 31, 2024, we had cash and cash equivalents of $58.5 million and available-for-sale marketable debt securities of $312.2 million.

Substantial sources of funds since the start of 2023, as summarized further below, include an upfront cash payment of $210.0 million in connection with the sale of our bile acid product portfolio, and net proceeds of $215.8 million from an underwritten public offering of our common stock and pre-funded warrants to purchase shares of our common stock.

Over the next 12 months, our expected financial obligations include, but are not limited to, funding our operations, operating lease payments, interest payments on our outstanding debt, anticipated milestone payments, royalties on sales of our existing commercialized products, research and development expenses pertaining to clinical and preclinical development activities across our pipeline, expenses associated with the launch of FILSPARI.

Substantial sources of funds since the beginning of 2024, as summarized further below, include net proceeds of $134.7 million from an underwritten public offering of our common stock.

Sources of cash over this period include net revenues from sales of our products, the sale or maturity of investments in our portfolio of marketable debt securities, and certain earned and potential milestone payments.

We anticipate achieving milestones with both FILSPARI and pegtibatinase that will result in us making net payments of approximately $50.0 million during the next 12 months.

Beyond the next 12 months and over the foreseeable future, our known commitments and potential financial obligations will likely include ongoing operations funding, operating lease payments, interest payments on our outstanding debt, royalties on sales of our existing commercialized products, research and development expenses pertaining to clinical and preclinical development activities across our pipeline, milestone and royalty payments associated with FILSPARI, pegtibatinase, and other developmental programs based upon the achievement of certain agreement-specific criteria, along with sales-based royalties and the repayment of principal on the outstanding 2025 Notes and 2029 Notes upon their respective maturities.

Potential sources of cash over this time horizon may include net revenues from sales of our existing products and, if commercialized, our pipeline products, licensing revenue, the sale or maturity of marketable debt securities in our investment portfolio, the refinancing of all or a portion of our debt, including the 2025 Notes and 2029 Notes, on or before maturity, or the issuance of additional debt or equity.

In addition, depending on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors, we may also from time to time seek to retire or purchase our outstanding debt, including the 2025 Notes or 2029 Notes, through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise.

In light of global and macroeconomic conditions, including rising interest rates, liquidity concerns at, and failures of, banks and other financial institutions, and volatility in the capital markets, we may not be able to successfully conduct financing or refinancing activity on favorable terms or at all.

We anticipate achieving milestones with FILSPARI that will result in us receiving payments of approximately $17.5 million during the next 12 months, with the potential for additional milestone payments depending on timing and outcomes that are currently uncertain.

Potential sources of cash over this time horizon may include net revenues from sales of our existing products and, if commercialized, our pipeline products, licensing revenue, the sale or maturity of marketable debt securities in our investment portfolio, the refinancing of all or a portion of our debt, on or before maturity, or the issuance of additional debt or equity.

In addition, depending on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors, we may also from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise.

We may not be able to successfully conduct financing or refinancing activity on favorable terms or at all.

Purchase Agreement Proceeds

Sale of Bile Acid Product Portfolio

On July 16, 2023, we entered into the Purchase Agreement with Mirum, pursuant to which Mirum agreed to purchase substantially all of the assets primarily related to our business of development, manufacture and commercialization of the Products, which comprised our bile acid business.

In July 2023, we entered into the Purchase Agreement with Mirum, pursuant to which Mirum agreed to purchase substantially all of the assets primarily related to our business of development, manufacture and commercialization of the Products, which comprised our bile acid business.

Upon the Closing of the transaction on August 31, 2023, we received an upfront cash payment of $210.0 million.

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In September, 2021, we entered into a License Agreement with CSL Vifor, pursuant to which we granted an exclusive license to CSL Vifor for the commercialization of sparsentan in the Licensed Territories.

Under the terms of the License Agreement, we received an upfront payment of $55.0 million in September 2021, and will be eligible for up to $135.0 million in aggregate regulatory and market access related milestone payments and up to $655.0 million in aggregate sales-based milestone payments for a total potential value of up to $845.0 million.

Under the terms of the License Agreement, we will be eligible for up to $135.0 million in aggregate regulatory and market access related milestone payments and up to $655.0 million in aggregate sales-based milestone payments for a total potential value of up to $845.0 million.

We are also entitled to receive tiered double-digit royalties of up to 40 percent of annual net sales of sparsentan in the Licensed Territories.

See Note 4 to Consolidated Financial Statements for further discussion.

Licensing Agreement with Renalys

In January 2024, our license agreement with Renalys Pharma, Inc.

came into effect.

Under the terms of the agreement, we granted an exclusive license to Renalys for the commercialization of sparsentan in Japan and other countries in Asia.

Pursuant to the terms of the agreement, we are eligible to receive up to $120.0 million in regulatory, development and sales-based milestone payments.

We are also entitled to receive tiered double-digit to mid-20 percent royalties of annual net sales of sparsentan in the licensed territories.

In addition, we received an option to purchase shares of common stock of Renalys (“Option Agreement”), which we exercised in January 2024.

We also have the option to purchase all equity securities of Renalys at any time prior to the top-line results of the Phase 3 trial in Japan (“Buyout Right”).

Equity Offerings

2024 Underwritten Public Offering of Common Stock

In November 2024, we sold an aggregate of approximately 9.0 million shares of our common stock in an underwritten public offering, at a price to the public of $16.00 per share of common stock.

The net proceeds to us from the offering, after deducting the underwriting discounts and offering expenses, were approximately $134.7 million.

2023 Underwritten Public Offering of Common Stock

In February 2023, we sold an aggregate of approximately 9.7 million shares of our common stock and pre-funded warrants to purchase 1.25 million shares of our common stock in an underwritten public offering, at a price to the public of $21.00 per share of common stock and $20.9999 per pre-funded warrant.

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The net proceeds to us from the offering, after deducting the underwriting discounts and offering expenses, were approximately $215.8 million.

All of the pre-funded warrants were exercised in the third quarter of 2024, resulting in the issuance of 1.25 million shares of our common stock.

At-the-Market Equity Offering

In February 2020, we entered into an Open Market Sale Agreement ("ATM Agreement") with Jefferies LLC, as agent (“Jefferies”), pursuant to which we may offer and sell, from time to time through Jefferies, shares of our common stock having an aggregate offering price of up to $100.0 million.

Of the $100.0 million originally authorized for sale under the ATM Agreement, approximately $28.6 million were sold under our prior registration statement on Form S-3 (Registration Statement No.

An additional $51.9 million were sold under our effective registration statement on Form S-3 (Registration Statement No.

333-259311), which included $20.1 million in the year ended December 31, 2022.

In October 2024, we filed a prospectus supplement to the prospectus included in our registration statement on Form S-3 (File No.

333-281194), pursuant to which we may offer and sell, from time to time through Jefferies LLC, as agent (“Jefferies”), up to $100.0 million of our common stock pursuant to an Amended and Restated Open Market Sale Agreement ("ATM Agreement") with Jefferies dated October 2024.

We did not sell any shares under the ATM Agreement during the year ended December 31, 2024.

As of December 31, 2023, an aggregate amount of $19.5 million remained eligible for sale under the ATM Agreement.

Operating Leases

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("Ligand") for a worldwide sublicense to develop, manufacture and commercialize sparsentan (the “Ligand License Agreement”).

As consideration for the license, the Company is required to make substantial payments upon the achievement of certain milestones, totaling up to $114.1 million.

Through December 31, 2023, we have paid $41.4 million for contractual milestone payments under the Ligand License Agreement, which includes a $23.0 million milestone payment to Ligand (and Bristol-Myers Squibb Company ("BMS")) in March 2023 that was triggered upon the accelerated approval of FILSPARI in February 2023.

As consideration for the license, we are required to make substantial payments upon the achievement of certain milestones, totaling up to $114.1 million.

Through December 31, 2024, we have capitalized $47.2 million for contractual milestones achieved under the Ligand License Agreement, which includes a $5.8 million regulatory milestone payment to Ligand (and Bristol-Myers Squibb Company ("BMS")) in the second quarter of 2024.

Following commercialization of sparsentan or any products containing related compounds, we are obligated to pay to Ligand an escalating royalty between 15% and 17% of net sales of all such products, with payments due quarterly.

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For the year ended December 31, 2024, we capitalized $20.3 million to intangible assets for royalties owed on net sales of FILSPARI.

The license agreement will continue until neither party has any further payment obligations under the agreement and is expected to continue for up to 20 years from the effective date.

Ligand may terminate the license agreement due to (i) our insolvency, (ii) our material uncured breach of the agreement, (iii) our failure to use commercially reasonable efforts to develop and commercialize sparsentan as described above or (iv) certain other conditions.

We may terminate the license agreement due to a material uncured breach of the agreement by Ligand.

The Ligand License Agreement will continue until neither party has any further payment obligations under the agreement and is expected to continue for up to 20 years from the effective date.

Ligand may terminate the Ligand License Agreement due to (i) our insolvency, (ii) our material uncured breach of the agreement, (iii) our failure to use commercially reasonable efforts to develop and commercialize sparsentan as described above or (iv) certain other conditions.

We may terminate the Ligand License Agreement due to a material uncured breach of the agreement by Ligand.

See Note 9 to our unaudited Consolidated Financial Statements for further discussion.

Thiola License Agreement

In 2014, we entered into a license agreement with Mission Pharmacal ("Mission"), pursuant to which we obtained an exclusive, royalty-bearing license to market, sell and commercialize Thiola (tiopronin) in the United States and Canada, and a non-exclusive license to use know-how relating to Thiola to the extent necessary to market Thiola.

Under the terms of the license agreement, as subsequently amended, which runs through May 2029, we are obligated to pay to Mission the greater of $2.1 million, representing the guaranteed minimum royalty, or 20% of our Thiola net sales generated globally during each calendar year.

Mission License Agreement

Under the terms of the Mission License Agreement, as subsequently amended, which runs through May 2029, we are obligated to pay to Mission the greater of $2.1 million, representing the guaranteed minimum royalty, or 20% of our Thiola net sales generated globally during each calendar year.

See Note 9 to Consolidated Financial Statements for further discussion.

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We acquired Orphan by purchasing all of its outstanding shares.

Under the Stock Purchase Agreement ("the Agreement"), we agreed to make contingent cash payments up to an aggregate of $427.0 million based on the achievement of certain development, regulatory and commercialization events as set forth in the Agreement, as well as additional tiered mid-single digit royalty payments based upon future net sales of any pegtibatinase products in the US and Europe, subject to certain reductions as set forth in the Agreement, and a contingent payment in the event a pediatric rare disease voucher for any pegtibatinase product is granted.

and Europe, subject to certain reductions as set forth in the Agreement, and a contingent payment in the event a pediatric rare disease voucher for any pegtibatinase product is granted.

We made a $65.0 million payment to Orphan in the second quarter of 2024 following the achievement of a development milestone.

Stock Purchase and Collaboration Agreement with PharmaKrysto

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In addition, we would be required to make cash milestone payments totaling up to an aggregate $16.0 million upon the achievement of certain development and regulatory milestones, plus tiered royalty payments of less than 4% on future net sales of a product, if approved.

We have the right to terminate the Agreements and return the shares for a nominal price at any time upon 60 days' notice, subject to survival of contingent obligations, if any.

We have the right to terminate the Agreements and sell the shares back for a nominal payment at any time upon 60 days' notice, subject to survival of contingent obligations, if any.

See Note 5 to Consolidated Financial Statements for further discussion.

French Rebate Accrual

In October 2021, our distributor in France for our previously marketed product Kolbam informed us that they had received a notice that the price previously paid for Kolbam during its period on the market in France had been recalculated by the agency responsible for pharmaceutical pricing in France.

As of December 31, 2023, $5.4 million for estimated amounts to be repaid was recorded in Accrued Expenses in the Consolidated Balance Sheets.

In October 2024, we received an invoice from the government authority in the amount of $6.2 million (€5.6 million) for reimbursement of amounts previously paid for Kolbam, which we paid in November 2024.

We have appealed the pricing decision and will pursue an appeal of the amount paid with the Competent Administrative Court.

Convertible Senior Notes Due 2029

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Funding Requirements

We believe that our available cash and short-term investments as of the date of this filing will be sufficient to fund our anticipated level of operations beyond the next 12 months.

We believe that our available cash and short-term investments as of the date of this filing will be sufficient to fund our anticipated level of operations beyond the next 12 months from the date of this filing.

We expect to use cash flows from operations and, when necessary, outside financings, to meet our current and future financial obligations, including funding our operations, debt service and capital expenditures.

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• the timing of, and costs involved in, commercial activities, including product marketing, sales and distribution;

• our ability to successfully commercialize FILSPARI for IgAN, to obtain full regulatory approval for, and successfully commercialize, FILSPARI for the treatment of IgAN, and to obtain regulatory approval for, and successfully commercialize, sparsentan for FSGS and our other or future product candidates;

• our ability to successfully commercialize FILSPARI for the treatment of IgAN, and to obtain regulatory approval for, and successfully commercialize, sparsentan for FSGS and our other or future product candidates;

• increases or decreases in revenue from our marketed products, including decreases in revenue resulting from generic entrants or health epidemics or pandemics;

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Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and technologies.

Cash Flows from Continuing Operations

The following table summarizes our cash flows for the periods set forth below ( in thousands ):

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2024 2023 2022

Net cash used in operating activities $ (280,021) $ (186,291) $ (14,792)

Net cash provided by (used in) investing activities 55,776 (32,553) (137,623)

Net cash provided by financing activities 218,752 117,573 231,683

Net cash used in operating activities - continuing operations $ (230,024) $ (325,357) $ (260,846)

Net cash provided by (used in) investing activities - continuing operations 99,325 (151,626) (32,553)

Net cash provided by financing activities - continuing operations 139,422 220,134 120,052

Cash flows from continuing operations 8,723 (256,849) (173,347)

Cash flows from discontinued operations (7,451) 251,356 72,076

Effect of exchange rate changes on cash (913) 1,981 (2,794)

Net (decrease) increase in cash and cash equivalents (3,512) (104,065) 80,981

Net increase (decrease) in cash and cash equivalents 359 (3,512) (104,065)

Cash and cash equivalents, beginning of year 58,176 61,688 165,753

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Cash Flows from Operating Activities

Operating activities used $280.0 million of cash during the year ended December 31, 2023 compared to $186.3 million of cash used for the year ended December 31, 2022.

The increase in cash used was primarily attributable to increased research and development and sales, general and administrative expenses.

Cash used in operating activities from continuing operations for the year ended December 31, 2024 was $230.0 million compared to cash used of $325.4 million for the year ended December 31, 2023.

The decrease in cash used was due to a $99.2 million increase in total net product sales, along with a decrease in operational spending as a result of the restructuring plan initiated in December 2023.

Cash Flows from Investing Activities

Cash provided by investing activities for the year ended December 31, 2023 was $55.8 million compared to cash used of $32.6 million for the year ended December 31, 2022.

The change was due to $207.4 million in net proceeds from the sale of our bile acid business in the third quarter 2023, offset by an increase in net purchases of marketable debt securities and the $23.0 million milestone payment to Ligand (and BMS) in March 2023 that was triggered upon the accelerated approval of FILSPARI in February 2023.

Cash provided by investing activities from continuing operations for the year ended December 31, 2024 was $99.3 million compared to cash provided of $151.6 million for the year ended December 31, 2023.

The change was due to a decrease in net purchases of marketable debt securities, offset by a $65.0 million payment to Orphan in the second quarter of 2024 following the achievement of a development milestone.

Cash Flows from Financing Activities

For the year ended December 31, 2023, cash provided by financing activities was $218.8 million compared to cash provided of $117.6 million for the year ended December 31, 2022.

The increase in cash provided was due to the March 2023 issuance of common stock and pre-funded warrants through an underwritten public offering that provided $215.8 million in net proceeds, compared with net proceeds of $95.0 million from the March 2022 issuance of the 2029 Notes and repurchase of the 2025 Notes and $19.5 million in net proceeds from sales under the ATM Agreement in 2022.

Cash provided by financing activities from continuing operations for the year ended December 31, 2024 was $139.4 million compared to cash provided of $220.1 million for the year ended December 31, 2023.

The change was due to the November 2024 issuance of common stock through an underwritten public offering that provided $134.7 million in net proceeds, compared to $215.8 million in net proceeds from the March 2023 issuance of common stock and pre-funded warrants.

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 7. Management’s Discussion and Analysis