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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________to__________
Commission File Number 001-36352
https://cdn.kscope.io/551b6804dad58405ad822bb38934b1e2-company logo.gif
AKEBIA THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 20-8756903
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification No.)
   
 245 First Street, Cambridge, MA
 02142
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (617871-2098
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common Stock, $0.00001 par value per shareAKBA
The Nasdaq Capital Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 
Large accelerated filer¨Accelerated filer
ý
    
Non-accelerated filer¨Smaller reporting company
ý
    
  Emerging growth company


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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  ý
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of May 7, 2024 was 209,596,378.



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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements that are being made pursuant to the provisions of the U.S. Private Securities Litigation Reform Act of 1995 with the intention of obtaining the benefits of the “safe harbor” provisions of that Act. All statements contained in this Quarterly Report on Form 10‑Q other than statements of historical fact are forward-looking statements. These forward-looking statements may be accompanied by words such as “anticipate,” “believe,” “build,” “can,” “contemplate,” “continue,” “could,” “should,” “designed,” “estimate,” “project,” “expect,” “forecast,” “future,” “goal,” “intend,” “likely,” “may,” “plan,” “possible,” “potential,” “predict,” “strategy,” “seek,” “target,” “will,” “would,” and other words and terms of similar meaning, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements include, but are not limited to, statements about:
our ability to execute a successful commercial launch of Vafseo®, and our plans with respect to commercializing Vafseo and indication expansion opportunities currently under evaluation for Vafseo;
the potential therapeutic benefits, safety profile, and effectiveness of Vafseo; 
our pipeline and portfolio, including its potential, and our related research and development activities;
the timing, investment and associated activities involved in continued commercialization of Auryxia® (ferric citrate), its growth opportunities and our ability to execute thereon;
the potential indications, demand and market opportunity, potential and acceptance of Auryxia and Vafseo, including the size of eligible patient populations; 
the potential therapeutic applications of the hypoxia inducible factor pathway;
our competitive position, including estimates, developments and projections relating to our competitors and their products and product candidates, and our industry; 
our expectations, projections and estimates regarding our capital requirements, need for additional capital, financing our future cash needs, costs, expenses, revenues, capital resources, cash flows, financial performance, profitability, tax obligations, liquidity, growth, contractual obligations and the period of time our cash resources will fund our current operating plan, estimates with respect to our ability to operate as a going concern, our internal control over financial reporting and disclosure controls and procedures, and any future deficiencies or material weaknesses in our internal controls and procedures; 
delivering value broadly to the kidney community, as well as others who may benefit from our medicines, will result in delivering value for stockholders;
the direct or indirect impacts of the recent COVID-19 pandemic on our business, operations and the markets and communities in which we and our partners, collaborators, vendors, and customers operate;
our manufacturing, supply and quality matters and any recalls, write-downs, impairments or other related consequences or potential consequences;
estimates, beliefs and judgments related to the valuation of intangible asset, goodwill, debt and other assets and liabilities, including classification of expenses, assets and liabilities, our impairment analyses and our methodology and assumptions regarding fair value measurements;
the timing of the availability and disclosure of clinical trial data and results;
the designs of our studies, and the type of information and data expected from our studies and the expected benefits thereof;
our and our collaborators’ strategy, plans and expectations with respect to the development, manufacturing, supply, commercialization, launch, marketing and sale of Auryxia and Vafseo and the associated timing thereof;
our ability to maintain any marketing authorizations we currently hold or will obtain, including our marketing authorizations for Auryxia and our ability to complete post-marketing requirements with respect thereto;
our ability to negotiate, secure and maintain adequate pricing, coverage and reimbursement terms and processes on a timely basis, or at all, with third-party payors for Auryxia and Vafseo;
the timing of initiation of our clinical trials and plans to conduct preclinical studies and clinical trials in the future; 
the timing and amounts of payments from or to our collaborators and licensees, and the anticipated arrangements and benefits under our collaboration and license agreements, including with respect to milestones and royalties; 


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our intellectual property position, including obtaining and maintaining patents, and the timing, outcome and impact of administrative, regulatory, legal and other proceedings relating to our patents and other proprietary and intellectual property rights, patent infringement suits that we have filed or may file, or other actions that we may take against companies, and the timing and resolution thereof;
expected ongoing reliance on third parties, including with respect to the development, manufacturing, supply and commercialization of Auryxia and Vafseo;
accounting standards and estimates, their impact, and their expected timing of completion;
estimated periods of performance of key contracts;
our facilities, lease commitments, and future availability of facilities;
cybersecurity;
insurance coverage;
management of personnel, including our management team, and our employees, including employee compensation, employee relations, and our ability to attract, train and retain high quality employees;
the implementation of our business model, current operating plan, and strategic plans for our business, product candidates and technology, and business development opportunities including potential collaborations, alliances, mergers, acquisitions or licensing of assets;
additional costs we may incur due to events associated with or resulting from our prior workforce reductions or other operating expenses, including additional costs related to vadadustat and selling, general and administrative expenses; and
the timing, outcome and impact of current and any future legal proceedings.
Any or all of these forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. These forward-looking statements involve risks and uncertainties, including those that are discussed below under the heading "Risk Factors Summary", and the risk factors identified further in Part II, Item 1A. "Risk Factors" included in this Quarterly Report on Form 10-Q and elsewhere in this Quarterly Report on Form 10-Q and in our Securities and Exchange Commission reports filed after this report, that could cause our actual results, financial condition, performance or achievements to be materially different from those indicated in these forward-looking statements. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason. Unless otherwise stated, our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.
This Quarterly Report on Form 10-Q also contains estimates and other information concerning our industry and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Unless otherwise expressly stated, we obtained this industry, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.




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RISK FACTORS SUMMARY
Investing in our common stock involves numerous risks, including the risks summarized below and described in further detail in “Part II, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q, any one of which could materially adversely affect our business, financial condition, results of operations and prospects. These risks include, but are not limited to, the following:
We have incurred significant losses since our inception, and anticipate that we will continue to incur losses and cannot guarantee when, if ever, we will become profitable or attain positive cash flows.
We may require substantial additional financing to fund our business. A failure to obtain this necessary capital when needed, or on acceptable terms, could force us to delay, limit, reduce or terminate our product development or commercialization efforts.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our products and product candidates on unfavorable terms to us.
If we fail to comply with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
We may not be successful in our efforts to identify, acquire, in-license, discover, develop and commercialize additional products or product candidates or our decisions to prioritize the development of certain product candidates over others may not be successful, which could impair our ability to grow.
We may engage in strategic transactions to acquire assets, businesses, or rights to products, product candidates or technologies or form collaborations or make investments in other companies or technologies that could harm our operating results, dilute our stockholders’ ownership, increase our debt, or cause us to incur significant expense.
Our obligations in connection with the Agreement for the Provision of a Loan Facility, or the BlackRock Credit Agreement, with Kreos Capital VII (UK) Limited, or Kreos, which are funds and accounts managed by BlackRock Inc., collectively BlackRock, and requirements and restrictions in the BlackRock Credit Agreement could adversely affect our financial condition and restrict our operations.
Our Royalty Interest Acquisition Agreement with HealthCare Royalty Partners IV, L.P. contains various covenants and other provisions, which, if violated, could materially adversely affect our financial condition.
Our business is substantially dependent on the commercial success of Auryxia and Vafseo. If we are unable to continue to successfully commercialize Auryxia and commercially launch Vafseo, our results of operations and financial condition will be materially harmed.
If we are unable to maintain or expand, or, with respect to Vafseo, initiate, sales and marketing capabilities or enter into additional agreements with third parties, we may not be successful in commercializing Auryxia, Vafseo or any other product candidates that may be approved.
Our, or our partners', failure to obtain or maintain adequate coverage, pricing and reimbursement for Auryxia, Vafseo or any other future approved products, could have a material adverse effect on our or our collaboration partners’ ability to sell such approved products profitably and otherwise have a material adverse impact on our business.
We face substantial competition, which may result in others discovering, developing or commercializing products before, or more successfully than, we do.
The commercialization of Riona and Vafseo in Japan, Vafseo in Europe and other territories where it is approved, and our current and potential future efforts with respect to the development and commercialization of our products and product candidates outside of the United States, or U.S., subject us to a variety of risks associated with international operations, which could materially adversely affect our business.
Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and we will incur additional costs in connection with, and may experience delays in completing, or ultimately be unable to complete, the development of any of our product candidates.
Conducting clinical trials outside of the U.S., as we have done historically and as we may decide to do in the future, presents additional risks and complexities and, if we decide to conduct a clinical trial outside of the U.S. in the future, we may not complete such trials successfully, in a timely manner, or at all, which could affect our ability to obtain regulatory approvals.
Auryxia, Vafseo or any other product or product candidate, including those that may be in-licensed or acquired, may cause undesirable side effects or have other properties that may delay or prevent marketing approval or limit their commercial potential.
We may not be able to obtain marketing approval for any current or future product candidate, or we may experience significant delays in doing so, any of which would materially harm our business.
Products approved for marketing are subject to extensive post-marketing regulatory requirements, including post-approval pediatric studies for Auryxia and Vafseo, and could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties, including withdrawal of marketing approval, if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products.
We are subject to complex regulatory schemes that require significant resources to ensure compliance and our failure to comply with applicable laws could subject us to government scrutiny or enforcement, potentially resulting in costly


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investigations, fines, penalties or sanctions, contractual damages, reputational harm, administrative burdens and diminished profits and future earnings.
We will incur significant liability if it is determined that we are promoting any “off-label” use of Auryxia, Vafseo or any other product we may develop, in-license or acquire or if it is determined that any of our activities violates the federal Anti-Kickback Statute.
Disruptions in the U.S. Food and Drug Administration, regulatory authorities outside the U.S. and other government agencies caused by global health concerns or funding shortages could prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.
Compliance with privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and the failure to comply with such requirements could subject us to significant fines and penalties, which may have a material adverse effect on our business, financial condition or results of operations.
Legislative and regulatory healthcare reform may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain for any products that are approved in the U.S. or foreign jurisdictions.
We depend on collaborations with third parties for the development and commercialization of Auryxia, Riona and Vafseo and if these collaborations are not successful or if our collaborators terminate their agreements with us, we may not be able to capitalize on the market potential of Auryxia, Riona and Vafseo, and our business could be materially harmed.
We may seek to establish additional collaborations and, if we are not able to establish them on commercially reasonable terms, or at all, we may have to alter our development and commercialization plans.
We rely upon third parties to conduct all aspects of our product manufacturing and commercial distribution, and in many instances only have a single supplier or distributor, and the loss of these manufacturers or distributors, their failure to supply us on a timely basis, or at all, or in accordance with their contractual duties, could cause delays in or disruptions to our supply chain and substantially harm our business.
We rely upon third parties to conduct our clinical trials and certain of our preclinical studies. If they do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain or maintain marketing approval for Auryxia, Vafseo or any of our product candidates, and our business could be substantially harmed.
If the licensor of certain intellectual property relating to Auryxia terminates, modifies or threatens to terminate existing contracts or relationships with us, our business may be materially harmed.
We currently rely on third parties in China for the manufacture of raw materials, drug substance and drug product for the commercial supply of Vafseo and for early-stage research services. Our commercialization of Vafseo, or our development of our product candidates could be delayed, prevented or impaired if there are disruptions or delays in obtaining these products or services.
If we are unable to adequately protect our intellectual property, third parties may be able to use our intellectual property, which could adversely affect our ability to compete in the market.
We may not be able to protect our intellectual property rights throughout the world.
The intellectual property that we own or have licensed and related non-patent exclusivity relating to our current and future products is, and may be, limited, which could adversely affect our ability to compete in the market and adversely affect the value of Auryxia, Vafseo or other future products.
The market entry of one or more generic competitors or any third party’s attempt to challenge our intellectual property rights will likely limit Auryxia and Vafseo sales and have an adverse impact on our business and results of operation.
Litigation and administrative proceedings, including intellectual property infringement or opposition/invalidation proceedings, may be costly and time consuming and may delay or harm our drug discovery, development and commercialization efforts.
We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.
If we fail to attract, retain and motivate senior management and qualified personnel, we may be unable to successfully develop and commercialize Auryxia or Vafseo.
We may encounter difficulties in managing our growth, including with respect to our employee base, and managing our partnerships and operations successfully.
We have identified a material weakness in our internal control over financial reporting as of December 31, 2023 relating to our accounting for inventory and inventory related transactions. If we are not able to remediate this material weakness, or if we experience additional material weaknesses or other deficiencies in our internal control over financial reporting in the future or otherwise fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial results or prevent fraud, and we may conclude that our internal control over financial reporting is not effective, which may adversely affect our business.
Our stock price has been and may continue to be volatile, which could result in substantial losses for holders or future purchasers of our common stock and lawsuits against us and our officers and directors.


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Akebia Therapeutics, Inc.
Form 10-Q
For the Quarter Ended March 31, 2024

TABLE OF CONTENTS
 
Page
Part I
Item 1
Item 2
Item 3
Item 4
Item 1
Item 1A
Item 2
Item 3
Item 4
Item 5
Item 6

In this Quarterly Report on Form 10-Q, unless otherwise stated or the context otherwise requires, references to “Akebia,” “we,” “us,” “our,” “the Company,” "our Company" and similar references refer to Akebia Therapeutics, Inc. and, where appropriate, its consolidated subsidiaries. On December 12, 2018, in connection with the consummation of the merger, or Merger, with Keryx Biopharmaceuticals, Inc., or Keryx, Keryx became a wholly owned subsidiary of the Company.
AURYXIA®, AKEBIA Therapeutics®, Vafseo® and their associated logos are trademarks of Akebia and/or its affiliates. All other trademarks, trade names and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, trademarks, trade names, and service marks referred to in this Quarterly Report on Form 10-Q may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other company.
Akebia Therapeutics, Inc. | Form 10-Q | Page 1

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PART I—FINANCIAL INFORMATION
Item 1.  Financial Statements.
Akebia Therapeutics, Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share amounts)March 31,
2024
December 31,
2023
Assets
Current assets:
Cash and cash equivalents$41,961 $42,925 
Inventories25,532 15,691 
Accounts receivable, net26,620 39,290 
Prepaid expenses and other current assets18,831 20,243 
Total current assets112,944 118,149 
Property and equipment, net3,265 3,629 
Operating right-of-use assets11,399 12,416 
Intangible asset, net27,032 36,042 
Goodwill59,044 59,044 
Other long-term assets11,793 12,423 
Total assets$225,477 $241,703 
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable$11,882 $14,635 
Accrued expenses and other current liabilities53,910 67,735 
Short-term deferred revenue695  
Current portion of long-term debt 17,500 
Total current liabilities66,487 99,870 
Deferred revenue, net of current portion43,296 43,296 
Long-term operating lease liabilities7,636 8,947 
Long-term debt, net30,145 17,183 
Liability related to sale of future royalties53,498 54,013 
Refund liability to customer39,927 40,093 
Warrant liability4,975  
Other long-term liabilities6,771 8,885 
Total liabilities252,735 272,287 
Commitments and contingencies (Note 10)
Stockholders' deficit:
Preferred stock $0.00001 par value, 25,000,000 shares authorized; no shares issued and
   outstanding at March 31, 2024 and December 31, 2023
  
Common stock $0.00001 par value; 350,000,000 shares authorized at March 31, 2024 and December 31, 2023; 209,454,149 and 194,582,539 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively
2 2 
Additional paid-in capital1,599,669 1,578,358 
Accumulated other comprehensive income6 6 
Accumulated deficit(1,626,935)(1,608,950)
Total stockholders' deficit(27,258)(30,584)
Total liabilities and stockholders' deficit$225,477 $241,703 
 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Akebia Therapeutics, Inc. | Form 10-Q | Page 2

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Akebia Therapeutics, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Three Months Ended March 31,
 (dollars in thousands, except per share amounts) 20242023
Revenues
Product revenue, net$31,009 $34,706 
License, collaboration and other revenue1,598 5,299 
Total revenues32,607 40,005 
Cost of goods sold
Cost of product and other revenue2,594 11,178 
Amortization of intangible asset9,011 9,011 
Total cost of goods sold11,605 20,189 
Operating expenses:
Research and development9,731 19,686 
Selling, general and administrative25,438 25,053 
License711 568 
Restructuring58 106 
Total operating expenses35,938 45,413 
Loss from operations(14,936)(25,597)
Other income (expense)
Interest expense(2,498)(1,561)
Other income95 282 
Change in fair value of warrant liability(129) 
Loss on extinguishment of debt(517) 
Net loss before income taxes$(17,985)$(26,876)
Net loss$(17,985)$(26,876)
Comprehensive loss$(17,985)$(26,876)
Net loss per share:
Basic and diluted$(0.09)$(0.15)
Weighted average common shares outstanding:
Basic and diluted204,955,151 184,768,983 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.


Akebia Therapeutics, Inc. | Form 10-Q | Page 3

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Akebia Therapeutics, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total Stockholders'
Equity (Deficit)
(dollars in thousands)SharesAmount
Balance at December 31, 2022184,135,714 $2 $1,562,247 $6 $(1,557,025)$5,230 
Proceeds from sale of stock under
   employee stock purchase plan
103,500 — 34 — — 34 
Stock-based compensation expense— — 2,489 — — 2,489 
Restricted stock unit vesting1,596,732 — — — — — 
Net loss— — — — (26,876)(26,876)
Balance at March 31, 2023185,835,946 $2 $1,564,770 $6 $(1,583,901)$(19,123)
Common StockAdditional Paid-In
Capital
Accumulated Other Comprehensive Income (Loss)Accumulated
Deficit
Total Stockholders'
Equity (Deficit)
(dollars in thousands)SharesAmount
Balance at December 31, 2023194,582,539 $2 $1,578,358 $6 $(1,608,950)$(30,584)
Issuance of common stock, net of
   issuance costs
13,261,311 — 18,740 — — 18,740 
Proceeds from sale of stock under
   employee stock purchase plan
92,321 — 70 — — 70 
Exercise of options280,260 — 141 — — 141 
Stock-based compensation expense— — 2,360 — — 2,360 
Restricted stock unit vesting1,237,718 — — — — — 
Net loss— — — — (17,985)(17,985)
Balance at March 31, 2024209,454,149 $2 $1,599,669 $6 $(1,626,935)$(27,258)
 


The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Akebia Therapeutics, Inc. | Form 10-Q | Page 4

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Akebia Therapeutics, Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 Three Months Ended March 31,
(dollars in thousands)20242023
Operating Activities:
Net loss$(17,985)$(26,876)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation364 398 
Amortization of intangible asset9,011 9,011 
Change in fair value of warrant liability129  
Non-cash royalty revenue related to sale of future royalties(391)(425)
Non-cash research and development expense 782 
Non-cash interest expense326 502 
Non-cash operating lease expense1,017 (578)
Non-cash loss on extinguishment of debt294  
Write-down of inventory590 335 
Stock-based compensation expense2,360 2,489 
Changes in operating assets and liabilities:
Accounts receivable12,670 21,553 
Inventory(4,434)7,347 
Prepaid expenses and other current assets1,412 7,378 
Other long-term assets(613)(2,812)
Accounts payable(7,501)(9,013)
Accrued expense and other current liabilities(15,045)(25,115)
Operating lease liabilities(731)651 
Deferred revenue695 (3,738)
Other long-term liabilities(1,600)573 
Net cash used in operating activities(19,432)(17,538)
Investing Activities:
Net cash used in investing activities  
Financing Activities:
Proceeds from the issuance of debt37,000  
Payments of issuance costs related to BlackRock Credit Agreement(750) 
Proceeds from issuance of common stock, net of issuance costs18,740  
Proceeds from issuance of stock under employee stock purchase plan70 34 
Proceeds from the exercise of stock options141  
Repayment of term debt(36,726)(16,000)
Net cash provided by (used in) financing activities18,475 (15,966)
Decrease in cash, cash equivalents and restricted cash(957)(33,504)
Cash, cash equivalents and restricted cash — beginning of period44,579 93,169 
Cash, cash equivalents and restricted cash — end of period$43,622 $59,665 
Non-cash financing activities
Issuance of warrants in connection with BlackRock Credit Agreement$4,846 $ 
Unpaid issuance costs related to BlackRock Credit Agreement $522 $ 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
Akebia Therapeutics, Inc. | Form 10-Q | Page 5

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Akebia Therapeutics, Inc.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS







1.NATURE OF BUSINESS
Organization
Akebia Therapeutics, Inc., referred to as Akebia or the Company, was incorporated in the State of Delaware in 2007 and became a public company in 2014. Akebia is a fully integrated commercial-stage biopharmaceutical company committed to addressing patients' unmet needs. The Company's purpose is to better the life of each person impacted by kidney disease.
The Company has two products approved by the Food and Drug Administration, or FDA, in the United States, or U.S. Vafseo® (vadadustat) is an oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH, inhibitor. Vafseo (vadadustat) tablets is approved in the U.S. on March 27, 2024 for the treatment of anemia due to chronic kidney disease, or CKD, in adults who have been receiving dialysis for at least three months. The Company intends to commercialize Vafseo in the U.S. with Vifor (International) Ltd. (now a part of CSL Limited), or CSL Vifor. Auryxia® (ferric citrate) is marketed for two indications: (i) the control of serum phosphorus levels in adult patients with dialysis dependent chronic kidney disease, or DD-CKD, and (ii) the treatment of iron deficiency anemia, or IDA, in adult patients with non-dialysis chronic kidney disease, or NDD-CKD. Auryxia will lose exclusivity in the U.S. in March 2025.
Vafseo is also approved for the treatment of symptomatic anemia associated with CKD in the European Economic Area, or EEA, the United Kingdom, or UK, Switzerland, Australia, South Korea and Taiwan in adult patients on chronic maintenance dialysis and in Japan for adult dialysis-dependent and non-dialysis patients. The Company will continue to support its partners in preparation to launch Vafseo in Europe, Taiwan and potentially other countries to pursue its goal of enabling broad access to Vafseo for patients globally.
Ferric citrate is also approved in Japan, and is marketed and sold by the Company's collaboration partner, as an oral treatment for the improvement of hyperphosphatemia in patients with CKD, including DD-CKD and NDD-CKD and for the treatment of adult patients with IDA under the trade name Riona (ferric citrate hydrate).
Since its inception, the Company has devoted most of its resources to research and development, or R&D, including its preclinical and clinical development activities, commercializing Auryxia and providing general and administrative support for these operations. The Company began recording revenue from the U.S. sales of Auryxia and revenue from sublicensing rights to Auryxia in Japan from the Company’s Japanese partners, Japan Tobacco, Inc. and its subsidiary Torii Pharmaceutical Co., Ltd., collectively, JT and Torii, in 2018. In addition, the Company continues to explore additional development opportunities to expand its pipeline and portfolio of novel therapeutics.
As of March 31, 2024, the Company had cash and cash equivalents of approximately $42.0 million. Based on its current operating plan, the Company believes that its cash resources and the cash the Company expects to generate from product, royalty, supply and license revenues will be sufficient to fund its current operating plan for at least twelve months from the filing of this Quarterly Report on Form 10-Q, or Form 10-Q. However, if the Company’s operating performance deteriorates significantly from the levels expected in the Company’s operating plan, it would affect the Company’s liquidity and its ability to continue as a going concern in the future. The Company expects to finance future cash needs through product and license, collaboration and other revenue, including royalties and revenue from supply agreements. If the Company believes its resources are insufficient to satisfy its liquidity requirements, it may seek to sell public or private equity, enter into new debt transactions, explore potential strategic transactions, consider other cash-generating or saving measures or a combination of these approaches or other strategic alternatives. There can be no assurance that the current operating plan will be achieved in the time frame anticipated by the Company or that its cash resources will fund its operating plan for the period of time anticipated by the Company, or that additional funding will be available on terms acceptable to the Company, or at all.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company's significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2023, and notes thereto, which are included in the Company's Annual Report on Form 10-K, that was filed with the Securities and Exchange Commission, or SEC, on March 14, 2024, or 2023 Form 10-K. Since the date of those financial statements, there have been no material changes to the Company's significant accounting policies.
In the opinion of management, all adjustments, consisting of normal recurring accruals and revisions of estimates, considered necessary for a fair presentation of the unaudited condensed consolidated financial statements have been included. Interim results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024 or any other future period.
The Company has experienced seasonality from quarter to quarter. In general, the first quarter usually has lower revenues than the preceding fourth quarter, the second and third quarters have higher revenues than the first quarter, and the fourth quarter revenues are the highest in the year.
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Basis of Presentation and Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S., or GAAP. Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB.
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements herein.
Certain monetary amounts, percentages, and other figures included elsewhere in these unaudited condensed consolidated financial statements have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.
Use of Estimates
The preparation of financial statements in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenue and expenses, classification of the expenses, assets and liabilities and the disclosure of contingent assets and liabilities as of and during the reported period. On an ongoing basis, management evaluates its estimates. Management bases its estimates and assumptions on historical experience when available and on various factors, including expected business and operational changes, sensitivity and volatility associated with the assumption that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of the assets and liabilities that are not readily apparent from other sources. In certain circumstances, management must apply significant judgment in this process. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management selects an amount that falls within that range of reasonable estimates. Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period they become known.
Significant estimates and judgments reflected in these unaudited condensed consolidated financial statements include, but are not limited to: accrued expenses, other long-term liabilities, product revenues, including various rebates, returns and reserves related to product sales, inventories, classification of expenses between cost of goods sold, R&D and selling, general and administrative, long-term assets, including the Company's right-of-use assets, intangible asset and goodwill.
Cash, Cash Equivalents and Restricted Cash
In determining its cash, cash equivalents and restricted cash, the Company considers only those highly liquid investments, readily convertible to cash within 90 days from the date of purchase to be cash equivalents. As of March 31, 2024, cash and cash equivalents primarily included cash on hand.
Restricted cash represents amounts required to secure the outstanding letter of credit in connection with the Company’s office and laboratory space in Cambridge, Massachusetts, or the Cambridge Lease. Restricted cash is included in “other long-term assets” in the consolidated balance sheets.
The following table reconciles cash, cash equivalents and restricted cash reported within the Company's consolidated balance sheets to the total amounts showing in the consolidated statements of cash flows:
(in thousands)March 31, 2024December 31, 2023
Cash and cash equivalents$41,961 $42,925 
Restricted cash included in other long-term assets1,661 1,654 
Total cash, cash equivalents and restricted cash$43,622 $44,579 
Concentration of Credit Risk
Cash, cash equivalents and accounts receivable are the only financial instruments that potentially subject the Company to concentrations of credit risk. The Company maintains cash accounts principally at two financial institutions in the U.S., which at times, may exceed the Federal Deposit Insurance Corporation's limits. The Company has not experienced any losses from cash balances in excess of the insurance limit. The Company's management does not believe the Company is exposed to significant credit risk at this time due to the financial condition of the financial institutions where its cash is held.
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The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for receivables when collection becomes doubtful. Provisions are made based upon a specific review of all significant outstanding receivables and the overall quality and age of those invoices not specifically reviewed as well as historical payment patterns and existing economic factors. The Company believes that credit risks associated with its customers and collaboration partners are not significant. The Company's allowance for credit losses was $0.6 million and $1.0 million as of March 31, 2024 and December 31, 2023, respectively. Write-offs for the three months ended March 31, 2024 were $0.5 million. There were no write-offs for the three months ended March 31, 2023.
Manufacturing and Distribution Risk
The Company is dependent on third-party manufacturers, logistics company and distributors to supply products for commercial activities associated with its product and product candidates, as applicable. In particular, the Company relies and expects to continue to rely on a small number of manufacturers to supply it with its requirements for the active pharmaceutical ingredients and formulated drugs related to the Company's product and product candidate activities. These activities, including the commercialization of Auryxia and Vafseo, could be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients and formulated drugs or distribution of finished product to the market.
Recent Accounting Pronouncements Not Yet Adopted
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker, or CODM, and included within the segment measure of profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. ASU 2023-07 will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. The Company is currently reviewing the impact that the adoption of ASU 2023-07 may have on its consolidated financial statements and disclosure.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires public companies to annually (i) disclose specific categories in the rate reconciliation and (ii) provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income or loss by the applicable statutory income tax rate). ASU 2023-09 will be effective for the annual reporting periods in fiscal years beginning after December 15, 2024. The Company is currently evaluating ASU 2023-09 and does not expect it to have a material effect on the Company’s consolidated financial statements.
3.FAIR VALUE OF FINANCIAL INSTRUMENTS
The tables below present certain assets and liabilities measured at fair value categorized by the level of input used in the valuation of each asset and liability (in thousands):
 March 31, 2024
 Level 1Level 2Level 3Total Fair Value
Long-term liability:
Warrant liability$ $4,975 $ $4,975 
 December 31, 2023
 Level 1Level 2Level 3Total Fair Value
Cash equivalents:    
Money market funds$1,504 $ $ $1,504 
Warrant liability – Warrant liability is classified within Level 2 of the fair value hierarchy because they are valued using inputs which are observable either directly or indirectly. The fair value was calculated using the Black-Scholes option pricing model using the following key inputs: volatility, risk-free rate, dividend yield and expected term.
Cash equivalents — Money market funds included within cash and cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets. As of March 31, 2024, the Company did not have any money market funds included in cash equivalents.

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4.INVENTORIES AND PREPAID MANUFACTURING
Inventories consists of the following (in thousands): 
 March 31, 2024December 31, 2023
Inventories, current:
Work-in-process$14,133 $4,297 
Finished goods11,399 11,394 
Inventories, current$25,532 $15,691 
Long-term inventories included in other long-term assets:
Raw materials 586 1,143 
Work-in-process7,568 8,260 
Inventories, long-term8,154 9,403 
Total inventories$33,686 $25,094 
As of March 31, 2024 and December 31, 2023, inventory consisted primarily of inventory related to the Company's commercial product, Auryxia. As of March 31, 2024 and December 31, 2023, the Company had no prepaid manufacturing costs and $0.5 million of prepaid manufacturing costs for Auryxia drug substance, respectively.
Inventory written down for Auryxia as a result of excess, obsolescence, scrap or other reasons charged to cost of product and other revenue in the unaudited condensed consolidated statement of operations and comprehensive loss totaled approximately $0.6 million and $0.3 million during the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, the Company realized lower cost of product and other revenue of $3.7 million due to the Company's ability to commercially sell inventory previously written down to zero, its then net realizable value.
Pre-Launch Inventory
The Company records advance payments for Vafseo active pharmaceutical ingredient, or API, or drug substance (raw materials) it expects to use for the U.S. launch and Medice Territory as prepaid manufacturing costs. Upon the quality release of the Vafseo batches and transfer of title to the Company from the contract manufacturing organization, or CMO, the cost of the pre-launch inventory prior to regulatory approval, including the manufacturing costs, was expensed to R&D. As of March 31, 2024 and December 31, 2023, the Company had $14.0 million of prepaid manufacturing costs for Vafseo drug substance expected to be used in the U.S. launch of Vafseo included in prepaid expenses and other current assets on the consolidated balance sheets. See Note 6, Additional Balance Sheet Detail, for further information.
5.INTANGIBLE ASSET AND GOODWILL
Intangible Asset
Intangible asset, net of accumulated amortization, prior impairments and adjustments as of March 31, 2024 and December 31, 2023 consisted of the following (in thousands):  
 March 31, 2024December 31, 2023
Intangible asset:Gross Carrying
Value
Accumulated AmortizationNet Book ValueNet Book ValueEstimated Useful Life
Developed product rights for Auryxia$214,705 $(187,673)$27,032 $36,042 6 years
The Company recorded $9.0 million in amortization expense for each of the three months ended March 31, 2024 and 2023 related to the developed product rights for Auryxia.
Goodwill
As of March 31, 2024 and December 31, 2023, the Company had goodwill of $59.0 million in connection with the December 2018 merger with Keryx. The Company has not identified any goodwill impairment to date.
6.ADDITIONAL BALANCE SHEET DETAIL
Prepaid expenses and other current assets are as follows (in thousands):
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DescriptionMarch 31, 2024December 31, 2023
Prepaid manufacturing$14,018 $14,489 
Other4,813 5,754 
Total prepaid expenses and other current assets$18,831 $20,243 
See Note 4, Inventories and Prepaid Manufacturing, for further information on prepaid manufacturing expenses.
Other long-term assets are as follows (in thousands):
DescriptionMarch 31, 2024December 31, 2023
Long-term inventories$8,154 $9,403 
Restricted cash1,661 1,654 
Other1,978 1,366 
Total other long-term assets$11,793 $12,423 
See Note 4, Inventories and Prepaid Manufacturing, for further information on long-term inventories.
Cloud Computing Implementation Costs
The Company incurs costs to implement cloud computing arrangements that are hosted by a third-party vendor. In accordance with ASC 350-40, Goodwill and Other, Internal-Use Software, for cloud computing arrangements that meet the definition of a service contract, the Company capitalizes qualifying implementation costs incurred during the application development stage as a component of other assets. Capitalization of these costs concludes once the project is substantially complete and the software is ready for the Company's intended use. Once available for its intended use, the capitalized costs will be amortized on a straight-line basis over the term of the associated hosting arrangement including periods covered by an option to extend, and will be included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss. Costs related to data conversion, overhead, general and administrative activities, and training are expensed as incurred. Post-configuration training and maintenance costs will be expensed as incurred.
Other assets as of March 31, 2024 included approximately $0.6 million of capitalized implementation costs. There were no implementation costs capitalized as of December 31, 2023. There was no amortization expense for the three months ended March 31, 2024 and 2023.
Accrued expenses and other current liabilities consists of the following (in thousands): 
Description
March 31, 2024December 31, 2023
Product revenue allowances$13,563 $22,940 
Product return reserves, current portion4,516 5,420 
Clinical trial costs253 328 
Compensation and related benefits5,817 8,216 
Operating lease liabilities, current portion5,071 4,491 
Royalties due to Panion2,568 3,989 
Professional fees2,889 1,909 
Accrued manufacturing costs1,676 5,555 
Restructuring costs, current portion751 737 
BioVectra termination fees, current portion10,000 7,500 
Liability related to sale of future royalties, current portion1,994 2,048 
Other4,812 4,602 
Total accrued expenses and other current liabilities$53,910 $67,735 
7.INDEBTEDNESS
Entry into BlackRock Loan Facility
On January 29, 2024, or the Closing Date, the Company entered into the Agreement for the Provision of a Loan Facility, or the BlackRock Credit Agreement, with Kreos Capital VII (UK) Limited, or Kreos, which are funds and accounts managed by BlackRock Inc., collectively, BlackRock, and provides for a senior secured term loan facility in the aggregate principal amount
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of up to $55.0 million, or the Term Loan Facility. The Term Loan Facility is available in three tranches (i) Tranche A — $37.0 million was funded on the Closing Date and used to repay the Pharmakon Term Loans; (ii) Tranche B — $8.0 million was funded on April 19, 2024, or the Tranche B Closing Date, and (iii) Tranche C — $10.0 million is available in a single draw through December 31, 2024, collectively the Term Loans. Tranche C is available subject to receipt of a certain amount of cumulative gross cash proceeds after the Closing Date in the form of equity or equity linked securities in one or more series of transactions.
On the Closing Date, the Company drew $34.5 million on Tranche A, after deducting debt issuance costs, fees and expenses. On the Tranche B Closing Date, the Company drew $7.5 million, after deducting debt issuance costs, fees and expenses.
The BlackRock Term Loan Facility had an initial maturity date of March 31, 2025, which was automatically extended to January 29, 2028, after the Company received FDA approval for Vafseo, or the BlackRock Maturity Date. The Company is required to make interest-only payments until December 31, 2026, or the BlackRock Interest Only Period, after which the Company will begin paying equal monthly principal on the first calendar day of each month. In the event of certain prespecified events, the repayment schedule will be accelerated.
The Term Loan Facility will accrue interest at a floating annual rate equal to the sum of (i) term Secured Overnight Financing Rate, or SOFR, for a tenor of one month (subject to a floor of 4.25% per annum) plus (ii) a margin of 6.75% per annum (subject to an overall cap of 15.00% per annum on the all-in interest rate). As of March 31, 2024, the Company's interest rate was 12.08%. The Company recognized interest expense related to the BlackRock Credit Agreement of $1.0 million during the three months ended March 31, 2024.
During the continuance of any payment event of default under the BlackRock Credit Agreement, the interest rate on such overdue sum will automatically increase by an additional 3.0% per annum, and may be subject to an additional late fee of 2.0% of such overdue sum. The Term Loan Facility also includes transaction fees ranging from 1.00% to 1.25% of the draw down amount as well exit fees of 0.75% of the amount funded to the relevant tranche.
If the Company prepays the outstanding loan prior to maturity, it will be required to pay a prepayment fee ranging from 1.0% to 4.0% of the amount prepaid. If prepayment is made during the first year, the Company also is required to pay the amount of otherwise due interest payments for the twelve-month period following prepayment.
As of March 31, 2024, future principal payments under the BlackRock Credit Agreement are as follows (in thousands):
 Principal Payments
2024$ 
2025 
2026 
202734,010 
20281,299 
Total before unamortized discount and issuance costs35,309 
Less: unamortized discount and issuance costs(5,164)
Total term loans$30,145 
The BlackRock Term Loan Facility is secured by substantially all of the existing and after-acquired assets of the Company, including intellectual property. The BlackRock Credit Agreement requires the Company to (i) maintain a minimum aggregate cash balance of $15.0 million in one or more controlled accounts or (ii) trailing twelve-month revenue of $150.0 million, both of which are measured monthly. The BlackRock Credit Agreement contains various affirmative and negative covenants that limit the Company's ability to enter into certain transactions.
Warrant
On the Closing Date, Kreos Capital VII Aggregator SCSp, an affiliate of Kreos, or the Warrant Holder, received a warrant to purchase 3,076,923 shares of the Company’s common stock, at an exercise price per share of $1.30, or the Initial Warrant, and upon borrowing of Tranche C, the Company will become obligated to issue to the Warrant Holder additional warrants to purchase 1,153,846 shares of the Company’s common stock at an exercise price per share of $1.30. Each warrant shall be exercisable for eight years from the date of issuance.
The Initial Warrant is liability classified under ASC 815, Derivatives and Hedging, as it could potentially require net cash settlement outside of the Company’s control. The Initial Warrant is measured at fair value each period with changes in fair value presented within the unaudited condensed consolidated statements of operations. The fair value of the warrant liability
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was $5.0 million as of March 31, 2024. See Note 3, Fair Value of Financial Instruments, for information on the fair value determination.
Other Agreements Accounted for as Debt
The Company has a liability related to the sale of future royalties which is accounted for as a debt arrangement. See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties, for further information.
The Company has a refund liability with CSL Vifor which is also accounted for as a debt arrangement. See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties, for further information.
Pharmakon Term Loans (Extinguished January 29, 2024)
On November 11, 2019, the Company, with Keryx as guarantor, entered into a loan agreement, or Pharmakon Loan Agreement, with BioPharma Credit PLC as collateral agent and a lender, or Collateral Agent, and BioPharma Credit Investments V (Master) LP as a lender, and a Guaranty and Security Agreement with the Collateral Agent. BioPharma Credit PLC subsequently transferred its interest in the loans, solely in its capacity as a lender, to its affiliate, BPCR Limited Partnership. The Collateral Agent and the lenders are collectively referred to as Pharmakon. The Pharmakon Loan Agreement, as amended, consisted of a secured term loan facility in an aggregate amount of up to $100.0 million, or Pharmakon Term Loans, which was made available under two tranches: (i) Pharmakon Tranche A - $80.0 million and (ii) Pharmakon Tranche B - $20.0 million. On November 25, 2019, the Company drew $77.3 million on Pharmakon Tranche A, net of fees and expenses of $2.7 million. On December 10, 2020, the Company drew $20.0 million on Pharmakon Tranche B, net of immaterial lender expenses and issuance costs.
On the Closing Date, using the proceeds from the BlackRock Credit Agreement, the Company paid the then outstanding principal balance on the Pharmakon Term Loans of $35.0 million, plus the outstanding interest and a prepayment fee of $0.2 million. During the three months ended March 31, 2024, the Company recorded a debt extinguishment loss of $0.5 million.
The Pharmakon Term Loans, as amended, bore interest through maturity at a variable rate based on the three month SOFR plus a SOFR adjustment of 0.30% plus 7.50%. The SOFR interest rate was capped at 3.35% through October 31, 2023, the date of the Fourth Amendment to the Pharmakon Loan Agreement, or Fourth Amendment. Interest expense related to the Pharmakon Loan Agreement was immaterial for the three months ended March 31, 2024. The Company recognized $1.8 million of interest expense during the three months ended March 31, 2023.
See Note 7, Indebtedness, of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for further details.
8.DEFERRED REVENUE, REFUND LIABILITY AND LIABILITY RELATED TO SALE OF FUTURE ROYALTIES
The Company had the following deferred revenue balances as of March 31, 2024 (in thousands):
 March 31, 2024
Deferred Revenue:Short-TermLong-TermTotal
MTPC
$695 $ $695 
CSL Vifor Agreement 43,296 43,296 
Total$695 $43,296 $43,991 
See Note 12, License, Collaboration and Other Revenue, for additional information on Mitsubishi Tanabe Pharma Corporation, or MTPC, deferred revenue.
CSL Vifor License Agreement
On February 18, 2022, the Company entered into a Second Amended and Restated License Agreement, or the Vifor Agreement, with CSL Vifor, which amended and restated the License Agreement dated May 12, 2017, or the Original License Agreement. The Vifor Agreement grants CSL Vifor an exclusive license to sell Vafseo to Fresenius Medical Care North America, or FMCNA, and its affiliates, including Fresenius Kidney Care Group LLC, to certain third-party dialysis organizations approved by the Company, to independent dialysis organizations that are members of certain group purchasing organizations and certain non-retail specialty pharmacies, collectively, the Supply Group, in the U.S., or Vifor Territory. The Company plans to market Vafseo in the U.S., including to the Supply Group, and sell Vafseo directly to organizations outside the Supply Group. CSL Vifor has agreed not to sell or otherwise supply Vafseo until CSL Vifor has entered a supply agreement with the applicable member of the Supply Group.
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The Vifor Agreement is structured as a profit share arrangement between the Company and CSL Vifor in which the Company will receive approximately 66% of the profits, net of certain pre-specified costs. In addition, CSL Vifor made an upfront payment to the Company of $25.0 million in February 2022 in connection with the amendment and restatement of the Vifor Agreement, which was recorded as long-term deferred revenue in the accompanying condensed consolidated balance sheets.
Unless earlier terminated, the Vifor Agreement will expire upon the later of the expiration of all patents that claim or cover Vafseo or expiration of marketing or regulatory exclusivity for Vafseo in the Vifor Territory. CSL Vifor may terminate the Vifor Agreement in its entirety upon thirty months' prior written notice after the first anniversary of the receipt of regulatory approval from the FDA for Vafseo for dialysis-dependent CKD patients. The Company may terminate the Vifor Agreement in its entirety for convenience, following the earlier of a certain period of time elapsing or following certain specified regulatory events and upon six months’ prior written notice. If the Company so terminates for convenience, subject to specified exceptions, the Company will pay a termination fee to CSL Vifor. In addition, either party may, subject to a cure period, terminate the Vifor Agreement in the event of the other party’s uncured material breach or bankruptcy.
Investment Agreements
In connection with the Original License Agreement, in May 2017, the Company sold an aggregate of 3,571,429 shares of the Company’s common stock, or 2017 Shares, to CSL Vifor at a price per share of $14.00 for a total of $50.0 million.
In February 2022, in connection with the Vifor Agreement, the Company sold an aggregate of 4,000,000 shares of its common stock, or 2022 Shares, to CSL Vifor at a price per share of $5.00 for a total of $20.0 million.
The $18.3 million representing the premium over the closing stock price, or $4.7 million for the 2017 Shares and $13.6 million for the 2022 Shares, represents consideration related to the Vifor Agreement.  
The 2017 Shares and 2022 Shares are subject to standstill agreement and are subject to voting agreements. The 2017 Shares and 2022 Shares have not been registered pursuant to the Securities Act of 1933, as amended, or the Securities Act, and were issued and sold in reliance upon the exemption from registration contained in Section 4(a)(2) of the Securities Act and Rule 506 promulgated thereunder as the transaction did not involve any public offering within the meaning of Section 4(a)(2) of the Securities Act. See Note 8, Deferred Revenue, Refund Liability and Liability Related to the Sale of Future Royalties, of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for a more detailed description of the Vifor Agreement.
Deferred Revenue Recognition
The Company evaluated the elements of the Vifor Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, CSL Vifor, is a customer. The Company identified one performance obligation under the Vifor Agreement at inception which is the non-sublicensable, non-transferrable license under certain of the Company's intellectual property to (i) sell Vafseo solely to the Supply Group, (ii) sell Vafseo to Designated Wholesalers solely for resale to members of the Supply Group, (iii) conduct medical affairs with respect to Vafseo in the Vifor Territory in the field during the term of the Vifor Agreement and (iv) use the Akebia Trademark solely in connection with the sale of Vafseo.
The transaction price of $43.3 million is comprised of the up-front payment of $25.0 million and the premiums paid by CSL Vifor for the 2017 Shares and 2022 Shares of $4.7 million and $13.6 million, respectively. Under the Vifor Agreement, these payments from CSL Vifor are non-refundable and non-creditable against any other amount due to the Company. In addition, if the Centers for Medicare & Medicaid Services, or CMS, determines that Vafseo is excluded from the Transitional Drug Add-on Payment Adjustment, or TDAPA, the Company can terminate the Vifor Agreement and will be required to repay the up-front payment and the premiums paid by CSL Vifor on the 2017 Shares and the 2022 Shares. Given the previous uncertainty associated with a potential future approval of Vafseo by the FDA, and whether Vafseo would be included in certain reimbursement bundles by CMS, the Company constrained the entire transaction price at inception. Although Vafseo was approved by the FDA in March 2024, until it is included in TDAPA by CMS, and therefore the license is delivered, the transaction price of $43.3 million will remain in long-term deferred revenue in the accompanying condensed consolidated balance sheets.
Refund Liability to Customer/Working Capital Fund
Pursuant to the Vifor Agreement, CSL Vifor contributed $40.0 million to a working capital fund, or Working Capital Fund, established to fund approximately 50% of the Company’s costs of purchasing Vafseo from its contract manufacturers for the supply of Vafseo for the Vifor Territory already delivered or to be delivered to the Company through the end of 2023. The amount of the Working Capital Fund will be reviewed at specified intervals and is adjusted based on a number of factors including outstanding supply commitments for Vafseo and agreed upon Vafseo inventory levels held by the Company for the Vifor Territory.
The Company has determined the Working Capital Fund does not represent an obligation to transfer goods or services to CSL Vifor in the future and thus under ASC 606 was recorded as a refund liability. The refund liability is considered a debt
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arrangement with zero coupon interest and the Company imputes interest on the refund liability at a rate of 15.0% per annum, which was determined based on certain factors, including the Company's credit rating, comparable securities yield and the expected repayment period. On March 18, 2022, when the $40.0 million was received from CSL Vifor, the Company recorded an initial discount on the refund liability and a corresponding deferred gain on the condensed consolidated balance sheet. The discount on the refund liability is being amortized to interest expense using the effective interest method over the expected term of the Vifor Agreement. The deferred gain is being amortized to interest income on a straight-line basis over the expected term of the Vifor Agreement. The amortization of the discount was $0.7 million and $0.8 million for the three months ended March 31, 2024 and 2023, respectively. The amortization of the deferred gain was $0.9 million and $1.0 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the $39.9 million refund liability is classified as a long-term liability based on management's estimated timing of the repayment of the refund liability to Vifor exceeding one-year.
On May 3, 2024, the Company and CSL Vifor entered into Amendment #1 to the Vifor Agreement, or the Amendment, under which the parties agreed to modify the method of repayment of the Working Capital Fund such that the Working Capital Fund will be repaid through tiered royalties ranging from a high single-digit to low double-digit percentage of the Company’s sales of Vafseo to both CSL Vifor and to third parties outside of the Vifor Agreement. The Amendment also modified the terms of repayment of the Working Capital Fund upon termination of the Vifor Agreement. See Note 16, Subsequent Events, for further information.
Liability Related to Sale of Future Royalties
On February 25, 2021, the Company entered into a royalty interest acquisition agreement, or the Royalty Agreement, with HealthCare Royalty Partners IV, L.P., or HCR, pursuant to which the Company sold to HCR its right to receive royalties and sales milestones for Vafseo in Japan and certain other Asian countries, such countries collectively, the MTPC Territory, and such payments collectively the Royalty Interest Payments, in each case, payable to the Company under the MTPC Agreement. The Royalty Interest Payments are subject to an annual maximum “cap” of $13.0 million, after which the Company will receive 85% of the Royalty Interest Payments for the remainder of that year. The Royalty Interest Payments are also subject to an aggregate maximum “cap” of $150.0 million, after which the Royalty Interest Payments will revert back to the Company. The Company retains the right to receive all potential future regulatory milestones for Vafseo under the MTPC Agreement.
At the transaction date, the Company recorded the proceeds received from HCR of $44.8 million (net of certain transaction expenses) as a liability and is amortizing it using the effective interest method over the life of the arrangement. The liability related to sale of future royalties and the debt amortization are based on the Company’s current estimates of future royalties expected to be paid over the life of the arrangement. To the extent the Company’s estimates of future royalty payments are greater or less than previous estimates or the estimated timing of such payments is materially different than previous estimates, the Company will adjust the effective interest rate and recognize related non-cash interest expense on a prospective basis. In the event the Company's estimates of future royalties are less than the proceeds from the sale of future royalties, the Company will not recognize related non-cash interest expense. On a quarterly basis, the Company reassesses the effective interest rate and adjusts the rate prospectively as needed. The annual effective interest rate as of March 31, 2024 was 0% and, therefore the Company did not recognize any non-cash interest expense in the unaudited condensed consolidated statements of operations and comprehensive loss. As a result of its ongoing involvement in the cash flows related to the royalties and sales milestones in the MTPC Territory, the Company will continue to account for these royalties as non-cash royalty revenue which is reflected in license, collaboration and other revenue in the unaudited condensed consolidated statements of operations and comprehensive loss. A more detailed description of Royalty Agreement can be found in Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties, of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K.
During each of the three months ended March 31, 2024 and 2023, the Company paid $0.4 million of royalties to HCR and as of March 31, 2024 and December 31, 2023 the balances were as follows (in thousands):                        
Liability related to sale of future royaltiesMarch 31, 2024December 31, 2023
Current portion (included in accrued expenses and other current liabilities)$1,994 $2,048 
Long-term portion53,498 54,013 
Total liability related to sale of future royalties$55,492 $56,061 
9.LEASES
Cambridge Lease
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Under the Cambridge Lease, the Company leases approximately 65,167 square feet of office, storage and lab space in Cambridge, Massachusetts. The term of the Cambridge Lease with respect to the 59,216 square feet of office and storage space expires on September 11, 2026, with one five-year extension option available. The term of the Cambridge Lease with respect to the 5,951 square feet of lab space was set to expire on January 31, 2025, with an extension option for one additional period through September 11, 2026. On May 6, 2024, the Company extended the term of the Cambridge Lease with respect to the lab space through September 11, 2026. See Note 16, Subsequent Events, for further information.
The Cambridge Lease is non-cancelable and is classified as an operating lease. The renewal option as it relates to the office and storage portion of the Cambridge Lease was not included in the calculation of the right-of-use asset and operating lease liability as the renewal is not reasonably certain. However, the renewal option as it relates to the lab portion of the Cambridge Lease was included in the calculation of the right-of-use assets and operating lease liabilities as the renewal is reasonably certain. The Cambridge Lease does not contain residual value guarantees. In arriving at the operating lease liabilities, the Company applied incremental borrowing rates ranging from 6.65% to 6.94%, which were based on the remaining lease term at either the date of adoption of ASC 842 or the effective date of any subsequent lease term extensions. As of March 31, 2024, the remaining lease term for the Cambridge Lease was 2.45 years.
Operating lease costs were $1.2 million and $1.8 million for the three months ended March 31, 2024 and 2023, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $1.4 million and $1.7 million for the three months ended March 31, 2024 and 2023, respectively. The security deposit in connection with the Cambridge Lease is $1.7 million in the form of a letter of credit, which is included as restricted cash in other long-term assets in the Company’s condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.
Sublease and Former Boston Lease
Previously, the Company leased 27,924 square feet of office space in Boston, Massachusetts, or Boston Lease, under a non-cancelable operating lease that was set to expire in July 2031. The Company subleased the entire Boston Lease, effective October 2019 through February 2023. The Company did not record any rental income for the three months ended March 31, 2024 and recorded $0.3 million in rental income as other income in the unaudited condensed consolidated statements of operations and comprehensive loss during the three months ended March 31, 2023.
In May 2023, pursuant to an Assignment and Assumption of Lease Agreement, or Lease Assignment Agreement, the Company assigned all of its rights, title and interest in, to, and under the Boston Lease to LG Chem Life Sciences Innovation Center, Inc., or LG Chem, and made a payment to LG Chem of $1.3 million. As of May 2023, LG Chem assumed all of the rights and obligations of the Company under the Boston Lease and the Company has no further obligations for rent or other payments under the Boston Lease. In accordance with ASC 842, Leases, the Company wrote off the right-of-use asset and lease liability associated with the Boston Lease, and recognized the difference between the right-of-use asset and the lease liability offset by the $1.3 million payment as a loss on lease termination in the unaudited condensed consolidated statement of operations and comprehensive loss of $0.5 million during the three months ended June 30, 2023.
Future Lease Commitments
Future commitments under the Cambridge Lease are as follows (in thousands):
Operating
Lease Commitments
Remainder of 2024$4,308 
20255,819 
20263,613 
Total lease commitments$13,740 
Less: present value adjustment (1,033)
Current and long-term operating lease liabilities$12,707 
10.COMMITMENTS AND CONTINGENCIES
Manufacturing and Unconditional Purchase Commitment Agreements
Siegfried Manufacturing
The Company's contractual obligations include a commercial supply agreement with Siegfried Evionnaz SA, or Siegfried, to supply commercial drug substance for Auryxia. The Company and Siegfried entered into a Master Manufacturing Services and Supply Agreement, most recently amended in February 2023, or the Siegfried Agreement, under which the Company has
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agreed to purchase a minimum quantity of drug substance of Auryxia at a predetermined price. As of March 31, 2024, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $22.0 million through the end of 2026.
The term of the Siegfried Agreement expires on December 31, 2026. The Siegfried Agreement provides the Company and Siegfried with certain early termination rights.
The excess firm commitment liability recorded in other long-term liabilities related to the Company's contractual purchase commitments with Siegfried was $1.5 million as of March 31, 2024 and December 31, 2023.
Patheon Manufacturing
On March 11, 2020, the Company entered into a Supply Agreement with Patheon Inc., or Patheon, or the Patheon Agreement, under which Patheon will manufacture Vafseo drug product for commercial use under a volume-based pricing structure through June 30, 2025, renewing annually unless either party gives the other party eighteen months' prior written notice. Under the Patheon Agreement, the Company agreed to purchase from Patheon a certain percentage of the estimated global demand for Vafseo drug product based on certain quarterly and annual forecasts provided by the Company. As of March 31, 2024, the Company had no minimum commitments with Patheon, however, as estimated global demand fluctuates, the Company may have future obligations under the Patheon Agreement.
WuXi STA Manufacturing
In April 2020, the Company entered into a Supply Agreement with STA Pharmaceutical Hong Kong Limited, a subsidiary of WuXi AppTec, or WuXi STA, or, as amended, the WuXi STA DS Agreement. Under the WuXi STA DS Agreement, WuXi STA will manufacture Vafseo drug substance for commercial use under a volume-based pricing structure through April 2, 2029. Pursuant to the WuXi STA DS Agreement, the Company has agreed to purchase a certain percentage of the global demand for Vafseo drug substance from WuXi STA. As of March 31, 2024, the Company has committed to purchase $13.4 million of Vafseo drug substance from WuXi STA through the end of 2024.
On February 10, 2021, the Company entered into a Supply Agreement with WuXi STA, or the WuXi STA DP Agreement, under which WuXi STA will manufacture and supply Vafseo drug product for commercial purposes under a volume-based pricing structure through February 10, 2025. The Vafseo drug product price is reviewed annually by the Company and WuXi STA. The Company will also reimburse WuXi STA for certain reasonable expenses. Pursuant to the WuXi STA DP Agreement, the Company has agreed to purchase a certain percentage of global demand for Vafseo drug product from WuXi STA. The WuXi STA DP Agreement may be renewed or extended by mutual agreement of the Company and WuXi STA with at least eighteen months’ prior written notice. The WuXi STA DP Agreement allows the Company to terminate the relationship on 180 calendar days’ prior written notice to WuXi STA for any reason. In addition, each party has the ability to terminate the WuXi STA DP Agreement upon the occurrence of certain conditions.
BioVectra - Former Manufacturing and Unconditional Purchase Commitments
Under the Manufacture and Supply Agreement with BioVectra, Inc., or BioVectra, and the Amended and Restated Product Manufacture and Supply and Facility Construction Agreement with BioVectra, the Company agreed to purchase minimum quantities of Auryxia drug substance annually at predetermined prices as well as reimburse BioVectra for certain costs in connection with construction of a new facility for the manufacture and supply of Auryxia drug substance.
On December 22, 2022, the Company and BioVectra entered into a termination agreement, or BioVectra Termination Agreement, pursuant to which the parties agreed, among other things, to terminate, effective immediately, any and all existing agreements entered into between the parties in connection with the manufacture and supply, by BioVectra to the Company, of Auryxia drug substance. Under the terms of the BioVectra Termination Agreement, each of the Company and BioVectra have released one another from all existing and future claims and liabilities and the return of certain materials and documents. In addition, the Company agreed to pay BioVectra a total of $32.5 million consisting of (i) an upfront payment of $17.5 million and (ii) six quarterly payments of $2.5 million which commenced in April 2024, totaling $15.0 million. The upfront payment of $17.5 million was made during the quarter ended December 31, 2022 and was recognized to cost of product and other revenue. In accordance with ASC 420, Exit or Disposal Cost Obligations, the Company recognized a liability and corresponding expense for the remaining termination fees based on estimated fair value as of December 22, 2022. The Company imputed interest on the liability for the remaining termination fees at a rate of 17.0% per annum, which was determined based on certain factors, including the Company's credit rating, comparable securities yield, and expected repayment period of the remaining termination fees. The Company recorded an initial discount on the remaining termination fees on the consolidated balance sheet on the date of the termination. This resulted in the recording of a liability and corresponding charge to cost of goods sold of $11.2 million during the quarter ended December 31, 2022. The discount on the liability balance is being amortized to interest expense using the effective interest rate method over the term of the liability. The amortization of the discount was $0.5 million for each of the three months ended March 31, 2024 and March 31, 2023.
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In-Licensing - Panion License Agreement
On April 17, 2019, the Company and Panion & BF Biotech, Inc., or Panion, entered into a second amended and restated license agreement, or Panion Amended License Agreement, which amended and restated in full the license agreement between the Company and Panion. The Panion Amended License Agreement provides the Company with an exclusive license under Panion-owned know-how and patents with the right to sublicense, develop, make, use, sell, offer for sale, import and export ferric citrate worldwide, excluding certain Asian-Pacific countries, or the Licensor Territory. The Panion Amended License Agreement also provides Panion with an exclusive license under the Company-owned patents, with the right to sublicense (with the Company’s written consent), develop, make, use, sell, offer for sale, import and export ferric citrate in certain countries in the Licensor Territory. Under the Panion Amended License Agreement, Panion is eligible to receive from the Company or any sublicensee royalty payments based on a mid-single digit percentage of sales of ferric citrate in the Company’s licensed territories. The Company is eligible to receive from Panion or any sublicensee royalty payments based on a mid-single digit percentage of net sales of ferric citrate in Panion’s licensed territories. See Note 10, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for a more detailed description of this license agreement.
The Company incurred royalty payments due to Panion of approximately $1.9 million and $2.6 million during the three months ended March 31, 2024 and 2023, respectively, relating to the Company’s sales of Auryxia in the U.S. and JT and Torii’s net sales of Riona in Japan.
Other Third-Party Contracts
The Company contracts with various organizations to conduct R&D activities with remaining contract costs to the Company of approximately $47.9 million at March 31, 2024. The scope of the services under these R&D contracts can be modified and the contracts cancelled by the Company upon written notice. In some instances, the contracts may be cancelled by the third party upon written notice.
Litigation and Related Matters
The Company is involved from time to time in various legal proceedings arising in the normal course of business. The Company provides disclosure when a loss in excess of any reserve is reasonably possible, and if estimable, the Company discloses the potential loss or range of possible loss. Significant judgment is required to assess the likelihood of various potential outcomes and the quantification of loss in those scenarios. Changes in the Company’s estimates could have a material impact and are recorded as litigation progresses and new information comes to light. Although the outcomes of potential legal proceedings are inherently difficult to predict, the Company does not expect the resolution of current legal proceedings to have a material adverse effect on its financial position, results of operations or cash flows of the Company.
Guarantees and Indemnifications
As permitted under Delaware law, the Company may indemnify its officers, directors and employees for certain events or occurrences that happen by reason of their relationship with, or position held at, the Company. The Company may also be subject to indemnification obligations by law with respect to the actions of its employees under certain circumstances and in certain jurisdictions. The Company maintains director and officer liability insurance coverage that is intended to cover a portion of amounts that may be due with respect to indemnification after a deductible is met. Further, the Company is a party to a variety of agreements in the ordinary course of business under which it may be obligated to indemnify third parties with respect to certain matters. For the three months ended March 31, 2024 and 2023, the Company did not experience any losses related to these indemnification obligations, and no claims were outstanding as of March 31, 2024. The Company does not have any claims related to these indemnification obligations and consequently concluded that the fair value of these obligations is negligible and no related accruals were recorded.
11.PRODUCT REVENUE AND RESERVES FOR VARIABLE CONSIDERATION
To date, the Company’s only source of product revenue has been from the U.S. sales of Auryxia. Total net product revenue was $31.0 million and $34.7 million for the three months ended March 31, 2024 and 2023, respectively. Product revenue allowance and reserve categories were as follows: 
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(in thousands)Chargebacks
and Discounts
Rebates, Fees
and other
Deductions
Product ReturnsTotal
Balance at December 31, 2023$1,607 $22,991 $6,916 $31,514 
Current provisions related to sales in current year1,910 10,229 961 13,100 
Adjustments related to prior year sales(93)(1,374)(105)(1,572)
Credits/payments made(2,216)(18,282)(1,974)(22,472)
Balance at March 31, 2024$1,208 $13,564 $5,798 $20,570 
(in thousands)Chargebacks
and Discounts
Rebates, Fees
and other
Deductions
Product ReturnsTotal
Balance at December 31, 2022$1,259 $26,252 $10,923 $38,434 
Current provisions related to sales in current year1,709 17,477 1,302 20,488 
Adjustments related to prior year sales(483)(1,266)(231)(1,980)
Credits/payments made(1,997)(22,321)(1,631)(25,949)
Balance at March 31, 2023$488 $20,142 $10,363 $30,993 
Chargebacks, discounts and estimated product returns are recorded as a reduction of revenue in the period the related product revenue is recognized in the unaudited condensed consolidated statements of operations and comprehensive loss. Chargebacks are recorded as a reduction to accounts receivable while discounts, rebates, fees and other deductions are recorded with a corresponding increase to accrued expenses and other current liabilities or accounts payable on the condensed consolidated balance sheets. Estimated product returns on product sales that are not expected to be returned within one year are recorded as other long-term liabilities in the condensed consolidated balance sheets.
Accounts receivable, net related to product sales, was approximately $23.9 million and $35.9 million as of March 31, 2024 and December 31, 2023, respectively.
12.LICENSE, COLLABORATION AND OTHER REVENUE
The Company recognized the following revenues from its license, collaboration and other revenue agreements (in thousands):
 Three Months Ended March 31,
EntityDescription20242023
MTPC
License and Product Supply of Vafseo in Japan
$412 $4,162 
JT and Torii License and royalties related to the sale of Riona in Japan1,186 1,137 
Total license and other revenue $1,598 $5,299 
The following tables present changes in the Company’s contract assets and liabilities related to license and other revenue (in thousands):
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Three Months Ended March 31, 2024
Balance at
Beginning of
Period
AdditionsDeductionsBalance
at End
of Period
Contract asset:    
Accounts receivable(1)
$3,333 $2,327 $(2,968)$2,692 
Contract liability:
Deferred revenue$43,296 $695 $ $43,991 
Three Months Ended March 31, 2023
Balance at
Beginning of
Period
AdditionsDeductionsBalance
at End
of Period
Contract assets:
Accounts receivable(1)
$1,901 $417 $(1,901)$417 
Prepaid expenses and other current assets$781 $ $(781)$ 
Contract liabilities:
Deferred revenue$47,034 $ $(3,738)$43,296 
 (1) Excludes accounts receivable related to amounts due to the Company from product sales of Auryxia which are included in the accompanying unaudited condensed consolidated balance sheets as of March 31, 2024 and 2023.
The Company recognized the following revenues as a result of changes in the contract asset and contract liability balances in the respective periods (in thousands): 
Three Months Ended March 31,
Revenue Recognized in the Period:20242023
Deferred revenue — beginning of the period$ $3,738 
During each of the three months ended March 31, 2024 and 2023, the Company recognized no revenue from performance obligations satisfied in previous periods.
Medice License Agreement
On May 24, 2023, or Medice Effective Date, the Company and MEDICE Arzneimittel Pütter GmbH & Co. KG, or Medice, entered into a License Agreement, or the Medice License Agreement, pursuant to which the Company granted to Medice an exclusive license to develop and commercialize Vafseo for the treatment of anemia in adult patients with CKD in the EEA, the UK, Switzerland and Australia, or the Medice Territory.
Under the Medice License Agreement, the Company received an up-front payment of $10.0 million and is eligible to receive the following payments:
(i)     commercial milestone payments up to an aggregate of $100.0 million, and
(ii)     tiered royalties ranging from 10% to 30% of Medice's annual net sales of Vafseo in the Medice Territory, subject to reduction in certain circumstances.
The royalties will expire on a country-by-country basis upon the latest to occur of (a) the date of expiration of the last-to-expire valid claim of any Company, Medice or joint patent that covers Vafseo in such country in the Medice Territory, (b) the date of expiration of data or regulatory exclusivity for Vafseo in such country in the Medice Territory and (c) the date that is twelve years from first commercial sale of Vafseo in such country in the Medice Territory.
Under the Medice License Agreement, the Company retains the right to develop Vafseo for non-dialysis patients with anemia due to CKD in the Medice Territory. If the Company develops Vafseo for non-dialysis patients and Vafseo receives marketing approval in the Medice Territory, Medice will commercialize Vafseo for both indications in the Medice Territory. In this instance, the Company would receive 70% of the net product margin of any sales of Vafseo in the non-dialysis patient population, unless Medice requests to share the cost of the development necessary to gain approval to market Vafseo for non-dialysis patients in the Medice Territory and the parties agree on alternative financial terms. If the Company develops Vafseo for non-dialysis patients, the Company has determined that the activities under the Medice License Agreement represent joint operating activities in which both parties are active participants and of which both parties are exposed to
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significant risks and rewards that are dependent on the success of the activities. Accordingly, if the Company develops Vafseo for non-dialysis patients, the Company will account for the joint activities in accordance with ASC No. 808, Collaborative Arrangements, or ASC 808. Additionally, the Company has determined that in the context of the development of Vafseo for non-dialysis patients, Medice does not represent a customer as contemplated by ASC 606-10-15, Revenue from Contracts with Customers – Scope and Scope Exceptions. As a result, the activities conducted pursuant to development activities for Vafseo for non-dialysis patients will be accounted for as a component of the related expense in the period incurred.
The Medice License Agreement expires on the date of expiration of all payment obligations due thereunder with respect to Vafseo in the last country in the Medice Territory, unless earlier terminated in accordance with the terms of the Medice License Agreement. Either party may, subject to a cure period, terminate the Medice License Agreement in the event of the other party's uncured material breach. Medice has the right to terminate the Medice License Agreement in its entirety for convenience upon twelve months' prior written notice delivered on or after the date that is twelve months after the Medice Effective Date.
The Medice License Agreement provides that the Company and Medice will enter into a supply agreement pursuant to which the Company will supply Vafseo to Medice for commercial use in the Medice Territory. As of March 31, 2024, the Company and Medice have not yet entered into a supply agreement.
The Company evaluated the elements of the Medice License Agreement in accordance with the provisions of ASC 606 and concluded Medice is a customer. The Company identified one performance obligation in connection with its obligations under the Medice License Agreement, which is the license, or License Performance Obligation. The transaction price at inception was comprised of the up-front payment of $10.0 million, of which the Company received $8.6 million during the quarter ended June 30, 2023. The remaining $1.4 million was withheld by the German Federal Tax Office and is included in other long-term assets on the condensed consolidated balance sheets as of March 31, 2024 and December 31, 2023.
Pursuant to the terms of the Medice License Agreement, the up-front payment of $10.0 million is non-refundable and non-creditable against any other amount due to the Company and was allocated to the License Performance Obligation, which was satisfied as of the Medice Effective Date.
In accordance with ASC 606, the Company will recognize sales-based royalties and milestone payments at the later of when the performance obligation is satisfied or the related sales occur.
Medice Letter Agreement
On December 6, 2023, the Company and Medice entered into a letter agreement, or the Medice Letter Agreement, pursuant to which the Company agreed to sell to Medice a partial batch of Vafseo in order to achieve packaging validation for the Medice Territory. The Company recognizes revenue under this arrangement when risk of loss passes to Medice and delivery has occurred. As of March 31, 2024, there was no accounts receivable, contract assets, payables or deferred revenue recorded in connection with the Medice Letter Agreement.
MTPC Collaboration Agreement
On December 11, 2015, the Company and MTPC entered into a Collaboration Agreement, or the MTPC Agreement, providing MTPC with exclusive development and commercialization rights to Vafseo in the MTPC Territory, which was amended effective as of December 2, 2022. In addition, the Company supplies Vafseo to MTPC for both clinical and commercial use in the MTPC Territory. In February 2021, the Company entered into the Royalty Agreement with HCR, whereby the Company sold its right to receive royalties and sales milestones under the MTPC Agreement, subject to certain caps and other terms and conditions. See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties, for additional information and Note 12, License, Collaboration and Other Revenue, of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for a more detailed description of the MTPC Agreement.
The Company evaluated the elements of the MTPC Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, MTPC, is a customer. The Company identified two performance obligations in connection with its material promises under the MTPC Agreement as follows: (i) License, Research and Clinical Supply Performance Obligation and (ii) Rights to Future Know-How Performance Obligation.
The transaction price was comprised of: (i) the up-front payment of $20.0 million, (ii) the cost for the Phase 2 studies of $20.5 million, (iii) the cost of all clinical supply provided to MTPC for the Phase 3 studies, (iv) $10.0 million in development milestones received, (v) $25.0 million in regulatory milestones received and (vi) $5.4 million in royalties from net sales of Vafseo. The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. As of March 31, 2024, all development milestones and $25.0 million in regulatory milestones have been achieved. No other regulatory milestones have been assessed as probable of being achieved and as a result have been fully constrained.
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The Company allocates the transaction price to each performance obligation based on the Company’s best estimate of the relative standalone selling price. The Company developed a best estimate of the standalone selling price for the Rights to Future Know-How Performance Obligation primarily based on the likelihood that additional intellectual property covered by the license conveyed will be developed during the term of the arrangement and determined it is immaterial. As such, the Company did not develop a best estimate of standalone selling price for the License, Research and Clinical Supply Performance Obligation and allocated the entire transaction price to this performance obligation.
Revenue for the License, Research and Clinical Supply Performance Obligation for the MTPC Agreement is being recognized using a proportional performance method, for which all deliverables have been completed. The Company recognizes any revenue from MTPC royalties in the period in which the sales occur. During each of the three months ended March 31, 2024 and 2023, the Company recognized $0.4 million of revenue from MTPC royalties. As noted above, in February 2021, the Company entered into the Royalty Agreement, whereby the Company sold its right to receive these royalties and sales milestones under the MTPC Agreement, subject to certain caps and other terms and conditions (see Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties, for additional information). The revenue is classified as license and other revenue in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss. As of March 31, 2024, there were no accounts receivable, payables or deferred revenue and $0.4 million in contract assets recorded in connection with the MTPC Agreement.
Supply of Drug Product to MTPC
On July 15, 2020, the Company and MTPC entered into a supply agreement, or MTPC Supply Agreement, under which the Company supplies Vafseo drug product to MTPC for commercial use in Japan and certain other Asian countries, as contemplated by the MTPC Agreement. See Note 12, License, Collaboration and Other Revenue, of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for a more detailed description of this supply agreement.
On December 16, 2022, the Company, MTPC and Esteve Química, S.A., or Esteve, executed an Assignment of Supply Agreement, or Esteve Assignment Agreement, pursuant to which the Supply Agreement between the Company and Esteve, or Esteve Agreement was assigned to MTPC. The Esteve Assignment Agreement transferred the rights and obligations of the Company under the Esteve Agreement to MTPC. The Company has no further obligation to take delivery of, or pay for, product delivered by Esteve.
The Company does not recognize revenue under this arrangement until risk of loss on the drug product passes to MTPC and delivery has occurred and MTPC has accepted the product. The Company recognized immaterial revenue and $3.7 million in revenue under the MTPC Supply Agreement during the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, there were $0.7 million in accounts receivable, $0.7 million in deferred revenue and no other current liabilities relating to the MTPC Supply Agreement.
JT and Torii Sublicense Agreement
The Company has an Amended and Restated Sublicense Agreement, which was amended in June 2013, with JT and Torii, or JT and Torii Sublicense Agreement, under which JT and Torii obtained the exclusive sublicense rights for the development and commercialization of ferric citrate hydrate in Japan. JT and Torii are responsible for the future development and commercialization costs in Japan. See Note 12, License, Collaboration and Other Revenue, of the Notes to the Consolidated Financial Statements in the 2023 Form 10-K for a more detailed description of this sublicense agreement.
The Company evaluated the elements of the JT and Torii Sublicense Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, JT and Torii, is a customer. The Company identified two performance obligations in connection with its obligations under the JT and Torii Sublicense Agreement: (i) License and Supply Performance Obligation and (ii) Rights to Future Know-How Performance Obligation. The Company developed a best estimate of the standalone selling price for the Rights to Future Know-How Performance Obligation primarily based on the likelihood that additional intellectual property covered by the license conveyed will be developed during the term of the arrangement and determined it immaterial. As such, the Company allocated the entire transaction price to the License and Supply Performance Obligation.
The Company recognized license revenue of $1.2 million and $1.1 million during the three months ended March 31, 2024 and 2023, respectively, related to royalties earned on net sales of Riona in Japan. The Company records the associated mid-single digit percentage of net sales royalty expense due to Panion, the licensor of Riona, in the same period as the royalty revenue from JT and Torii is recorded.
13.CAPITAL STOCK
Authorized and Outstanding Capital Stock
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On June 5, 2020, the Company filed a Certificate of Amendment to its Ninth Amended and Restated Certificate of Incorporation, or its Charter, to increase the number of authorized shares of common stock from 175,000,000 to 350,000,000. As of March 31, 2024, the authorized capital stock of the Company included 350,000,000 shares of common stock, $0.00001 par value per share, of which 209,454,149 and 194,582,539 shares were issued and outstanding as of March 31, 2024 and December 31, 2023, respectively; and 25,000,000 shares of undesignated preferred stock, $0.00001 par value per share, of which no shares were issued and outstanding as of March 31, 2024 and December 31, 2023.
At-the-Market Facility
On April 7, 2022, the Company entered into an at-the-market, or ATM, sales agreement with Jefferies LLC, or Jefferies, as the Company's sales agent, under which the Company could offer and sell from time to time up to $26.0 million of shares of its common stock at current market prices. During the year ended December 31, 2023, the Company sold 6,189,974 shares of common stock under this program with gross proceeds of $6.8 million ($6.7 million, net of offering expenses). During the three months ended March 31, 2024, the Company sold 13,261,311 shares of its common stock under this program with gross proceeds of $19.2 million ($18.7 million, net of offering expenses).
14.STOCK-BASED COMPENSATION AND BENEFIT PLAN
Stock-Based Compensation and Benefit Plans
The Company incurred stock-based compensation expenses of $2.4 million and $2.5 million for the three months ended March 31, 2024 and 2023, respectively.
Equity Incentive Plans
The following table contains information about the Company's equity plans:
March 31, 2024December 31, 2023
Title of PlanGroup EligibleType of Award Granted (or to be Granted)Awards OutstandingAdditional Awards Authorized for GrantAwards OutstandingAdditional Awards Authorized for Grant
Keryx Equity Plans(1)(2)
Employees, directors and consultantsStock options and RSUs224,929  232,203  
Akebia Therapeutics, Inc. 2014 Incentive Plan, as amended (2) (3)
(the 2014 Plan)
Employees, directors, consultants and advisorsStock options, RSUs, SARs and performance awards13,531,330  15,311,501  
Akebia Therapeutics, Inc. 2023 Stock Incentive Plan(3) (the 2023 Plan)
(replaced 2014 Plan)
Employees, officers, directors, consultants and advisorsStock options, SARs, restricted stock, unrestricted stock, RSUs, performance awards, other share-based awards and dividend equivalents9,198,750 10,945,556 1,712,400 17,382,722 
(1)     The Keryx Equity Plans consist of the Keryx Biopharmaceuticals, Inc. 1999 Share Option Plan, Keryx Biopharmaceuticals, Inc., as amended, the 2004 Long-Term Incentive Plan, as amended, the Keryx Biopharmaceuticals, Inc. 2007 Incentive Plan, the Keryx Biopharmaceuticals Inc. Amended and Restated 2013 Incentive Plan and the Keryx Biopharmaceuticals, Inc. 2018 Equity Incentive Plan.
(2)     New awards are no longer being granted under these plans.
(3)     This table includes inducement awards that are subject to the terms and conditions of the applicable plan but were granted as inducement awards consistent with Nasdaq Listing Rule 5635(c)(4) and not under the applicable plan: 1,525,375 options outstanding under the 2014 Plan and 1,764,950 options outstanding under the 2023 Plan as of March 31, 2024 and 1,616,019 options outstanding under the 2014 Plan and 794,000 options outstanding under the 2023 Plan as of December 31, 2023.
Common Stock Options and Stock Appreciation Rights
During the three months ended March 31, 2024, the Company issued 3,117,500 options to employees under the 2023 Plan. Options and SARs granted by the Company generally vest over periods of between 12 and 48 months, subject, in each case, to the individual’s continued service through the applicable vesting date. Options and SARs generally vest either 100% on the first anniversary of the grant date or in installments of (i) 25% at the one year anniversary and (ii) 12 equal quarterly installments beginning after the one year anniversary of the grant date, subject to the individual’s continuous service with the Company. Options and SARs generally expire ten years after the date of grant.
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The Company also maintains an inducement award program with a share pool that is separate from the Company's equity plans under which inducement awards may be granted consistent with Nasdaq Listing Rule 5635(c)(4). During the three months ended March 31, 2024, the Company granted 970,950 options to purchase shares of the Company’s common stock to new hires as inducements to such employees entering into employment with the Company, of which 970,950 options remained outstanding as of March 31, 2024.
The Company grants annual service-based stock options to employees and directors and SARs to certain executives under the 2023 and 2014 Plans. In addition, the Company issues stock options to directors, new hires and occasionally to other employees not in connection with the annual grant process.
Finally, the Company grants performance-based stock options which generally vest in connection with the achievement of specified commercial, regulatory and corporate milestones. The performance-based stock options also generally feature a time-based vesting component. The expense recognized for these awards is based on the grant date fair value of the Company’s common stock multiplied by the number of options granted and recognized over time based on the probability of meeting such commercial, regulatory and corporate milestones.
The combined stock option activity for the three months ended March 31, 2024, is as follows:
Stock
Options
Weighted Average Exercise PriceWeighted-Average Contractual Life (years) Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 202313,312,835 $4.20 7.27 years 
Granted4,088,450 $1.68 — — 
Exercised(280,260)$0.50 — — 
Expired(25,074)$13.67 
Canceled and forfeited(218,175)$6.28 — — 
Outstanding at March 31, 202416,877,776 $3.61 7.69 years$5,655 
Exercisable at March 31, 20247,898,693 $5.94 6.05 years
As of March 31, 2024, there was approximately $10.0 million of unrecognized compensation costs related to stock options, which is expected to be recognized over a weighted average period of 3.05 years.
Restricted Stock Units
Generally, restricted stock units, or RSUs, granted by the Company vest in one of the following ways: (i) 100% of each RSU grant vests on the first anniversary of the grant date, (ii) one third of each RSU grant vests on the first, second and third anniversaries of the grant date, or (iii) one third of each RSU grant vests on the first anniversary of the grant date and the remaining two thirds vests in eight substantially equal quarterly installments beginning after the one year anniversary, subject, in each case, to the individual’s continued service through the applicable vesting date. The grant-date fair value of the RSUs is recognized as expense on a straight-line basis. The Company determines the fair value of the RSUs based on the closing price of the common stock on the date of the grants.
The Company also periodically grants performance-based restricted stock units, or PSUs, to employees under the 2023 Plan and previously granted PSUs under the 2014 Plan. The PSUs granted by the Company generally vest in connection with the achievement of specified commercial, regulatory and corporate milestones. The PSUs also generally feature a time-based vesting component. The expense recognized for these awards is based on the grant date fair value of the Company’s common stock multiplied by the number of units granted and recognized over time based on the probability of meeting such commercial, regulatory and corporate milestones.
RSU and PSU activity is as follows:
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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS






2014 Plan2023 Plan
Number of SharesWeighted Average Fair ValueNumber of SharesWeighted Average Fair Value
Outstanding as of December 31, 20233,339,869 $1.30 603,400 $1.48 
Granted $ 3,407,200$1.68 
Vested(1,237,718)$1.69  $ 
Forfeited and canceled(36,218)$1.16 (9,300)$1.68 
Outstanding as of March 31, 20242,065,933 $1.08 4,001,300 $1.65 
As of March 31, 2024, there was $7.7 million of unrecognized compensation costs related to time-based RSUs and PSUs, which is expected to be recognized over a weighted-average period of 2.43 years.
Employee Stock Purchase Plan
On June 6, 2019, the Company's stockholders approved the Amended and Restated 2014 Employee Stock Purchase Plan, or ESPP. Under the ESPP substantially all employees may voluntarily enroll to purchase shares of the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning or the end of the six-month offering period. An employee's payroll deductions under the ESPP are limited to 15% of the employee's compensation, and an employee may not purchase more than $25,000 worth of stock during any calendar year. In addition, an employee may not purchase more than 1,500 shares in any offering period. As of March 31, 2024 and December 31, 2023, a total of 4,545,480 and 4,637,801 shares of the Company’s common stock were available for future issuance under the ESPP, respectively. The Company issued 92,321 shares under the ESPP during the three months ended March 31, 2024.
Stock-Based Compensation Expense
The Black-Scholes option pricing model is used to estimate the fair value of the stock options. The weighted-average assumptions used in calculating the fair values of the rights to acquire stock under the 2023 Plan, the 2014 Plan and inducement awards were as follows:                                         
 Three Months Ended March 31,
Stock Options20242023
Risk-free interest rate3.90 %-4.23%3.54 %-3.57%
Expected volatility111.33 %-114.25%100.97 %-102.16%
Expected term (years)6.25 years-6.25 years6.25 years-6.25 years
Expected dividend yield %%
Weighted average grant date fair value
$1.46$0.52
The Company has classified stock-based compensation in its unaudited condensed consolidated statements of operations and comprehensive loss as follows (in thousands):                                    
 Three Months Ended March 31,
 20242023
Cost of goods sold $87 $66 
Research and development419 669 
Selling, general and administrative 1,816 1,536 
Restructuring38 218 
Total stock-based compensation$2,360 $2,489 
15.NET LOSS PER SHARE
Potentially dilutive securities, warrants, common stock options, RSUs and SARs have been excluded from the calculation of diluted net loss per share as their effects would be anti-dilutive. For periods in which the Company reports a net loss, the weighted average number of shares outstanding used to calculate both basic and diluted net loss per share were the same. The shares in the table below were excluded from the calculation of diluted net loss per share, prior to the use of the treasury stock method, due to their anti-dilutive effect:
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 Three Months Ended March 31,
 20242023
Warrants4,230,769  
Outstanding common stock options 16,242,463 13,877,754 
Unvested RSUs6,067,233 6,060,421 
Stock appreciation rights635,313 635,313 
Total27,175,778 20,573,488 
16.SUBSEQUENT EVENTS
The Company has evaluated events and transactions occurring after the balance sheet date through the filing date of this Quarterly Report on Form 10-Q with the SEC, to ensure that the unaudited condensed consolidated financial statements include appropriate disclose of events both recognized in the accompanying unaudited condensed consolidated financial statements as of March 31, 2024, and events which occurred subsequently but were not recognized in the consolidated financial statements. The Company has concluded that no subsequent events have occurred that require disclosure other than the following:
Amendment to WuXi STA DS Agreement
On April 15, 2024, the Company and WuXi STA entered into Amendment #2 to the WuXi STA DS Agreement pursuant to which the parties agreed to extend the term for an additional five years and set the expiration date to April 2, 2029. In addition, the volume-based pricing structure under the WuXi STA DS Agreement was amended. See Note 10, Commitments and Contingencies, for further information on the WuXi STA DS Agreement.
Drawdown of Tranche B Term Loan
On April 19, 2024, the Company drew $7.5 million on Tranche B, after deducting debt issuance costs, fees and expenses. See Note 7, Indebtedness, for further information on the BlackRock Credit Agreement.
Amendment #1 to the Vifor Agreement
On May 3, 2024, the Company and CSL Vifor entered into the Amendment. Pursuant to the Amendment, the Company and CSL Vifor agreed to modify the method of repayment of the Working Capital Fund such that the Working Capital Fund will be repaid through tiered royalties ranging from a high single-digit to low double-digit percentage of the Company’s sales of Vafseo to both CSL Vifor and to third parties outside of the Vifor Agreement, or the Vifor Royalty Payments. The Vifor Royalty Payments will begin on July 1, 2025, and will continue until the cumulative total of the Vifor Royalty Payments reach $40.0 million, or through May 2028, or the Vifor Royalty Term, at which time, if the Vifor Royalty Payments have not yet reached $40.0 million, the Company is required to pay CSL Vifor the difference between the $40.0 million and the sum of any Vifor Royalty Payments paid by the Company during the Vifor Royalty Term and subject to certain minimum Vifor Royalty Payments during the Vifor Royalty Term. In addition, upon termination of the Vifor Agreement prior to the end of the Vifor Royalty Term: (i) if by the Company for convenience, then the Vifor Royalty Payments shall be accelerated and the Company shall be required to pay the difference between the $40.0 million and the sum of any Vifor Royalty Payments paid by the Company during the Vifor Royalty Term; (ii) if by CSL Vifor for convenience, then all Vifor Royalty Payments shall cease and the Vifor Royalty Term shall end; or (iii) for any reason other than convenience by the Company or CSL Vifor, the Vifor Royalty Term and Vifor Royalty Payments shall continue as agreed under the Amendment. See Note 12, License, Collaboration and Other Revenue, for further information on the Vifor Agreement.
Cambridge Lease Extension - Lab Space
On May 6, 2024, the Company extended the term of the Cambridge Lease with respect to the lab space from January 31, 2025 to September 11, 2026. The Company has an option to extend the term for an additional two years with respect to the lab space. See Note 9, Leases, for further information on the Cambridge Lease.


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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the United States, or U.S., Securities and Exchange Commission, or the SEC, on March 14, 2024, or the 2023 Form 10-K. In addition to historical information, the following discussion and analysis contains forward-looking statements that reflect our plans, estimates, beliefs and explanations that involve significant risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” in Part II, Item 1A. of this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.
Business Overview
We are a fully integrated commercial-stage biopharmaceutical company committed to addressing patients’ unmet needs. We have built a business focused on developing and commercializing innovative therapeutics that we believe serves as a foundation for future growth. Our purpose is to better the life of each person impacted by kidney disease, and we have established ourselves as a leader in the kidney community. We believe our demonstrated ability to deliver value broadly to the kidney community has enabled us to build a sustainable company. Upon this solid foundation and our continued commitment to patients, we believe focusing on all patients who can realize a meaningful benefit from our medicines, will result in delivering value for our stockholders.
Our current portfolio includes:
Vafseo (vadadustat) is an oral hypoxia-inducible factor prolyl hydroxylase inhibitor, approved in 37 countries as a treatment for anemia due to chronic kidney disease, or CKD. On March 27, 2024, the U.S. Food and Drug Administration, or FDA, approved Vafseo (vadadustat) tablets for the treatment of anemia due to CKD in adults who have been receiving dialysis for at least three months. We intend to commercialize Vafseo in the U.S. with Vifor (International) Ltd. (now a part of CSL Limited), or CSL Vifor. We also have several lifecycle management and indication expansion opportunities currently under evaluation for Vafseo, including the potential for alternative dosing and label expansion for the treatment of adult patients not on dialysis. In May 2023, we entered into a license agreement granting MEDICE Arzneimittel Pütter GmbH & Co. KG, or Medice, the rights to market and sell Vafseo in the European Economic Area, or EEA, the United Kingdom, or UK, Switzerland and Australia, or the Medice Territory, where Vafseo is approved for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis. We retain the rights to develop and commercialize Vafseo in Europe for other indications. In Japan, Vafseo is approved as a treatment for anemia due to CKD in both dialysis dependent and non-dialysis dependent patients and is marketed and sold by our collaborator Mitsubishi Tanabe Pharma Corporation, or MTPC. In Taiwan and South Korea, Vafseo is approved for the treatment of symptomatic anemia due to CKD in adult patients on chronic maintenance dialysis. MTPC plans to commercialize Vafseo in Taiwan.
Auryxia® (ferric citrate) is an orally administered medicine approved and marketed in the U.S. for two indications: (1) the control of serum phosphorus levels in adult patients with dialysis dependent chronic kidney disease, or DD-CKD, and (2) the treatment of iron deficiency anemia, or IDA, in adult patients with non-dialysis-dependent chronic kidney disease, or NDD-CKD. Today, we market Auryxia in the U.S. with our well-established, nephrology-focused commercial organization. Our Japanese sublicensee, Japan Tobacco, Inc., and its subsidiary, Torii Pharmaceutical Co., Ltd., collectively, JT and Torii, commercialize ferric citrate hydrate as Riona in Japan. Averoa SAS, or Averoa, has an exclusive license to develop and commercialize ferric citrate in the EEA, Turkey, Switzerland and the UK. In April 2024, Averoa submitted its marketing authorization application, or MAA, for ferric citrate in Europe.
Our HIF-based pipeline assets are molecules being evaluated to target areas of unmet needs in acute care settings. The discovery of hypoxia-inducible factor, or HIF, laid the foundation to explore the central role of oxygen sensing in many diseases. As we have seen through the development of vadadustat as a treatment for anemia due to CKD, when stabilized, HIF triggers wide-ranging adaptive, protective responses during hypoxic or ischemic conditions. We have selected two additional HIF molecules for preclinical development: AKB-9090, for use in an acute care setting, potentially for acute kidney disease, or AKI, or acute respiratory distress syndrome, or ARDS, and AKB-10108 for retinopathy of prematurity, or ROP, in neonates.
We continue to explore additional commercial and development opportunities to expand our pipeline and portfolio of novel therapeutics through both internal research and external innovation to leverage our fully integrated team.
Factors Affecting Our Performance and Results of Operations
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Financial Highlights
Product revenue for the first three months of 2024 has declined by approximately 11% to $31.0 million from $34.7 million for the first three months of 2023, primarily due to decreases in product volume partially offset by price increases and execution of our contracting strategy with third-party payors.
We have incurred net losses in each year since inception. Our net losses were $18.0 million and $26.9 million for the three months ended March 31, 2024 and 2023, respectively. Substantially all of our net losses resulted from costs incurred in connection with the continued commercialization of Auryxia and development efforts relating to Vafseo, including conducting clinical trials of, and seeking regulatory approval for, Vafseo, and providing general and administrative support for these operations and protecting our intellectual property.
Financial Components
Product Revenue
We generate product revenue from commercial sales of Auryxia to a limited number of wholesale distributors as well as certain specialty pharmacy providers. Our net product revenue includes many variables, including judgments and estimates of discounts, rebates and product returns, which can fluctuate from quarter-to-quarter and year-over-year. We evaluate, at least annually and more frequently, if needed, the price of Auryxia, which will lose exclusivity, or LoE, in March 2025. We expect our product revenue to continue to be generated primarily from our commercial sales of Auryxia until Vafseo's U.S. market entry which is expected in January 2025.
Due to the buying patterns of our customers, we tend to have seasonality from quarter to quarter. In general, our first quarter usually has lower revenues than the preceding fourth quarter, the second and third quarters have higher revenues than the first quarter, and the fourth quarter revenues are the highest in the year. While seasonality may affect quarterly comparisons within a fiscal year, it generally is not material to our annual consolidated financial results. However, absent further legislation or regulation, Auryxia will be included in the ESRD bundle starting in January 2025, which coupled with Auryxia's LoE in March 2025 may