UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-36352 AKEBIA THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 20-8756903 (State or other jurisdiction of incorporation or organizatio ...

Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was $60 million, down from $92 million in Q3 2019, primarily due to lower collaborative revenue as the company advanced the vadadustat development program [17][18] - Net product revenue for Auryxia increased by 14.6% to $34.4 million compared to $30.0 million in Q3 2019, although the company remains cautious due to the impact of CMS' non-coverage decision and COVID-19 uncertainties [19] - The company reported a net loss of $60 million for Q3 2020, compared to a net loss of $54.6 million in Q3 2019 [20] Business Line Data and Key Metrics Changes - Collaborative revenue decreased as development costs for vadadustat declined, with 80% of these costs reimbursed by Otsuka [18] - Royalty revenue from the sale of vadadustat in Japan amounted to $373,000 since its launch in late August 2020, indicating early commercial performance [18] Market Data and Key Metrics Changes - The potential market opportunity for vadadustat in the US is estimated at $2 billion, targeting over 500,000 adult patients with anemia due to CKD on dialysis [10][16] - The company is also preparing for a Marketing Authorization Application in Europe in collaboration with Otsuka [10] Company Strategy and Development Direction - The company aims to position vadadustat as a new oral standard of care for treating anemia due to CKD in dialysis patients, with a focus on regulatory submission for potential US approval [9][10] - Akebia is leveraging its renal expertise and existing nephrology-focused commercial organization to support a strong launch of vadadustat upon approval [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the INNO2VATE results, which they believe provide a straightforward path to advance vadadustat towards potential approval [9] - The company is focused on executing pre-commercialization activities and ensuring readiness for a strong launch, while also maintaining a robust publication plan to support vadadustat's potential [14][15] Other Important Information - The company ended Q3 2020 with cash, cash equivalents, and available-for-sale securities of $269.3 million, which is expected to fund operations beyond the anticipated US launch of vadadustat [21] Q&A Session Summary Question: Concerns about FDA acceptance of non-pre-specified analysis - Management clarified that the continuous age variable was pre-specified and that they are confident in the analysis presented to the FDA [24][25] Question: Plans for regulatory approval using a Priority Review Voucher - The company still has the option to use the PRV, but discussions with partners are ongoing [28][29] Question: Filing for NDAs for dialysis and non-dialysis patients - Management confirmed that there will be one NDA that includes both populations, and they are planning to file as early as possible next year [32] Question: Additional studies required by the FDA - No indication was given that additional studies would be necessary, and management expressed confidence in the data presented [46][47] Question: Differences in cardiovascular events between US and non-US patients - Management noted that the difference in MACE was driven by patients treated to a higher hemoglobin target outside the US, and emphasized that treating to a target of 10 to 11 does not increase cardiovascular risk [54][55]

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 September 30, 2020 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 AKEBIA THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) | --- | --- | |-- ...

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 June 30, 2020 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 AKEBIA THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 20-8756903 (S ...

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, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ | --- | --- | |--------------------------------------------------------------------------------------------|--------------------------- ...

Akebia Therapeutics, Inc. (NASDAQ:AKBA) Q1 2020 Earnings Conference Call May 5, 2020 8:30 AM ET Company Participants Kristen Sheppard - SVP, IR John Butler - President and CEO Steven Burke - Chief Medical Officer Jason Amello - CFO Conference Call Participants Allison Bratzel - Piper Sandler Eric Joseph - JPMorgan Difei Yang - Mizuho Securities Bert Hazlett - BTIG Chad Messer - Needham & Company Ed Arce - H.C. Wainwright David Lebowitz - Morgan Stanley Kennen MacKay - RBC Capital Markets Operator Good morni ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Securities registered pursuant to Section 12(g) of the Act: None FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-36352 AKEBIA THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 20-875 ...

Akebia Therapeutics, Inc. (NASDAQ:AKBA) Q4 2019 Earnings Conference Call March 10, 2020 9:00 AM ET Company Participants Kristen Sheppard - Vice President, Investor Relations John Butler - President and Chief Executive Officer Jason Amello - Chief Financial Officer Conference Call Participants Chris Raymond - Piper Sandler Eric Joseph - JPMorgan Difei Yang - Mizuho David Lebowitz - Morgan Stanley Ed Arce - H.C. Wainwright Bert Hazlett - BTIG Kennen MacKay - RBC Capital Markets Operator Ladies and gentlemen t ...

[FORM 10-Q Cover Page](index=1&type=section&id=FORM%2010-Q) [Note Regarding Forward-Looking Statements](index=2&type=section&id=NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that the report contains forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements about the company's expectations regarding the financial impact and benefits of the Keryx merger, commercialization of Auryxia, potential of vadadustat, pipeline, research activities, product candidate benefits and safety, market potential, competitive position, financial projections, clinical trial timing and data, regulatory filings and approvals, pricing and reimbursement, intellectual property, reliance on third parties, accounting standards, and legal proceedings[3](index=3&type=chunk) - These forward-looking statements involve risks and uncertainties, including those detailed in Part II, Item 1A. Risk Factors, which could cause actual results to differ materially. The company assumes no obligation to publicly update or revise these statements, except as required by law[5](index=5&type=chunk) [Table of Contents](index=4&type=section&id=Table%20of%20Contents) [Part I—Financial Information](index=5&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements.) This section presents the unaudited condensed consolidated financial statements, including the Balance Sheets, Statements of Operations and Comprehensive Loss, Statements of Stockholders' Equity, and Statements of Cash Flows, along with detailed notes explaining the company's accounting policies, significant agreements, and financial position [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets provide a snapshot of the company's financial position as of September 30, 2019, and December 31, 2018, showing a decrease in total assets and stockholders' equity, while liabilities saw a slight reduction | Metric | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | **Assets** | | | | Total current assets | $299,008 | $468,275 | | Property and equipment, net | $12,799 | $8,023 | | Operating lease assets | $30,141 | — | | Goodwill | $55,053 | $55,053 | | Other intangible assets, net | $300,312 | $328,153 | | Other assets | $97,907 | $137,036 | | **Total assets** | **$795,220** | **$996,540** | | **Liabilities** | | | | Total current liabilities | $223,148 | $265,693 | | Deferred revenue, net of current portion | $43,887 | $55,709 | | Operating lease liabilities, net of current portion | $28,811 | — | | Total liabilities | $327,658 | $360,612 | | **Stockholders' equity** | | | | Total stockholders' equity | $467,562 | $635,928 | | **Total liabilities and stockholders' equity** | **$795,220** | **$996,540** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The statements of operations show a significant increase in total revenues for both the three and nine months ended September 30, 2019, primarily driven by product revenue from Auryxia and increased collaboration revenue | Metric | Three Months Ended Sep 30, 2019 (in thousands) | Three Months Ended Sep 30, 2018 (in thousands) | Nine Months Ended Sep 30, 2019 (in thousands) | Nine Months Ended Sep 30, 2018 (in thousands) | | :------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Product revenue, net | $30,004 | $— | $82,204 | $— | | License, collaboration and other revenue | $61,973 | $53,169 | $183,242 | $147,892 | | **Total revenues** | **$91,977** | **$53,169** | **$265,446** | **$147,892** | | Total cost of goods sold | $38,263 | $— | $107,189 | $— | | Research and development | $74,512 | $70,634 | $242,557 | $203,955 | | Selling, general and administrative | $34,178 | $10,378 | $104,537 | $31,940 | | Total operating expenses | $109,619 | $81,012 | $349,654 | $235,895 | | **Operating loss** | **$(55,905)** | **$(27,843)** | **$(191,397)** | **$(88,003)** | | Net loss | $(54,585) | $(26,047) | $(185,176) | $(83,534) | | Net loss per share - basic and diluted | $(0.46) | $(0.46) | $(1.57) | $(1.54) | | Total comprehensive loss | $(54,602) | $(25,997) | $(184,909) | $(83,501) | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This statement details changes in stockholders' equity over the nine months ended September 30, 2019, and the prior year, reflecting impacts from common stock issuance, share-based compensation, and accumulated deficit - Total stockholders' equity decreased from **$635,928 thousand** at December 31, 2018, to **$467,562 thousand** at September 30, 2019. This change was primarily due to a net loss of **$185,176 thousand** for the nine months ended September 30, 2019, partially offset by increases in additional paid-in capital from stock sales and share-based compensation[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The cash flow statement shows a significant increase in cash used in operating activities for the nine months ended September 30, 2019, compared to the prior year, largely offset by cash provided by investing activities | Metric | Nine Months Ended Sep 30, 2019 (in thousands) | Nine Months Ended Sep 30, 2018 (in thousands) | | :-------------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(165,306) | $(23,795) | | Net cash provided by investing activities | $188,896 | $19,877 | | Net cash provided by (used in) financing activities | $(5,448) | $96,477 | | Increase in cash, cash equivalents, and restricted cash | $18,142 | $92,559 | | Cash, cash equivalents, and restricted cash at end of period | $125,241 | $163,996 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering the company's business, significant accounting policies, revenue recognition, collaboration agreements, business combination impacts, and other financial details [1. Nature of Organization and Operations](index=9&type=section&id=1.%20Nature%20of%20Organization%20and%20Operations) Akebia Therapeutics, Inc. is a biopharmaceutical company focused on kidney disease, with commercial product Auryxia and investigational product vadadustat - Akebia Therapeutics, Inc. is a biopharmaceutical company focused on developing and commercializing therapeutics for kidney disease. Its commercial product, Auryxia® (ferric citrate), is approved in the U.S. for controlling serum phosphorus in adult CKD patients on dialysis and treating iron deficiency anemia in adult CKD patients not on dialysis. Ferric citrate is also marketed as Riona® in Japan and approved as Fexeric® in the EU (not currently marketed)[20](index=20&type=chunk) - The company's lead investigational product candidate, vadadustat, is an oral therapy in Phase 3 development for anemia due to CKD in both dialysis-dependent and non-dialysis-dependent adult patients. Vadadustat acts via the hypoxia-inducible factor (HIF) pathway, which regulates red blood cell production[20](index=20&type=chunk) - On December 12, 2018, Akebia completed a merger with Keryx Biopharmaceuticals, Inc., issuing **59,270,410** Akebia Shares. Since inception, the company has primarily focused on R&D, raising capital, and general administrative support. It began recording revenue from U.S. Auryxia sales and sublicensing rights in Japan on December 12, 2018[22](index=22&type=chunk)[23](index=23&type=chunk) - The company has not generated a profit to date and expects to require additional capital for Auryxia commercialization and product candidate development. It anticipates financing future cash needs through equity/debt transactions, collaborator payments, royalty transactions, or strategic transactions[23](index=23&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - Akebia expects its cash resources, including **$100.0 million** from Term Loans with Pharmakon (subject to conditions), to fund its operating plan beyond the next twelve months, into Q1 2021. However, under ASC 205-40, certain elements like a milestone payment from MTPC for vadadustat approval in Japan are excluded from the going concern analysis, leading to 'substantial doubt' about sufficient funds for the next twelve months from the report's issuance date[24](index=24&type=chunk)[25](index=25&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This section outlines the key accounting principles and policies used in preparing the unaudited condensed consolidated financial statements, including the basis of presentation, recently adopted and not-yet-adopted accounting pronouncements, and the use of estimates [Basis of Presentation](index=10&type=section&id=Basis%20of%20Presentation) The unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP for interim reporting, including the accounts of Akebia and its wholly-owned subsidiaries, with all intercompany balances and transactions eliminated - The unaudited condensed consolidated financial statements are prepared in conformity with U.S. GAAP for interim financial reporting and Regulation S-X, Rule 10-01. They include the accounts of Akebia and its wholly-owned subsidiaries, with all intercompany balances and transactions eliminated[27](index=27&type=chunk)[29](index=29&type=chunk) - Management has determined that the Company operates in one segment, focused on developing and commercializing novel therapeutics for people with kidney disease[29](index=29&type=chunk) [New Accounting Pronouncements – Recently Adopted](index=10&type=section&id=New%20Accounting%20Pronouncements%20%E2%80%93%20Recently%20Adopted) The company adopted ASU 2016-02, Leases (ASC 842), on January 1, 2019, using a modified retrospective approach, resulting in the recognition of approximately $37.1 million in operating lease liabilities and $33.4 million in right-of-use assets - The Company adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019, using the modified retrospective approach. This resulted in the recognition of approximately **$37.1 million** in operating lease liabilities and **$33.4 million** in corresponding right-of-use assets, with no restatement of prior periods or impact on the unaudited condensed consolidated statement of operations[31](index=31&type=chunk)[32](index=32&type=chunk) - The Company elected practical expedients under ASC 842, including retaining lease classification and initial direct costs for existing leases, and not reassessing contracts completed prior to adoption. It also elected not to recognize leases with terms of 12 months or less on the balance sheet and not to separate non-lease components from lease components for building leases[31](index=31&type=chunk)[33](index=33&type=chunk) - The Company early adopted ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, in the first quarter of fiscal year 2019, eliminating Step 2 of the impairment test[36](index=36&type=chunk) [New Accounting Pronouncements – Not Yet Adopted](index=11&type=section&id=New%20Accounting%20Pronouncements%20%E2%80%93%20Not%20Yet%20Adopted) The company is evaluating the impact of ASU 2016-13 (Credit Losses) and ASU 2018-13 (Fair Value Measurement Disclosures), both effective for fiscal year 2020 - The Company is evaluating the impact of ASU 2016-13, Financial Instruments-Credit Losses (Topic 326), effective for fiscal year 2020, but does not expect a material impact on its consolidated financial statements[37](index=37&type=chunk) - The Company is also evaluating ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, effective for fiscal year 2020[38](index=38&type=chunk) [Use of Estimates](index=11&type=section&id=Use%20of%20Estimates) The preparation of financial statements requires management to make significant estimates and assumptions, which may differ from actual results - Management makes estimates and assumptions affecting reported amounts of assets, liabilities, revenues, and expenses. Key areas include prepaid and accrued R&D expense, operating lease assets and liabilities, other non-current liabilities, stock-based compensation, product and collaboration revenues (including rebates and reserves), inventories, income taxes, intangible assets, and goodwill[39](index=39&type=chunk)[40](index=40&type=chunk) [Cash, Cash Equivalents, and Restricted Cash](index=13&type=section&id=Cash,%20Cash%20Equivalents,%20and%20Restricted%20Cash) Cash and cash equivalents include cash on hand, deposits, and available-for-sale securities with original maturities of three months or less - Cash and cash equivalents consist of cash on hand, deposits, and available-for-sale securities with original maturities of three months or less. At September 30, 2019, cash was primarily in money market funds[41](index=41&type=chunk) - Restricted cash, for security deposits and employee credit card programs, is included in 'prepaid expenses and other current assets' and 'other assets' on the balance sheets[42](index=42&type=chunk) | Metric | Sep 30, 2019 (in thousands) | Sep 30, 2018 (in thousands) | | :--------------------------------------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $122,886 | $162,430 | | Prepaid expenses and other current assets (restricted cash) | $263 | — | | Other assets (restricted cash) | $2,092 | $1,566 | | **Total cash, cash equivalents, and restricted cash** | **$125,241** | **$163,996** | [Investments](index=13&type=section&id=Investments) All securities are classified as available-for-sale and carried at fair value, intended to fund current operations - All securities are classified as available-for-sale and included in current assets, carried at fair value. The company conducts periodic reviews for other-than-temporary impairment and found none at September 30, 2019[44](index=44&type=chunk) - Unrealized losses on available-for-sale securities deemed temporary are recorded in accumulated other comprehensive loss. Amortized cost of debt securities reflects amortization of premiums and accretion of discounts, included in 'Interest income'[44](index=44&type=chunk) [Property and Equipment](index=13&type=section&id=Property%20and%20Equipment) Property and equipment are recorded at cost, net of accumulated depreciation, and depreciated using the straight-line method over estimated useful lives of three to seven years - Property and equipment are stated at cost, less accumulated depreciation, and depreciated using the straight-line method over estimated useful lives (generally three to seven years). Leasehold improvements are depreciated over the shorter of their useful life or remaining lease term (10 years)[45](index=45&type=chunk)[48](index=48&type=chunk) | Category | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | | :---------------------------- | :-------------------------- | :-------------------------- | | Computer equipment and software | $1,010 | $1,593 | | Furniture and fixtures | $2,086 | $1,170 | | Equipment | $2,451 | $1,780 | | Leasehold improvements | $10,869 | $5,324 | | Office equipment under capital lease | $— | $114 | | Total | $16,416 | $9,981 | | Less accumulated depreciation | $(3,617) | $(1,958) | | **Net property and equipment** | **$12,799** | **$8,023** | - Depreciation expense was approximately **$0.6 million** and **$0.2 million** for the three months ended September 30, 2019 and 2018, respectively, and approximately **$1.7 million** and **$0.6 million** for the nine months ended September 30, 2019 and 2018, respectively[49](index=49&type=chunk) [Inventory](index=14&type=section&id=Inventory) Inventory is valued at the lower of cost or net realizable value, determined on a first-in, first-out basis - Inventory is valued at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. Long-term inventory is classified in other assets[50](index=50&type=chunk) - Costs for manufacturing product candidates prior to regulatory approval are expensed as research and development. Inventory used in clinical trials or identified for clinical manufacturing is also expensed as R&D[51](index=51&type=chunk) - The company assesses inventory recoverability each period, writing down excess or obsolete inventory to net realizable value, recorded as a component of cost of product sales. This requires management estimates, and actual market conditions may necessitate additional write-downs[52](index=52&type=chunk) [Revenue Recognition](index=14&type=section&id=Revenue%20Recognition) Revenue is recognized in accordance with ASC 606 when control of promised goods or services is transferred to the customer - Revenue is recognized under ASC 606 when the customer obtains control of promised goods or services, reflecting the consideration expected. The five-step model is applied to contracts where collection is probable[53](index=53&type=chunk)[54](index=54&type=chunk) [Product Revenue, Net](index=15&type=section&id=Product%20Revenue,%20Net) Product revenue from U.S. Auryxia sales to wholesale distributors and specialty pharmacy providers is recognized upon delivery - The Company sells Auryxia in the U.S. primarily to wholesale distributors and specialty pharmacy providers. Revenue is recognized when the customer obtains control of the product, typically upon delivery[55](index=55&type=chunk)[56](index=56&type=chunk) - Net product revenue includes estimates of variable consideration for discounts, returns, chargebacks, rebates, co-pay assistance, and other allowances, for which reserves are established[57](index=57&type=chunk) [Reserves for Variable Consideration](index=15&type=section&id=Reserves%20for%20Variable%20Consideration) Reserves for variable consideration, including trade discounts, product returns, provider chargebacks, commercial and Medicare Part D rebates, other government rebates, and co-pay assistance, are established based on estimates and probability-weighted outcomes - Reserves for variable consideration (discounts, returns, chargebacks, rebates, co-pay assistance) are based on probability-weighted estimates, considering historical experience, contractual requirements, market trends, and customer patterns. These reduce net product revenue and are classified as reductions of accounts receivable or current liabilities[57](index=57&type=chunk)[58](index=58&type=chunk) - Specific reserves include: trade discounts and allowances (reduction of revenue/accounts receivable), product returns (estimated based on industry/historical data), provider chargebacks and discounts (estimated obligations for sales to healthcare providers at lower prices), commercial and Medicare Part D rebates (based on contracts and payor mix), other government rebates (Medicaid, Medicare Part D coverage gap), and co-pay assistance programs (based on claims and historical utilization)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk) [Collaboration Revenues](index=17&type=section&id=Collaboration%20Revenues) Collaboration revenues are generated from out-license and collaboration agreements, typically including upfront license fees, milestone payments, manufacturing supply services, and royalties - Collaboration revenues are generated from out-license and collaboration agreements, including non-refundable upfront license fees, development/regulatory/commercial milestone payments, manufacturing supply services, and royalties on net sales[65](index=65&type=chunk) - The five-step model is used to determine revenue recognition, requiring judgment to identify distinct performance obligations and estimate standalone selling prices based on factors like forecasted revenues, development timelines, reimbursement rates, discount rates, and probabilities of technical/regulatory success[66](index=66&type=chunk) [Licenses of Intellectual Property](index=17&type=section&id=Licenses%20of%20Intellectual%20Property) Revenue from distinct intellectual property licenses is recognized when the license is transferred and the customer can use and benefit from it - Revenue from distinct intellectual property licenses is recognized when the license is transferred and the customer can use and benefit from it. For bundled licenses, the nature of the combined performance obligation determines if revenue is recognized over time or at a point in time, with progress measured and adjusted each reporting period[67](index=67&type=chunk) [Milestone Payments](index=17&type=section&id=Milestone%20Payments) Development milestone payments are included in the transaction price if considered probable of being reached, using the most likely amount method - Development milestone payments are included in the transaction price if probable of being reached, using the most likely amount method. Regulatory approvals are not considered probable until received. The transaction price is allocated to performance obligations based on relative standalone selling price[68](index=68&type=chunk)[69](index=69&type=chunk) - The probability of achievement and any related constraints are re-evaluated each reporting period, with adjustments recorded on a cumulative catch-up basis[69](index=69&type=chunk) [Manufacturing Supply Services](index=19&type=section&id=Manufacturing%20Supply%20Services) Arrangements for future drug supply are treated as options - Arrangements for future drug substance or product supply are generally considered options. If these options provide a material right to the licensee, they are accounted for as separate performance obligations. Additional payments upon option exercise are recorded in license, collaboration, and other revenues upon delivery of goods[70](index=70&type=chunk) [Royalties](index=19&type=section&id=Royalties) Sales-based royalties, including those tied to sales levels, are recognized when the related sales occur or when the performance obligation to which the royalty is allocated has been satisfied, whichever is later - Sales-based royalties, including milestone payments based on sales levels, are recognized at the later of when related sales occur or when the performance obligation to which the royalty is allocated has been satisfied. The company receives royalties from JT and Torii on Riona net sales in Japan[71](index=71&type=chunk) [Collaborative Arrangements](index=19&type=section&id=Collaborative%20Arrangements) Elements of collaboration agreements representing joint operating activities, where both parties are active participants and exposed to significant risks and rewards, are accounted for under ASC 808 - Elements of collaboration agreements representing joint operating activities, where both parties are active participants and exposed to significant risks and rewards, are recorded under ASC Topic 808. Shared costs for jointly conducted medical affairs and commercialization activities under the Otsuka U.S. Agreement are recognized as a component of related expense in the period incurred[72](index=72&type=chunk) - During the three months ended September 30, 2019 and 2018, the company incurred approximately **$0.5 million** and **$0.2 million**, respectively, in costs related to Otsuka U.S. Agreement cost-sharing, with **$0.2 million** and **$0.1 million**, respectively, reimbursable by Otsuka and recorded as a reduction to R&D expense[72](index=72&type=chunk) - Otsuka incurred approximately **$0.3 million** and **$0.5 million** in cost-sharing related to the Otsuka U.S. Agreement for the three months ended September 30, 2019 and 2018, respectively, with **$0.2 million** and **$0.1 million** reimbursable by the company and recorded as an increase to R&D expense[72](index=72&type=chunk) [Intangible Assets](index=19&type=section&id=Intangible%20Assets) The company holds a definite-lived intangible asset for Auryxia developed product rights, acquired in the Keryx merger, which is amortized over nine years using the straight-line method - The Company maintains a definite-lived intangible asset related to developed product rights for Auryxia, acquired in the December 12, 2018 Merger. It is amortized over an estimated useful life of **nine years** using the straight-line method[73](index=73&type=chunk)[74](index=74&type=chunk) - Intangible assets are reviewed for impairment if adverse conditions or changes in circumstances exist. Amortization expense for developed product rights for Auryxia was **$9.1 million** for the three months and **$27.3 million** for the nine months ended September 30, 2019[76](index=76&type=chunk)[188](index=188&type=chunk) | Year | Estimated Future Amortization Expense (in thousands) | | :--- | :----------------------------------- | | 2019 | $9,100 | | 2020 | $36,402 | | 2021 | $36,401 | | 2022 | $36,402 | | 2023 | $36,401 | | Thereafter | $145,606 | | **Total** | **$300,312** | [Fair Value of Financial Instruments](index=20&type=section&id=Fair%20Value%20of%20Financial%20Instruments) The company classifies financial instruments measured at fair value into a three-level hierarchy based on input observability - The fair value hierarchy classifies inputs into Level 1 (unadjusted quoted prices in active markets), Level 2 (quoted prices for similar assets or observable inputs), and Level 3 (unobservable inputs reflecting company assumptions)[78](index=78&type=chunk) - Cash equivalents and marketable securities are classified within Level 1 or Level 2. The carrying amounts of prepaid expenses, accounts payable, and accrued expenses approximate their fair values due to short-term maturities[80](index=80&type=chunk)[81](index=81&type=chunk) - No impairments to assets measured using Level 3 inputs (property and equipment, intangible assets, goodwill) were identified during the three and nine months ended September 30, 2019 and 2018[81](index=81&type=chunk) [Net Loss per Share](index=20&type=section&id=Net%20Loss%20per%20Share) Basic net loss per share is calculated by dividing net loss by weighted-average shares outstanding - Basic net loss per share is calculated by dividing net loss by weighted-average shares outstanding. Diluted net loss per share is the same as basic because all common stock equivalents (preferred stock, stock options, warrants, restricted stock, RSUs) were anti-dilutive for all periods presented[82](index=82&type=chunk) [3. Product Revenue and Reserves for Variable Consideration](index=21&type=section&id=3.%20Product%20Revenue%20and%20Reserves%20for%20Variable%20Consideration) The company's sole product revenue source is U.S. Auryxia sales, which began on December 12, 2018 - The Company's only product revenue source is U.S. sales of Auryxia, which commenced on December 12, 2018, following the Merger[84](index=84&type=chunk) | Metric | Three Months Ended Sep 30, 2019 (in thousands) | Nine Months Ended Sep 30, 2019 (in thousands) | | :------------------- | :--------------------------------------------- | :-------------------------------------------- | | Net Product Revenue | $30,004 | $82,204 | | Category | Balance at Dec 31, 2018 (in thousands) | Current provisions related to sales in current year (in thousands) | Adjustments related to prior period sales (in thousands) | Credits/payments made relating to sales in current year (in thousands) | Credits/payments made relating to prior period sales (in thousands) | Balance at Sep 30, 2019 (in thousands) | | :------------------------------------ | :------------------------------------- | :------------------------------------------------- | :--------------------------------------- | :----------------------------------------------------- | :---------------------------------------------------- | :------------------------------------- | | Chargebacks and Discounts | $516 | $5,617 | $13 | $(4,108) | $(1,373) | $665 | | Rebates, Fees and other Deductions | $22,861 | $73,424 | $1,507 | $(21,087) | $(46,803) | $29,902 | | Returns | $360 | $1,835 | $— | $— | $(1,907) | $288 | | **Total** | **$23,737** | **$80,876** | **$1,520** | **$(25,195)** | **$(50,083)** | **$30,855** | [4. License, Collaboration and Other Significant Agreements](index=21&type=section&id=4.%20License,%20Collaboration%20and%20Other%20Significant%20Agreements) This section details the company's significant license and collaboration agreements, including those with MTPC, Otsuka (U.S. and International), Janssen, Vifor Pharma, Panion, and JT and Torii | Revenue Source | Three Months Ended Sep 30, 2019 (in thousands) | Three Months Ended Sep 30, 2018 (in thousands) | Nine Months Ended Sep 30, 2019 (in thousands) | Nine Months Ended Sep 30, 2018 (in thousands) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | MTPC Agreement | $— | $— | $10,000 | $9,281 | | Otsuka U.S. Agreement | $39,718 | $29,030 | $103,461 | $75,086 | | Otsuka International Agreement | $20,220 | $24,114 | $64,643 | $63,176 | | Total Proportional Performance Revenue | $59,938 | $53,144 | $178,104 | $147,543 | | JT and Torii | $1,549 | $— | $4,266 | $— | | MTPC Stability Studies | $486 | $25 | $872 | $349 | | **Total License, Collaboration and Other Revenue** | **$61,973** | **$53,169** | **$183,242** | **$147,892** | | Deferred Revenue | Short-Term (in thousands) | Long-Term (in thousands) | Total (in thousands) | | :----------------------------- | :------------------------ | :----------------------- | :------------------- | | Otsuka U.S. Agreement | $18,873 | $28,576 | $47,449 | | Otsuka International Agreement | $13,269 | $10,632 | $23,901 | | Vifor Agreement | $— | $4,679 | $4,679 | | **Total** | **$32,142** | **$43,887** | **$76,029** | [Mitsubishi Tanabe Pharma Corporation Collaboration Agreement](index=22&type=section&id=Mitsubishi%20Tanabe%20Pharma%20Corporation%20Collaboration%20Agreement) Akebia has an agreement with MTPC for exclusive development and commercialization rights of vadadustat in Japan and other Asian countries - Akebia and MTPC have a collaboration agreement for exclusive development and commercialization rights to vadadustat in Japan and certain other Asian countries. MTPC is responsible for the Phase 3 program in Japan and commercialization in the MTPC Territory[90](index=90&type=chunk)[92](index=92&type=chunk) - In July 2019, MTPC submitted a Japanese New Drug Application (JNDA) for vadadustat, triggering a **$10.0 million** regulatory milestone payment to Akebia[91](index=91&type=chunk) - Akebia is eligible to receive up to **$225.0 million** in specified development, regulatory, and commercial milestone payments, including **$40.0 million** in regulatory milestones (of which **$10.0 million** was received) and **$175.0 million** in commercial milestones. Tiered double-digit royalty payments of up to **20%** on sales in the MTPC Territory are also possible[94](index=94&type=chunk) - Revenue for the License, Research and Clinical Supply Performance Obligation is recognized using a proportional performance method. The **$10.0 million** regulatory milestone for the JNDA filing was recognized as revenue during the nine months ended September 30, 2019[101](index=101&type=chunk) [U.S. Collaboration and License Agreement with Otsuka Pharmaceutical Co. Ltd.](index=24&type=section&id=U.S.%20Collaboration%20and%20License%20Agreement%20with%20Otsuka%20Pharmaceutical%20Co.%20Ltd.) Akebia and Otsuka have a collaboration for vadadustat development and co-commercialization in the U.S. - Akebia and Otsuka have a collaboration for vadadustat development and co-commercialization in the U.S. Akebia leads development, including the Phase 3 program, and controls final decision-making on certain matters[102](index=102&type=chunk)[104](index=104&type=chunk)[106](index=106&type=chunk) - Otsuka made a **$125.0 million** upfront payment and contributes a percentage of global development plan costs. In Q2 2019, Otsuka's funding percentage increased from **52.5%** to **80%** (Otsuka Funding Option), with an estimated additional funding of **$63.7 million** or more[107](index=107&type=chunk) - Akebia is eligible for up to **$125.0 million** in development milestone payments and up to **$65.0 million** in regulatory milestone payments. Commercial milestone payments up to **$575.0 million** are also possible, subject to reduction by the Additional Funding[108](index=108&type=chunk) - Revenue related to the License and Development Services Combined and Joint Committee Services performance obligations is recognized on a proportional performance basis as development services are performed. For the nine months ended September 30, 2019, **$103.5 million** in revenue was recognized[120](index=120&type=chunk)[122](index=122&type=chunk) - As of September 30, 2019, deferred revenue related to this agreement was approximately **$47.5 million** (**$18.9 million** current, **$28.6 million** long-term)[122](index=122&type=chunk) [International Collaboration and License Agreement with Otsuka Pharmaceutical Co. Ltd.](index=28&type=section&id=International%20Collaboration%20and%20License%20Agreement%20with%20Otsuka%20Pharmaceutical%20Co.%20Ltd.) Akebia and Otsuka have an international collaboration for vadadustat development and commercialization in Europe, Russia, China, Canada, Australia, the Middle East, and other territories - Akebia and Otsuka have an international collaboration for vadadustat development and commercialization in Europe, Russia, China, Canada, Australia, the Middle East, and other territories. Akebia leads global development, and Otsuka has sole responsibility for commercialization costs in its territory[124](index=124&type=chunk)[126](index=126&type=chunk) - Otsuka made a **$73.0 million** upfront payment and contributes a percentage of global development plan costs, estimated at roughly **$177.2 million** or more subsequent to March 31, 2017[129](index=129&type=chunk) - Akebia is eligible for up to **$80.0 million** in development milestone payments and up to **$52.0 million** in regulatory milestone payments. Commercial milestone payments up to **$525.0 million** are also possible, along with tiered royalties from low double digits to low thirties on net sales[130](index=130&type=chunk) - Revenue related to the License and Development Services Combined and Joint Committee Services performance obligations is recognized on a proportional performance basis. For the nine months ended September 30, 2019, **$64.6 million** in revenue was recognized[139](index=139&type=chunk)[141](index=141&type=chunk) - As of September 30, 2019, deferred revenue related to this agreement was approximately **$23.9 million** (**$13.3 million** current, **$10.6 million** long-term)[141](index=141&type=chunk) [Janssen Pharmaceutica NV Research and License Agreement](index=32&type=section&id=Janssen%20Pharmaceutica%20NV%20Research%20and%20License%20Agreement) Akebia entered into a research and license agreement with Janssen Pharmaceutica NV, granting Akebia exclusive worldwide rights to develop and commercialize certain HIF prolyl hydroxylase targeted compounds - Akebia has an exclusive license from Janssen Pharmaceutica NV to develop and commercialize certain HIF prolyl hydroxylase targeted compounds worldwide. Akebia is solely responsible for development and commercialization costs[142](index=142&type=chunk)[143](index=143&type=chunk) - Akebia made a **$1.0 million** upfront payment and issued a warrant for **509,611 shares** of common stock. Janssen is eligible for up to **$16.5 million** in development milestones and **$215.0 million** in commercial milestones, plus tiered royalties (low- to mid-single digit percentage of net sales)[144](index=144&type=chunk) - The warrant, valued at **$3.4 million** at issuance, was charged to research and development expense and remains outstanding, expiring February 9, 2022[147](index=147&type=chunk)[205](index=205&type=chunk) [Vifor Pharma License Agreement](index=33&type=section&id=Vifor%20Pharma%20License%20Agreement) Akebia granted Vifor Pharma an exclusive license to sell vadadustat to Fresenius Kidney Care Group LLC (FKC) and approved third-party dialysis organizations in the U.S. - Akebia granted Vifor Pharma an exclusive license to sell vadadustat to FKC and certain Third Party Dialysis Organizations in the U.S. The license becomes effective upon FDA approval for DD-CKD, favorable Medicare reimbursement determination, and a **$25.0 million** milestone payment[148](index=148&type=chunk)[149](index=149&type=chunk) - The agreement is a profit-share arrangement, with Akebia receiving a majority of the profit after Vifor Pharma's costs. Akebia retains rights to commercialize vadadustat in the NDD-CKD market and other dialysis organizations[150](index=150&type=chunk) - In connection with the Vifor Agreement, Akebia sold **3,571,429 shares** of common stock to Vifor Pharma for **$50.0 million**. A premium of **$4.7 million** over the closing stock price was recorded as deferred revenue, fully constrained due to the uncertainty of conditions for the agreement's effectiveness[154](index=154&type=chunk) [License Agreement with Panion & BF Biotech, Inc.](index=34&type=section&id=License%20Agreement%20with%20Panion%20%26%20BF%20Biotech,%20Inc.) Akebia, through its Keryx subsidiary, has an amended exclusive worldwide license (excluding certain Asian-Pacific countries) from Panion for ferric citrate - Akebia, through its Keryx subsidiary, has an amended exclusive worldwide license (excluding certain Asian-Pacific countries) from Panion for the development and commercialization of ferric citrate[155](index=155&type=chunk)[156](index=156&type=chunk) - Panion is eligible to receive mid-single digit royalty payments from Akebia based on sales of ferric citrate in Akebia's licensed territories. Akebia is eligible for similar royalties from Panion's sales in its licensed territories[156](index=156&type=chunk) - Akebia incurred approximately **$2.7 million** and **$7.5 million** in royalty payments to Panion for the three and nine months ended September 30, 2019, respectively, related to Auryxia sales in the U.S. and Riona sales in Japan[161](index=161&type=chunk) [Sublicense Agreement with Japan Tobacco, Inc. and its subsidiary, Torii Pharmaceutical Co., Ltd.](index=35&type=section&id=Sublicense%20Agreement%20with%20Japan%20Tobacco,%20Inc.%20and%20its%20subsidiary,%20Torii%20Pharmaceutical%20Co.,%20Ltd.) Akebia has a sublicense agreement with JT and Torii for exclusive development and commercialization rights of ferric citrate hydrate (Riona) in Japan - Akebia has a sublicense agreement with JT and Torii for exclusive development and commercialization rights of ferric citrate hydrate (Riona) in Japan. JT and Torii are responsible for future development and commercialization costs[162](index=162&type=chunk) - Riona is approved and marketed in Japan for hyperphosphatemia in CKD patients, and JT and Torii are conducting a Phase 3 program for IDA as an additional indication[163](index=163&type=chunk) - Akebia is eligible for tiered double-digit royalty payments (up to mid-teens) on net sales of Riona in Japan and up to an additional **$55.0 million** upon achieving certain annual net sales milestones[163](index=163&type=chunk) - For the three and nine months ended September 30, 2019, Akebia recognized **$1.5 million** and **$4.3 million**, respectively, in license revenue related to royalties earned on net sales of Riona in Japan[168](index=168&type=chunk) [5. Business Combination](index=36&type=section&id=5.%20Business%20Combination) On December 12, 2018, Akebia completed its merger with Keryx Biopharmaceuticals, Inc., acquiring all outstanding shares for a total fair value consideration of $527.8 million - On December 12, 2018, Akebia completed the Merger with Keryx Biopharmaceuticals, Inc., acquiring all outstanding shares for a total fair value consideration of **$527.8 million**[169](index=169&type=chunk)[170](index=170&type=chunk) | Acquired Assets and Assumed Liabilities | Fair Value (in thousands) | | :-------------------------------------- | :------------------------ | | Cash and cash equivalents | $5,257 | | Inventory | $235,597 | | Trade accounts receivable, net | $15,834 | | Prepaid expenses and other current assets | $8,399 | | Goodwill | $55,053 | | Intangible assets: Developed product rights for Auryxia | $329,130 | | Other intangible assets | $545 | | Property and equipment, net | $3,646 | | Other assets | $14,441 | | Accounts payable | $(17,570) | | Accrued expenses | $(42,972) | | Deferred tax liability | $(35,096) | | Debt | $(15,000) | | Fair value of unfavorable executory contract | $(29,510) | | **Total purchase price** | **$527,754** | - Goodwill of **$55.1 million** was recognized, representing the excess of purchase price over net assets, driven by expected strategic and synergistic benefits such as establishing a leading renal company and leveraging Keryx's commercial organization[175](index=175&type=chunk)[191](index=191&type=chunk) - Developed product rights for Auryxia, the primary intangible asset, were valued at **$329.1 million** using the multi-period excess earnings method and are amortized over **nine years**[173](index=173&type=chunk) [6. Available For Sale Securities](index=38&type=section&id=6.%20Available%20For%20Sale%20Securities) Available-for-sale securities, primarily U.S. government debt securities and certificates of deposit, totaled $22.7 million at September 30, 2019, a significant decrease from $217.0 million at December 31, 2018 | Category | Amortized Cost (in thousands) | Gross Unrealized Gains (in thousands) | Gross Unrealized Losses (in thousands) | Fair Value (in thousands) | | :------------------------------------ | :---------------------------- | :---------------------------- | :----------------------------- | :------------------------ | | **September 30, 2019** | | | | | | Cash and cash equivalents | $122,886 | $— | $— | $122,886 | | Certificates of deposit | $245 | $— | $— | $245 | | U.S. government debt securities | $22,476 | $6 | $— | $22,482 | | **Total available for sale securities** | **$22,721** | **$6** | **$—** | **$22,727** | | **Total cash, cash equivalents, and available for sale securities** | **$145,607** | **$6** | **$—** | **$145,613** | | **December 31, 2018** | | | | | | Cash and cash equivalents | $104,644 | $— | $— | $104,644 | | Certificates of deposit | $245 | $— | $— | $245 | | U.S. government debt securities | $158,518 | $1 | $(198) | $158,321 | | Corporate debt securities | $58,494 | $— | $(64) | $58,430 | | **Total available for sale securities** | **$217,257** | **$1** | **$(262)** | **$216,996** | | **Total cash, cash equivalents, and available for sale securities** | **$321,901** | **$1** | **$(262)** | **$321,640** | - There were no realized gains or losses on available-for-sale securities for the three and nine months ended September 30, 2019 and 2018. No securities were in an unrealized loss position as of September 30, 2019[178](index=178&type=chunk)[179](index=179&type=chunk) [7. Fair Value of Financial Instruments](index=39&type=section&id=7.%20Fair%20Value%20of%20Financial%20Instruments) The company uses a portfolio management company for valuation and classifies cash equivalents and marketable securities as Level 1 or Level 2 in the fair value hierarchy - The Company uses a portfolio management company for valuation and classifies cash equivalents and marketable securities within Level 1 or Level 2 of the fair value hierarchy, utilizing quoted market prices or observable inputs[180](index=180&type=chunk)[181](index=181&type=chunk) | Category | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :---------------------------- | :--------------------- | :--------------------- | :--------------------- | :------------------- | | **September 30, 2019** | | | | | | Cash and cash equivalents | $122,886 | $— | $— | $122,886 | | Certificates of deposit | $— | $245 | $— | $245 | | U.S. government debt securities | $— | $22,482 | $— | $22,482 | | **Total Assets** | **$122,886** | **$22,727** | **$—** | **$145,613** | | **December 31, 2018** | | | | | | Cash and cash equivalents | $104,644 | $— | $— | $104,644 | | Certificates of deposit | $— | $245 | $— | $245 | | U.S. government debt securities | $— | $158,321 | $— | $158,321 | | Corporate debt securities | $— | $58,430 | $— | $58,430 | | **Total Assets** | **$104,644** | **$216,996** | **$—** | **$321,640** | - No assets or liabilities were measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at September 30, 2019, and December 31, 2018[182](index=182&type=chunk) [8. Inventory](index=39&type=section&id=8.%20Inventory) Total inventory decreased from $235.2 million at December 31, 2018, to $200.9 million at September 30, 2019 | Component | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | | :---------------- | :-------------------------- | :-------------------------- | | Raw materials | $2,824 | $1,880 | | Work in process | $152,208 | $215,122 | | Finished goods | $45,863 | $18,182 | | **Total inventory** | **$200,895** | **$235,184** | | Classification | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | | :----------------------- | :-------------------------- | :-------------------------- | | Inventory (current) | $115,987 | $114,245 | | Other assets (long-term) | $84,908 | $120,939 | | **Total inventory** | **$200,895** | **$235,184** | - Inventory write-downs due to excess, obsolescence, scrap, or other reasons, charged to cost of goods sold, totaled **$2.9 million** for the three months and **$6.0 million** for the nine months ended September 30, 2019. No write-offs occurred in the comparable 2018 periods prior to the Merger[187](index=187&type=chunk) [9. Intangible Assets and Goodwill](index=40&type=section&id=9.%20Intangible%20Assets%20and%20Goodwill) Intangible assets, primarily developed product rights for Auryxia, totaled $300.3 million at September 30, 2019, down from $328.2 million at December 31, 2018, due to amortization | Acquired Intangible Assets | Gross Carrying Value (in thousands) | Accumulated Amortization (in thousands) | ASC 842 Adjustment (in thousands) | Total (in thousands) | | :------------------------------------ | :-------------------------- | :-------------------------- | :------------------------ | :------------------- | | **September 30, 2019** | | | | | | Developed product rights for Auryxia | $329,130 | $(28,818) | $— | $300,312 | | Favorable lease | $545 | $(5) | $(540) | $— | | **Total** | **$329,675** | **$(28,823)** | **$(540)** | **$300,312** | | **December 31, 2018** | | | | | | Developed product rights for Auryxia | $329,130 | $(1,517) | | $327,613 | | Favorable lease | $545 | $(5) | | $540 | | **Total** | **$329,675** | **$(1,522)** | | **$328,153** | - Goodwill remained at **$55.1 million** as of September 30, 2019, and December 31, 2018, representing the excess of the **$527.8 million** Merger consideration over the fair value of identified acquired net assets (**$472.7 million**)[191](index=191&type=chunk) - Goodwill is evaluated for impairment annually as of October 1, and more frequently if impairment indicators are present[191](index=191&type=chunk) [10. Accrued Expenses](index=41&type=section&id=10.%20Accrued%20Expenses) Total accrued expenses decreased from $150.9 million at December 31, 2018, to $126.6 million at September 30, 2019 | Accrued Expense Category | Sep 30, 2019 (in thousands) | Dec 31, 2018 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Accrued clinical expenses | $66,194 | $71,881 | | Product revenue allowances | $28,408 | $22,861 | | Accrued bonus | $7,740 | $9,537 | | Lease liability | $4,884 | $— | | Accrued commercial manufacturing | $3,352 | $6,383 | | Royalties | $2,697 | $2,430 | | Professional fees | $2,393 | $2,367 | | Accrued payroll | $1,208 | $2,255 | | Accrued vacation | $926 | $1,088 | | Accrued severance | $79 | $3,962 | | Merger costs | $— | $16,071 | | Accrued other | $8,763 | $12,082 | | **Total accrued expenses** | **$126,644** | **$150,917** | [11. Debt](index=42&type=section&id=11.%20Debt) Akebia entered into a $100.0 million Term Loan agreement with Pharmakon in November 2019, available in two tranches, with proceeds for general corporate purposes - On November 11, 2019, Akebia entered into a Loan Agreement with Pharmakon for **$100.0 million** in term loans, available in two tranches (**$80.0 million** Tranche A on Nov 25, 2019, and **$20.0 million** Tranche B until Dec 31, 2020). Proceeds are for general corporate purposes[194](index=194&type=chunk) - The Term Loans bear interest at a floating rate of three-month LIBOR plus **7.50%**, subject to a **2.00%** LIBOR floor and a **3.35%** LIBOR cap, payable quarterly. They mature on the fifth anniversary of the Tranche A Funding Date, with principal repayments starting on the 33rd or 48th month anniversary[196](index=196&type=chunk) - The Term Loans are unconditionally guaranteed by Keryx and secured by a first priority lien on certain assets of Akebia and Keryx, including Auryxia and related assets[195](index=195&type=chunk) - Akebia terminated its **$40.0 million** revolving line of credit with Silicon Valley Bank on November 7, 2019, and paid a termination fee of **$0.8 million**[203](index=203&type=chunk) [12. Warrant](index=43&type=section&id=12.%20Warrant) In February 2017, Akebia issued a warrant to purchase 509,611 shares of common stock at an exercise price of $9.81 per share, fully vested upon issuance and expiring on February 9, 2022 - In February 2017, Akebia issued a warrant to purchase **509,611 shares** of common stock at an exercise price of **$9.81 per share**. The warrant was fully vested upon issuance and expires on February 9, 2022[205](index=205&type=chunk) - The fair value of the warrant at issuance, **$3.4 million** (calculated using the Black Scholes option pricing model), was charged to research and development expense[205](index=205&type=chunk) [13. Stockholders' Equity](index=43&type=section&id=13.%20Stockholders'%20Equity) As of September 30, 2019, Akebia had 118,863,735 common shares outstanding - As of September 30, 2019, Akebia had **175,000,000** authorized common shares (**$0.00001** par value), with **118,863,735 shares** issued and outstanding. No preferred stock was issued or outstanding[206](index=206&type=chunk) - In April 2019, the Company repurchased and retired **55,324 shares** of common stock to cover tax liabilities associated with vested RSUs[207](index=207&type=chunk) - The 2014 Incentive Plan and the ESPP govern equity awards. In 2019, **2,028,625** stock options and **4,430,945** RSUs were granted to employees under the 2014 Plan, and **1,228,900** options were granted under the Inducement Award Program[209](index=209&type=chunk)[210](index=210&type=chunk) | Shares Reserved for Future Issuance | Sep 30, 2019 | Dec 31, 2018 | | :---------------------------------- | :----------- | :----------- | | Common stock options and RSUs outstanding | 12,618,799 | 9,309,204 | | Shares available for issuance under Akebia equity plans | 4,684,048 | 4,526,563 | | Warrant to purchase common stock | 509,611 | 509,611 | | Shares available for issuance under the ESPP | 5,715,992 | 603,522 | | **Total** | **23,528,450** | **14,948,900** | [Stock-Based Compensation](index=45&type=section&id=Stock-Based%20Compensation) Stock-based compensation expense totaled $2.6 million and $6.9 million for the three and nine months ended September 30, 2019, respectively | Category | Three Months Ended Sep 30, 2019 (in thousands) | Three Months Ended Sep 30, 2018 (in thousands) | Nine Months Ended Sep 30, 2019 (in thousands) | Nine Months Ended Sep 30, 2018 (in thousands) | | :---------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Research and development | $556 | $647 | $2,118 | $2,090 | | Selling, general and administrative | $2,057 | $1,605 | $4,873 | $4,888 | | **Total** | **$2,613** | **$2,252** | **$6,991** | **$6,978** | | Type of Award | Three Months Ended Sep 30, 2019 (in thousands) | Three Months Ended Sep 30, 2018 (in thousands) | Nine Months Ended Sep 30, 2019 (in thousands) | Nine Months Ended Sep 30, 2018 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Stock options | $1,305 | $1,458 | $3,490 | $5,074 | | Restricted stock units | $1,217 | $742 | $3,318 | $1,751 | | Employee stock purchase plan | $91 | $52 | $183 | $153 | | **Total** | **$2,613** | **$2,252** | **$6,991** | **$6,978** | - Service-based stock options granted in 2019 totaled **2,028,625** to employees, vesting over **12 to 48 months**. Performance-based stock options, totaling **233,954** from the Merger, vest up to **50%** upon performance condition achievement and **50%** one year thereafter[215](index=215&type=chunk)[216](index=216&type=chunk) - RSUs granted in 2019 totaled **1,384,775** (annual grant) and **2,979,400** (September 30), vesting over **one to three years**. ESPP issued **87,530 shares** during the nine months ended September 30, 2019[217](index=217&type=chunk)[218](index=218&type=chunk) [14. Income Taxes](index=46&type=section&id=14.%20Income%20Taxes) The company's net deferred tax liability decreased from $6.6 million at December 31, 2018, to $1.8 million at September 30, 2019 - The Company's net deferred tax liability was **$1.8 million** as of September 30, 2019, down from **$6.6 million** at December 31, 2018[223](index=223&type=chunk) - A tax benefit of **$1.3 million** for the three months and **$4.9 million** for the nine months ended September 30, 2019, was reported due to a decrease in net deferred tax liabilities, resulting from an increase in deferred tax assets associated with state net operating losses[223](index=223&type=chunk) - A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all will not be realized, as the company cannot be certain that future taxable income will be sufficient[222](index=222&type=chunk) [15. Commitments and Contingencies](index=47&type=section&id=15.%20Commitments%20and%20Contingencies) Akebia has significant lease commitments for office and lab space in Cambridge and Boston, with total undiscounted minimum rental commitments of $41.4 million as of September 30, 2019 - Akebia leases approximately **65,167 sq ft** of office and lab space in Cambridge, MA (expires Sep 2026/Nov 2021) and **27,300 sq ft** of office space in Boston, MA (expires Feb 2023)[225](index=225&type=chunk)[226](index=226&type=chunk) - In September 2019, Keryx subleased the Boston office space to Foundation Medicine, Inc., with the sublease term commencing October 16, 2019, and expiring February 27, 2023. Keryx remains obligated for the Boston Lease payments[228](index=228&type=chunk) | Year | Undiscounted Minimum Rental Commitments (in thousands) | | :--- | :--------------------------------------------------- | | Remaining 2019 | $1,296 | | 2020 | $7,008 | | 2021 | $7,064 | | 2022 | $6,735 | | 2023 | $5,347 | | Thereafter | $13,934 | | **Total** | **$41,384** | - Akebia has commercial supply agreements for Auryxia drug substance: **$135.7 million** with BioVectra through 2026 and **$66.3 million** with Siegfried through 2021, requiring minimum annual purchases[236](index=236&type=chunk)[238](index=238&type=chunk) - Other third-party contracts include **$76.9 million** with IQVIA for PRO2TECT and INNO2VATE programs (through end of 2020) and approximately **$52.7 million** for other R&D activities, which can be modified or cancelled[240](index=240&type=chunk) [16. Net Loss per Share](index=49&type=section&id=16.%20Net%20Loss%20per%20Share) This section provides a reconciliation of shares excluded from the diluted net loss per share calculation due to their anti-dilutive effect | Category | As of Sep 30, 2019 | As of Sep 30, 2018 | | :-------------------------- | :----------------- | :----------------- | | Warrant | 509,611 | 509,611 | | Outstanding stock options | 7,808,382 | 3,957,940 | | Unvested restricted stock units | 4,810,417 | 893,850 | | **Total** | **13,128,410** | **5,361,401** | - The shares listed were excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive for all periods presented[82](index=82&type=chunk)[241](index=241&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=50&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, including an operating overview, financial performance analysis for the three and nine months ended September 30, 2019, and a discussion of liquidity and capital resources [Operating Overview](index=50&type=section&id=Operating%20Overview) Akebia is a biopharmaceutical company focused on kidney disease, with commercial product Auryxia and late-stage product candidate vadadustat - Akebia is a biopharmaceutical company focused on kidney disease, with commercial product Auryxia® (ferric citrate) and investigational product candidate vadadustat, an oral HIF-PHI in global Phase 3 development[244](index=244&type=chunk)[245](index=245&type=chunk) - The company completed a merger with Keryx Biopharmaceuticals, Inc. on December 12, 2018, combining a nephrology-focused commercial organization with its development organization[244](index=244&type=chunk) - Auryxia generated approximately **$30.0 million** and **$82.2 million** in revenue from product sales during the three and nine months ended September 30, 2019, respectively[248](index=248&type=chunk) - Akebia has incurred net losses since inception, with **$54.6 million** and **$185.2 million** for the three and nine months ended September 30, 2019, respectively. The company expects to continue incurring significant expenses and operating losses due to R&D programs (vadadustat, other candidates), Auryxia commercialization, merger integration, and public company operations[250](index=250&type=chunk)[251](index=251&type=chunk) [Financial Overview](index=52&type=section&id=Financial%20Overview) Akebia's revenues are primarily from collaboration agreements and, following the Keryx merger, commercial sales of Auryxia and Riona royalties - Revenues are derived from collaboration agreements (license and milestone payments, cost-sharing) and, post-Merger, commercial sales of Auryxia and Riona royalties in Japan[255](index=255&type=chunk) - Cost of goods sold includes direct manufacturing costs for Auryxia, indirect costs (packaging, shipping, quality assurance), idle capacity charges, inventory write-offs, and royalties to Auryxia's licensor. It also includes amortization of developed product rights for Auryxia (over nine years) and fair value inventory step-up expense (over approximately two years)[257](index=257&type=chunk)[258](index=258&type=chunk) - Research and development expenses are expensed as incurred, primarily for product candidate development, including personnel, CROs, CMOs, facilities, and preclinical/clinical/regulatory activities. Total R&D expenses from inception through September 30, 2019, were **$996.3 million**[259](index=259&type=chunk)[260](index=260&type=chunk)[263](index=263&type=chunk) - Selling, general and administrative expenses include personnel costs (salaries, benefits, stock-based compensation), facility costs, director fees, accounting/legal services, and patent-related expenses. These are expected to increase with Auryxia commercialization, R&D support, and public company compliance[266](index=266&type=chunk)[267](index=267&type=chunk) [Results of Operations](index=53&type=section&id=Results%20of%20Operations) This section provides a detailed comparison of the company's financial performance for the three and nine months ended September 30, 2019, versus the corresponding periods in 2018, analyzing changes in revenues, cost of goods sold, and operating expenses [Comparison of the Three Months Ended September 30, 2019 and 2018](index=53&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030,%202019%20and%202018) For the three months ended September 30, 2019, total revenues increased by $38.8 million to $92.0 million, driven by $30.0 million in Auryxia product revenue and an $8.8 million increase in collaboration revenue | Metric | Sep 30, 2019 (in thousands) | Sep 30, 2018 (in thousands) | Increase (Decrease) (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :--------------------------------- | | Product revenue, net | $30,004 | $— | $30,004 | | License, collaboration and other revenue | $61,973 | $53,169 | $8,804 | | **Total revenues** | **$91,977** | **$53,169** | **$38,808** | | Total cost of goods sold | $38,263 | $— | $38,263 | | Research and development | $74,512 | $70,634 | $3,878 | | Selling, general and administrative | $34,178 | $10,378 | $23,800 | | Total operating expenses | $109,619 | $81,012 | $28,607 | | **Operating loss** | **$(55,905)** | **$(27,843)** | **$28,062** | | Net loss | $(54,585) | $(26,047) | $28,538 | - Net product revenue was **$30.0 million** for Q3 2019, compared to **$26.6 million** (Keryx standalone) for Q3 2018, driven by increased patient prescriptions and units sold. CMS's decision on Auryxia Medicare coverage for IDA and prior authorization for Hyperphosphatemia has negatively impacted sales[268](index=268&type=chunk)[269](index=269&type=chunk) - License, collaboration and other revenue increased by **$8.8 million** to **$62.0 million**, primarily due to an additional **$6.8 million** from the Otsuka U.S. Agreement (driven by increased funding percentage to **80%**) and license revenue/royalties from JT and Torii[270](index=270&type=chunk) - Cost of goods sold was **$29.2 million**, including an **$18.0 million** charge for fair-value inventory step-up. Amortization of intangibles was **$9.1 million**. These costs were not present in Q3 2018[271](index=271&type=chunk)[272](index=272&type=chunk) - R&D expenses increased by **$3.9 million** to **$74.5 million**, mainly due to increases in headcount, consulting, facilities, and other research, partially offset by a decrease in vadadustat development costs as PRO2TECT and INNO2VATE enrollment completed[273](index=273&type=chunk)[275](index=275&type=chunk) - SG&A expenses increased by **$23.8 million** to **$34.2 million**, primarily due to Auryxia commercialization costs and support for R&D programs[276](index=276&type=chunk) [Comparison of the Nine Months Ended September 30, 2019 and 2018](index=55&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030,%202019%20and%202018) For the nine months ended September 30, 2019, total revenues increased by $117.6 million to $265.4

Akebia Therapeutics, Inc. (NASDAQ:AKBA) Q3 2019 Earnings Conference Call November 12, 2019 9:00 AM ET Company Participants Kristen Sheppard - VP of IR John Butler - President and CEO Jason Amello - CFO Conference Call Participants Chris Raymond - Piper Jaffray Eric Joseph - JP Morgan David Lebowitz - Morgan Stanley Difei Yang - Mizuho Securities Ed Arce - H.C. Wainwright Justin Burns - RBC Capital Markets Operator Ladies and gentlemen, and welcome to the Akebia Therapeutics Third quarter Financial Results a ...