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Nature of Organization and Operations

1. Nature of Organization and Operations

Akebia Therapeutics, Inc., referred to as Akebia or the Company, was incorporated in the State of Delaware in 2007. Akebia is a biopharmaceutical company with the purpose of bettering the lives of people living with kidney disease. Akebia’s lead investigational product candidate, vadadustat, is an oral therapy in Phase 3 development. The Company believes vadadustat has the potential to set a new standard of care in the treatment of anemia due to CKD, acting via a novel hypoxia inducible factor, or HIF, pathway. HIF is the primary regulator of the production of red blood cells, or RBCs, in the body, as well as other important metabolic functions. The Company’s commercial product, Auryxia^® (ferric citrate) is currently approved by the U.S. Food and Drug Administration, or FDA, and marketed for two indications in the United States: the control of serum phosphorus levels in adult patients with chronic kidney disease, or CKD, on dialysis, or DD-CKD, and the treatment of iron deficiency anemia, or IDA, in adult patients with CKD not on dialysis, or NDD-CKD. Ferric citrate is also approved and marketed in Japan as an oral treatment for the improvement of hyperphosphatemia in patients with DD-CKD and NDD-CKD under the trade name Riona^® (ferric citrate hydrate).

Since inception, the Company has devoted most of its resources to research and development, including its preclinical and clinical development activities, 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 to the Company’s Japanese partners Japan Tobacco, Inc. and its subsidiary Torii Pharmaceutical Co., Ltd., collectively, JT and Torii, on December 12, 2018 following the consummation of a merger with Keryx Biopharmaceuticals, Inc., or Keryx, or the Merger. The Company has not generated a profit to date and may never generate profits from product sales. The Company’s product candidates are subject to long development cycles, and the Company may be unsuccessful in its efforts to develop, obtain marketing approval for or market its product candidates. If the Company does not successfully commercialize any of its products or product candidates, it may be unable to achieve profitability.

The Company’s management completed its going concern assessment in accordance with ASC 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, or ASC 205-40. The Company believes that its cash resources will be sufficient to allow the Company to fund its current operating plan through at least the next twelve months from the filing of this Quarterly Report on Form 10-Q, as required by ASC 205-40. There can be no assurance, however, that the current operating plan will be achieved in the time frame anticipated by the Company, or that its cash resources will fund the Company’s operating plan for the period anticipated by the Company or that additional funding will be available on terms acceptable to the Company, or at all. The Company will require additional capital for the further commercialization of Auryxia and continued development and potential commercialization of the Company’s existing product candidates and would need to raise additional funds to pursue development activities related to any additional product candidates. If and until the Company can generate a sufficient amount of product revenue, the Company expects to finance future cash needs through public or private equity or debt transactions, payments from its collaborators, royalty transactions, strategic transactions, or a combination of these approaches. However, adequate additional financing may not be available to the Company on acceptable terms, or at all. If the Company is unable to raise capital when needed or on attractive terms, it may be forced to delay, reduce or eliminate its research and development programs or any commercialization efforts.

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2020

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S., or GAAP, for interim financial reporting and as required by Regulation S-X, Rule 10-01. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification, or ASC, and Accounting Standards Update, or ASU, of the Financial Accounting Standards Board, or FASB.

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, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2020 or any other future period.

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Management has determined that the Company operates in one segment, which is the business of developing and commercializing novel therapeutics for people with kidney disease. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and the accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with the U.S. Securities and Exchange Commission on March 12, 2020, or the 2019 Annual Report on Form 10-K.

The significant accounting policies used in preparation of these unaudited condensed consolidated financial statements for the three months ended March 31, 2020 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s 2019 Annual Report on Form 10-K and are updated below as necessary.

New Accounting Pronouncements – Recently Adopted

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that financial assets measured at amortized cost be presented at the net amount expected to be collected. Previously, U.S. GAAP delayed recognition of the full amount of credit losses until the loss was probable of occurring. Under this ASU, the income statement will reflect an entity’s current estimate of all expected credit losses. The Company adopted this new standard on January 1, 2020 using the modified retrospective approach, which requires a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption with prior periods not restated. The cumulative-effect adjustment recorded on January 1, 2020, is not material. Please see the description of the Company’s “Credit Losses” accounting policy in the “Significant Accounting Policies” section below.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for fair value measurements. The Company adopted this new standard on January 1, 2020 using the prospective approach for amendments applicable to the Company. The adoption of this standard did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15, Intangible-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This standard clarifies the accounting for implementation costs in cloud computing arrangements. This standard became effective for us on January 1, 2020, and was adopted on a prospective basis. The adoption of this standard did not have a material impact to the Company’s unaudited condensed consolidated financial statements and disclosures.

In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. This standard makes targeted improvements for collaborative arrangements as follows:

•

Clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, Revenue from Contracts with Customers, when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in ASC 606 should be applied, including recognition, measurement, presentation and disclosure requirements;

•

Adds unit-of-account guidance to ASC 808, Collaborative Arrangements, to align with the guidance in ASC 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of ASC 606; and

•

Precludes a company from presenting transactions with collaborative arrangement participants that are not directly related to sales to third parties with revenue recognized under ASC 606 if the collaborative arrangement participant is not a customer.

This standard became effective for the Company on January 1, 2020, and did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

New Accounting Pronouncements – Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU is effective for fiscal years beginning after December 15, 2020, including interim periods therein, and is applicable to the Company in fiscal year 2021. Early adoption is permitted. ASU 2019-12 requires certain amendments to be applied using a modified retrospective approach, which requires a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption, while other amendments should be applied on a prospective basis. The Company does not expect that the adoption of this standard will have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

Derivative Financial Instruments

The Company accounts for warrants and other derivative financial instruments as either equity or liabilities in accordance with ASC Topic 815, Derivatives and Hedging, or ASC 815, based upon the characteristics and provisions of each instrument. Warrants classified as equity are recorded at fair value as of the date of issuance on the Company’s unaudited condensed consolidated balance sheets and no further adjustments to their valuation are made. Warrants classified as derivative liabilities and other derivative financial instruments that require separate accounting as liabilities are recorded on the Company’s unaudited condensed consolidated balance sheets at their fair value on the date of issuance and will be revalued on each subsequent balance sheet date until such instruments are exercised or expire, with any changes in the fair value between reporting periods recorded as other income or expense. The warrant issued by the Company in connection with the Janssen Pharmaceutica NV Research and License Agreement, the Janssen Agreement, is classified as equity in the Company’s unaudited condensed consolidated balance sheet. (See Note 12). The derivative liability recorded in connection with the Company’s Loan Agreement with Pharmakon is classified as a liability in the Company’s unaudited condensed consolidated balance sheet. (See Note 11).

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: prepaid and accrued research and development expense, operating lease assets and liabilities, derivative liabilities, other non-current liabilities, stock-based compensation expense, product and collaboration revenues including various rebates and reserves related to product sales, inventories, income taxes, intangible assets and goodwill. The Company has made estimates of the impact of COVID-19 within the unaudited condensed consolidated financial statements and there may be changes to those estimates in future periods including changes to sales, payer mix, reserves and allowances, intangible assets and goodwill. While the COVID-19 pandemic has not had a material adverse impact on the Company’s financial condition, the future impacts of the pandemic and any resulting economic impact is largely unknown and rapidly evolving.

Credit Losses

Available for sale debt securities. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date. The Company classifies all securities as available for sale and includes them in current assets as they are intended to fund current operations. The Company's investment portfolio at any point in time contains investments in money market mutual funds, U.S. government debt securities, certificates of deposit and corporate debt securities. The Company segments its portfolio based on the underlying risk profiles of the securities and have a zero loss expectation for money market mutual funds, U.S. government debt securities and certificates of deposit. The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such as historical experience, market data, issuer-specific factors, and current economic conditions. During the quarter ended March 31, 2020, the Company’s only available for sales securities consisted of certificates of deposit and therefore the Company did not recognize any credit losses.

Cash, Cash Equivalents, and Restricted Cash

Cash and cash equivalents consist of all cash on hand, deposits and funds invested in available for sale securities with original maturities of three months or less at the time of purchase. Cash equivalents are reported at fair value. At March 31, 2020, the Company’s cash is primarily in money market funds. The Company may maintain balances with its banks in excess of federally insured limits.

Restricted cash represents amounts required for security deposits under the Company’s office and lab space lease agreements and, at March 31, 2019, cash balances held as collateral for the Company’s employee credit card program. Restricted cash is included in “prepaid expenses and other current assets” and “other assets” in the unaudited condensed consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the unaudited condensed consolidated balance sheet that sum to the total of the amounts reported in the unaudited condensed consolidated statement of cash flows (in thousands):

	March 31, 2020		March 31, 2019
Cash and cash equivalents	$	115,374	$	62,741
Prepaid expenses and other current assets		395		263
Other assets		2,039		2,192
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	117,808	$	65,196

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Assets under capital lease are included in property and equipment. Property and equipment is depreciated using the straight-line method over the estimated useful lives of the assets, generally three to seven years. Such costs are periodically reviewed for recoverability when impairment indicators are present. Such indicators include, among other factors, operating losses, unused capacity, market value declines and technological obsolescence. Recorded values of asset groups of equipment that are not expected to be recovered through undiscounted future net cash flows are written down to current fair value, which generally is determined from estimated discounted future net cash flows (assets held for use) or net realizable value (assets held for sale).

The following is the summary of property and equipment and related accumulated depreciation as of March 31, 2020 and December 31, 2019.

	Useful Life	March 31, 2020			December 31, 2019
		(in thousands)
Computer equipment and software	3	$	1,010		$	1,010
Furniture and fixtures	5 - 7		2,086			2,086
Equipment	7		2,451			2,451
Leasehold improvements	Shorter of the useful life or remaining lease term (10 years)		8,497			8,497
			14,044			14,044
Less accumulated depreciation			(4,189	)		(3,664	)
Net property and equipment		$	9,855		$	10,380

Depreciation expense was approximately $0.5 million and $0.4 million for the three months ended March 31, 2020 and 2019, respectively.

Inventory

The Company values its inventories at the lower-of-cost or net realizable value. The Company determines the cost of its inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. The Company classifies its inventory costs as long-term, in other assets in its unaudited condensed consolidated balance sheets, when it expects to utilize the inventory beyond their normal operating cycle.

Prior to the regulatory approval of its product candidates, the Company incurs expenses for the manufacture of material that could potentially be available to support the commercial launch of its products. Until the first reporting period when regulatory approval has been received or is otherwise considered probable and the future economic benefit is expected to be realized, the Company records all such costs as research and development expense. Inventory used in clinical trials is also expensed as research and development expense, when selected for such use. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified for use in a clinical manufacturing campaign.

The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and writes down any excess and obsolete inventory to its net realizable value in the period in which the impairment is first identified. Such impairment charges, should they occur, are recorded as a component of cost of product sales in the unaudited condensed consolidated statements of operations and comprehensive loss. The determination of whether inventory costs will be realizable requires the use of estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required. Additionally, the Company’s product is subject to strict quality control and monitoring that it performs throughout the

manufacturing process. In the event that certain batches or units of product no longer meet quality specifications, the Company will record a charge to cost of product sales to write-down any unmarketable inventory to its estimated net realizable value. In all cases, product inventory is carried at the lower of cost or its estimated net realizable value.

Debt

The Company performs an assessment of all embedded features of a debt instrument to determine if (1) such features should be bifurcated and separately accounted for, and (2) if bifurcation requirements are met, whether such features should be classified and accounted for as equity or liability instruments. If the embedded feature meets the requirements to be bifurcated and accounted for as a liability, the fair value of the embedded feature is measured initially, included as a liability on the unaudited condensed consolidated balance sheet, and re-measured to fair value at each reporting period. Any changes in fair value are recorded in the unaudited condensed consolidated statement of operations. The Company monitors, on an ongoing basis, whether events or circumstances could give rise to a change in the classification of embedded features.

Revenue Recognition

The Company generates revenues primarily from sales of Auryxia, see Note 3, and from its collaborations with MTPC and Otsuka, see Note 4. The Company recognizes revenue in accordance with ASC 606, which applies to all contracts with customers, except for contracts that are within the scope of other standards. Under ASC 606, the Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, it performs the following five steps:

(i)

identify the contract(s) with a customer;

(ii)

identify the performance obligations in the contract;

(iii)

determine the transaction price;

(iv)

allocate the transaction price to the performance obligations in the contract; and

(v)

recognize revenue when (or as) the entity satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company does not include a financing component to its estimated transaction price at contract inception unless it estimates that certain performance obligations will not be satisfied within one year. Additionally, the Company recognizes the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less.

Product Revenue, Net

The Company sells Auryxia in the United States, or U.S., primarily to wholesale distributors as well as certain specialty pharmacy providers, collectively, Customers. These Customers resell the Company’s product to health care providers and patients. In addition to distribution agreements with Customers, the Company enters into arrangements with health care providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks, and discounts with respect to the purchase of the Company’s product.

The Company recognizes revenue on product sales when the Customer obtains control of the Company’s product, which occurs at a point in time, typically upon delivery to the Customer. The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that it would have recognized is one year or less.

Reserves for Variable Consideration

Revenue from product sales is recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established and which result from discounts, returns, chargebacks, rebates, co-pay assistance and other allowances that are offered within contracts between the Company and its Customers, health care providers, payors and other indirect customers relating to the Company’s sales of its products. These reserves are based on the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount will be credited to the Customer) or as a current liability (if the

amount is payable to a Customer or a party other than a Customer). When appropriate, these estimates take into consideration a range of possible outcomes which are probability-weighted in accordance with the expected value method in ASC 606 for relevant factors such as the Company’s historical experience, current contractual and statutory requirements, specific known market events and trends, industry data, and forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the respective underlying contracts.

The amount of variable consideration that is included in the transaction price may be constrained, and is included in the net sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

Trade Discounts and Allowances: The Company generally provides Customers with discounts that include incentive fees that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, the Company compensates (through trade discounts and allowances) its Customers for sales order management, data, and distribution services. However, the Company has determined such services received to date are not distinct from the Company’s sale of products to the Customer and, therefore, these payments have been recorded as a reduction of revenue within the unaudited condensed consolidated statement of operations and comprehensive loss through March 31, 2020. The Company records a corresponding reduction of accounts receivable (if the trade discount and/or allowance will be credited to the Customer) or an increase in accrued expense (if the trade discount and/or allowance is payable to a Customer) on the unaudited condensed consolidated balance sheets.

Product Returns: Consistent with industry practice, the Company generally offers Customers a limited right of return which allows for the product to be returned when the product expiry is within an allowable window. This right of return lapses once the product is provided to a patient. The Company estimates the amount of its product sales that may be returned by its Customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return reserve using available industry data and its own historical sales information, including its visibility into the inventory remaining in the distribution channel.

Provider Chargebacks and Discounts: Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices charged to Customers who directly purchase the product from the Company. Customers charge the Company for the difference between what they pay for the product and the ultimate selling price to the qualified healthcare providers. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivable. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider by Customers, and the Company generally issues credits for such amounts within a few weeks of the Customer’s resale of the product. Reserves for chargebacks consist of credits that the Company expects to issue for units that remain in the distribution channel at each reporting period end that the Company expects will be sold to qualified healthcare providers, and chargebacks that Customers have claimed but for which the Company has not yet issued a credit.

Commercial and Medicare Part D Rebates: The Company contracts with various commercial payor organizations, primarily health insurance companies and pharmacy benefit managers, for the payment of rebates with respect to utilization of its products. The Company estimates the rebates for commercial and Medicare Part D payors based upon (i) its contracts with the payors and (ii) information obtained from its Customers and other third parties regarding the payor mix for Auryxia. The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability.

Other Government Rebates: The Company is subject to discount obligations under state Medicaid programs and other government programs. The Company estimates its Medicaid and other government programs rebates based upon a range of possible outcomes that are probability-weighted for the estimated payor mix. These reserves are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability which is included in accrued expenses and other current liabilities on the unaudited condensed consolidated balance sheets. For Medicare, the Company also estimates the number of patients in the prescription drug coverage gap for whom the Company will owe an additional liability under the Medicare Part D program. The Company’s liability for these rebates consists of invoices received for claims from prior quarters that have not been paid or for which an invoice has not yet been received, estimates of claims for the current quarter, and estimated future claims that will be made for product that has been recognized as revenue, but which remains in the distribution channel at the end of each reporting period.

Other Incentives: Other incentives that the Company offers include voluntary patient assistance programs such as the Company’s co-pay assistance program, which are intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payors. The calculation of the accrual for co-pay assistance is based on actual claims processed during a given period, as well as historical utilization data to estimate the amount the Company expects to receive associated with product that has been recognized as revenue, but remains in in the distribution channel at the end of each reporting period.

Collaboration Revenues

The Company enters into out-license and collaboration agreements which are within the scope of ASC 606, under which it licenses certain rights to its product candidates to third parties. The terms of these arrangements typically include payment to the Company of one or more of the following: non-refundable, up-front license fees; development, regulatory, and commercial milestone payments; payments for manufacturing supply services the Company provides through its contract manufacturers; and royalties on net sales of licensed products. Each of these payments may result in license, collaboration and other revenue, except for revenues from royalties on net sales of licensed products, which are classified as royalty revenues.

In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under each of its agreements, the Company implements the five-step model noted above. As part of the accounting for these arrangements, the Company must develop assumptions that require judgment to determine whether the individual promises should be accounted for as separate performance obligations or as a combined performance obligation, and to determine the stand-alone selling price for each performance obligation identified in the contract. A deliverable represents a separate performance obligation if both of the following criteria are met: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. The Company uses key assumptions to determine the stand-alone selling price, which may include forecasted revenues, development timelines, reimbursement rates for personnel costs, discount rates, and probabilities of technical and regulatory success. With regard to the MTPC and Otsuka collaboration agreements, the Company recognizes revenue related to amounts allocated to the identified performance obligation on a proportional performance basis as the underlying services are performed.

Licenses of Intellectual Property

If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in an out-license and collaboration arrangement, the Company recognizes revenue from non-refundable, up-front fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Milestone Payments

At the inception of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. The Company evaluates factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to assess the milestone as probable of being achieved. There is considerable judgment involved in determining whether a milestone is probable of being reached at each specific reporting period. Milestone payments that are not within the control of the Company or the customer, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenues as, or when, the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenue in the period of adjustment.

Manufacturing Supply Services

Arrangements that include a promise for future supply of drug substance or drug product for either clinical development or commercial supply at the licensee’s discretion are generally considered as options. The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. If the Company is entitled to additional payments when the licensee exercises these options, any additional payments are recorded in license, collaboration and other revenues when the licensee obtains control of the goods, which is upon delivery.

Royalties

The Company will recognize sales-based royalties, including milestone payments based on the level of sales, at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). The Company receives royalty payments from JT and Torii, based on net sales of Riona in Japan.

Collaborative Arrangements

The Company records the elements of its collaboration agreements that represent joint operating activities in accordance with ASC Topic 808, Collaborative Arrangements (ASC 808). Accordingly, the elements of the collaboration agreements that represent activities in which both parties are active participants and to which both parties are exposed to the significant risks and rewards that are dependent on the commercial success of the activities are recorded as collaborative arrangements. The Company considers the guidance in ASC 606-10-15, Revenue from Contracts with Customers – Scope and Scope Exceptions, in determining the appropriate treatment for the transactions between the Company and its collaborative partner and the transactions between the Company and third parties. Generally, the classification of transactions under the collaborative arrangements is determined based on the nature and contractual terms of the arrangement along with the nature of the operations of the participants. Therefore, the Company recognizes its allocation of the shared costs incurred with respect to the jointly conducted medical affairs and commercialization and non-promotional activities under the Otsuka U.S. Agreement, as defined below in Note 4, as a component of the related expense in the period incurred. During the three months ended March 31, 2020 and 2019, the Company incurred approximately $0.5 million and $0.3 million, respectively, of costs related to the cost-sharing provisions of the Otsuka U.S. Agreement, of which approximately $0.3 million and $0.2 million are reimbursable by Otsuka and recorded as a reduction to research and development expense during the three months ended March 31, 2020 and 2019, respectively. During each of the three months ended March 31, 2020 and 2019, Otsuka incurred approximately $0.4 million of costs related to the cost-sharing provisions of the Otsuka U.S. Agreement, of which approximately $0.2 million are reimbursable by the Company and recorded as an increase to research and development expense during each of the three months ended March 31, 2020 and 2019. To the extent product revenue is generated from the collaboration, the Company recognizes its share of the net sales on a gross basis if it is deemed to be the principal in the transactions with customers, or on a net basis if it is instead deemed to be the agent in the transactions with customers, consistent with the guidance in ASC 606.

Intangible Assets

The Company maintains a definite-lived intangible asset related to developed product rights for Auryxia, which was acquired on December 12, 2018 as part of the Merger.

Intangible assets are initially recorded at fair value and stated net of accumulated amortization and impairments. The Company amortizes its intangible assets that have finite lives using either the straight-line method, or if reliably determinable, based on the pattern in which the economic benefit of the asset is expected to be utilized. Amortization for the Company’s intangible asset is recorded over its estimated useful life of nine years.

The Company reviews intangible assets subject to amortization to determine if any adverse conditions exist or a change in circumstances has occurred that would indicate impairment or a change in the remaining useful life. If an impairment indicator exists, the Company performs a recoverability test by comparing the sum of the estimated undiscounted cash flows of the intangible asset and asset group to its carrying value on the unaudited condensed consolidated balance sheet. If the carrying value of the intangible asset exceeds the undiscounted cash flows used in the recoverability test, the Company will write the carrying value down to the fair value in the period identified. The Company calculates the fair value of intangible assets as the present value of estimated future cash flows expected to be generated from the intangible asset using a risk-adjusted discount rate. In determining estimated future cash flows associated with its intangible assets, the Company uses market participant assumptions pursuant to ASC Topic 820, Fair Value Measurements and Disclosures (ASC 820).

Goodwill

The Company allocates any excess purchase price over the fair value of the net tangible and intangible assets acquired in a business combination to goodwill. Goodwill is evaluated for impairment on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstances suggest that impairment may exist.

The Company compares the fair value of its reporting unit to its carrying value. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of its reporting unit, the Company would record an impairment loss equal to the difference. As described above, the Company operates in one operating segment which the Company considers to be the only reporting unit.

Fair Value of Financial Instruments

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. ASC 820 establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available.

Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability, and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported fair value of the investments, and is not a measure of the investment credit quality. The three levels of the fair value hierarchy are described below:

•

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

•

Level 2 – Valuations based on quoted prices for similar assets or liabilities in markets that are not active, or for which all significant inputs are observable, either directly or indirectly.

•

Level 3 – Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Items measured at fair value on a recurring basis include available for sale securities and derivative liabilities (see Note 7). The carrying amounts of prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to their short-term maturities.

Items measured at fair value on a nonrecurring basis include property and equipment, intangible assets and goodwill. The Company remeasures the fair value of these assets upon the occurrence of certain events. There were no such remeasurements to property and equipment for the three months ended March 31, 2020 and 2019, respectively. There were no impairments to assets measured using Level 3 inputs during the three months ended March 31, 2020 and 2019, respectively.

The Company’s other financial instruments mainly consists of debt (see Note 11).

Net Loss per Share

Basic net loss per share is calculated by dividing net loss by the weighted-average shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per share is calculated by adjusting weighted-average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calculation, preferred stock, stock options, warrants, restricted stock and RSUs are considered to be common stock equivalents, but have been excluded from the calculation of diluted net loss per share, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for all periods presented. Diluted net income per share is calculated by dividing the net income by the weighted-average common shares outstanding for the period, including any dilutive effect from outstanding options, warrants, restricted stock and RSUs using the treasury stock method.

Product Revenue and Reserves for Variable Consideration

3 Months Ended

Mar. 31, 2020

Revenue From Contract With Customer [Abstract]

Product Revenue and Reserves for Variable Consideration

3. Product Revenue and Reserves for Variable Consideration

To date, the Company’s only source of product revenue has been product revenue from the U.S. sales of Auryxia, which it began recording on December 12, 2018 following the consummation of the Merger. Total net product revenue was $29.2 million and $23.1 million for the three months ended March 31, 2020 and 2019, respectively. The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months ended March 31, 2020 and 2019 (in thousands):

	Chargebacks and Discounts			Rebates, Fees and other Deductions			Returns			Total
Balance at December 31, 2019	$	738		$	30,552		$	253		$	31,543
Current provisions related to sales in current year		2,250			30,519			1,053			33,822
Adjustments related to prior year sales		82			32			—			114
Credits/payments made		(2,353	)		(29,024	)		(1,051	)		(32,428	)
Balance at March 31, 2020	$	717		$	32,079		$	255		$	33,051

Balance at December 31, 2018	$	516		$	22,861		$	360		$	23,737
Current provisions related to sales in current year		1,486			17,476			870			19,832
Adjustments related to prior year sales		—			156			—			156
Credits/payments made		(1,495	)		(17,301	)		(947	)		(19,743	)
Balance at March 31, 2019	$	507		$	23,192		$	283		$	23,982

Chargebacks, discounts and returns are recorded as a direct reduction of revenue on the unaudited condensed consolidated statement of operations with a corresponding reduction to accounts receivable on the unaudited condensed consolidated balance sheets. Rebates, distribution-related fees, and other sales-related deductions are recorded as a reduction in revenue on the unaudited condensed consolidated statement of operations with a corresponding increase to accrued liabilities or accounts payable on the unaudited condensed consolidated balance sheets.

Accounts receivable, net related to product sales was approximately $20.2 million and $23.0 million as of March 31, 2020 and December 31, 2019, respectively.

License, Collaboration and Other Significant Agreements

3 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

License, Collaboration and Other Significant Agreements

4. License, Collaboration and Other Significant Agreements

During the three months ended March 31, 2020 and 2019, the Company recognized the following revenues from its license, collaboration and other significant agreements and had the following deferred revenue balances as of March 31, 2020:

	Three Months Ended March 31,
	2020		2019
License, Collaboration and Other Revenue:	(in thousands)
Otsuka U.S. Agreement	$	38,577	$	26,223
Otsuka International Agreement		19,370		21,956
Total Proportional Performance Revenue	$	57,947	$	48,179
JT and Torii		1,126		1,228
MTPC Other Revenue		196		148
Total License, Collaboration and Other Revenue	$	59,269	$	49,555

	March 31, 2020
	Short-Term		Long-Term		Total
Deferred Revenue:	(in thousands)
Otsuka U.S. Agreement	$	19,090	$	26,854	$	45,944
Otsuka International Agreement		11,807		11,266		23,073
MTPC - Supply of Validation Drug Product		3,989		—		3,989
Vifor Agreement		—		4,679		4,679
Total	$	34,886	$	42,799	$	77,685

The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2020 and 2019 (in thousands):

Three Months Ended March 31, 2020	Balance at Beginning of Period		Additions		Deductions			Balance at End of Period
Contract assets:
Accounts receivable⁽¹⁾	$	15,822	$	71,639	$	(2,895	)	$	84,566
Prepaid expenses and other current assets	$	—	$	546	$	—		$	546
Contract liabilities:
Deferred revenue	$	72,950	$	65,209	$	(60,474	)	$	77,685
Accrued expenses and other current liabilities	$	—	$	615	$	—		$	615

Three Months Ended March 31, 2019
Contract assets:
Accounts receivable⁽¹⁾	$	1,587	$	30,387	$	(2,041	)	$	29,933
Contract liabilities:
Deferred revenue	$	112,689	$	41,962	$	(48,180	)	$	106,471
Accounts payable	$	13,492	$	—	$	(13,492	)	$	—

⁽¹⁾

^{Excludes accounts receivable from other services related to clinical and regulatory activities performed by the Company on behalf of MTPC that are not included in the performance obligations identified under the MTPC Agreement as of March 31, 2019 and 2020 and December 31, 2018 and 2019. Also excludes accounts receivable related to amounts due to the Company from product sales which are included in the accompanying unaudited condensed consolidated balance sheet as of March 31, 2020 and December 31, 2019.}

During the three months ended March 31, 2020 and 2019, 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 from:	2020		2019
Amounts included in deferred revenue at the beginning of the period	$	10,130	$	45,179
Performance obligations satisfied in previous periods	$	—	$	1,254

Mitsubishi Tanabe Pharma Corporation Collaboration Agreement

Summary of 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 vadadustat in Japan and certain other Asian countries, collectively, the MTPC Territory. In addition, the Company will supply vadadustat for both clinical and commercial use in the MTPC Territory, subject to MTPC’s option to manufacture commercial drug product in the MTPC Territory.

The Company and MTPC agreed that, instead of including Japanese patients in the Company’s global Phase 3 program for vadadustat, MTPC would be the sponsor of a Phase 3 program for vadadustat in Japan. MTPC reported top-line data for the two Phase 3 pivotal trials and data from the two supportive Phase 3 studies in March 2019 and 52-week data for the two Phase 3 pivotal trials in November 2019. MTPC is responsible for the costs of the Phase 3 program in Japan and other studies required in Japan, and will make no funding payments for the global Phase 3 program. In July 2019, MTPC submitted a Japanese New Drug Application, or JNDA, to the Ministry of Health, Labor and Welfare in Japan for manufacturing and marketing approval of vadadustat, as a treatment for anemia due to CKD, which triggered a $10.0 million regulatory milestone payment to the Company.

MTPC has sole responsibility for the commercialization of vadadustat in the MTPC Territory as well as for Medical Affairs (as defined in the MTPC Agreement) in the MTPC Territory. Akebia is responsible for manufacturing and supplying vadadustat for clinical use in the MTPC Territory.

The Company and MTPC have established a joint steering committee pursuant to the MTPC Agreement to oversee development and commercialization of vadadustat in the MTPC Territory, including approval of any development or commercialization plans. Unless earlier terminated, the MTPC Agreement will continue in effect on a country-by-country basis until the later of the following: expiration of the last-to-expire patent covering vadadustat in such country in the MTPC Territory; expiration of marketing or regulatory exclusivity in such country in the MTPC Territory; or ten years after the first commercial sale of vadadustat in such country in the MTPC Territory. MTPC may terminate the MTPC Agreement upon twelve months’ notice at any time after the second anniversary of the effective date of the MTPC Agreement. Either party may terminate the MTPC Agreement upon the material breach of the other party that is not cured within a specified time period or upon the insolvency of the other party.

MTPC is required to make certain milestone payments to the Company aggregating up to approximately $225.0 million upon the achievement of specified development, regulatory and commercial events. More specifically, the Company received $10.0 million in development milestone payments, and is eligible to receive up to $40.0 million in regulatory milestone payments, of which the Company received $10.0 million in relation to the JNDA filing in the third quarter of 2019 and is eligible to receive an additional $15.0 million upon regulatory approval of vadadustat in Japan, and up to $175.0 million in commercial milestone payments associated with aggregate sales of all products. In consideration for the exclusive license and other rights contained in the MTPC Agreement, MTPC also made a $20.0 million upfront payment as well as a payment of $20.5 million for Phase 2 studies in Japanese patients completed by the Company and reimbursed by MTPC. Additionally, if vadadustat is commercialized, the Company would be entitled to receive tiered double-digit royalty payments of up to 20% on sales of vadadustat in the MTPC Territory. Royalty payments are subject to certain reductions, including upon the introduction of competitive products in certain instances. Royalties are due on a country-by-country basis from the date of first commercial sale of a licensed product in a country until the last to occur of: (i) the expiration of the last to expire valid claim within the intellectual property covering the licensed product, (ii) the expiration of marketing or regulatory exclusivity in such country, or (iii) the tenth anniversary of the first commercial sale of such licensed product in such country. Due to the uncertainty of pharmaceutical development and the high historical failure rates associated with drug development, although the Company has received $10.0 million in development milestones and a $10.0 million regulatory milestone, no additional milestone or royalty payments may ever be received from MTPC.

In September 2017, the Company provided MTPC with an option to use data from the Company’s global Phase 3 vadadustat program to obtain regulatory approval for vadadustat in Japan. If exercised, MTPC would make payments to the Company of up to $25.0 million, which is in addition to the milestone payments described above.

Revenue Recognition

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’s arrangement with MTPC contains the following material promises under the contract at inception: (i) license under certain of the Company’s intellectual property to develop and commercialize vadadustat (the License Deliverable) in the MTPC Territory, (ii) clinical supply of vadadustat (the Clinical Supply Deliverable), (iii) knowledge transfer, (iv) Phase 2 dosing study research services (the Research Deliverable), and (v) rights to future know-how.

The Company has 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. Factors considered in making the assessment of which material promises will be accounted for as separate performance obligations included, among other things, the capabilities of the collaboration partner, whether any other vendor sells the item separately, whether the good or service is highly interdependent or highly interrelated to the other elements in the arrangement, and whether there are other vendors that can provide the items. Additionally, the MTPC Agreement does not include a general right of return.

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. The Company did not develop a best estimate of standalone selling price for the License, Research and Clinical Supply Performance Obligation because the estimate of standalone selling price associated with the Rights to Future Know-How Performance Obligation was determined to be immaterial. The Company has concluded that a change in the key assumptions used to determine the best estimate of standalone selling price for each performance obligation would not have a significant impact on the allocation of arrangement consideration. The deliverables associated with the License, Research and Clinical Supply Performance Obligation were satisfied as of June 30, 2018.

The transaction price at inception was comprised of: (i) the up-front payment, (ii) the estimated cost for the Phase 2 studies, (iii) a non-substantive milestone associated with the first patient enrolled in the NDD-CKD Phase 3 study, and (iv) the cost of all clinical supply provided to MTPC for the Phase 3 studies. No other development and no regulatory milestones were included in the transaction price at inception, as all other milestone amounts were fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon success in future clinical trials and the licensee’s efforts. The total aggregate amount of development milestones is $10.0 million and the total aggregate amount of the regulatory milestones is up to $40.0 million. The total aggregate amount of sales milestones is up to $175.0 million. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to MTPC and therefore have also been excluded from the transaction price. 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, 2020, the transaction price is 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, comprised of a $6.0 million and a $4.0 million development milestone, and (v) the $10.0 million regulatory milestone relating to the JNDA filing. As of March 31, 2020, all development milestones and a $10.0 million regulatory milestone related to the filing of the JNDA have been achieved. No other regulatory milestones have been assessed as probable of being achieved and as a result have been fully constrained. 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. No revenues were recognized for the three months ended March 31, 2020 and 2019 with respect to the MTPC Agreement. As of March 31, 2020, there is no deferred revenue, no accounts receivable, and no contract assets. There were no asset or liability balances classified as long-term in the unaudited condensed consolidated balance sheet as of March 31, 2020.

Supply of Validation Drug Product

The Company is advancing key pre-commercial activities in support of the first regulatory approval of vadadustat expected in Japan this year. As a result, in March 2020, in connection with the MTPC agreement, the Company agreed to supply MTPC with certain vadadustat drug product for commercial use and MTPC agreed to reimburse the Company for certain manufacturing-related expenses. In connection with this arrangement, the Company invoiced the upfront payment of $10.4 million, which it received in the second quarter of 2020. The Company does not recognize revenue under this arrangement until risk of loss passes to MTPC and delivery has occurred. As of March 31, 2020, the Company deferred recognition of all revenues relating to this arrangement and recorded $10.4 million in accounts receivable, $4.0 million in short-term deferred revenue for drug product that was delivered in Q2 2020, and $6.4 million in other current liabilities for drug product that is subject to return by MTPC.

U.S. Collaboration and License Agreement with Otsuka Pharmaceutical Co. Ltd.

Summary of Agreement

On December 18, 2016, the Company entered into a collaboration and license agreement with Otsuka, or the Otsuka U.S. Agreement. The collaboration is focused on the development and commercialization of vadadustat in the United States. Under the terms of the Otsuka U.S. Agreement, the Company is responsible for leading the development of vadadustat, including the ongoing Phase 3 development program. The Company and Otsuka will co-commercialize vadadustat in the United States, subject to the approval of vadadustat by the FDA.

Under the terms of the Otsuka U.S. Agreement, the Company granted to Otsuka a co-exclusive, non-sublicensable license under certain intellectual property controlled by the Company solely to perform medical affairs activities and to conduct non-promotional and commercialization activities related to vadadustat in accordance with the associated plans. The co-exclusive license relates to activities that will be jointly conducted by the Company and Otsuka pursuant to the terms of the Otsuka U.S. Agreement. Additionally, the parties agreed not to promote, market or sell any competing product in the territory covered by the agreement.

The Company is responsible for performing all activities related to the development of vadadustat as outlined in the current global development plan, while Otsuka may agree to perform certain activities under the global development plan from time to time as agreed by the parties. The current global development plan encompasses all activities with respect to the ongoing PRO₂TECT and INNO₂VATE clinical programs through the filing for marketing approval, as well as certain other studies. Under the Otsuka U.S. Agreement the Company controls and retains final decision making authority with respect to certain matters. The Company’s obligations related to the conduct of the current global development plan include the associated manufacturing and supply services for vadadustat.

Under the Otsuka U.S. Agreement, the parties jointly conduct, and have equal responsibility for, all medical affairs, commercialization and non-promotional activities pursuant to underlying plans as agreed to by the parties. If approved by the FDA, the Company plans to provide vadadustat to Otsuka for commercialization pursuant to a separate supply agreement to be negotiated.

The activities under the Otsuka U.S. Agreement are governed by a joint steering committee, or JSC, formed by an equal number of representatives from the Company and Otsuka. The JSC coordinates and monitors the parties’ activities under the collaboration. Among other responsibilities, the JSC manages the overall strategic alignment between the parties, oversees the current global development plan and reviews other detailed plans setting forth the parties’ activities under the arrangement, including the medical affairs plan and commercialization and non-promotional activities plan. Additionally, the parties established a joint development committee, or JDC, which is comprised of an equal number of representatives from the Company and Otsuka. Among other responsibilities, the JDC shares information related to, and reviews and discusses activities and progress under, the current global development plan and any other development that may be conducted pursuant to the collaboration. The Company and Otsuka also established a joint manufacturing committee, or JMC, which is comprised of an equal number of representatives from each of the parties. Among other responsibilities, the JMC oversees the manufacturing plan and related manufacturing activities. In support of the potential commercialization of vadadustat, the parties established a joint commercialization committee, or JCC, which is comprised of an equal number of representatives from the Company and Otsuka. Among other responsibilities, the JCC oversees the activities and progress under the commercialization and non-promotional activities plan and all other sales and marketing activities. The Company has retained final decision-making authority with respect to certain matters, including U.S. pricing strategy and certain other key commercialization matters.

Under the terms of the Otsuka U.S. Agreement, the Company received a $125.0 million up-front, non-refundable, non-creditable cash payment in December 2016. In March 2017, the Company received a payment of approximately $33.8 million, which represented reimbursement for Otsuka’s share of costs previously incurred by the Company in implementing the current global development plan through December 31, 2016. Commencing in the third quarter of 2017, whereupon the Company had incurred a specified amount of incremental costs, Otsuka began to contribute, as required by the Otsuka U.S. Agreement, a percentage of the remaining costs incurred under the current global development plan. The Company estimates that Otsuka’s funding of the current global development plan costs subsequent to December 31, 2016 will total $279.9 million or more, depending on the actual costs incurred toward the current global development plan. The costs associated with the performance of any development activities in addition to those outlined in the current global development plan will be subject to a cost sharing or reimbursement mechanism as set forth in the Otsuka U.S. Agreement or to be determined by the parties. Costs incurred with respect to medical affairs and commercialization and non-promotional activities will generally be shared equally by the parties. In addition, due to the costs incurred in completing the activities under the current global development plan exceeding a certain threshold in the second quarter of 2019, the Company elected to require Otsuka to increase the aggregate percentage of current global development costs it funds under the Otsuka U.S. Agreement and the Otsuka International Agreement, as defined below, from 52.5% to 80%, or the Otsuka Funding Option. The Company estimates the additional funding as a result of exercising the Otsuka Funding Option, or the Additional Funding, to total approximately $104.2 million or more, depending on the actual costs incurred toward the current global development plan. The Additional Funding is fully creditable against future payments due to the Company under the arrangement, provided that future payments due to the Company may not be reduced by more than 50% in any calendar year and any remaining creditable amount above 50% in any calendar year will be applied to subsequent future payments until fully credited. As of March 31, 2020, the Additional Funding was $60.0 million.

In addition, Otsuka is required to make certain milestone payments to the Company upon the achievement of specified development, regulatory and commercial events. More specifically, as of March 31, 2020, the Company is eligible to receive up to $125.0 million in development milestone payments, up to $65.0 million in regulatory milestone payments for the first product to achieve the associated event, and up to $575.0 million in commercial milestone payments associated with aggregate sales of licensed products. These future milestones are subject to reduction as a result of the Company’s exercise of the Otsuka Funding Option, as described above, the Additional Funding for which, as of March 31, 2020, totaled $60.0 million. Due to the uncertainty of pharmaceutical development and the high historical failure rates associated therewith, no milestone payments may ever be received from Otsuka.

Under the Otsuka U.S. Agreement, the Company and Otsuka share the costs of developing and commercializing vadadustat in the United States and the profits from the sales of vadadustat after approval by the FDA. In connection with the profit share calculation, net sales include gross sales to third-party customers net of discounts, rebates, chargebacks, taxes, freight and insurance charges and other applicable deductions. Shared costs generally include costs attributable or reasonably allocable to the manufacture of vadadustat for commercialization purposes and the performance of medical affairs activities, non-promotional activities and commercialization activities.

Unless earlier terminated, the Otsuka U.S. Agreement will expire in the United States on a product-by-product basis on the date that one or more generic versions of vadadustat first achieves 90% market penetration. Either party may terminate the Otsuka U.S. Agreement in its entirety upon an uncured breach or insolvency on the part of the other party. Otsuka may terminate the Otsuka U.S. Agreement in its entirety upon 12 months’ prior written notice at any time after the release of the first top-line data from the global Phase 3 development program for vadadustat. In the event of termination of the Otsuka U.S. Agreement, all rights and licensees granted to Otsuka under the Otsuka U.S. Agreement will automatically terminate and the licenses granted to the Company will become freely sublicensable. In addition, the upfront payment, all development costs and milestone payments received by the Company prior to such termination will not be refunded to Otsuka.

Revenue Recognition

The Company evaluated the elements of the Otsuka U.S. Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, Otsuka, is a customer. The Company’s arrangement with Otsuka contains the following material promises under the contract at inception: (i) license under certain of the Company’s intellectual property to develop, perform medical affairs activities with respect to and conduct non-promotional and commercialization activities related to vadadustat and products containing or comprising vadadustat (the License Deliverable), (ii) development services to be performed pursuant to the current global development plan (the Development Services Deliverable), (iii) rights to future intellectual property (the Future IP Deliverable), and (iv) joint committee services (the Committee Deliverable).

The Company has identified three performance obligations in connection with its obligations under the Otsuka U.S. Agreement. Factors considered in making the assessment of which material promises will be accounted for as separate performance obligations included, among other things, the capabilities of the collaboration partner, whether any other vendor sells the item separately, whether the good or service is highly interdependent or highly interrelated to the other elements in the arrangement, and whether there are other vendors that can provide the items. Additionally, the Otsuka U.S. Agreement does not include a general right of return. The three performance obligations identified in connection with the Company’s obligations under the Otsuka U.S. Agreement are as follows:

(i)

License and Development Services Combined (License Performance Obligation)

The License Deliverable is not distinct from the Development Services Deliverable, due to the limitations inherent in the license conveyed. More specifically, the license conveyed to Otsuka does not provide Otsuka with the right to manufacture vadadustat and products containing or comprising vadadustat. However, the manufacturing and supply services that are conducted as part of the services to be performed pursuant to the current global development plan are necessary for Otsuka to fully exploit the associated license for its intended purpose. The value of the rights provided through the license conveyed will be realized when the underlying products covered by the intellectual property progress through the development cycle, receive regulatory approval and are commercialized. Products containing or comprising vadadustat cannot be commercialized until the development services under the current global development plan are completed. Accordingly, Otsuka must obtain the manufacturing and supply of the associated products that are included within the development services to be performed pursuant to the current global development plan from the Company in order to derive benefit from the license, which significantly limits the ability for Otsuka to utilize the License Deliverable for its intended purpose in a way that generates economic benefits.

(ii)

Rights to Future Intellectual Property (Future IP Performance Obligation)

The License and Development Services deliverables combined are distinct from the Future IP Deliverable because Otsuka can obtain the value of the license using the clinical trial materials implicit in the development services without the receipt of any other intellectual property that may be discovered or developed in the future. The Future IP Deliverable is distinct from the Committee Deliverable because the joint committee services have no bearing on the value to be derived from the rights to potential future intellectual property. As a result, the Future IP Deliverable qualifies as a separate performance obligation.

(iii)

Joint Committee Services (Committee Performance Obligation)

The License and Development Services deliverables combined are distinct from the Committee Deliverable because Otsuka can obtain the value of the license using the clinical trial materials implicit in the development services without the joint committee services. The Committee Deliverable also is distinct from the rights to Future IP Deliverable because the joint committee services have no bearing on the value to be derived from the rights to potential future intellectual property. As a result, the Committee Deliverable qualifies as a separate performance obligation.

associated with the Future IP Performance Obligation was determined to be immaterial and (ii) the period of performance and pattern of recognition for the License Performance Obligation and the Committee Performance Obligation was determined to be similar. The Company has concluded that a change in the key assumptions used to determine the best estimate of standalone selling price for each performance obligation would not have a significant impact on the allocation of arrangement consideration.

The transaction price at inception was comprised of: (i) the up-front payment, (ii) the cost share payment with respect to amounts incurred by the Company through December 31, 2016, and (iii) an estimate of the cost share payments to be received with respect to amounts incurred by the Company subsequent to December 31, 2016. No development or regulatory milestones were included in the transaction price at inception, as all milestone amounts were fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestones is outside the control of the Company and contingent upon success in future clinical trials and the licensee’s efforts. Any consideration related to sales-based milestones will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to Otsuka and therefore have also been excluded from the transaction price.

The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. The Company determined that under ASC 606, the contract was modified in the second quarter of 2019 when the Otsuka Funding Option became effective and the Company became eligible to receive the Additional Funding amount. In connection with the modification, the Company adjusted the transaction price to include the Additional Funding amount as additional variable consideration. The Company constrains the variable consideration to an amount for which a significant revenue reversal is not probable. In the event that there is consideration received by a customer in the form of activities performed by such customer under the global development plan, such consideration is reflected as a reduction to the transaction price as contra revenue rather than as an expense because the associated services are not distinct from the License Performance Obligation.

No amounts were allocated to the Future IP Performance Obligation because the associated best estimate of standalone selling price was determined to be immaterial. Due to the similar performance period and recognition pattern between the License Performance Obligation and the Committee Performance Obligation, the transaction price has been allocated to the License Performance Obligation and the Committee Performance Obligation on a combined basis. Accordingly, the Company will recognize revenue related to the allocable arrangement consideration on a proportional performance basis as the underlying development services are performed pursuant to the current global development plan which is commensurate with the period and consistent with the pattern over which the Company’s obligations are satisfied for both the License Performance Obligation and the Committee Performance Obligation. Effectively, the Company has treated the arrangement as if the License Performance Obligation and the Committee Performance Obligation are a single performance obligation.

As of March 31, 2020, the transaction price totaling $438.7 million is comprised of: (i) the up-front payment of $125.0 million, (ii) the cost share payment with respect to amounts incurred by the Company through December 31, 2016 of $33.8 million, and (iii) the estimate of the net cost share consideration to be received of approximately $279.9 million with respect to amounts incurred by the Company subsequent to December 31, 2016 and the Additional Funding. As of March 31, 2020, no development or regulatory milestones have been assessed as probable of being reached and thus have been fully constrained.

During the three months ended March 31, 2020 and 2019, the Company recognized revenue totaling approximately $38.6 million and $26.2 million, respectively, with respect to the Otsuka U.S. Agreement. The revenue is classified as collaboration revenue in the accompanying unaudited condensed consolidated statements of operations. As of March 31, 2020, there is approximately $45.9 million of deferred revenue related to the Otsuka U.S. Agreement of which $19.1 million is classified as current and $26.8 million is classified as long-term in the accompanying unaudited condensed consolidated balance sheet based on the performance period of the underlying obligations. Additionally, as of March 31, 2020 and December 31, 2019, there is approximately $49.3 million and $8.9 million, respectively, in accounts receivable in the accompanying unaudited condensed consolidated balance sheet. As of March 31, 2020, there is also $0.4 million in prepaid expenses and other current assets and $0.4 million in accrued expenses and other current liabilities in the accompanying unaudited condensed consolidated balance sheet. There were no prepaid expenses and other current assets or accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2019.

The Company determined that the medical affairs, commercialization and non-promotional activities elements of the Otsuka U.S. Agreement represent joint operating activities in which both parties are active participants and of which both parties are exposed to significant risks and rewards that are dependent on the success of the activities. Accordingly, the Company is accounting for the joint medical affairs, commercialization and non-promotional activities in accordance with ASC No. 808, Collaborative Arrangements (ASC 808). Additionally, the Company has determined that in the context of the medical affairs, commercialization and non-promotional activities, Otsuka 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 the medical affairs, commercialization and non-promotional activities plans will be accounted for as a component of the related expense in the period incurred. During the three months ended March 31, 2020 and 2019, the Company incurred approximately $0.5 million and $0.3 million, respectively, of costs related to the cost-sharing provisions of the Otsuka U.S. Agreement of which approximately $0.3 million and $0.2 million are

reimbursable by Otsuka and recorded as a reduction to research and development expense during each of the three months ended March 31, 2020 and 2019, respectively. During each of the three months ended March 31, 2020 and 2019, Otsuka incurred approximately $0.4 million of costs related to the cost-sharing provisions of the Otsuka U.S. Agreement, of which approximately $0.2 million are reimbursable by the Company and recorded as an increase to research and development expense during each of the three months ended March 31, 2020 and 2019.

International Collaboration and License Agreement with Otsuka Pharmaceutical Co. Ltd.

Summary of Agreement

On April 25, 2017, the Company entered into a collaboration and license agreement with Otsuka, or the Otsuka International Agreement. The collaboration is focused on the development and commercialization of vadadustat in Europe, Russia, China, Canada, Australia, the Middle East and certain other territories, collectively, the Otsuka International Territory. Under the terms of the Otsuka International Agreement, the Company is responsible for leading the development of vadadustat, including the ongoing global Phase 3 development program. Otsuka has the sole responsibility, at its own cost, for the commercialization of vadadustat in the Otsuka International Territory, subject to the approval by the relevant regulatory authorities.

Under the terms of the Otsuka International Agreement, the Company granted to Otsuka an exclusive, sublicensable license under certain intellectual property controlled by the Company to develop and commercialize vadadustat and products containing or comprising vadadustat in the Otsuka International Territory.

Pursuant to the terms of the Otsuka International Agreement, the Company is responsible for performing all activities related to the development of vadadustat as outlined in the current global development plan, while Otsuka may agree to perform certain activities under the global development plan from time to time as agreed by the parties. Under the Otsuka International Agreement, the Company controls and retains final decision-making authority with respect to certain matters. Per the terms of the Otsuka International Agreement, Otsuka is generally responsible for the conduct of any development activities that may be required for marketing approvals in the Otsuka International Territory or otherwise performed with respect to the Otsuka International Territory that are incremental to those included in the current global development plan. The Company’s obligations related to the conduct of the current global development plan include the associated manufacturing and supply services for vadadustat.

Under the Otsuka International Agreement, Otsuka is to be solely responsible for the conduct of all medical affairs and commercialization activities in the Otsuka International Territory pursuant to underlying plans as reviewed and discussed by the parties. If approved by the relevant jurisdictional regulatory health authorities in the Otsuka International Territory, the Company will provide vadadustat to Otsuka for commercialization pursuant to a separate supply agreement to be negotiated. Additionally, the parties agreed not to promote, market or sell any competing product in the territory covered by the agreement.

The activities under the Otsuka International Agreement are governed by a JSC formed by an equal number of representatives from the Company and Otsuka. The JSC coordinates and monitors the parties’ activities under the collaboration. Among other responsibilities, the JSC manages the overall strategic alignment between the parties, oversees the current global development plan and reviews other detailed plans setting forth any other development activities that may be conducted under the arrangement. Additionally, the parties established a JDC, which is comprised of an equal number of representatives from the Company and Otsuka. Among other responsibilities, the JDC shares information related to, and reviews and discusses activities and progress under, the current global development plan and any other development that may be conducted pursuant to the collaboration. The Company and Otsuka also established a JMC, which is comprised of an equal number of representatives from each of the parties. Among other responsibilities, the JMC oversees the manufacturing plan and related manufacturing activities. In support of the potential commercialization of vadadustat, the parties established a JCC, which is comprised of an equal number of representatives from the Company and Otsuka. Among other responsibilities, the JCC manages the activities and progress under the commercialization and non-promotional activities plan and all other sales and marketing activities. The Company has retained final decision‑making authority with respect to certain matters. Otsuka has retained final decision‑making authority with respect to all commercialization matters, other than decisions related to certain marketing matters.

Under the terms of the Otsuka International Agreement, the Company received a $73.0 million up-front, non-refundable, non-creditable cash payment. The Company also received a payment of approximately $0.2 million which represents reimbursement for Otsuka’s share of costs previously incurred by the Company in implementing the current global development plan in excess of a specified threshold during the quarter ended March 31, 2017. Commencing in the second quarter of 2017, Otsuka began to contribute, as required by the Otsuka International Agreement, a percentage of the remaining costs incurred under the current global development plan. The Company estimates that Otsuka’s funding of the current global development plan costs subsequent to March 31, 2017 will total roughly $213.0 million or more, depending on the actual current global development plan costs incurred. The costs associated with the performance of any mutually agreed upon development activities in addition to those outlined in the current global development plan will be subject to a cost sharing or reimbursement mechanism as set forth in the Otsuka International Agreement or

to be determined by the parties. Otsuka may elect to conduct additional studies of vadadustat in the EU, subject to the Company’s right to delay such studies based on its objectives outside the Otsuka International Territory. Otsuka will pay a percentage of the costs of any such studies, and the Company will pay its portion of the costs in the form of a credit against future amounts due to the Company under the Otsuka International Agreement. The costs incurred related to any other development activities, which are pursued solely for obtaining or maintaining marketing approval in the Otsuka International Territory or otherwise performed solely with respect to the Otsuka International Territory that are incremental to the development activities included in the current global development plan, will be borne in their entirety by Otsuka. Otsuka will pay costs incurred with respect to medical affairs and commercialization activities in the Otsuka International Territory.

In addition, Otsuka would be required to make certain milestone payments to the Company upon the achievement of specified development, regulatory and commercial events. More specifically, as of March 31, 2020, the Company is eligible to receive up to $80.0 million in development milestone payments and up to $52.0 million in regulatory milestone payments for the first licensed product to achieve the associated event. Moreover, the Company is eligible for up to $525.0 million in commercial milestone payments associated with aggregate sales of all licensed products. Additionally, to the extent vadadustat is commercialized, the Company would be entitled to receive tiered royalty payments ranging from the low double digits to the low thirties based on a percentage of net sales. Royalties are due on a country-by-country basis from the date of the first commercial sale of a licensed product in a country until the latest to occur of: (i) the expiration date in such country of the last to expire valid claim within the intellectual property covering the licensed product, (ii) the date of expiration of data or regulatory exclusivity in such country or (iii) the tenth anniversary of the first commercial sale of such licensed product in such country. Due to the uncertainty of pharmaceutical development and the high historical failure rates associated therewith, no milestone or royalty payments may ever be received from Otsuka. There are no cancellation, termination or refund provisions in the Otsuka International Agreement that contain material financial consequences to the Company.

Unless earlier terminated, the Otsuka International Agreement will expire upon the expiration of the royalty term in the last country in the Otsuka International Territory. Either party may terminate the Otsuka International Agreement in its entirety upon an uncured material breach or insolvency on the part of the other party. Otsuka may terminate the Otsuka International Agreement in its entirety or for a specific region in the Otsuka International Territory upon 12 months’ prior written notice at any time after the release of the first top-line data from the global Phase 3 development program for vadadustat. In the event of termination of the Otsuka International Agreement, all rights and licensees granted to Otsuka under the Otsuka International Agreement will automatically terminate, and the licenses granted to the Company will become freely sublicensable, but potentially subject to a future royalty. In addition, the upfront payment, all development costs and milestone payments received by the Company prior to such termination will not be eligible for refund to Otsuka.

Revenue Recognition

The Company has accounted for the Otsuka International Agreement separately from the collaboration arrangement with Otsuka with respect to the U.S. due to the lack of interrelationship and interdependence of the elements and payment terms within each of the contracts as they relate to the respective territories. Accordingly, the Company has applied the guidance in ASC 606 solely in reference to the terms and conditions of the Otsuka International Agreement, while the Otsuka U.S. Agreement has continued to be accounted for as a discrete agreement in its own right. The Company evaluated the Otsuka International Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, Otsuka, is a customer. The Company’s arrangement with Otsuka related to the Otsuka International Territory contains the following material promises under the contract at inception: (i) license under certain of the Company’s intellectual property to develop and commercialize (including the associated packaging) vadadustat and products containing or comprising vadadustat and development services to be performed pursuant to the current global development plan (the License and Development Services Deliverable), (ii) rights to future intellectual property (the Future IP Deliverable) and (iii) joint committee services (the Committee Deliverable).

The Company has identified three performance obligations in connection with its obligations under the Otsuka International Agreement. Factors considered in making this assessment of which material promises will be accounted for as a separate performance obligation included, among other things, the capabilities of the collaboration partner, whether any other vendor sells the item separately, whether the good or service is highly interdependent or highly interrelated to the other elements in the arrangement, and whether there are other vendors that can provide the items. Additionally, the Otsuka International Agreement does not include a general right of return. The three performance obligations identified in connection with the Company’s obligations under the Otsuka International Agreement are as follows:

(i)

License and Development Services Combined (License Performance Obligation)

The Company has determined that the license granted to Otsuka pursuant to the Otsuka International Agreement will be accounted for as component of the development services as opposed to a separately identified promise. Although the rights granted under the license are effective throughout the entire term of the arrangement, the Company will not be providing significant additional contributions of study data, regulatory submissions and regulatory approvals beyond the point that services under the current global development plan

are conducted. Therefore, the period and pattern of recognition would be the same for both the license and the development services. Consequently, the Company has concluded that the license will effectively be treated as an inherent part of the associated development services promise instead of as a separate promise. As a result, the License and Development Services Deliverable will be treated as a single performance obligation (the License Performance Obligation).

(ii)

Rights to Future Intellectual Property (Future IP Performance Obligation)

The License and Development Services Deliverable is distinct from the Future IP Deliverable because Otsuka can obtain the value of the license using the clinical trial materials implicit in the development services without the receipt of any other intellectual property that may be discovered or developed in the future. The Future IP Deliverable is distinct from the Committee Deliverable because the Committee Deliverable has no bearing on the value to be derived from the rights to potential future intellectual property. As a result, the Future IP Deliverable qualifies as a separate performance obligation.

(iii)

Joint Committee Services (Committee Performance Obligation)

The License and Development Services Deliverable is distinct from the Committee Deliverable because Otsuka can obtain the value of the license using the clinical trial materials implicit in the development service without the joint committee services. The Committee Deliverable is distinct from the Future IP Deliverable because the Committee Deliverable has no bearing on the value to be derived from the rights to potential future intellectual property. As a result, the Committee Deliverable qualifies as a separate performance obligation.

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 standalone selling price for the Committee Performance Obligation after considering the nature of the services to be performed and estimates of the associated effort and rates applicable to such services that would be expected to be realized under similar contracts. The Company developed a best estimate of standalone selling price for the Future IP 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. The Company did not develop a best estimate of standalone selling price for the License Performance Obligation due to the following: (i) the best estimates of standalone selling price associated with the Future IP Performance Obligation was determined to be immaterial and (ii) the period of performance and pattern of recognition for the License Performance Obligation and the Committee Performance Obligation was determined to be similar. The Company has concluded that a change in the key assumptions used to determine the best estimate of standalone selling price for each performance obligation would not have a significant impact on the allocation of arrangement consideration.

The transaction price at inception was comprised of: (i) the up-front payment, (ii) the cost share payment with respect to amounts incurred by the Company during the quarter ended March 31, 2017, and (iii) an estimate of the cost share payments to be received with respect to amounts incurred by the Company subsequent to March 31, 2017. No development or regulatory milestones were included in the transaction price at inception, as all milestone amounts were fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including whether the receipt of the milestone payment is outside the control of the Company and contingent upon success in future clinical trials and the licensee’s efforts. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as they were determined to relate predominantly to the license granted to Otsuka and therefore have also been excluded from the transaction price.

The Company re-evaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur. In the event that there is consideration received by a customer in the form of activities performed by such customer under the global development plan, such consideration is reflected as a reduction to the transaction price as contra revenue rather than as an expense because the associated services are not distinct from the License Performance Obligation.

As of March 31, 2020, the transaction price totaling $286.2 million is comprised of: (i) the up-front payment of $73.0 million, (ii) the cost share payment with respect to amounts incurred by the Company during the quarter ended March 31, 2017 of $0.2 million, and (iii) an estimate of the net cost share consideration to be received with respect to amounts incurred by the Company subsequent to March 31, 2017 of $213.0 million. As of March 31, 2020, no development or regulatory milestones have been assessed as probable of being reached and thus have been fully constrained.

During the three months ended March 31, 2020 and 2019, the Company recognized revenue totaling approximately $19.4 million and $22.0 million, respectively, with respect to the Otsuka International Agreement. The revenue is classified as collaboration revenue in the accompanying unaudited condensed consolidated statements of operations. As of March 31, 2020, there is approximately $23.1 million of deferred revenue related to the Otsuka International Agreement of which $11.8 million is classified as current and $11.3 million is classified as long-term in the accompanying unaudited condensed consolidated balance sheet based on the performance period of the underlying obligations. Additionally, as of March 31, 2020 and December 31, 2019, there is approximately $22.4 million and $4.0 million, respectively, in accounts receivable in the accompanying unaudited condensed consolidated balance sheet. As of March 31, 2020, there is also $0.2 million in prepaid expenses and other current assets and $0.2 million in accrued expenses and other current liabilities in the accompanying unaudited condensed consolidated balance sheet. There were no prepaid expenses and other current assets and accrued expenses and other current liabilities in the consolidated balance sheet as of December 31, 2019.

Janssen Pharmaceutica NV Research and License Agreement

Summary of Agreement

On February 9, 2017, the Company entered into a Research and License Agreement, the Janssen Agreement, with Janssen Pharmaceutica NV, or Janssen, a subsidiary of Johnson & Johnson, pursuant to which Janssen granted the Company an exclusive license under certain intellectual property rights to develop and commercialize worldwide certain HIF prolyl hydroxylase targeted compounds.

Under the terms of the Janssen Agreement, Janssen granted to the Company a license for a three-year research term to conduct research on the HIF compound portfolio, which research term is now expired. During the research term, the Company could designate one or more compounds as candidates for development and commercialization. Once a compound was designated for development and commercialization, the Company was to be solely responsible for the development and commercialization of the compound worldwide at its own cost and expense.

Under the terms of the Janssen Agreement, the Company made an upfront payment of $1.0 million in cash to Janssen and issued a warrant to purchase 509,611 shares of the Company’s common stock. In addition, Janssen could be eligible to receive up to an aggregate of $16.5 million from the Company in specified development milestone payments on a product-by-product basis. Janssen will also be eligible to receive up to $215.0 million from the Company in specified commercial milestones as well as tiered, escalating royalties ranging from a low- to mid-single digit percentage of net sales, on a product-by-product basis, and subject to reduction upon expiration of patent rights or the launch of a generic product in the territory.

Unless earlier terminated, the Janssen Agreement will expire on a product-by-product and country-by-country basis upon the expiration of the last royalty term, which ends upon the longer of the expiration of the patents licensed under the Janssen Agreement, the expiration of regulatory exclusivity for such product, or 10 years from first commercial sale of such product. The Company may terminate the Janssen Agreement in its entirety or only with respect to a particular licensed compound or product upon 180 days’ prior written notice to Janssen. The parties also have customary termination rights, subject to a cure period, in the event of the other party’s material breach of the Janssen Agreement or in the event of certain additional circumstances.

As discussed above, the Company issued a Common Stock Purchase Warrant, or the Warrant, to Johnson & Johnson Innovation – JJDC, Inc., or JJDC, an affiliate of Janssen, for 509,611 shares of the Company’s common stock at an exercise price of $9.81 per share. The Warrant is exercisable by JJDC, in whole or in part, at any time prior to February 9, 2022. The Warrant and the shares issuable upon exercise of the Warrant will be sold and issued without registration under the Securities Act of 1933, as amended, or the Securities Act. The Company recorded the fair value of the Warrant in the amount of $3.4 million to additional paid-in capital and research and development expense in March 2017.

Vifor Pharma License Agreement

Summary of Agreement

On May 12, 2017, the Company entered into a License Agreement, or the Vifor Agreement, with Vifor (International) Ltd., or Vifor Pharma, pursuant to which the Company granted Vifor Pharma an exclusive license to sell vadadustat solely to Fresenius Kidney Care Group LLC, or FKC, an affiliate of Fresenius Medical Care North America, or FMCNA, in the United States. On April 8, 2019, the Company and Vifor Pharma entered into an Amended and Restated License Agreement, or the Vifor Amended Agreement, which amends and restates in full the Vifor Agreement.

Pursuant to the Vifor Amended Agreement, the Company granted Vifor Pharma an exclusive license to sell vadadustat to FKC and to certain third party dialysis organizations approved by the Company, or Third Party Dialysis Organizations, in the United States.

The license granted under the Vifor Amended Agreement will become effective upon (i) the approval of vadadustat for DD-CKD patients by the FDA, (ii) the earlier of a determination by the Centers for Medicare & Medicaid Services that vadadustat will be reimbursed using Medicare’s bundled reimbursement model or that vadadustat will be reimbursed using the Transitional Drug Add-On Payment Adjustment, and (iii) payment by Vifor Pharma of a $25.0 million milestone upon the occurrence of (i) and (ii).

The Vifor Amended Agreement is structured as a profit share arrangement between the Company and Vifor Pharma in which the Company will receive a majority of the profit, after deduction of certain amounts relating to Vifor Pharma’s costs, from Vifor Pharma’s sales of vadadustat to FKC and the Third Party Dialysis Organizations in the United States. The Company will share the milestone payment and the revenue from the profit share with Otsuka pursuant to the Otsuka U.S. Agreement. The Company currently retains rights to commercialize vadadustat for use in the NDD-CKD market and in other dialysis organizations in the United States, which will be done in collaboration with Otsuka following FDA approval.

The Vifor Amended Agreement provides that the Company and Vifor Pharma will enter into a commercial supply agreement for vadadustat pursuant to which the Company will supply all of Vifor Pharma’s requirements for vadadustat in the United States. In addition, Vifor Pharma will enter into supply arrangements with FKC and the Third Party Dialysis Organizations that will govern the terms pursuant to which Vifor Pharma will supply vadadustat to FKC and the Third Party Dialysis Organizations for use in patients at its dialysis centers in the United States. During the term of the Vifor Amended Agreement, Vifor Pharma is not permitted to sell any HIF product that competes with vadadustat in the United States to FKC or its affiliates or to any Third Party Dialysis Organization, and the Company may not directly supply vadadustat to FKC or any other affiliate of FMCNA or any Third Party Dialysis Organization.

Unless earlier terminated, the Vifor Amended Agreement will expire upon the later of the expiration of all patents that claim or cover vadadustat or expiration of marketing or regulatory exclusivity for vadadustat in the United States. Vifor Pharma may terminate the Vifor Amended Agreement in its entirety upon 12 months’ prior written notice after the release of the first top-line data in the vadadustat global Phase 3 program for DD-CKD patients. In addition, either party may, subject to a cure period, terminate the Vifor Amended Agreement in the event of the other party’s uncured material breach or bankruptcy. The Company may terminate the Vifor Amended Agreement (or suspend the license) upon the occurrence of certain events, such as for specific violations of the Vifor Amended Agreement, Vifor Pharma’s failure to achieve certain sales levels, or if there are changes in Vifor Pharma’s relationship with FKC or in applicable laws and regulations related to the reimbursement of drugs like vadadustat at dialysis clinics, or if Vifor Pharma contests the validity or enforceability of any patent controlled by the Company that covers vadadustat. The Vifor Amended Agreement also includes a standstill provision and customary representations and warranties.

Investment Agreement

In connection with the Vifor Agreement, in May 2017, the Company and Vifor Pharma entered into an investment agreement, or the Investment Agreement, pursuant to which the Company sold an aggregate of 3,571,429 shares of the Company’s common stock, or the Shares, to Vifor Pharma at a price per share of $14.00 for a total of $50.0 million. The amount representing the premium over the closing stock price of $12.69 on the date of the transaction, totaling $4.7 million, was determined by the Company to represent consideration related to the Vifor Agreement. As the parties’ rights under the Vifor Agreement are conditioned upon (a) the approval of vadadustat for DD-CKD patients by the FDA; (b) the earlier of a determination by the Centers for Medicare & Medicaid Services that vadadustat will be reimbursed using Medicare’s bundled reimbursement model or that vadadustat will be reimbursed using the Transitional Drug Add-On Payment Adjustment; and (c) payment by Vifor Pharma of a $25.0 million milestone upon the occurrence of (a) and (b), in accordance with ASC 606, the Company has determined that the full transaction price is fully constrained. As part of its evaluation of the constraint, the Company considered numerous factors, including clinical and regulatory risks that must be overcome in order for the parties’ rights to become effective and the probability of the $25.0 million milestone being achieved. Accordingly, the $4.7 million continues to be recorded as deferred revenue in the accompanying unaudited condensed consolidated balance sheets. Upon the satisfaction of the aforementioned conditions, revenue will be recognized as the Company supplies vadadustat to Vifor Pharma using a proportional performance method.

Vifor Pharma agreed to a lock-up restriction such that it agrees not to sell the Shares for a period of time following the effective date of the Investment Agreement as well as a customary standstill agreement. In addition, the Investment Agreement contains voting agreements made by Vifor Pharma with respect to the Shares. The Shares have not been registered pursuant to 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.

Priority Review Voucher Letter Agreement

On February 14, 2020, the Company entered into a letter agreement, or the Letter Agreement, with Vifor Pharma relating to Vifor Pharma’s agreement with a third party to purchase a Priority Review Voucher, or the PRV, issued by the FDA, subject to satisfaction of customary closing conditions, or the PRV Purchase. A PRV entitles the holder to priority review of a New Drug Application, or NDA, or a Biologics License Application for a new drug, which reduces the target FDA review time to six months after official acceptance of the submission, and could lead to expedited approval. Pursuant to the Letter Agreement, Akebia paid Vifor Pharma

$10.0 million in connection with the closing of the PRV Purchase. Vifor Pharma is obligated to retain all rights to, and maintain the validity of, the PRV until Akebia and Vifor Pharma (a) enter into a definitive agreement setting forth the financial and other terms by which Vifor Pharma will assign the PRV to Akebia for use with Akebia’s planned NDA for vadadustat for the treatment of anemia due to CKD in both dialysis-dependent and non-dialysis dependent patients, or (b) make a mutual decision to sell the PRV and share the proceeds based on certain terms.

During the quarter ended March 31, 2020, the $10.0 million payment to Vifor Pharma was recorded to research and development expense in the unaudited condensed consolidated statement of operations and as an operating cash outflow in the unaudited condensed consolidated statement of cash flows.

License Agreement with Panion & BF Biotech, Inc.

As a result of the Merger, the Company had a license agreement, which was amended from time to time, with Panion & BF Biotech, Inc., or Panion, under which Keryx, the Company’s wholly owned subsidiary, was the contracting party, or the Panion License Agreement, Keryx in-licensed the exclusive worldwide rights, excluding certain Asian-Pacific countries, or the Licensor Territory, for the development and commercialization of ferric citrate.

On April 17, 2019, the Company and Panion entered into a second amended and restated license agreement, or the Panion Amended License Agreement, which amends and restates in full the Panion License Agreement, effective as of April 17, 2019. The Panion Amended License Agreement provides Keryx with an exclusive license under Panion-owned know-how and patents covering the rights to sublicense, develop, make, use, sell, offer for sale, import and export ferric citrate worldwide, excluding the Licensor Territory. The Panion Amended License Agreement also provides Panion with an exclusive license under Keryx-owned patents covering the rights 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. Consistent with the Panion License Agreement, 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.

The Panion Amended License Agreement terminates upon the expiration of each of the Company’s and Panion’s obligations to pay royalties thereunder. In addition, the Company may terminate the Panion Amended License Agreement (i) in its entirety or (ii) with respect to one or more countries in the Company’s licensed territory, in either case upon 90 days’ notice. The Company and Panion also each have the right to terminate the Panion Amended License Agreement upon the occurrence of a material breach of the Panion Amended License Agreement by the other party, subject to certain cure provisions, or certain insolvency events. The Panion Amended License Agreement also provides that, on a country-by-country basis, until the second anniversary of the expiration of the obligation of the Company or Panion, as applicable, to pay royalties in a country in which such party has ferric citrate for sale on the date of such expiration, neither the other party nor its affiliates will, directly or indirectly, sell, distribute or otherwise commercialize or supply or cause to supply ferric citrate to a third party for sale or distribution in such country.

The Panion Amended License Agreement includes customary terms relating to, among others, indemnification, confidentiality, remedies, and representations and warranties. In addition, the Panion Amended License Agreement provides that each of the Company and Panion has the right, but not the obligation, to conduct litigation against any infringer of certain patent rights under the Panion Amended License Agreement in certain territories.

During the three months ended March 31, 2020 and 2019, the Company recognized approximately $2.5 million and $2.1 million, respectively, in royalty payments due to Panion relating to the Company’s sales of Auryxia in the United States and JT and Torii’s net sales of Riona in Japan, as the Company is required to pay a mid-single digit percentage of net sales of ferric citrate in the Company’s licensed territories to Panion under the terms of the Panion Amended License Agreement.

Sublicense Agreement with Japan Tobacco, Inc. and its subsidiary, Torii Pharmaceutical Co., Ltd.

Summary of Agreement

As a result of the Merger, the Company has an Amended and Restated Sublicense Agreement, which was amended in June 2013, with JT and Torii, or the JT and Torii Sublicense Agreement, under which Keryx, the Company’s wholly owned subsidiary, remains the contracting party. Under the JT and Torii Sublicense Agreement, 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.

Ferric citrate hydrate is currently approved by the Japanese Ministry of Health, Labour and Welfare for manufacturing and marketing in Japan for the treatment of hyperphosphatemia in patients with CKD. Ferric citrate hydrate is being marketed in Japan by Torii, under the brand name Riona. JT and Torii are currently conducting a Phase 3 clinical program evaluating Riona for the treatment of IDA in adult patients in Japan. JT and Torii have stated that, upon successful completion of its Phase 3 program, they expect to file an application for approval of IDA as an additional indication for Riona in Japan. The Company is eligible to receive royalty payments based on a tiered double-digit percentage of net sales of Riona in Japan escalating up to the mid-teens, subject to certain reductions upon expiration or termination of the Amended and Restated License Agreement between Keryx and Panion, by which Keryx in-licensed the exclusive worldwide rights, excluding certain Asian-Pacific countries, for the development and commercialization of ferric citrate. The Company is entitled to receive up to an additional $55.0 million upon the achievement of certain annual net sales milestones.

The sublicense under the JT and Torii Sublicense Agreement terminates upon the expiration of all underlying patent rights. Also, JT and Torii may terminate the JT and Torii Sublicense Agreement with or without cause upon at least six months prior written notice to us. Additionally, either party may terminate the JT and Torii Sublicense Agreement for cause upon 60 days’ prior written notice after the breach of any uncured material provision of the JT and Torii Sublicense Agreement, or after certain insolvency events.

Revenue Recognition

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’s arrangement with JT and Torii contains the following material promises under the contract at inception: (i) exclusive license to develop and commercialize ferric citrate hydrate in Japan (the License Deliverable), (ii) supply of ferric citrate hydrate until JT and Torii could secure their own source (the Supply Deliverable), (iii) knowledge transfer, and (iv) rights to future know-how.

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 allocated 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 immaterial. As such, the Company did not develop a best estimate of standalone selling price for the License and Supply Performance Obligation and allocated the entire transaction price to this performance obligation. Additionally, as of the consummation of the Merger, the services associated with the License and Supply Performance Obligation were completed and JT and Torii had secured their own source to manufacture ferric citrate hydrate. As such, any initial license fees as well as any development-based milestones and manufacturing fee revenue were received and recognized prior to the Merger. The Company determined that the remaining consideration that may be payable to the Company under the terms of the sublicense agreement are either quarterly royalties on net sales or payments due upon the achievement of sales-based milestones. In accordance with ASC 606, the Company recognizes sales-based royalties, including milestone payments based on the level of sales, when the related sales occur as these amounts have been determined to relate predominantly to the license granted to JT and Torii and therefore are recognized at the later of when the performance obligation is satisfied, or the related sales occur.

During each of the three months ended March 31, 2020 and 2019, the Company recognized $1.1 million and $1.2 million, respectively, in license revenue 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.

Business Combination

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Business Combination

5. Business Combination

On December 12, 2018, the Company completed the Merger with Keryx. Keryx’s proprietary product, Auryxia, is approved by the FDA for two indications: (1) the control of serum phosphorus levels in adult patients with DD-CKD and (2) the treatment of iron deficiency anemia in adult patients with NDD-CKD.

Pursuant to the terms and conditions of the Merger Agreement, each outstanding Keryx Share, excluding the Baupost Additional Shares, as defined below, and each outstanding Keryx equity award were converted into Akebia Shares and substantially similar Akebia equity awards, respectively, at an exchange ratio of 0.37433 for a total fair value consideration of $527.8 million consisting of the following (in thousands):

Fair value of 57,773,090 Akebia Shares	$	516,492
Fair value of 602,752 Akebia RSUs		304
Fair value of 3,967,290 Akebia stock options		10,958
Total consideration	$	527,754

Immediately prior to the Merger, Baupost Group Securities, L.L.C., or Baupost, agreed to convert its $164.7 million of Keryx’s Convertible Notes into 35,582,335 Keryx Shares, in accordance with the terms of the governing indenture agreement, in exchange for an additional 4,000,000 Keryx Shares, or the Baupost Additional Shares. The aggregate 39.6 million Keryx Shares were then converted into Akebia Shares at the 0.37433 exchange ratio. The fair value of the Baupost Additional Shares, on an as-converted basis, of $13.4 million has been excluded from the purchase price and recorded within selling, general and administrative expenses in the Company’s consolidated financial statements, as the issuance of those shares by Keryx is considered to be a separate transaction under ASC 805, Business Combinations, since it was entered into by or on behalf of the acquirer or primarily for the benefit of the acquirer or the combined entity.

The Company allocated the $527.8 million purchase price to the identifiable assets acquired and liabilities assumed in the business combination at their fair values as of December 12, 2018 as follows (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

In performing the purchase price allocation, the Company considered, among other factors, the intended future use of acquired assets, analysis of historical financial performance and estimates of future performance of Keryx’s business.

As part of the purchase price allocation, the Company identified developed product rights for Auryxia as the primary intangible asset. The fair value of the developed product rights for Auryxia was determined using the multi-period excess earnings method which is a variation of the income approach, and is a valuation technique that provides an estimate of the fair value of an asset based on the principle that the value of an intangible asset is equal to the present value of the incremental after-tax cash flows attributable to the asset, after taking charges for the use of other assets employed by the business. Key estimates and assumptions used in this model were projected revenues and expenses related to the asset, estimated contributory asset charges, and a risk-adjusted discount rate of 20.0% used to calculate the present value of the future expected cash inflows from the asset. The intangible asset is being amortized on a straight-line basis over its estimated useful life, which for Auryxia is nine years.

The Company also identified an executory contract in the supply agreement between Keryx and BioVectra Inc., or BioVectra, which includes future firm purchase commitments. This executory contract was deemed to have an off-market element related to the amount of purchase commitments that exceed the current forecast and as such, the Company recorded a liability in purchase accounting. As of the acquisition date, the fair value of the off-market element was $29.5 million.

The goodwill represents the excess of the purchase price over the estimated fair value of net assets acquired. The factors contributing to the recognition of goodwill were based on several strategic and synergistic benefits that were expected to be realized from the Merger. These benefits included the expectation that the combined company would establish itself as a leading renal company with enhanced position and large market opportunity, synergistic utilization of Keryx’s commercial organization, and strengthening the combined company’s financial profile. Such goodwill is not deductible for tax purposes.

In connection with the Merger, the Company identified a deferred tax liability of $35.1 million as a result of the difference in the book basis and tax basis related to the identifiable inventory, other intangible assets, net and other liability. In determining the deferred tax liability to be recorded the Company elected to first consider the recoverability of the deferred tax assets acquired in the acquisition before considering the recoverability of the acquirer’s existing deferred tax assets.

Available for Sale Securities

3 Months Ended

Mar. 31, 2020

Investments Debt And Equity Securities [Abstract]

Available for Sale Securities

6. Available For Sale Securities

Cash, cash equivalents, and available for sale securities at March 31, 2020 and December 31, 2019 consisted of the following:

			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(in thousands)
March 31, 2020
Cash and cash equivalents	$	115,374	$	—	$	—	$	115,374
Total cash, cash equivalents, and available for sale securities	$	115,374	$	—	$	—	$	115,374

			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(in thousands)
December 31, 2019
Cash and cash equivalents	$	147,449	$	—	$	—	$	147,449
Available for sale securities:
Certificates of deposit	$	245	—		—		$	245
Total available for sale securities	$	245	$	—	$	—	$	245
Total cash, cash equivalents, and available for sale securities	$	147,694	$	—	$	—	$	147,694

The Company did not hold any available for sale securities at March 31, 2020. There were no realized gains or losses on available for sale securities for the three months ended March 31, 2019. Additionally, the Company did not have any available for sale securities that were in an unrealized loss position as of December 31, 2019.

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

7. Fair Value of Financial Instruments

The Company utilizes a portfolio management company for the valuation of the majority of its investments. This company is an independent, third-party vendor recognized to be an industry leader with access to market information that obtains or computes fair market values from quoted market prices, pricing for similar securities, recently executed transactions, cash flow models with yield curves and other pricing models. For valuations obtained from the pricing service, the Company performs due diligence to understand how the valuation was calculated or derived, focusing on the valuation technique used and the nature of the inputs.

Based on the fair value hierarchy, the Company classifies its cash equivalents and available for sale securities within Level 1 or Level 2. This is because the Company values its cash equivalents and available for sale securities using quoted market prices or alternative pricing sources and models utilizing market observable inputs.

Assets measured or disclosed at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 are summarized below:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(in thousands)
March 31, 2020
Assets:
Cash and cash equivalents	$	115,374	$	—	$	—	$	115,374
	$	115,374	$	—	$	—	$	115,374

Liabilities:
Derivative liability	$	—	$	—	$	1,740	$	1,740
	$	—	$	—	$	1,740	$	1,740

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(in thousands)
December 31, 2019
Assets:
Cash and cash equivalents	$	147,449	$	—	$	—	$	147,449
Certificates of deposit		—		245		—		245
	$	147,449	$	245	$	—	$	147,694

Liabilities:
Derivative liability	$	—	$	—	$	1,650	$	1,650
	$	—	$	—	$	1,650	$	1,650

The Company’s Loan Agreement with Pharmakon (see Note 11) contains certain provisions that change the underlying cash flows of the debt instrument, including a potential extension to the interest-only period dependent on both no event of default having occurred and continuing and on the Company achieving certain regulatory and revenue conditions. The Company also assessed the acceleration of the obligations under the Loan Agreement under an event of default. In addition, under certain circumstances, a default interest rate will apply on all outstanding obligations during the occurrence and continuance of an event of default. In accordance with ASC 815, the Company concluded that these features are not clearly and closely related to the host instrument, and represent a single compound derivative that is required to be re-measured at fair value on a quarterly basis.

The events of default include maintaining, on an annual basis, a minimum liquidity threshold starting in 2021, and on a quarterly basis, a minimum net sales threshold for Auryxia starting in the fourth quarter of 2020. The Company recorded a derivative liability related to the Company’s Loan Agreement with Pharmakon of $1.7 million as of both March 31, 2020 and December 31, 2019, respectively. The Company classified the derivative liability as a non-current liability on the unaudited condensed consolidated balance sheet as of March 31, 2020 and December 31, 2019. The estimated fair value of the derivative liability on both March 31, 2020 and December 31, 2019 was determined using a scenario-based approach and discounted cash flow model that includes principal and interest payments under various scenarios involving clinical development success for vadadustat and various cash flow assumptions. Probabilities surrounding clinical development success were derived using industry benchmarks. Should the Company’s assessment of the probabilities around these scenarios change, including for changes in market conditions, there could be a change to the fair value of the derivative liability.

The following table provides a roll-forward of the fair value of the derivative liability (in thousands):

Balance at December 31, 2019	$	1,650
Change in fair value of derivative liability, recorded as other expense		90
Balance at March 31, 2020	$	1,740

The Company had no other assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at March 31, 2020 and December 31, 2019.

Investment securities are exposed to various risks such as interest rate, market and credit risks. When the Company holds investment securities, due to the level of risk associated with certain investment securities and the level of uncertainty related to changes in the value of investment securities, the Company considers if changes in risks in the near term would result in material changes in the fair value of investments.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Inventory

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Inventory

8. Inventory

The components of inventory, inclusive of step-up as a result of bringing Keryx’s inventory onto Akebia’s books at fair value in connection with the Merger, are summarized as follows:

	March 31, 2020		December 31, 2019
	(in thousands)
Raw materials	$	1,841	$	2,278
Work in process		135,474		137,858
Finished goods		36,925		42,096
Total inventory	$	174,240	$	182,232

Long-term inventory, which primarily consists of raw materials and work in process, is included in other assets in the Company’s unaudited condensed consolidated balance sheets.

	March 31, 2020		December 31, 2019
	(in thousands)
Balance Sheet Classification:
Inventory	$	111,854	$	116,349
Other assets		62,386		65,883
Total inventory	$	174,240	$	182,232

Inventory amounts written down as a result of excess, obsolescence, scrap or other reasons and charged to cost of goods sold totaled $0.1 million and $1.7 million during the three months ended March 31, 2020 and 2019, respectively. If future sales of Auryxia are lower than expected, the Company may be required to write-down the value of such inventories. Inventory write-downs and losses on purchase commitments are recorded as a component of cost of sales in the unaudited condensed consolidated statement of operations.

Intangible Assets and Goodwill

3 Months Ended

Mar. 31, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

9. Intangible Assets and Goodwill

Intangible Assets

The following table presents the Company’s intangible assets at March 31, 2020 and December 31, 2019 (in thousands):

	March 31, 2020
	Gross Carrying Value		Accumulated Amortization			ASC 842 Adjustment			Total		Estimated useful life
Acquired intangible assets:
Developed product rights for Auryxia	$	329,130	$	(47,018	)	$	—		$	282,112	9 Years
Favorable lease		545		(5	)		(540	)		—	N/A
Total	$	329,675	$	(47,023	)	$	(540	)	$	282,112

	December 31, 2019
	Gross Carrying Value		Accumulated Amortization			ASC 842 Adjustment			Total		Estimated useful life
Acquired intangible assets:
Developed product rights for Auryxia	$	329,130	$	(37,918	)	$	—		$	291,212	9 Years
Favorable lease		545		(5	)		(540	)		—	N/A
Total	$	329,675	$	(37,923	)	$	(540	)	$	291,212

On December 12, 2018, the Company completed the Merger, whereby it acquired certain definite-lived intangible assets, including the developed product rights for Auryxia and a favorable lease. The Company amortizes its definite-lived intangible assets acquired as part of the Merger using the straight-line method, which is considered the best estimate of economic benefit, over its estimated useful life. As a result of the adoption of ASC 842 on January 1, 2019, the Company reclassed the remaining balance of the favorable lease intangible asset into the operating lease asset. The Company recorded $9.1 million in amortization expense related to the developed product rights for Auryxia during each of the three months ended March 31, 2020 and 2019. Estimated future amortization expense for the intangible asset as of March 31, 2020 is as follows (in thousands):

	Total
2020	$	27,302
2021		36,401
2022		36,402
2023		36,401
2024		36,402
Thereafter		109,204
	$	282,112

Goodwill

Goodwill was $55.1 million as of March 31, 2020 and December 31, 2019, derived as follows (in thousands):

Total Merger consideration	$	527,754
Less: Fair value of identified acquired assets and liabilities, net		(472,701	)
Goodwill	$	55,053

Goodwill is evaluated for impairment on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstances suggest that an impairment may exist.

Accrued Expenses

3 Months Ended

Mar. 31, 2020

Payables And Accruals [Abstract]

Accrued Expenses

10. Accrued Expenses

Accrued expenses as of March 31, 2020 and December 31, 2019 are as follows:

	March 31, 2020		December 31, 2019
	(in thousands)
Accrued clinical	$	54,581	$	61,815
Product revenue allowances		31,225		30,552
Accrued payroll		7,727		12,604
MTPC - Supply of Validation Drug Product		6,441		—
Lease liability		5,096		4,989
Professional fees		3,949		3,444
Accrued commercial manufacturing		2,694		2,680
Royalties		2,459		2,713
Accrued severance		452		725
Accrued other		10,263		9,549
Total accrued expenses	$	124,887	$	129,071

Debt

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Debt

11. Debt

Future principal payments on the Term Loans (as defined below) as of March 31, 2020 are as follows (in thousands):

	Principal
	Payments
	(in thousands)
2020	$	—
2021		—
2022		7,140
2023		30,354
2024		42,506
Thereafter		—
Total before unamortized discount and issuance costs		80,000
Less: unamortized discount and issuance costs		(3,928	)
Total term loans	$	76,072

Term Loans

On November 11, 2019, the Company, with Keryx as guarantor, entered into a loan agreement, or the Loan Agreement, with BioPharma Credit PLC as collateral agent and a lender, or the Collateral Agent, and BioPharma Credit Investments V (Master) LP as a lender, collectively with the Collateral Agent, Pharmakon, pursuant to which term loans in an aggregate principal amount of $100.0 million are made available to the Company in two tranches, subject to certain terms and conditions, or the Term Loans. The first tranche of $80.0 million, or Tranche A, was drawn on November 25, 2019, or the Tranche A Funding Date. The second tranche, available until December 31, 2020, allows the Company to borrow, at its option, an additional $20.0 million, or Tranche B, subject to the satisfaction of customary conditions. The date on which Tranche B is drawn, the Tranche B Funding Date, and each of the Tranche A Funding Date and the Tranche B Funding Date, a Funding Date.

Proceeds from the Term Loans may be used for general corporate purposes. The Company and Keryx entered into a Guaranty and Security Agreement with the Collateral Agent, or the Guaranty and Security Agreement, on the Tranche A Funding Date. Pursuant to the Guaranty and Security Agreement, the Company’s obligations under the Term Loans are unconditionally guaranteed by Keryx, or the Guarantee. Additionally, the obligations of the Company and Keryx under the Term Loans and the Guarantee are secured by a first priority lien on certain assets of the Company and Keryx, including Auryxia and certain related assets, cash, and certain equity interests held by the Company and Keryx, collectively the Collateral.

The Term Loans bear interest at a floating rate per annum equal to the three-month LIBOR rate plus 7.50%, subject to a 2.00% LIBOR floor and a 3.35% LIBOR cap, payable quarterly in arrears. The Term Loans will mature on the fifth anniversary of the Tranche A Funding Date, or the Maturity Date. The Company will repay the principal under the Term Loans in equal quarterly payments starting on the 33rd-month anniversary of the applicable Funding Date or, if certain conditions are met, it will have the option to repay the principal in equal quarterly payments starting on the 48th-month anniversary of the applicable Funding Date, or collectively the Amortization Schedule. Under certain circumstances, unless certain liquidity conditions are met, the Maturity Date may decrease by up to one year, and the Amortization Schedule may correspondingly commence up to one year earlier.

On the Tranche A Funding Date, the Company paid to Pharmakon a facility fee equal to 2.00% of the aggregate principal amount of the Term Loans, or $2.0 million, in addition to other expenses incurred by Pharmakon and reimbursed by the Company, or Lender Expenses. The Tranche A draw was $77.3 million, net of facility fee, Lender Expenses and issuance costs. The Loan Agreement permits voluntary prepayment at any time in whole or in part, subject to a prepayment premium. The prepayment premium would be 2.00% of the principal amount being prepaid prior to the third anniversary of the applicable Funding Date, 1.00% on or after the third anniversary, but prior to the fourth anniversary, of the applicable Funding Date, and 0.50% on or after the fourth anniversary of the applicable Funding Date but prior to the Maturity Date, and a make-whole premium on or prior to the second anniversary of the applicable Funding Date in an amount equal to foregone interest through the second anniversary of the applicable Funding Date. A change of control triggers a mandatory prepayment of the Term Loans.

The Loan Agreement contains customary representations, warranties, events of default and covenants of the Company and its subsidiaries, including maintaining, on an annual basis, a minimum liquidity threshold starting in 2021, and on a quarterly basis, a minimum net sales threshold for Auryxia starting in the fourth quarter of 2020. If an event of default occurs and is continuing under the Loan Agreement, the Collateral Agent is entitled to take enforcement action, including acceleration of amounts due under the Loan Agreement. Under certain circumstances, a default interest rate will apply on all outstanding obligations during the occurrence and continuance of an event of default. As of March 31, 2020 and December 31, 2019, the Company determined that no events of default had occurred.

The Company assessed the terms and features of the Loan Agreement in order to identify any potential embedded features that would require bifurcation or any beneficial conversion feature. As part of this analysis, the Company assessed the economic characteristics and risks of the Loan Agreement, including put and call features. The terms and features assessed include a potential extension to the interest-only period dependent on both no event of default having occurred and continuing and on the Company achieving certain regulatory and revenue conditions. The Company also assessed the acceleration of the obligations under the Loan Agreement under an event of default. In addition, under certain circumstances, a default interest rate will apply on all outstanding obligations during the occurrence and continuance of an event of default. In accordance with ASC 815, the Company concluded that these features are not clearly and closely related to the host instrument, and represent a single compound derivative that is required to be re-measured at fair value on a quarterly basis.

During the three months ended March 31, 2020, the Company recognized approximately $2.2 million of interest expense related to the Loan Agreement.

Warrant

3 Months Ended

Mar. 31, 2020

Warrant Disclosure [Abstract]

Warrant

12. Warrant

In connection with the Janssen Agreement, in February 2017 the Company issued a warrant to purchase 509,611 shares of the Company’s common stock at an exercise price of $9.81 per share. The warrant was fully vested upon issuance and is exercisable in whole or in part, at any time prior to February 9, 2022. The warrant satisfied the equity classification criteria of ASC 815, and is therefore classified as an equity instrument. The fair value at issuance of $3.4 million was calculated using the Black Scholes option pricing model and was charged to research and development expense as it represented consideration for a license for which the underlying intellectual property was deemed to have no alternative future use. As of March 31, 2020, the warrant remains outstanding and expires on February 9, 2022.

Stockholders' Equity

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Stockholders' Equity

13. Stockholders’ Equity

Authorized and Outstanding Capital Stock

As of March 31, 2020, the authorized capital stock of the Company included 175,000,000 shares of common stock, par value $0.00001 per share, of which 130,251,440 and 121,674,568 shares were issued and outstanding at March 31, 2020 and December 31, 2019, respectively; and 25,000,000 shares of undesignated preferred stock, par value $0.00001 per share, of which no shares were issued and outstanding at March 31, 2020 and December 31, 2019.

At-the-Market Facility

On November 12, 2019, the Company entered into an Amended and Restated Controlled Equity Offering^SM Sales Agreement with Cantor Fitzgerald & Co. for the offer and sale of common stock at the then current market prices in amounts to be determined from time to time. Also, on November 12, 2019, the Company filed a prospectus supplement pursuant to which it was able to offer and sell up to $75.0 million its common stock at the then current market prices from time to time. In December 2019, the Company commenced sales under this program. Through December 31, 2019, the Company sold 2,684,392 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $16.8 million. During the three months ended March 31, 2020, the Company sold 7,973,967 shares of common stock under this program with net proceeds (after deducting commissions and other offering expenses) of $56.7 million. On March 12, 2020, the Company filed an additional prospectus supplement, pursuant to which it is able to offer and sell up to $65.0 million in its common stock at current market prices from time to time. During the three months ended March 31, 2020 and through the date of this Quarterly Report on Form 10-Q, the Company did not sell any shares of common stock pursuant to the March 12, 2020 prospectus supplement.

Equity Plans

On February 28, 2014, the Company’s Board of Directors adopted its 2014 Incentive Plan and its 2014 Employee Stock Purchase Plan, or the 2014 ESPP, which were subsequently approved by its shareholders and became effective upon the closing of the Company’s initial public offering on March 25, 2014. The Company’s 2014 Incentive Plan was subsequently amended on December 11, 2018, which amendment did not require shareholder approval. The Company’s 2014 Incentive Plan, as amended, is referred to as the 2014 Plan. The 2014 Plan replaced the Company’s Amended and Restated 2008 Equity Incentive Plan, or the 2008 Plan; however, options or other awards granted under the 2008 Plan prior to the adoption of the 2014 Plan that have not been settled or forfeited remain outstanding and effective. On June 6, 2019, the Company’s shareholders approved the Amended and Restated 2014 Employee Stock Purchase Plan, or the ESPP. In May 2016, the Company’s Board of Directors approved an inducement award program that was separate from the Company’s equity plans and which, consistent with Nasdaq Listing Rule 5635(c)(4), did not require shareholder approval, or the Inducement Award Program. During the three months ended March 31, 2020, the Company granted 299,450 options to purchase shares of the Company’s common stock to new hires under the Inducement Award Program, of which all 299,450 options to purchase Akebia Shares remained outstanding at March 31, 2020.

The 2014 Plan allows for the granting of stock options, stock appreciation rights, or SARs, restricted stock, unrestricted stock, RSUs, performance awards and other awards convertible into or otherwise based on shares of the Company’s common stock. Dividend equivalents may also be provided in connection with an award under the 2014 Plan. The Company’s employees, officers, directors and consultants and advisors are eligible to receive awards under the 2014 Plan. The Company initially reserved 1,785,000 shares of its common stock for the issuance of awards under the 2014 Plan. The 2014 Plan provides that the number of shares reserved and available for issuance under the 2014 Plan will automatically increase annually on January 1 of each calendar year, by an amount equal to three percent (3%) of the number of Akebia Shares outstanding on a fully diluted basis as of the close of business on the immediately preceding December 31, or the 2014 Plan Evergreen Provision. The Company’s Board of Directors may act prior to January 1 of any year to provide that there will be no automatic increase in the number of Akebia Shares available for grant under the 2014 Plan for that year (or that the increase will be less than the amount that would otherwise have automatically been made). On December 12, 2018, in connection with the consummation of the Merger, the Company assumed outstanding and unexercised options to purchase Keryx Shares, as adjusted by the Exchange Multiplier pursuant to the terms of the Merger Agreement, under the following Keryx equity plans, or the Keryx Equity Plans: the Keryx 1999 Share Option Plan, the Keryx 2004 Long-Term Incentive Plan, the Keryx 2007 Incentive Plan, the Keryx Amended and Restated 2013 Incentive Plan, and the Keryx 2018 Equity Incentive Plan, or the Keryx 2018 Plan. In addition, the number of Keryx Shares available for issuance under the Keryx 2018 Plan, as adjusted by the Exchange Multiplier pursuant to the terms of the Merger Agreement, may be used for awards granted by the Company under its 2014 Plan, or the Assumed Shares, provided that the Company uses the Assumed Shares for individuals who were not employees or directors of the Company prior to the consummation of the Merger. During the three months ended March 31, 2020, the Company granted 1,714,800 options to purchase Akebia Shares to employees under the 2014 Plan, 299,450 options to purchase Akebia Shares to employees under the Inducement Award Program, 2,350,400 Akebia RSUs to employees under the 2014 Plan, 479,000 Akebia PSUs to employees under the 2014 plan, no options to purchase Akebia Shares to directors under the 2014 Plan, and no Akebia RSUs to directors under the 2014 Plan.

The ESPP provides for the issuance of options to purchase shares of the Company’s common stock to participating employees at a discount to their fair market value. As noted above, the Company’s stockholders approved the ESPP, which amended and restated the Company’s 2014 ESPP, on June 6, 2019. The maximum aggregate number of shares at March 31, 2020 of the Company’s common stock available for future issuance under the ESPP is 5,600,968. Under the ESPP, each offering period is six months, at the end of which employees may purchase shares of the Company’s common stock through payroll deductions made over the term of the offering. The per-share purchase price at the end of each offering period is equal to the lesser of eighty-five percent (85%) of the closing price of the Company’s common stock at the beginning or end of the offering period.

Shares Reserved for Future Issuance

The Company has reserved for future issuance the following number of shares of common stock:

	March 31, 2020		December 31, 2019
Common stock options and RSUs outstanding ⁽¹⁾		16,107,645		12,195,031
Shares available for issuance under Akebia equity plans ⁽²⁾		2,740,708		2,983,256
Warrant to purchase common stock		509,611		509,611
Shares available for issuance under the ESPP ⁽³⁾		5,600,968		5,715,992
Total		24,958,932		21,403,890

⁽¹⁾	^{Includes awards granted under the 2014 Plan and the Inducement Award Program and awards issued in connection with the Merger.}

⁽²⁾

On January 1, 2020, January 1, 2019 and January 1, 2018, the shares reserved for future grants under the 2014 Plan increased by 4,031,376, 3,801,198 and 1,575,329 shares, respectively, pursuant to the 2014 Plan Evergreen Provision. On December 12, 2018, the shares reserved for future grants under the 2014 Plan increased by 2,323,213 shares as a result of the Company’s addition of the Assumed Shares to the 2014 Plan. On January 30, 2019, the Company’s Board of Directors approved 3,150,000 shares for issuance as option awards in fiscal year 2019 under the Inducement Award Program.

⁽³⁾

On June 6, 2019, the shares reserved for future issuance under the ESPP increased by 5,200,000 shares upon shareholder approval of the Amended and Restated 2014 Employee Stock Purchase Plan. On February 28, 2018 and February 28, 2017, the shares reserved for future issuance under the 2014 ESPP remained unchanged. There were no increases in the shares reserved for future issuance pursuant to the evergreen provision under the ESPP in 2017 and 2018 as the maximum aggregate number of shares available for purchase under the 2014 ESPP had reached its cap of 739,611 on February 28, 2016.

Stock-Based Compensation

Stock Options

Service-Based Stock Options

On February 28, 2020, as part of the Company’s annual grant of equity, the Company issued 1,714,800 stock options to employees. In addition, the Company issues stock options to directors, new hires and occasionally to other employees not in connection with the annual grant process. Options granted by the Company 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 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 generally expire ten years after the date of grant. The Company recorded approximately $1.6 million and $1.1 million of stock-based compensation expense related to stock options during the three months ended March 31, 2020 and 2019.

Performance-Based Stock Options

On December 12, 2018, pursuant to the Merger Agreement, each outstanding and unexercised performance-based option to acquire Keryx Shares granted under a Keryx equity plan converted into a service-based option or performance-based option to acquire Akebia Shares, with the number of shares and exercise price adjusted by the Exchange Multiplier. As a result, the Company issued 233,954 performance-based options related to the Merger. The Company did not have any performance-based options outstanding in fiscal year 2018 prior to the Merger. The Company did not issue any performance-based options during the three months ended March 31, 2020 and 2019. As of March 31, 2020, the Company had no performance-based options outstanding compared to 46,790 performance-based options outstanding at December 31, 2019. The potential range of shares issuable pursuant to the Company’s performance-based options range from 0% to 100% of the target shares based on financial measures. Performance-based options vest up to 50% upon achievement of performance condition and up to 50% one year following achievement of the performance condition.

Restricted Stock Units

Service-Based Restricted Stock Units

On February 28, 2020, as part of the Company’s annual grant of equity, the Company issued 2,268,000 restricted stock units, or RSUs, to employees. In addition, the Company occasionally issues RSUs not in connection with the annual grant process to employees. Generally, RSUs granted by the Company vest in one of the following ways: (i) 100% of each RSU grant vests on either the first or the third anniversary of the grant date, (ii) one third of each RSU grant vests on the first, second and third anniversaries of the grant date, subject, in each case, to the individual’s continued service through the applicable vesting date, or (iii) 50% of each RSU grant vests on the first anniversary and 25% of each RSU grant vests in 6 months increment after the one year anniversary of the grant date. 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 on a straight-line basis over the vesting period. The Company recorded approximately $3.1 million and $0.9 million of stock-based compensation expense related to employee RSUs during the three months ended March 31, 2020 and 2019, respectively.

Performance-Based Restricted Stock Units

On February 28, 2020, as part of the Company’s annual grant of equity, the Company issued 479,000 performance-based restricted stock units, or PSUs, to the Company’s executives. The PSUs granted by the Company vest in connection with the achievement of specified commercial and regulatory milestones. The PSUs also 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 and regulatory milestones. The Company recorded approximately $0.1 million and $0 of stock-based compensation expense related to employee PSUs during the three months ended March 31, 2020 and 2019, respectively.

Employee Stock Purchase Plan

The first offering period under the ESPP opened on January 2, 2015. The Company issued 115,024 shares during the three months ended March 31, 2020. The Company recorded approximately $0.2 million and $48,000 of stock-based compensation expense related to the ESPP during the three months ended March 31, 2020 and 2019, respectively.

Compensation Expense Summary

The Company has classified its stock-based compensation expense related to share-based awards as follows:

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Research and development	$	1,542	$	878
Selling, general and administrative		3,374		1,216
Total	$	4,916	$	2,094

Compensation expense by type of award:

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Stock options	$	1,617	$	1,112
Restricted stock units		3,142		934
Employee stock purchase plan		157		48
Total	$	4,916	$	2,094

Commitments and Contingencies

3 Months Ended

Mar. 31, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

14. Commitments and Contingencies

Leases

The Company leases approximately 65,167 square feet of office and lab space in Cambridge, Massachusetts under a lease which was most recently amended in April 2018, collectively the Cambridge Lease. Under the Third Amendment to the Cambridge Lease, or the Third Amendment, executed in July 2016, total monthly lease payments under the initial base rent were approximately $242,000 and are subject to annual rent escalations. In addition to such annual rent escalations, base rent payments for a portion of said premises commenced on January 1, 2017 in the monthly amount of approximately $22,000. The Fourth Amendment to the Cambridge Lease, executed in May 2017, provided additional storage space to the Company and did not impact rent payments. In April 2018, the Company entered into a Fifth Amendment to the Cambridge Lease, or the Fifth Amendment, for an additional 19,805 square feet of office space on the 12^th floor. Monthly lease payments for the existing 45,362 square feet of office and lab space, under the Third Amendment, remain unchanged. The new space leased by the Company was delivered in September 2018 and additional monthly lease payments of approximately $135,000 commenced in February 2019 and are subject to annual rent escalations, which commenced in September 2019.

Additionally, as a result of the Merger, the Company now has a lease for 27,300 square feet of office space in Boston, Massachusetts, or the Boston Lease, which expires in February 2023. The total monthly lease payments under the base rent are approximately $136,000 and are subject to annual rent escalations.

The term of the Cambridge Lease with respect to the office space expires on September 11, 2026, with one five-year extension option available. The term of the Cambridge Lease with respect to the lab space expires on November 30, 2021, with an extension option for one additional period of two years. The term of the Boston Lease office space expires on February 28, 2023, with an extension option for one additional five-year extension option available. The renewal options in the Company’s real estate leases were not included in the calculation of the operating lease assets and operating lease liabilities as the renewal is not reasonably certain. The lease agreements do not contain residual value guarantees. Operating lease costs for each of the three months ended March 31, 2020 and 2019 were $1.7 million and cash paid for amounts included in the measurement of operating lease liabilities for each of the three months ended March 31, 2020 and 2019 were $1.7 million.

In September 2019, Keryx entered into an agreement to sublease the Boston office space to Foundation Medicine, Inc., or Foundation. The sublease is subject and subordinate to the Boston Lease between Keryx and the landlord. The term of the sublease commenced on October 16, 2019, upon receipt of the required consent from the landlord for the sublease agreement, and expires on February 28, 2023. Foundation is obligated to pay Keryx rent that approximates the rent due from Keryx to its landlord with respect to the Boston Lease. Sublease rental income is recorded to other income. Keryx continues to be obligated for all payment terms pursuant to the Boston Lease, and the Company will guaranty Keryx’s obligations under the sublease. Keryx recorded $0.4 million in sublease rental income from Foundation during the three months ended March 31, 2020.

The Company has not entered into any material short-term leases or financing leases as of March 31, 2020.

The total security deposit in connection with the Cambridge Lease is $1.6 million as of March 31, 2020. Additionally, the Company recorded $0.8 million for the security deposit under the Boston Lease. Both the Cambridge Lease and the Boston Lease have their security deposits in the form of a letter of credit, all of which are included in prepaid expenses and other current assets in the Company’s unaudited condensed consolidated balance sheets as of March 31, 2020.

As of March 31, 2020, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter are as follows:

			Lease Payments
	Operating		to be Received		Net Operating
	Leases		from Sublease		Lease Payments
	(in thousands)
Remaining 2020	$	4,820	$	1,328	$	3,492
2021		7,064		1,797	$	5,267
2022		6,735		1,824	$	4,911
2023		5,347		307	$	5,040
2024		5,116		—	$	5,116
Thereafter		8,818		—	$	8,818
Total	$	37,900	$	5,256	$	32,644

In arriving at the operating lease liabilities, the Company applied incremental borrowing rates ranging from 5.91% to 6.94%, which were based on the remaining lease term at the date of adoption of ASC 842, which was January 1, 2019. As of March 31, 2020, the remaining lease terms ranged from 1.67 years to 6.45 years. As of March 31, 2020, the following represents the difference between the remaining undiscounted minimum rental commitments under non-cancelable leases and the operating lease liabilities:

	Operating
	Leases
	(in thousands)
	Total
Undiscounted minimum rental commitments	$	37,900
Present value adjustment using incremental borrowing rate		(6,596	)
Operating lease liabilities	$	31,304

Manufacturing Agreements

As part of the Merger, the Company retained Keryx’s commercial supply agreements with BioVectra and Siegfried Evionnaz SA, or Siegfried, to supply commercial drug substance for Auryxia.

Pursuant to the Manufacture and Supply Agreement with BioVectra and the Product Manufacture and Supply and Facility Construction Agreement with BioVectra, collectively the BioVectra Agreement, the Company has agreed to purchase a minimum quantity of drug substance of Auryxia at predetermined prices. The price per kilogram will decrease with an increase in quantity above the minimum purchase quantity. In addition, the BioVectra Agreement contained contingent milestone payments for capital developments in connection with construction of an expansion of the site of the BioVectra production facility for the manufacture of drug substance for Auryxia. These milestone payments were achieved by BioVectra and fully recorded prior to the Merger. These milestone payments are recorded in other assets and amortized into drug substance as inventory is released to the Company. The term of the BioVectra Agreement expires in late 2026, after which, it automatically renews for specified terms until terminated. The Company may terminate the BioVectra Agreement prior to the expiration of the contract term, which could result in early termination fee. As of March 31, 2020, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $135.3 million through the end of the contract term.

As part of purchase accounting, the Company identified an executory contract in the BioVectra Agreement, which includes future firm purchase commitments. This executory contract was deemed to have an off-market element related to the amount of purchase commitments that exceed the current forecast. As a result, the Company recorded a liability of $29.5 million in purchase accounting, as of the acquisition date for the fair value of the off-market element. Through March 31, 2020, the Company recorded $0.9 million in accretion expense related to the present value discount associated with this liability.

Pursuant to the Siegfried Master Manufacturing Services and Supply Agreement, or the Siegfried Agreement, the Company has agreed to purchase a minimum quantity of drug substance of Auryxia at predetermined prices. The price per kilogram will decrease with an increase in quantity above the minimum purchase quantity. The term of the Siegfried Agreement expires on December 31, 2021, after which, it automatically renews for one-year terms until terminated. The Siegfried Agreement provides for certain termination rights prior to December 31, 2021 for the Company. As of March 31, 2020, the Company is required to purchase a minimum quantity of drug substance for Auryxia annually at a total cost of approximately $53.3 million through the year ending December 31, 2021.

On April 9, 2019, the Company entered into a Supply Agreement with Esteve Química, S.A., or Esteve, or the Esteve Agreement. The Esteve Agreement includes the terms and conditions under which Esteve will manufacture vadadustat drug substance, or API, for commercial use.

Pursuant to the Esteve Agreement, the Company will provide rolling forecasts to Esteve on a quarterly basis, or the Forecast. The Forecast will reflect the Company’s needs for API produced by Esteve over a certain number of months, represented as a quantity of API per calendar quarter. The parties have agreed to a volume-based pricing structure under the Esteve Agreement. The Esteve Agreement has an initial term of four years, beginning April 9, 2019 and ending April 9, 2023. As of March 31, 2020, the Company had a minimum commitment with Esteve for $6.0 million through the first quarter of 2021. Subsequent to March 31, 2020, the minimum commitment with Esteve increased to $13.6 million through the second quarter of 2021.

On March 11, 2020, the Company entered into a Supply Agreement with Patheon Inc., or Patheon, or the Patheon Agreement. The Patheon Agreement includes the terms and conditions under which Patheon will manufacture vadadustat drug product for commercial use. Additionally, on April 2, 2020, the Company entered into a Supply Agreement with STA Pharmaceutical Hong Kong Limited, a subsidiary of Wuxi AppTec, or WuXi STA, or the WuXi STA Agreement. The WuXi STA Agreement includes the terms and conditions under which WuXi STA will manufacture vadadustat API for commercial use. There are no minimum commitments under either supply agreement as of March 31, 2020.

Other Third Party Contracts

Under the Company’s agreement with IQVIA to provide contract research organization services for the PRO₂TECT and INNO₂VATE programs, the total remaining contract costs as of March 31, 2020 were approximately $41.1 million, of which Otsuka reimburses a significant portion back to the Company. The estimated period of substantive performance for the committed work with IQVIA is through the end of 2020. The Company also contracts with various other organizations to conduct research and development activities with remaining contract costs to the Company of approximately $67.4 million at March 31, 2020. The scope of the services under these research and development 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

From time to time, the Company may become subject to legal proceedings and claims which arise in the ordinary course of its business. Consistent with ASC 450, Contingencies, the Company’s policy is to record a liability if a loss in a significant legal dispute is considered probable and an amount can be reasonably estimated. 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. The Company’s estimates change as litigation progresses and new information comes to light. Changes in Company estimates could have a material impact on the Company’s results and financial position. As of March 31, 2020, the Company does not have any significant legal disputes that require a loss liability to be recorded. The Company continually monitors the need for a loss liability for litigation and related matters.

Net Loss per Share

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Net Loss per Share

15. Net Loss per Share

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:

	As of March 31,
	2020		2019
Warrant		509,611		509,611
Outstanding stock options		9,371,675		10,261,827
Unvested restricted stock units		6,735,970		2,058,687
Total		16,617,256		12,830,125

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2020

New Accounting Pronouncements

Basis of Presentation

New Accounting Pronouncements – Recently Adopted

•

This standard became effective for the Company on January 1, 2020, and did not have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

New Accounting Pronouncements – Not Yet Adopted

Derivative Financial Instruments

Use of Estimates

Credit Losses

Cash, Cash Equivalents, and Restricted Cash

	March 31, 2020		March 31, 2019
Cash and cash equivalents	$	115,374	$	62,741
Prepaid expenses and other current assets		395		263
Other assets		2,039		2,192
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	117,808	$	65,196

Property and Equipment

The following is the summary of property and equipment and related accumulated depreciation as of March 31, 2020 and December 31, 2019.

	Useful Life	March 31, 2020			December 31, 2019
		(in thousands)
Computer equipment and software	3	$	1,010		$	1,010
Furniture and fixtures	5 - 7		2,086			2,086
Equipment	7		2,451			2,451
Leasehold improvements	Shorter of the useful life or remaining lease term (10 years)		8,497			8,497
			14,044			14,044
Less accumulated depreciation			(4,189	)		(3,664	)
Net property and equipment		$	9,855		$	10,380

Depreciation expense was approximately $0.5 million and $0.4 million for the three months ended March 31, 2020 and 2019, respectively.

Inventories

Inventory

Debt

Revenue Recognition

(i)

identify the contract(s) with a customer;

(ii)

identify the performance obligations in the contract;

(iii)

determine the transaction price;

(iv)

allocate the transaction price to the performance obligations in the contract; and

(v)

recognize revenue when (or as) the entity satisfies a performance obligation.

Product Revenue, Net

Reserves for Variable Consideration

Collaboration Revenues

Licenses of Intellectual Property

Milestone Payments

Manufacturing Supply Services

Royalties

Collaborative Arrangements

Intangible Assets

The Company maintains a definite-lived intangible asset related to developed product rights for Auryxia, which was acquired on December 12, 2018 as part of the Merger.

Goodwill

Fair Value of Financial Instruments

•

Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

•

Level 2 – Valuations based on quoted prices for similar assets or liabilities in markets that are not active, or for which all significant inputs are observable, either directly or indirectly.

•

Level 3 – Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement and unobservable.

The Company’s other financial instruments mainly consists of debt (see Note 11).

Net Loss per Share

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2020

Reconciliation of Cash, Cash Equivalents, and Restricted Cash

	March 31, 2020		March 31, 2019
Cash and cash equivalents	$	115,374	$	62,741
Prepaid expenses and other current assets		395		263
Other assets		2,039		2,192
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	117,808	$	65,196

Summary of Property and Equipment and Related Accumulated Depreciation

The following is the summary of property and equipment and related accumulated depreciation as of March 31, 2020 and December 31, 2019.

	Useful Life	March 31, 2020			December 31, 2019
		(in thousands)
Computer equipment and software	3	$	1,010		$	1,010
Furniture and fixtures	5 - 7		2,086			2,086
Equipment	7		2,451			2,451
Leasehold improvements	Shorter of the useful life or remaining lease term (10 years)		8,497			8,497
			14,044			14,044
Less accumulated depreciation			(4,189	)		(3,664	)
Net property and equipment		$	9,855		$	10,380

Product Revenue and Reserves for Variable Consideration (Tables)

3 Months Ended

Mar. 31, 2020

Revenue From Contract With Customer [Abstract]

Summary of Product Revenue Allowance and Reserve Categories

The following table summarizes activity in each of the product revenue allowance and reserve categories for the three months ended March 31, 2020 and 2019 (in thousands):

	Chargebacks and Discounts			Rebates, Fees and other Deductions			Returns			Total
Balance at December 31, 2019	$	738		$	30,552		$	253		$	31,543
Current provisions related to sales in current year		2,250			30,519			1,053			33,822
Adjustments related to prior year sales		82			32			—			114
Credits/payments made		(2,353	)		(29,024	)		(1,051	)		(32,428	)
Balance at March 31, 2020	$	717		$	32,079		$	255		$	33,051

Balance at December 31, 2018	$	516		$	22,861		$	360		$	23,737
Current provisions related to sales in current year		1,486			17,476			870			19,832
Adjustments related to prior year sales		—			156			—			156
Credits/payments made		(1,495	)		(17,301	)		(947	)		(19,743	)
Balance at March 31, 2019	$	507		$	23,192		$	283		$	23,982

License, Collaboration and Other Significant Agreements (Tables)

3 Months Ended

Mar. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Revenues Recognized From License, Collaboration and Other Significant Agreements

	Three Months Ended March 31,
	2020		2019
License, Collaboration and Other Revenue:	(in thousands)
Otsuka U.S. Agreement	$	38,577	$	26,223
Otsuka International Agreement		19,370		21,956
Total Proportional Performance Revenue	$	57,947	$	48,179
JT and Torii		1,126		1,228
MTPC Other Revenue		196		148
Total License, Collaboration and Other Revenue	$	59,269	$	49,555

Deferred Revenues Balance

	March 31, 2020
	Short-Term		Long-Term		Total
Deferred Revenue:	(in thousands)
Otsuka U.S. Agreement	$	19,090	$	26,854	$	45,944
Otsuka International Agreement		11,807		11,266		23,073
MTPC - Supply of Validation Drug Product		3,989		—		3,989
Vifor Agreement		—		4,679		4,679
Total	$	34,886	$	42,799	$	77,685

Schedule of Changes in Contract Assets and Liabilities

The following table presents changes in the Company’s contract assets and liabilities during the three months ended March 31, 2020 and 2019 (in thousands):

Three Months Ended March 31, 2020	Balance at Beginning of Period		Additions		Deductions			Balance at End of Period
Contract assets:
Accounts receivable⁽¹⁾	$	15,822	$	71,639	$	(2,895	)	$	84,566
Prepaid expenses and other current assets	$	—	$	546	$	—		$	546
Contract liabilities:
Deferred revenue	$	72,950	$	65,209	$	(60,474	)	$	77,685
Accrued expenses and other current liabilities	$	—	$	615	$	—		$	615

Three Months Ended March 31, 2019
Contract assets:
Accounts receivable⁽¹⁾	$	1,587	$	30,387	$	(2,041	)	$	29,933
Contract liabilities:
Deferred revenue	$	112,689	$	41,962	$	(48,180	)	$	106,471
Accounts payable	$	13,492	$	—	$	(13,492	)	$	—

⁽¹⁾

Schedule of Revenue Recognized Resulting from Changes in Contract Asset and Contract Liability

	Three Months Ended March 31,
Revenue Recognized in the Period from:	2020		2019
Amounts included in deferred revenue at the beginning of the period	$	10,130	$	45,179
Performance obligations satisfied in previous periods	$	—	$	1,254

Business Combination (Tables)

3 Months Ended

Mar. 31, 2020

Business Combinations [Abstract]

Summary of Total Fair Value Consideration

Fair value of 57,773,090 Akebia Shares	$	516,492
Fair value of 602,752 Akebia RSUs		304
Fair value of 3,967,290 Akebia stock options		10,958
Total consideration	$	527,754

Summary of Purchase Price of Identifiable Assets Acquired and Liabilities Assumed

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

Available for Sale Securities (Tables)

3 Months Ended

Mar. 31, 2020

Investments Debt And Equity Securities [Abstract]

Summary of Cash Cash Equivalents and Available for Sale Securities at Fair Value

Cash, cash equivalents, and available for sale securities at March 31, 2020 and December 31, 2019 consisted of the following:

			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(in thousands)
March 31, 2020
Cash and cash equivalents	$	115,374	$	—	$	—	$	115,374
Total cash, cash equivalents, and available for sale securities	$	115,374	$	—	$	—	$	115,374

			Gross		Gross
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(in thousands)
December 31, 2019
Cash and cash equivalents	$	147,449	$	—	$	—	$	147,449
Available for sale securities:
Certificates of deposit	$	245	—		—		$	245
Total available for sale securities	$	245	$	—	$	—	$	245
Total cash, cash equivalents, and available for sale securities	$	147,694	$	—	$	—	$	147,694

Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2020

Fair Value Disclosures [Abstract]

Assets Measured or Disclosed at Fair Value on Recurring Basis

Assets measured or disclosed at fair value on a recurring basis as of March 31, 2020 and December 31, 2019 are summarized below:

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(in thousands)
March 31, 2020
Assets:
Cash and cash equivalents	$	115,374	$	—	$	—	$	115,374
	$	115,374	$	—	$	—	$	115,374

Liabilities:
Derivative liability	$	—	$	—	$	1,740	$	1,740
	$	—	$	—	$	1,740	$	1,740

	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
	(in thousands)
December 31, 2019
Assets:
Cash and cash equivalents	$	147,449	$	—	$	—	$	147,449
Certificates of deposit		—		245		—		245
	$	147,449	$	245	$	—	$	147,694

Liabilities:
Derivative liability	$	—	$	—	$	1,650	$	1,650
	$	—	$	—	$	1,650	$	1,650

Schedule of Fair Value Derivative Liability

The following table provides a roll-forward of the fair value of the derivative liability (in thousands):

Balance at December 31, 2019	$	1,650
Change in fair value of derivative liability, recorded as other expense		90
Balance at March 31, 2020	$	1,740

Inventory (Tables)

3 Months Ended

Mar. 31, 2020

Inventory Disclosure [Abstract]

Components of Inventory

The components of inventory, inclusive of step-up as a result of bringing Keryx’s inventory onto Akebia’s books at fair value in connection with the Merger, are summarized as follows:

	March 31, 2020		December 31, 2019
	(in thousands)
Raw materials	$	1,841	$	2,278
Work in process		135,474		137,858
Finished goods		36,925		42,096
Total inventory	$	174,240	$	182,232

Long-term inventory, which primarily consists of raw materials and work in process, is included in other assets in the Company’s unaudited condensed consolidated balance sheets.

	March 31, 2020		December 31, 2019
	(in thousands)
Balance Sheet Classification:
Inventory	$	111,854	$	116,349
Other assets		62,386		65,883
Total inventory	$	174,240	$	182,232

Intangible Assets and Goodwill (Tables)

3 Months Ended

Mar. 31, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Intangible Assets

The following table presents the Company’s intangible assets at March 31, 2020 and December 31, 2019 (in thousands):

	March 31, 2020
	Gross Carrying Value		Accumulated Amortization			ASC 842 Adjustment			Total		Estimated useful life
Acquired intangible assets:
Developed product rights for Auryxia	$	329,130	$	(47,018	)	$	—		$	282,112	9 Years
Favorable lease		545		(5	)		(540	)		—	N/A
Total	$	329,675	$	(47,023	)	$	(540	)	$	282,112

	December 31, 2019
	Gross Carrying Value		Accumulated Amortization			ASC 842 Adjustment			Total		Estimated useful life
Acquired intangible assets:
Developed product rights for Auryxia	$	329,130	$	(37,918	)	$	—		$	291,212	9 Years
Favorable lease		545		(5	)		(540	)		—	N/A
Total	$	329,675	$	(37,923	)	$	(540	)	$	291,212

Schedule of Estimated Future Amortization Expense for Intangible Assets

Estimated future amortization expense for the intangible asset as of March 31, 2020 is as follows (in thousands):

	Total
2020	$	27,302
2021		36,401
2022		36,402
2023		36,401
2024		36,402
Thereafter		109,204
	$	282,112

Schedule of Goodwill

Goodwill was $55.1 million as of March 31, 2020 and December 31, 2019, derived as follows (in thousands):

Total Merger consideration	$	527,754
Less: Fair value of identified acquired assets and liabilities, net		(472,701	)
Goodwill	$	55,053

Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2020

Payables And Accruals [Abstract]

Components of Accrued Expenses

Accrued expenses as of March 31, 2020 and December 31, 2019 are as follows:

	March 31, 2020		December 31, 2019
	(in thousands)
Accrued clinical	$	54,581	$	61,815
Product revenue allowances		31,225		30,552
Accrued payroll		7,727		12,604
MTPC - Supply of Validation Drug Product		6,441		—
Lease liability		5,096		4,989
Professional fees		3,949		3,444
Accrued commercial manufacturing		2,694		2,680
Royalties		2,459		2,713
Accrued severance		452		725
Accrued other		10,263		9,549
Total accrued expenses	$	124,887	$	129,071

Debt (Tables)

3 Months Ended

Mar. 31, 2020

Debt Disclosure [Abstract]

Schedule of Future Principal Payments on the Term Loans

Future principal payments on the Term Loans (as defined below) as of March 31, 2020 are as follows (in thousands):

	Principal
	Payments
	(in thousands)
2020	$	—
2021		—
2022		7,140
2023		30,354
2024		42,506
Thereafter		—
Total before unamortized discount and issuance costs		80,000
Less: unamortized discount and issuance costs		(3,928	)
Total term loans	$	76,072

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2020

Equity [Abstract]

Summary of Reserved Shares of Common Stock for Future Issuance

The Company has reserved for future issuance the following number of shares of common stock:

	March 31, 2020		December 31, 2019
Common stock options and RSUs outstanding ⁽¹⁾		16,107,645		12,195,031
Shares available for issuance under Akebia equity plans ⁽²⁾		2,740,708		2,983,256
Warrant to purchase common stock		509,611		509,611
Shares available for issuance under the ESPP ⁽³⁾		5,600,968		5,715,992
Total		24,958,932		21,403,890

⁽¹⁾	^{Includes awards granted under the 2014 Plan and the Inducement Award Program and awards issued in connection with the Merger.}

⁽²⁾

⁽³⁾

Stock-Based Compensation Expense Related to Share-Based Awards

The Company has classified its stock-based compensation expense related to share-based awards as follows:

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Research and development	$	1,542	$	878
Selling, general and administrative		3,374		1,216
Total	$	4,916	$	2,094

Schedule of Compensation Expense by Type of Award

Compensation expense by type of award:

	Three Months Ended
	March 31, 2020		March 31, 2019
	(in thousands)
Stock options	$	1,617	$	1,112
Restricted stock units		3,142		934
Employee stock purchase plan		157		48
Total	$	4,916	$	2,094

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2020

Commitments And Contingencies Disclosure [Abstract]

Schedule of Undiscounted Minimum Rental Commitments Under Non-cancelable Leases

As of March 31, 2020, undiscounted minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter are as follows:

			Lease Payments
	Operating		to be Received		Net Operating
	Leases		from Sublease		Lease Payments
	(in thousands)
Remaining 2020	$	4,820	$	1,328	$	3,492
2021		7,064		1,797	$	5,267
2022		6,735		1,824	$	4,911
2023		5,347		307	$	5,040
2024		5,116		—	$	5,116
Thereafter		8,818		—	$	8,818
Total	$	37,900	$	5,256	$	32,644

Schedule of Difference Between Undiscounted Minimum Rental Commitments Under Non-cancelable Leases and Operating Leases Liabilities

As of March 31, 2020, the following represents the difference between the remaining undiscounted minimum rental commitments under non-cancelable leases and the operating lease liabilities:

	Operating
	Leases
	(in thousands)
	Total
Undiscounted minimum rental commitments	$	37,900
Present value adjustment using incremental borrowing rate		(6,596	)
Operating lease liabilities	$	31,304

Net Loss per Share (Tables)

3 Months Ended

Mar. 31, 2020

Earnings Per Share [Abstract]

Anti-Dilutive Securities Excluded from Calculation of Diluted Net Loss per Share

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:

	As of March 31,
	2020		2019
Warrant		509,611		509,611
Outstanding stock options		9,371,675		10,261,827
Unvested restricted stock units		6,735,970		2,058,687
Total		16,617,256		12,830,125

Nature of Organization and Operations - Additional Information (Details)	3 Months Ended
	Mar. 31, 2020
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of months for operating plan sufficiently funded by cash resources	12 months

Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended
	Mar. 31, 2020 USD ($) Segment	Mar. 31, 2019 USD ($)
Summary Of Significant Accounting Policies [Line Items]
Number of operating segments \| Segment	1
Available for sale debt securities credit losses	$ 0
Depreciation expense	$ 500,000	$ 400,000
Intangible assets, estimated useful life	9 years
Remeasurements to property and equipment	$ 0
Fair Value, Inputs, Level 3
Summary Of Significant Accounting Policies [Line Items]
Assets impairments charges	0	0
Otsuka U.S. Agreement
Summary Of Significant Accounting Policies [Line Items]
Cost share costs for license agreement	500,000	300,000
Reimbursable by Otsuka	300,000	200,000
Cost share costs by partner for license agreement	400,000	400,000
Reimbursable to Otsuka	$ 200,000	$ 200,000
Minimum
Summary Of Significant Accounting Policies [Line Items]
Property, plant and equipment, Useful life	3 years
Maximum
Summary Of Significant Accounting Policies [Line Items]
Property, plant and equipment, Useful life	7 years

Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019	Mar. 31, 2019	Dec. 31, 2018
Summary Of Significant Accounting Policies [Line Items]
Cash and cash equivalents	$ 115,374	$ 147,449	$ 62,741
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	117,808	$ 149,804	65,196	$ 107,099
Prepaid Expenses and Other Current Assets
Summary Of Significant Accounting Policies [Line Items]
Restricted cash, current	395		263
Other Assets
Summary Of Significant Accounting Policies [Line Items]
Restricted cash, noncurrent	$ 2,039		$ 2,192

Summary of Significant Accounting Policies - Summary of Property and Equipment and Related Accumulated Depreciation (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Gross property, plant and equipment	$ 14,044	$ 14,044
Less accumulated depreciation	(4,189)	(3,664)
Net property and equipment	$ 9,855	10,380
Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	3 years
Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	7 years
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	3 years
Gross property, plant and equipment	$ 1,010	1,010
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Gross property, plant and equipment	$ 2,086	2,086
Furniture and fixtures \| Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	5 years
Furniture and fixtures \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	7 years
Equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	7 years
Gross property, plant and equipment	$ 2,451	2,451
Leasehold improvements
Property, Plant and Equipment [Line Items]
Leasehold improvements, Useful Life	Shorter of the useful life or remaining lease term (10 years)
Gross property, plant and equipment	$ 8,497	$ 8,497
Leasehold improvements \| Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Useful life	10 years

Product Revenue and Reserves for Variable Consideration - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Disaggregation Of Revenue [Line Items]
Total revenues	$ 88,478	$ 72,666
Product Revenue, Net
Disaggregation Of Revenue [Line Items]
Total revenues	29,209	23,111
Accounts receivable, net	$ 20,200	$ 23,000

Product Revenue and Reserves for Variable Consideration - Summary of Product Revenue Allowance and Reserve Categories (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Valuation And Qualifying Accounts Disclosure [Line Items]
Beginning Balance	$ 31,543	$ 23,737
Current provisions related to sales in current year	33,822	19,832
Adjustments related to prior year sales	114	156
Credits/payments made	(32,428)	(19,743)
Ending Balance	33,051	23,982
Chargebacks and Discounts
Valuation And Qualifying Accounts Disclosure [Line Items]
Beginning Balance	738	516
Current provisions related to sales in current year	2,250	1,486
Adjustments related to prior year sales	82
Credits/payments made	(2,353)	(1,495)
Ending Balance	717	507
Rebates, Fees and other Deductions
Valuation And Qualifying Accounts Disclosure [Line Items]
Beginning Balance	30,552	22,861
Current provisions related to sales in current year	30,519	17,476
Adjustments related to prior year sales	32	156
Credits/payments made	(29,024)	(17,301)
Ending Balance	32,079	23,192
Returns
Valuation And Qualifying Accounts Disclosure [Line Items]
Beginning Balance	253	360
Current provisions related to sales in current year	1,053	870
Credits/payments made	(1,051)	(947)
Ending Balance	$ 255	$ 283

License, Collaboration and Other Significant Agreements - Revenues Recognized From License, Collaboration and Other Significant Agreements (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
License, Collaboration and Other Revenue:
License, Collaboration and Other Revenue	$ 88,478	$ 72,666
License, Collaboration and Other Revenue
License, Collaboration and Other Revenue:
License, Collaboration and Other Revenue	59,269	49,555
License, Collaboration and Other Revenue \| Otsuka Pharmaceutical Company. Ltd. \| Development and Commercialize United States Collaboration and License Agreement
License, Collaboration and Other Revenue:
License, Collaboration and Other Revenue	38,577	26,223
License, Collaboration and Other Revenue \| Otsuka Pharmaceutical Company. Ltd. \| Development and Commercialize International Collaboration and License Agreement
License, Collaboration and Other Revenue:
License, Collaboration and Other Revenue	19,370	21,956
License, Collaboration and Other Revenue \| Mitsubishi Tanabe Pharma Corporation and Otsuka Pharmaceutical Company Limited
License, Collaboration and Other Revenue:
License, Collaboration and Other Revenue	57,947	48,179
License, Collaboration and Other Revenue \| Japan Tobacco Incorporation and Torii Pharmaceutical Company Limited
License, Collaboration and Other Revenue:
License, Collaboration and Other Revenue	1,126	1,228
License, Collaboration and Other Revenue \| Mitsubishi Tanabe Pharma Corporation
License, Collaboration and Other Revenue:
License, Collaboration and Other Revenue	0	0
License, Collaboration and Other Revenue \| Other Revenue \| Mitsubishi Tanabe Pharma Corporation
License, Collaboration and Other Revenue:
License, Collaboration and Other Revenue	$ 196	$ 148

License, Collaboration and Other Significant Agreements - Deferred Revenues Balance (Details) - USD ($) $ in Thousands	Mar. 31, 2020	Dec. 31, 2019
Deferred Revenue:
Short-Term	$ 34,886	$ 39,830
Long-Term	42,799	$ 33,120
Total	77,685
Otsuka Pharmaceutical Company. Ltd. \| U.S.
Deferred Revenue:
Short-Term	19,090
Long-Term	26,854
Total	45,944
Otsuka Pharmaceutical Company. Ltd. \| International
Deferred Revenue:
Short-Term	11,807
Long-Term	11,266
Total	23,073
MTPC \| Supply of Validation Drug Product
Deferred Revenue:
Short-Term	3,989
Total	3,989
Vifor Pharma
Deferred Revenue:
Long-Term	4,679
Total	$ 4,679

License, Collaboration and Other Significant Agreements - Schedule of Changes in Contract Assets and Liabilities (Details) - USD ($)
$ in Thousands

3 Months Ended

Mar. 31, 2020

Mar. 31, 2019

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Contract liabilities, Balance at End of Period

$ 77,685

Accounts Receivable

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Contract assets, Balance at Beginning of Period

^[1]

15,822

$ 1,587

Contract assets, Additions

^[1]

71,639

30,387

Contract assets, Deductions

^[1]

(2,895)

(2,041)

Contract assets, Balance at End of Period

^[1]

84,566

29,933

Prepaid Expenses and Other Current Assets

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Contract assets, Additions

546

Contract assets, Balance at End of Period

546

Accrued Expenses and Other Current Liabilities

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Contract liabilities, Additions

615

Contract liabilities, Balance at End of Period

615

Deferred Revenue

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Contract liabilities, Balance at Beginning of Period

72,950

112,689

Contract liabilities, Additions

65,209

41,962

Contract liabilities, Deductions

(60,474)

(48,180)

Contract liabilities, Balance at End of Period

$ 77,685

106,471

Accounts Payable

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Contract liabilities, Balance at Beginning of Period

13,492

Contract liabilities, Deductions

$ (13,492)

[1]

Excludes accounts receivable from other services related to clinical and regulatory activities performed by the Company on behalf of MTPC that are not included in the performance obligations identified under the MTPC Agreement as of March 31, 2019 and 2020 and December 31, 2018 and 2019. Also excludes accounts receivable related to amounts due to the Company from product sales which are included in the accompanying unaudited condensed consolidated balance sheet as of March 31, 2020 and December 31, 2019.

License, Collaboration and Other Significant Agreements - Schedule of Revenue Recognized Resulting from Changes in Contract Asset and Contract Liability (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Amounts included in deferred revenue at the beginning of the period	$ 10,130	$ 45,179
Performance obligations satisfied in previous periods		$ 1,254

License, Collaboration and Other Significant Agreements - Additional Information (Details)

1 Months Ended

3 Months Ended

Feb. 14, 2020

USD ($)

Apr. 08, 2019

USD ($)

May 12, 2017

USD ($)

$ / shares

Apr. 25, 2017

USD ($)

Feb. 09, 2017

USD ($)

$ / shares

Jul. 31, 2019

USD ($)

Mar. 31, 2017

USD ($)

Dec. 31, 2016

USD ($)

Jun. 30, 2020

USD ($)

Mar. 31, 2020

USD ($)

Obligation

Sep. 30, 2019

USD ($)

Mar. 31, 2019

USD ($)

Mar. 31, 2017

USD ($)

Dec. 31, 2019

USD ($)

Dec. 31, 2018

USD ($)

Sep. 30, 2017

USD ($)

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

$ 88,478,000

$ 72,666,000

77,685,000

34,886,000

$ 39,830,000

Common stock shares sold | shares

$ 42,799,000

$ 33,120,000

130,251,440

121,674,568

License, Collaboration and Other Revenue

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

$ 59,269,000

49,555,000

Accounts Receivable

Prepaid Expenses and Other Current Assets

^[1]

84,566,000

29,933,000

$ 15,822,000

$ 1,587,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Accrued Expenses and Other Current Liabilities

546,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | License, Collaboration and Other Revenue

615,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Development and Commercialize Collaboration Agreement

$ 0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Collaboration Agreement, expiration period

$ 10,000,000.0

10 years

Collaboration Agreement, notice period for termination

12 months

Percentage of royalty payments on sales

$ 20,000,000.0

20.00%

Additional milestone or royalty payments received

$ 0

Mitsubishi Tanabe Pharma Corporation | Development and Commercialize Collaboration Agreement | Maximum

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | New Agreement | Maximum

$ 175,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Data access fee receivable

$ 25,000,000.0

Mitsubishi Tanabe Pharma Corporation | Development And Commercialize Research And License Agreement

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Cost of research services

20,000,000.0

20,500,000

Mitsubishi Tanabe Pharma Corporation | Mitsubishi Tanabe Pharma Corporation and Otsuka Pharmaceutical Company Limited | Scenario Forecast

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Mitsubishi Tanabe Pharma Corporation and Otsuka Pharmaceutical Company Limited | Accounts Receivable

$ 10,400,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Mitsubishi Tanabe Pharma Corporation and Otsuka Pharmaceutical Company Limited | Short-term Deferred Revenue

10,400,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Mitsubishi Tanabe Pharma Corporation and Otsuka Pharmaceutical Company Limited | Other Current Liabilities

4,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Regulatory Milestone Payments

6,400,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Regulatory Milestone Payments | Development and Commercialize Collaboration Agreement

$ 10,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Additional milestone revenue receivable

$ 10,000,000.0

15,000,000.0

Mitsubishi Tanabe Pharma Corporation | Regulatory Milestone Payments | Development and Commercialize Collaboration Agreement | Maximum

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Regulatory Milestone Payments | Development And Commercialize Research And License Agreement

40,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Development, Regulatory and Commercial Events | Development and Commercialize Collaboration Agreement | Maximum

10,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Development Milestones | Development and Commercialize Collaboration Agreement

225,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Commercial Milestone Payments | Development and Commercialize Collaboration Agreement | Maximum

10,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Upfront | Development and Commercialize Collaboration Agreement

175,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Incurred clinical and commercial development cost

20,500,000

Mitsubishi Tanabe Pharma Corporation | Development Milestones One | Development And Commercialize Research And License Agreement

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Development Milestones Two | Development And Commercialize Research And License Agreement

6,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Mitsubishi Tanabe Pharma Corporation | Development and Commercialize Collaboration Agreement | Development And Commercialize Research And License Agreement | Accounts Receivable

4,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize United States Collaboration and License Agreement

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

$ 0

$ 45,944,000

Collaborative arrangements cost sharing payments

19,090,000

279,900,000

Collaborative arrangements additional cost sharing payments amount

$ 60,000,000.0

Percentage of market penetration for license agreement

90.00%

Reimbursement for Otsuka's share of costs previously incurred

12 months

Transaction price

$ 438,700,000

$ 33,800,000

Transaction price, description

Cost share costs incurred

$ 26,854,000

500,000

300,000

Reimbursable by Otsuka

300,000

200,000

Cost share costs by partner for license agreement

400,000

Reimbursable to Otsuka

200,000

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize United States Collaboration and License Agreement | Global Development Plan

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Reimbursement for Otsuka's share of costs previously incurred

$ 33,800,000

Collaborative arrangements additional cost sharing payments expected amount

104,200,000

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize United States Collaboration and License Agreement | License, Collaboration and Other Revenue

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize United States Collaboration and License Agreement | Accounts Receivable

38,577,000

26,223,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize United States Collaboration and License Agreement | Prepaid Expenses and Other Current Assets

49,300,000

8,900,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize United States Collaboration and License Agreement | Accrued Expenses and Other Current Liabilities

400,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize United States Collaboration and License Agreement | Minimum

$ 400,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Percentage of increase in funding to fund current global development costs

52.50%

Reduction in percentage of future payments due upon current global development costs creditable

50.00%

Percentage of remaining creditable amount applied to future payments

50.00%

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize United States Collaboration and License Agreement | Minimum | Global Development Plan

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Collaborative arrangements cost sharing payments

$ 279,900,000

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize United States Collaboration and License Agreement | Maximum

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Percentage of increase in funding to fund current global development costs

80.00%

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize International Collaboration and License Agreement

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

$ 23,073,000

$ 11,807,000

Reimbursement for Otsuka's share of costs previously incurred

12 months

Transaction price

$ 286,200,000

$ 200,000

Transaction price, description

Estimate Subsequent Cost Share Payment Receivable

$ 11,266,000

213,000,000.0

Milestone or royalty payments received

$ 0

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize International Collaboration and License Agreement | Global Development Plan

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Reimbursement for Otsuka's share of costs previously incurred

$ 200,000

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize International Collaboration and License Agreement | License, Collaboration and Other Revenue

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize International Collaboration and License Agreement | Accounts Receivable

19,370,000

21,956,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize International Collaboration and License Agreement | Prepaid Expenses and Other Current Assets

22,400,000

4,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize International Collaboration and License Agreement | Accrued Expenses and Other Current Liabilities

200,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Commercialize International Collaboration and License Agreement | Minimum | Global Development Plan

200,000

$ 0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Estimate Subsequent Cost Share Payment Receivable

213,000,000.0

Otsuka Pharmaceutical Company. Ltd. | Regulatory Milestone Payments | Development and Commercialize United States Collaboration and License Agreement | Maximum

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Regulatory Milestone Payments | Development and Commercialize International Collaboration and License Agreement | Maximum

65,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development Milestones | Development and Commercialize United States Collaboration and License Agreement | Maximum

52,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development Milestones | Development and Commercialize International Collaboration and License Agreement | Maximum

125,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Commercial Milestone Payments | Development and Commercialize United States Collaboration and License Agreement | Maximum

80,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Commercial Milestone Payments | Development and Commercialize International Collaboration and License Agreement | Maximum

575,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Up-front, Non-refundable and Non-creditable | Development and Commercialize United States Collaboration and License Agreement

525,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Up-front, Non-refundable and Non-creditable | Development and Commercialize International Collaboration and License Agreement

$ 125,000,000.0

125,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Regulatory Milestones | Development and Commercialize United States Collaboration and License Agreement

$ 73,000,000.0

73,000,000.0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Otsuka Pharmaceutical Company. Ltd. | Development and Regulatory Milestones | Development and Commercialize International Collaboration and License Agreement

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Janssen Pharmaceutica NV | Development And Commercialize Research And License Agreement

$ 0

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Collaboration Agreement, expiration period

10 years

Collaboration Agreement, notice period for termination

180 days

Upfront payment made in cash

$ 1,000,000.0

Warrant to purchase common stock, shares | shares

509,611

Janssen Pharmaceutica NV | Development And Commercialize Research And License Agreement | Maximum

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

$ 215,000,000.0

Johnson & Johnson Innovation | Development And Commercialize Research And License Agreement

$ 16,500,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Warrant to purchase common stock, shares | shares

509,611

Fair value of warrant

$ 3,400,000

Exercise price | $ / shares

$ 9.81

Vifor (International) Ltd. | Research and Development Expense

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Payments after closing of PRV purchase

$ 10,000,000.0

Vifor (International) Ltd. | License Agreement

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

$ 25,000,000.0

25,000,000.0

12 months

Common stock shares sold | shares

$ 4,700,000

3,571,429

Sale of stock, price per share | $ / shares

$ 14.00

Proceeds from common stock sold

$ 50,000,000.0

Premium over the closing stock price of common stock | $ / shares

$ 12.69

Premium amount over the closing stock price of common stock

$ 4,700,000

Vifor (International) Ltd. | Priority Review Voucher Letter Agreement

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Payments after closing of PRV purchase

$ 10,000.0

Japan Tobacco Incorporation and Torii Pharmaceutical Company Limited | License, Collaboration and Other Revenue

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Japan Tobacco Incorporation and Torii Pharmaceutical Company Limited | License Agreement | Panion & BF Biotech, Incorporation

$ 1,126,000

1,228,000

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

Royalty payments

$ 2,500,000

2,100,000

Japan Tobacco Incorporation and Torii Pharmaceutical Company Limited | Sublicense Agreement

Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]

$ 1,100,000

$ 1,200,000