UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
For the transi on period from _to_
Commission File Number 001-36352
AKEBIA THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdic on of
incorpora on or organiza on)
245 First Street, Cambridge, MA
(Address of principal execu ve offices)
20-8756903
(I.R.S. Employer
Iden fica on No.)
02142
(Zip Code)
Registrant’s telephone number, including area code: (617) 871-2098
Securi es registered pursuant to Sec on 12(b) of the Act:
Title of each class
Common Stock, $0.00001 par value per share
Trading Symbol(s)
AKBA
Name of each exchange on which registered
The Nasdaq Capital Market
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securi es Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Sec on 13 or 15(d) of the Act. Yes ☐ No ☒
Securi es registered pursuant to Sec on 12(g) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Sec on 13 or 15(d) of the Securi es Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submi ed electronically every Interac ve Data File required to be submi ed pursuant to Rule 405 of Regula on S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller repor ng company, or an emerging growth company. See the
defini ons of “large accelerated filer,” “accelerated filer,” “smaller repor ng company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☐
☐
Accelerated filer
Smaller repor ng company
Emerging growth company
☒
☒
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transi on period for complying with any new or revised financial accoun ng
standards provided pursuant to Sec on 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and a esta on to its management’s assessment of the effec veness of its internal control over financial repor ng under
Sec on 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accoun ng firm that prepared or issued its audit report. ☒
If securi es are registered pursuant to Sec on 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correc on of an error
to previously issued financial statements. ☐
Indicate by check mark whether any of those error correc ons are restatements that required a recovery analysis of incen ve-based compensa on received by any of the registrant’s execu ve
officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the vo ng and non-vo ng common equity held by non-affiliates of the registrant, based on the closing price of the registrant’s Common Stock on The Nasdaq
Global Market on June 30, 2023, was $169,721,714.
The number of shares of registrant’s Common Stock outstanding as of March 13, 2024 was 209,372,275.
The registrant intends to file a defini ve proxy statement pursuant to Regula on 14A in connec on with its 2024 Annual Mee ng of Stockholders within 120 days a er the end of the
registrant’s fiscal year ended December 31, 2023. Por ons of the proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE
Table of Contents
Akebia Therapeu cs, Inc.
Form 10-K
For the Year Ended December 31, 2023
TABLE OF CONTENTS
Cau onary Note Regarding Forward Looking Statements
Risk Factors Summary
PART I
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Proper es
Legal Proceedings
Mine Safety Disclosures
PART II
Market for Registrant’s Common Equity, Related Stockholder Ma ers and Issuer Purchases of Equity Securi es
[Reserved]
Management’s Discussion and Analysis of Financial Condi on and Results of Opera ons
Quan ta ve and Qualita ve Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accoun ng and Financial Disclosure
Controls and Procedures
Other Informa on
Disclosure Regarding Foreign Jurisdic ons that Prevent Inspec ons
PART III
Directors, Execu ve Officers and Corporate Governance
Execu ve Compensa on
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Ma ers
Certain Rela onships and Related Transac ons, and Director Independence
Principal Accountant Fees and Services
PART IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
SIGNATURES
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Page
2
4
7
50
105
105
106
106
109
110
110
110
124
125
166
166
169
170
170
170
170
170
170
171
171
180
181
In this Annual Report on Form 10-K, or Form 10-K, unless otherwise stated or the context otherwise requires, references to “Akebia,” “we,” “us,” “our,” “the
Company,” "our Company" and similar references refer to Akebia Therapeu cs, Inc. and, where appropriate, its consolidated subsidiaries. On December 12,
2018, in connec on with the consumma on of the merger, or Merger, with Keryx Biopharmaceu cals, Inc., or Keryx, Keryx became a wholly owned subsidiary
of the Company.
AURYXIA®, AKEBIA Therapeu cs®, Vafseo® and their associated logos are trademarks of Akebia and/or its affiliates. All other trademarks, trade names and
service marks appearing in this Form 10-K are the property of their respec ve owners. Solely for convenience, trademarks, trade names and service marks
referred to in this Form 10-K may appear without the ® or
symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its
rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a
rela onship with, or endorsement or sponsorship of us by, any other company.
TM
Akebia Therapeu cs, Inc. | Form 10-K | Page 1
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, or Form 10-K, contains forward-looking statements that are being made pursuant to the provisions of the U.S. Private
Securi es Li ga on Reform Act of 1995 with the inten on of obtaining the benefits of the “safe harbor” provisions of that Act. All statements contained in
this Form 10-K other than statements of historical fact are forward-looking statements. These forward-looking statements may be accompanied by words
such as “an cipate,” “believe,” “build,” “can,” “contemplate,” “con nue,” “could,” “should,” “designed,” “es mate,” “project,” “expect,” “forecast,” “future,”
“goal,” “intend,” “likely,” “may,” “plan,” “possible,” “poten al,” “predict,” “strategy,” “seek,” “target,” “will,” “would,” and other words and terms of similar
meaning, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements include, but
are not limited to, statements about:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the ming of or likelihood of regulatory filings and approvals, including with respect to labeling or other restric ons, such as the an cipated
ming of a response by the FDA to our resubmission of our new drug applica on for vadadustat following our receipt of a complete
response le er from the FDA, and poten al indica ons for vadadustat;
the poten al therapeu c benefits, safety profile, and effec veness of vadadustat;
our pipeline and por olio, including its poten al, and our related research and development ac vi es;
the ming, investment and associated ac vi es involved in con nued commercializa on of Auryxia® (ferric citrate), its growth
opportuni es and our ability to execute thereon;
the poten al indica ons, demand and market opportunity, poten al and acceptance of Auryxia and vadadustat, if approved, including the
size of eligible pa ent popula ons;
the poten al therapeu c applica ons of the hypoxia inducible factor pathway;
our compe ve posi on, including es mates, developments and projec ons rela ng to our compe tors and their products and product
candidates, and our industry;
our expecta ons, projec ons and es mates regarding our capital requirements, need for addi onal capital, financing our future cash
needs, costs, expenses, revenues, capital resources, cash flows, financial performance, profitability, tax obliga ons, liquidity, growth,
contractual obliga ons and the period of me our cash resources will fund our current opera ng plan, es mates with respect to our ability
to operate as a going concern, our internal control over financial repor ng and disclosure controls and procedures, and any future
deficiencies or material weaknesses in our internal controls and procedures;
delivering value broadly to the kidney community, as well as others who may benefit from our medicines, will result in delivering value for
stockholders;
the direct or indirect impacts of the recent COVID-19 pandemic on our business, opera ons and the markets and communi es in which we
and our partners, collaborators, vendors, and customers operate;
our manufacturing, supply and quality ma ers and any recalls, write-downs, impairments or other related consequences or poten al
consequences;
es mates, beliefs and judgments related to the valua on of intangible asset, goodwill, debt and other assets and liabili es, including
classifica on of expenses, assets and liabili es, our impairment analyses and our methodology and assump ons regarding fair value
measurements;
the ming of the availability and disclosure of clinical trial data and results;
the designs of our studies, and the type of informa on and data expected from our studies and the expected benefits thereof;
our and our collaborators’ strategy, plans and expecta ons with respect to the development, manufacturing, supply, commercializa on,
launch, marke ng and sale of Auryxia, Vafseo and vadadustat, if approved, and the associated ming thereof;
our ability to maintain any marke ng authoriza ons we currently hold or will obtain, including our marke ng authoriza ons for Auryxia and
our ability to complete post-marke ng requirements with respect thereto;
our ability to nego ate, secure and maintain adequate pricing, coverage and reimbursement terms and processes on a mely basis, or at
all, with third-party payors for Auryxia and vadadustat, if approved;
the ming of ini a on of our clinical trials and plans to conduct preclinical studies and clinical trials in the future;
the ming and amounts of payments from or to our collaborators and licensees, and the an cipated arrangements and benefits under our
collabora on and license agreements, including with respect to milestones and royal es;
Akebia Therapeu cs, Inc. | Form 10-K | Page 2
Table of Contents
•
•
•
•
•
•
•
•
•
•
•
our intellectual property posi on, including obtaining and maintaining patents, and the ming, outcome and impact of administra ve,
regulatory, legal and other proceedings rela ng to our patents and other proprietary and intellectual property rights, patent infringement
suits that we have filed or may file, or other ac ons that we may take against companies, and the ming and resolu on thereof;
expected ongoing reliance on third par es, including with respect to the development, manufacturing, supply and commercializa on of
Auryxia and vadadustat, if approved;
accoun ng standards and es mates, their impact, and their expected ming of comple on;
es mated periods of performance of key contracts;
our facili es, lease commitments, and future availability of facili es;
cybersecurity;
insurance coverage;
management of personnel, including our management team, and our employees, including employee compensa on, employee rela ons,
and our ability to a ract, train and retain high quality employees;
the implementa on of our business model, current opera ng plan, and strategic plans for our business, product candidates and technology,
and business development opportuni es including poten al collabora ons, alliances, mergers, acquisi ons or licensing of assets;
addi onal costs we may incur due to events associated with or resul ng from our prior workforce reduc ons or other opera ng expenses,
including addi onal costs related to vadadustat and selling, general and administra ve expenses; and
the ming, outcome and impact of current and any future legal proceedings.
Any or all of these forward-looking statements in this Form 10-K may turn out to be inaccurate. These forward-looking statements involve risks and
uncertain es, including those that are discussed below under the heading "Risk Factors Summary", and the risk factors iden fied further in Part I, Item 1A.
"Risk Factors" included in this Form 10-K and elsewhere in this Form 10-K and in our Securi es and Exchange Commission reports filed a er this report, that
could cause our actual results, financial condi on, performance or achievements to be materially different from those indicated in these forward-looking
statements. Given these risks and uncertain es, you should not place undue reliance on these forward-looking statements. Forward-looking statements speak
only as of the date of this Form 10-K. Except as required by law, we assume no obliga on to publicly update or revise these forward-looking statements for
any reason. Unless otherwise stated, our forward-looking statements do not reflect the poten al impact of any future acquisi ons, mergers, disposi ons,
joint ventures or investments we may make.
This Form 10-K also contains es mates and other informa on concerning our industry and the markets for certain diseases, including data regarding the
es mated size of those markets, and the incidence and prevalence of certain medical condi ons. Unless otherwise expressly stated, we obtained this
industry, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third par es, industry,
medical and general publica ons, government data and similar sources.
Akebia Therapeu cs, Inc. | Form 10-K | Page 3
Table of Contents
RISK FACTORS SUMMARY
Inves ng in our common stock involves numerous risks, including the risks summarized below and described in further detail in “Part I, Item 1A. Risk Factors”
of this Form 10-K, any one of which could materially adversely affect our business, financial condi on, results of opera ons, and prospects. These risks
include, but are not limited to, the following.
• We have incurred significant losses since our incep on and an cipate that we will con nue to incur losses and cannot guarantee when, if ever, we
will become profitable or a ain posi ve cash flows.
• We may require substan al addi onal financing to fund our business. A failure to obtain this necessary capital when needed, or on acceptable
terms, could force us to delay, limit, reduce or terminate our product development or commercializa on efforts.
•
•
Raising addi onal capital may cause dilu on to our exis ng stockholders, restrict our opera ons or require us to relinquish rights to our product and
product candidates on unfavorable terms to us.
If we fail to comply with the con nued lis ng requirements of Nasdaq, our common stock may be delisted and the price of our common stock and
our ability to access the capital markets could be nega vely impacted.
• We may not be successful in our efforts to iden fy, acquire, in-license, discover, develop and commercialize addi onal products or product
candidates or our decisions to priori ze the development of certain product candidates over others may not be successful, which could impair our
ability to grow.
• We may engage in strategic transac ons to acquire assets, businesses, or rights to products, product candidates or technologies or form
collabora ons or make investments in other companies or technologies that could harm our opera ng results, dilute our stockholders’ ownership,
increase our debt, or cause us to incur significant expense.
• Our obliga ons in connec on with the Agreement for the Provision of a Loan Facility, or the BlackRock Credit Agreement, with Kreos Capital VII (UK)
Limited, or Kreos, which are funds and accounts managed by BlackRock Inc., collec vely BlackRock, and requirements and restric ons in the
BlackRock Credit Agreement could adversely affect our financial condi on and restrict our opera ons.
• Our Royalty Interest Acquisi on Agreement with HealthCare Royalty Partners IV, L.P. contains various covenants and other provisions, which, if
violated, could materially adversely affect our financial condi on.
• Our business is substan ally dependent on the commercial success of Auryxia and vadadustat, if approved. If we are unable to con nue to
successfully commercialize Auryxia or vadadustat, if approved and commercialized, our results of opera ons and financial condi on will be
materially harmed.
•
If we are unable to maintain or expand, or, if vadadustat is approved, ini ate, sales and marke ng capabili es or enter into addi onal agreements
with third par es, we may not be successful in commercializing Auryxia, vadadustat, if approved, or any other product candidates that may be
approved.
• Our, or our partners', failure to obtain or maintain adequate coverage, pricing and reimbursement for Auryxia, vadadustat, if approved, or any other
future approved products, could have a material adverse effect on our or our collabora on partners’ ability to sell such approved products profitably
and otherwise have a material adverse impact on our business.
• We face substan al compe on, which may result in others discovering, developing or commercializing products before, or more successfully than,
we do.
•
•
The commercializa on of Riona and Vafseo in Japan, Vafseo in Europe and other territories where it is approved, and our current and poten al
future efforts with respect to the development and commercializa on of our products and product candidates outside of the United States, or U.S.,
subject us to a variety of risks associated with interna onal opera ons, which could materially adversely affect our business.
Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and we will incur addi onal costs in connec on
with, and may experience delays in comple ng, or ul mately be unable to complete, the development of vadadustat and any other product
candidates.
• We may find it difficult to enroll pa ents in our clinical trials, which could delay or prevent clinical trials of Auryxia, vadadustat or any other product
or product candidate, including those that may be in-licensed or acquired.
•
•
Conduc ng clinical trials outside of the U.S., as we have done historically and as we may decide to do in the future, presents addi onal risks and
complexi es and, if we decide to conduct a clinical trial outside of the U.S. in the future, we may not complete such trials successfully, in a mely
manner, or at all, which could affect our ability to obtain regulatory approvals.
Auryxia, vadadustat or any other product or product candidate, including those that may be in-licensed or acquired, may cause undesirable side
effects or have other proper es that may delay or prevent marke ng approval or limit their commercial poten al.
Akebia Therapeu cs, Inc. | Form 10-K | Page 4
Table of Contents
• We may not be able to obtain marke ng approval for vadadustat or any other product candidate, or we may experience significant delays in doing
so, any of which would materially harm our business.
•
Products approved for marke ng are subject to extensive post-marke ng regulatory requirements and could be subject to post-marke ng
restric ons or withdrawal from the market, and we may be subject to penal es, including withdrawal of marke ng approval, if we fail to comply
with regulatory requirements or if we experience unan cipated problems with our products, or product candidates, when and if any of them is
approved.
• We are subject to complex regulatory schemes that require significant resources to ensure compliance and our failure to comply with applicable laws
could subject us to government scru ny or enforcement, poten ally resul ng in costly inves ga ons, fines, penal es or sanc ons, contractual
damages, reputa onal harm, administra ve burdens and diminished profits and future earnings.
• We will incur significant liability if it is determined that we are promo ng any “off-label” use of Auryxia or any other product we may develop, in-
license or acquire or if it is determined that any of our ac vi es violates the federal An -Kickback Statute.
•
•
•
Disrup ons in the U.S. Food and Drug Administra on, regulatory authori es outside the U.S. and other government agencies caused by global health
concerns or funding shortages could prevent new products and services from being developed or commercialized in a mely manner, which could
nega vely impact our business.
Compliance with privacy and data security requirements could result in addi onal costs and liabili es to us or inhibit our ability to collect and
process data globally, and the failure to comply with such requirements could subject us to significant fines and penal es, which may have a material
adverse effect on our business, financial condi on or results of opera ons.
Legisla ve and regulatory healthcare reform may increase the difficulty and cost for us to obtain marke ng approval of and commercialize our
product candidates and affect the prices we may obtain for any products that are approved in the U.S. or foreign jurisdic ons.
• We depend on collabora ons with third par es for the development and commercializa on of Auryxia, Riona, Vafseo and vadadustat and if these
collabora ons are not successful or if our collaborators terminate their agreements with us, we may not be able to capitalize on the market poten al
of Auryxia, Riona, Vafseo and vadadustat, and our business could be materially harmed.
• We may seek to establish addi onal collabora ons and, if we are not able to establish them on commercially reasonable terms, or at all, we may
have to alter our development and commercializa on plans.
• We rely upon third par es to conduct all aspects of our product manufacturing and commercial distribu on, and in many instances only have a
single supplier or distributor, and the loss of these manufacturers or distributors, their failure to supply us on a mely basis, or at all, or their failure
to successfully carry out their contractual du es or comply with regulatory requirements, cGMP requirements, or guidance could cause delays in or
disrup ons to our supply chain and substan ally harm our business.
• We rely upon third par es to conduct our clinical trials and certain of our preclinical studies. If they do not successfully carry out their contractual
du es, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain or maintain marke ng approval for Auryxia,
vadadustat or any of our product candidates, and our business could be substan ally harmed.
•
•
If the licensor of certain intellectual property rela ng to Auryxia terminates, modifies or threatens to terminate exis ng contracts or rela onships
with us, our business may be materially harmed.
If we are unable to adequately protect our intellectual property, third par es may be able to use our intellectual property, which could adversely
affect our ability to compete in the market.
• We may not be able to protect our intellectual property rights throughout the world.
•
•
•
The intellectual property that we own or have licensed and related non-patent exclusivity rela ng to our current and future products is, and may be,
limited, which could adversely affect our ability to compete in the market and adversely affect the value of Auryxia, vadadustat, if approved, or
future products.
The market entry of one or more generic compe tors or any third party’s a empt to challenge our intellectual property rights will likely limit Auryxia
sales and have an adverse impact on our business and results of opera on.
Li ga on and administra ve proceedings, including third party claims of intellectual property infringement and opposi on/invalida on proceedings
against third party patents, may be costly and me consuming and may delay or harm our drug discovery, development and commercializa on
efforts.
• We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confiden al informa on
of third par es.
Akebia Therapeu cs, Inc. | Form 10-K | Page 5
Table of Contents
•
If we fail to a ract, retain and mo vate senior management and qualified personnel, we may be unable to successfully develop, obtain and/or
maintain marke ng approval of and commercialize vadadustat or commercialize Auryxia.
• Our cost savings plan and the associated workforce reduc ons implemented in April, May and November 2022 may not result in an cipated savings,
could result in total costs and expenses that are greater than expected and could disrupt our business.
• We may encounter difficul es in managing our growth, including with respect to our employee base, and managing our partnerships and opera ons
successfully.
• We have iden fied a material weakness in our internal control over financial repor ng as of December 31, 2023 rela ng to our accoun ng for
inventory and inventory related transac ons. If we are not able to remediate this material weakness, or if we experience addi onal material
weaknesses or other deficiencies in our internal control over financial repor ng in the future or otherwise fail to maintain an effec ve system of
internal control over financial repor ng, we may not be able to accurately or mely report our financial results or prevent fraud, and we may
conclude that our internal control over financial repor ng is not effec ve, which may adversely affect our business.
• We are currently subject to legal proceedings that could result in substan al costs and divert management's a en on, and we could be subject to
addi onal legal proceedings.
• Our stock price has been and may con nue to be vola le, which could result in substan al losses for holders or future purchasers of our common
stock and lawsuits against us and our officers and directors.
Akebia Therapeu cs, Inc. | Form 10-K | Page 6
Table of Contents
Item 1. Business
Overview
PART I
We are a fully integrated, commercial-stage biopharmaceu cal company commi ed to addressing pa ents’ unmet needs. We have built a business focused
on developing and commercializing innova ve therapeu cs that we believe serve as a founda on for future growth. Our purpose is to be er the life of each
person impacted by kidney disease, and we have established ourselves as a leader in the kidney community. We believe our demonstrated ability to deliver
value broadly to the kidney community has enabled us to build a sustainable company. Upon this solid founda on and our con nued commitment to
pa ents, we believe focusing on all pa ents who can realize a meaningful benefit from our medicines will deliver value for our shareholders.
Our current por olio and hypoxia-inducible factor (HIF)-based pipeline includes:
Product
Indica on
Region(s)
Discovery
Phase 1
Phase 2
Phase 3
Regulatory
Review
Commercial
Approval
In Market
Auryxia®
(ferric citrate)
Hyperphosphatemia,
IDA
2
United States , Japan
2
and Taiwan
1
Vafseo®
Anemia DD-CKD,
Anemia NDD-CKD
3
Japan
Vafseo®
Anemia DD-CKD
4
European Union ,
4
United Kingdom ,
4
Switzerland ,
Australia , Taiwan and
5
Korea
5
4
Vadadustat
Anemia DD-CKD
1
United States
Vadadustat
Anemia NDD-CKD
6
Global
AKB-9090
AKI, ARDS
1
Global
AKB-10108
ROP
1
Global
1
Marketed by Akebia
2
Marketed by JT Torii
3
Marketed by MTPC
4
To be marketed by Medice
5
To be marketed by MTPC
6
To be marketed by Akebia; MTPC and Medice have certain rights in their territories
Auryxia® (ferric citrate) is an orally administered medicine approved and marketed in the United States, or U.S., for two indica ons: (1) the control of serum
phosphorus levels in adult pa ents with dialysis dependent chronic kidney disease, or DD-CKD, and (2) the treatment of iron deficiency anemia, or IDA, in
adult pa ents with non-dialysis-dependent chronic kidney disease, or NDD-CKD. Today, we market Auryxia in the U.S. with our well-established, nephrology-
focused commercial organiza on. Our Japanese sublicensee, Japan Tobacco, Inc., and its subsidiary, Torii Pharmaceu cal Co., Ltd., collec vely, JT and Torii,
commercialize ferric citrate hydrate as Riona in Japan. Averoa SAS, or Averoa, has an exclusive license to develop and commercialize ferric citrate in the
European Economic Area, or EEA, Turkey, Switzerland and the United Kingdom, or UK. We expect Averoa will apply for marke ng authoriza on for ferric
citrate in Europe.
Vafseo® (vadadustat) is a HIF prolyl hydroxylase, or HIF-PH, inhibitor, approved in 36 countries as a treatment for anemia due to chronic kidney disease, or
CKD.
Akebia Therapeu cs, Inc. | Form 10-K | Page 7
Table of Contents
•
•
In the European Union, or EU, the UK, Switzerland and Australia, vadadustat is approved under the trade name Vafseo for the treatment of
symptoma c anemia associated with CKD in adults on chronic maintenance dialysis. In May 2023, we entered into a License Agreement with
MEDICE Arzneimi el Pü er GmbH & Co. KG, or Medice, pursuant to which we granted Medice an exclusive license to develop and commercialize
vadadustat for the treatment of anemia in pa ents with CKD in the EEA, the UK, Switzerland and Australia, or the Medice Territory.
In Japan, vadadustat is approved as a treatment for anemia due to CKD in both dialysis dependent and non-dialysis dependent pa ents under the
trade name Vafseo, and is marketed and sold by our collaborator Mitsubishi Tanabe Pharma Corpora on, or MTPC. In Taiwan, vadadustat is
approved for the treatment of symptoma c anemia due to CKD in adult pa ents on chronic maintenance dialysis and in Korea as an anemia
treatment for pa ents with CKD on hemodialysis. MTPC plans to commercialize vadadustat in Taiwan.
We con nue to pursue approval for vadadustat in the U.S. In September 2023, we completed our resubmission to our New Drug Applica on, or NDA, for the
treatment of anemia due to CKD in adult pa ents on dialysis to the U.S. Food and Drug Administra on, or FDA. In October 2023, the FDA acknowledged that
the resubmission was complete, classified it as a Class 2 response and set a user fee goal date, or PDUFA Date, of March 27, 2024.
We ini ally submi ed an NDA to the FDA for vadadustat in March of 2021. On March 29, 2022, the FDA issued a complete response le er, or CRL, to our NDA.
The FDA concluded that the data in the NDA did not support a favorable benefit-risk assessment of vadadustat for dialysis and non-dialysis pa ents. The FDA
expressed safety concerns, no ng failure to meet non-inferiority in Major Adverse Cardiovascular Events, or MACE, in the non-dialysis pa ent popula on, the
increased risk of thromboembolic events driven by vascular access thrombosis in dialysis pa ents and the risk of drug-induced liver injury. We believe there
are compelling data suppor ng a posi ve benefit-risk profile for the use of vadadustat broadly in pa ents with CKD. In October 2022, we submi ed a Formal
Dispute Resolu on Request, or FDRR, with the FDA regarding the CRL focused on the favorable balance of the benefits and risks of vadadustat for the
treatment of adult pa ents with anemia due to CKD on dialysis. In May 2023, the Office of New Drugs, or OND, denied our appeal but provided a path
forward for us to resubmit the NDA for vadadustat for the treatment of anemia due to CKD for dialysis dependent pa ents without the need for us to
generate addi onal clinical data. This led to the NDA resubmission in September 2023.
We own full rights to vadadustat in the U.S., subject to our licensing agreement with Vifor (Interna onal) Ltd. (now a part of CSL Limited), or CSL Vifor. If we
obtain FDA approval for vadadustat as an oral treatment for anemia due to CKD in adult dialysis pa ents, we plan to commercialize vadadustat in the U.S.
with CSL Vifor. Beyond seeking U.S. approval, we have several lifecycle management and indica on expansion opportuni es currently under evalua on for
vadadustat, including the poten al for alterna ve dosing and label expansion for treatment of anemia due to CKD in adult pa ents not on dialysis.
Our HIF-based pipeline assets are molecules being evaluated to target areas of unmet needs in acute care se ngs. The discovery of HIF laid the founda on to
explore the central role of oxygen sensing in many diseases. As we have seen through the development of vadadustat as a treatment for anemia due to CKD,
when stabilized, HIF triggers wide-ranging adap ve, protec ve responses during hypoxic or ischemic condi ons. We have selected two addi onal HIF
molecules for preclinical development: AKB-9090, for use in an acute care se ng, poten ally for acute kidney disease, or AKI, or acute respiratory distress
syndrome, or ARDS, and AKB-10108 for re nopathy of prematurity, or ROP, in neonates.
We con nue to explore addi onal commercial and development opportuni es to expand our pipeline and por olio of novel therapeu cs through both
internal research and external innova on to leverage our fully integrated team.
Strategy
Our strategic focus and business opera ons are driven by our commitment to pa ents. Our broad understanding of kidney disease helps us serve the unmet
needs of kidney pa ents and others impacted by chronic and debilita ng illness. Our team has extensive experience in developing and commercializing
innova ve products, a deep understanding of the renal space commercially as well as the biological pathways involved in kidney disease and business
development exper se. We are focused on execu ng on the following four key ini a ves:
• Maximize the Value of Auryxia: We con nue to use our nephrology-focused commercial organiza on to increase awareness and the demand for
and adop on of Auryxia for its approved indica ons with key stakeholders including nephrologists, third-party payors, dialysis organiza ons and
pa ents. Auryxia has contributed consistent, meaningful revenue to the business since it became part of our por olio in 2018. Our goals are to grow
Auryxia net product revenue in 2024 and posi on the brand to enable our team to leverage poten al tailwinds which could slow revenue decline
upon loss of exclusivity, or LoE, for Auryxia in March 2025.
• Unlock Significant Value with Poten al U.S. Vadadustat Approval and Commercial Launch Globally: Our near-term goal is to secure approval for
vadadustat as an oral treatment for anemia due to CKD in adult dialysis pa ents in the U.S., which is the largest market opportunity globally for this
popula on. We will also con nue to support our partners in prepara on to launch Vafseo in Europe, Taiwan and poten ally other countries to
pursue our goal of
Akebia Therapeu cs, Inc. | Form 10-K | Page 8
Table of Contents
enabling broad access to vadadustat for pa ents globally. We own full rights to vadadustat in China, La n America and certain other territories and
U.S. rights subject to our license agreement with CSL Vifor, which could provide poten al long-term value.
•
•
Advance pipeline, with focus on HIF-based molecules: As a leader in HIF biology, we aim to though ully invest in our pipeline, including our
decision to advance two HIF-based molecules for poten al use in acute care se ngs to the clinic. Through pipeline advancement, our goal is to
target new market opportuni es in areas of high unmet need.
Explore Strategic Growth: We con nue to explore addi onal commercial and development opportuni es to expand our pipeline and por olio of
novel therapeu cs through both internal research and external innova on to leverage our fully integrated team.
In addi on to our work to maximize net product revenue, we plan to pursue ini a ves to ensure strategic use of capital, most recently securing access to a
term loan with a payback period beyond a poten al launch of vadadustat in the U.S., if approved. We will also con nue on our path of financial discipline,
cross-organiza onal efficiency and opera onal effec veness.
Background on Chronic Kidney Disease
There is a clear need to improve the quality of life outcomes for people living with kidney disease. CKD is a condi on in which the kidneys are progressively
damaged to the point that they cannot properly filter the blood circula ng in the body. This damage causes waste products to build up in the pa ent’s blood,
leading to other health problems, including anemia, cardiovascular disease and bone disease. In the U.S., CKD significantly impacts the U.S. healthcare
system, poten ally affec ng about 37 million pa ents and cos ng Medicare nearly $125.0 billion annually for trea ng Medicare beneficiaries with CKD or
end-stage renal disease, or ESRD, according to the Centers for Disease Control and Preven on.
The prevalence and incidence of CKD is increasing in all segments of the U.S. popula on. Risk factors for the development of CKD include concomitant
diseases such as obesity, hypertension, diabetes mellitus and cardiovascular disease, lifestyle factors such as tobacco use and inac vity, family history, aging
and prenatal factors such as maternal diabetes mellitus, low birth weight and small-for-gesta onal-age status. The progression of CKD towards renal failure is
complicated by mul ple condi ons which further deteriorate kidney func on and the general health of pa ents if le untreated. Typically the prevalence of
these condi ons increases as CKD progresses. For instance, pa ents with CKD o en experience high phosphorus and develop hyperphosphatemia, which can
result in bone disease, vascular calcifica on and calciphylaxis (skin ulcera on). Addi onally, anemia, characterized by low hemoglobin levels, is typically
associated with fa gue, worsening quality of life, increased hospitaliza ons and increased mortality.
Anemia, or low hemoglobin/red blood count, in pa ents with CKD most commonly arises from two e ologies:
1. Anemia due to CKD: results from inadequate levels of erythropoie n, or EPO, a protein hormone synthesized by specialized cells in the kidney that
s mulates red blood cell, or RBC, produc on in the bone marrow. As renal func on declines, the body progressively loses the ability to produce
endogenous EPO; and
2.
IDA: results from low levels of iron due to abnormal iron absorp on and u liza on in pa ents with CKD.
Auryxia
Auryxia is an iron-based, non-calcium, non-chewable, orally-administered tablet approved and marketed in the U.S., Japan and Taiwan for the treatment of
hyperphosphatemia in adult pa ents with dialysis dependent CKD and for the treatment of IDA in adult pa ents with NDD-CKD.
Market Opportunity – Hyperphosphatemia and Iron Deficiency Anemia
Hyperphosphatemia is a metabolic disorder characterized by elevated serum phosphorus levels. Phosphorus is a vital element required for most cellular
processes and, in individuals with normal kidney func on, excess dietary phosphorus is removed by the kidneys and excreted in urine. In adults with
func oning kidneys, normal serum phosphorus levels are 2.5 to 4.5 mg/dL. In adults with DD-CKD, elevated phosphorus levels, or hyperphosphatemia, can be
associated with adverse effects, including increased risk for cardiovascular disease, bone disease and death.
Phosphate binders and phosphate inhibitors are the only interven ons marketed for the treatment of hyperphosphatemia. According to the U.S. Renal Data
System 2022 Annual Data Report, there were nearly 558,000 pa ents in the U.S. on dialysis in 2020, of which approximately 80% were treated with a
phosphate binder. Phosphate binders need to be taken with meals and snacks, and it is not uncommon for DD-CKD pa ents to be prescribed as many as 12 or
more phosphate binder pills per day, among other medica ons. Pa ents taking phosphate binders also experience gastrointes nal tolerability issues. As a
result of the pill burden and tolerability issues associated phosphate binders, prescribed phosphate binders are o en intolerable for many pa ents, leading to
lack of treatment adherence.
In addi on, in 2020 approximately 44% of pa ents treated with a phosphate binder were treated solely with a calcium-based binder, which can lead to side
effects such as increased cardiovascular risk, hypercalcemia and gastrointes nal-related
Akebia Therapeu cs, Inc. | Form 10-K | Page 9
Table of Contents
adverse events. Due to the risks associated with calcium-based binders, in 2017 Kidney Disease: Improving Global Outcomes, or KDIGO, recommended that
clinicians limit the use of calcium-based binders.
Anemia is a condi on characterized by abnormally low levels of hemoglobin. Hemoglobin is contained within RBCs and carries oxygen to other parts of the
body. If there are too few RBCs or if hemoglobin levels are low, the cells in the body will not get enough oxygen. IDA is a common form of anemia that is
caused by pa ents not having enough iron to manufacture healthy RBCs. Although anyone can develop IDA, IDA is par cularly common in NDD-CKD pa ents.
IDA is associated with fa gue, lethargy, decrease quality of life, cardiovascular complica ons, hospitaliza ons and increased mortality.
We es mate that there are more than 500,000 adult pa ents in the U.S. with NDD-CKD diagnosed with IDA and managed by a nephrologist. Currently, there
are two forms of iron therapy used to treat IDA: oral iron supplements and iron delivered via intravenous infusion, or IV, iron. Oral iron is currently the first-
line iron replacement therapy for most physicians; however, oral iron supplements are poorly absorbed by many pa ents, which may adversely impact their
effec veness, and are associated with certain side effects, such as cons pa on, diarrhea and cramping, that may adversely affect treatment adherence. IV
iron is viewed as an effec ve treatment; however, like other intravenous medicines, it is logis cally difficult to administer in an office se ng, where NDD-CKD
pa ents are more o en treated.
Commercializa on
We market Auryxia in the U.S. through our well-established, nephrology-focused sales force and commercial organiza on.
Auryxia, as an oral drug, is covered by Medicare under Part D and commercial channels. Pa ents with hyperphosphatemia have access to Auryxia through the
major Medicare Part D plans and the ten largest commercial plans and pharmacy benefit managers in the U.S., which provide coverage for approximately 127
million people. In September 2018, the Centers for Medicare & Medicaid Services, or CMS, decided that Auryxia would no longer be covered by Medicare for
the treatment of IDA. While this decision does not impact CMS coverage for the treatment of hyperphosphatemia, it requires all Auryxia prescrip ons for
Medicare pa ents to undergo a prior authoriza on, or PA, to ensure their use in that indica on. We decided beginning in 2022 to terminate certain Part D
contracts, as pa ents no longer had the access benefit given the PA requirement. Now, pa ents must go through a medical exemp on process, which is very
similar to a PA review. While we believe this had, and may con nue to have, a nega ve impact on our overall sales volume, we believe it had a significant
posi ve impact on our net selling price.
In recogni on of the evolu on of chronic kidney care to value-based reimbursement and care delivery, in late 2022 we shi ed our commercial model to align
to customer objec ves. The team of key account managers are focused on high value individual prescribers that represent approximately 70% of Auryxia
prescribing and 40% of the overall binder market poten al. The team also focuses on large group prac ces that are part of the Comprehensive Kidney Care
Contrac ng, or CKCC, program. These en es are focused on delivering coordinated, cost-effec ve care for advanced CKD pa ents, including those receiving
dialysis. This customer group requires different clinical and economic ra onale for suppor ng product use in protocols and formularies. Therefore, we have
aligned key account managers to these high-volume, value-based care organiza ons. We believe this model is more aligned to our customers’ needs and
recogni on of our product’s value proposi on.
JT and Torii market Riona in Japan. We receive ered double-digit royal es from JT and Torii based on their sales in Japan.
Vadadustat
Market Opportunity
Anemia is common in pa ents with CKD, and its prevalence increases with disease progression. Anemia due to CKD results from inadequate EPO levels,
nega vely affec ng RBC produc on. Le untreated, anemia accelerates the overall deteriora on of pa ent health with increased morbidity and mortality.
Based on third-party prevalence data and company es mates, approximately 5.7 million people in the U.S. with CKD suffer from anemia. According to the U.S.
Renal Data System 2022 Annual Data Report, there were nearly 558,000 pa ents in the U.S. on dialysis in 2020, of which 86% were on in-center hemodialysis
and the remainder on home dialysis, which includes both peritoneal dialysis and home hemodialysis.
The current standard of care for anemia due to CKD is treatment by injectable recombinant human erythropoiesis-s mula ng agents, or ESAs, such as
Epogen® (epoe n alfa), Aranesp® (darbepoe n alfa) or Mircera® (methoxy polyethylene glycol-epoe n beta), or blood transfusion. Based on publicly available
informa on on ESA sales and market data compiled by a third-party vendor, global sales of injectable ESAs for all uses were es mated to be approximately
$10.0 billion in 2022. The vast majority of these sales are believed to have been for the treatment of anemia due to CKD. In Europe, within the EU5, which
refers to the five largest markets in Europe or France, Germany, Italy, Spain and England, more than 200,000 dialysis pa ents are diagnosed with anemia due
to CKD and are treated with ESAs.
When administered to a pa ent, injectable ESAs provide supraphysiological levels of exogenous EPO to s mulate produc on of RBCs. While injectable ESAs
can be effec ve in raising hemoglobin levels, they have the poten al to cause significant side
Akebia Therapeu cs, Inc. | Form 10-K | Page 10
Table of Contents
effects, and need to be injected subcutaneously or intravenously. In par cular, injectable ESAs may lead to thrombosis, stroke, myocardial infarc on and
death. Also, controlled trials have demonstrated that pa ents experienced greater risk of death, serious adverse cardiovascular reac ons, and stroke when
administered ESAs to a target hemoglobin level of greater than 11g/dL. While these safety concerns, which became evident star ng in 2006, have led to a
significant reduc on in the use of injectable ESAs, and an increase in the use of injectable iron, injectable ESAs remain the current standard of care for the
treatment of anemia due to CKD in pa ents on dialysis and not dialysis dependent.
We believe there is a significant opportunity for vadadustat to address limita ons of injectable ESAs and become a new oral op on for the treatment of
anemia due to CKD in adult pa ents on dialysis, if approved. In addi on, clinical data from our Phase 3 INNO VATE program showed vadadustat was non-
inferior to darbepoe n alfa with respect to hematological efficacy (change in hemoglobin concentra on) and cardiovascular safety (MACE) in adult pa ents
on dialysis.
2
Injectable ESAs are administered by dialysis center staff to approximately 90% of in-center hemodialysis pa ents and 75% of home dialysis pa ents. Although
the significant majority of dialysis pa ents are cared for in-center, recently, several factors including the COVID-19 pandemic, changing pa ent preferences,
government ini a ves and reimbursement changes are suppor ng a shi toward home dialysis. We believe as an oral therapeu c, vadadustat has poten al
to be a convenient treatment alterna ve to injectable ESAs not only for in-center dialysis pa ents, but also for the growing number of home dialysis pa ents
and pa ents transi oning to home dialysis.
Given the concentra on of dialysis clinics in large networks, with DaVita, Inc., or DaVita, and Fresenius Kidney Care Group LLC, or Fresenius, accoun ng for a
vast majority of the dialysis popula on in the U.S., treatment is usually driven by medical protocols that are implemented across the en re network of clinics.
These protocols are informed by very large data sets and when updated, result in rapid change applicable to large segments of the pa ent popula on. This is
par cularly true of medica ons covered under the ESRD Prospec ve Payment System, or PPS, in Medicare, or the ESRD Bundle, a payment structure with a
flat base rate per dialysis session adjusted for individual pa ent and facility characteris cs. Dialysis-related drugs are included in the ESRD Bundle if they fall
into func onal categories such as anemia management and bone and mineral metabolism, except that oral-only drugs are exempted from inclusion un l
2025. In a final ESRD PPS rule published in November 2018, CMS confirmed that it will expand the Transi onal Drug Add-on Payment Adjustment, or TDAPA,
to all new dialysis drugs approved by the FDA a er January 1, 2020. The TDAPA will provide separate payment for new drugs for two years based on the
drug’s Average Sales Price, or ASP, that will be in addi on to the base rate in order to facilitate the adop on of innova ve therapies. Although there are
several details that need further clarifica on, and the precise ming of when we could receive codes to allow for reimbursement under TDAPA is not known,
the codes are assigned on a quarterly basis, and the rule provides support for our assump on that new anemia treatments, including those in the HIF-PH
inhibitor class, will be included in the ESRD Bundle and will be eligible for separate payment ini ally under TDAPA, and we expect to receive TDAPA
designa on for vadadustat six months post-filing acceptance if approved by the FDA.
Commercializa on
We are suppor ng MTPC's commercializa on of vadadustat in Japan and will support Medice's commercializa on of vadadustat in Europe. We are also
preparing for a poten al commercial launch of vadadustat in the U.S., if approved.
If we obtain FDA approval for vadadustat for the treatment of anemia due to CKD in adult pa ents, we plan to commercialize vadadustat in the U.S. with CSL
Vifor. Today, we have an established and embedded commercial team with approximately 30 key account managers supported by our commercial opera ons
team. There is a more than 96% overlap in call points that exists between Auryxia and vadadustat. Enhancing the ability of our commercial team, we also
have renal exper se across our organiza on, including among our leadership team and Board of Directors, as well as exis ng rela onships with dialysis
organiza ons that we believe will enhance our commercial effec veness if vadadustat is approved.
In February 2022, we entered into a Second Amended and Restated License Agreement, or the Vifor Agreement, with CSL Vifor, under which we granted CSL
Vifor an exclusive license to sell vadadustat to Fresenius Medical Care North America and its affiliates, including Fresenius, to certain third-party dialysis
organiza ons approved by us, to independent dialysis organiza ons that are members of certain group purchasing organiza ons and to certain non-retail
specialty pharmacies, collec vely, the Supply Group, in the U.S., or Vifor Territory. If approved, we plan to market vadadustat in the U.S., including to the
Supply Group, and we plan to sell vadadustat directly to organiza ons outside the Supply Group. During the term of the Vifor Agreement, CSL Vifor is not
permi ed to sell any HIF product that competes with vadadustat in the Vifor Territory to the Supply Group.
Akebia Therapeu cs, Inc. | Form 10-K | Page 11
Table of Contents
Clinical Development Program
Below is a summary of the clinical development work undertaken for vadadustat.
Vadadustat Global Phase 3 Clinical Program in Anemia Due To CKD
We conducted a global Phase 3 clinical development program for vadadustat, which included two programs, INNO VATE and PRO TECT. INNO VATE evaluated
vadadustat in adult DD-CKD pa ents with anemia due to CKD in two studies, and PRO TECT evaluated vadadustat in adult NDD-CKD pa ents with anemia due
to CKD in two studies. Combined, we enrolled approximately 7,500 pa ents in these studies and evaluated a once daily oral dosing of vadadustat against an
injectable ESA ac ve comparator, darbepoe n alfa.
2
2
2
2
2
2
2
2
Both the INNO VATE and PRO TECT Phase 3 programs were global, mul center, open-label, sponsor-blind, ac ve-controlled non-inferiority programs. In both
programs, pa ents were randomized 1:1 to receive either oral vadadustat or injectable darbepoe n alfa. The primary efficacy endpoint for each study in the
INNO VATE and PRO TECT programs was the mean change in hemoglobin between baseline and the primary evalua on period. Non-inferiority, or NI, for the
primary efficacy endpoint was achieved if the lower bound of the 95% confidence interval for the between-group difference of the mean hemoglobin change
did not fall below the pre-specified NI margin. Both the INNO VATE and PRO TECT programs included the primary safety endpoint of the assessment of MACE,
with a comparison of vadadustat to darbepoe n alfa. MACE is defined as the composite endpoint of all-cause mortality, non-fatal myocardial infarc on, or
non-fatal stroke. The primary safety analysis for each program was based on the combined MACE events from the two studies in each of INNO VATE and
PRO TECT. NI for the primary safety analysis was achieved if the upper bound of the 95% confidence interval for the hazard ra o of vadadustat to darbepoe n
alfa did not exceed the pre-specified NI margin. We prospec vely defined and agreed to non-inferiority margins with the U.S. and European regulatory
authori es and agreed with the U.S. regulatory authori es on the key components of our sta s cal analysis plan.
2
2
2
2
Top-line Results from Global Phase 3 INNO VATE Program within DD-CKD Adult Pa ents
2
The two INNO VATE studies (Correc on/Conversion and Conversion), which collec vely enrolled 3,923 pa ents, evaluated the efficacy and safety of
vadadustat versus darbepoe n alfa for the treatment of anemia due to CKD in DD-CKD adult pa ents.
2
Vadadustat achieved the primary and key secondary efficacy endpoint in each of the two INNO VATE studies, demonstra ng non-inferiority to darbepoe n
alfa as measured by a mean change in hemoglobin, or Hb, between baseline and the primary evalua on period (weeks 24 to 36) and secondary evalua on
period (weeks 40 to 52). Vadadustat also achieved the primary safety endpoint of the INNO VATE program, defined as non-inferiority of vadadustat versus
darbepoe n alfa in me to first occurrence of MACE across both INNO VATE studies.
2
2
2
Primary and Key Secondary Efficacy Endpoint Results
Vadadustat achieved each of the INNO VATE studies’ primary efficacy endpoints of mean change in Hb between baseline and the primary evalua on period
compared to darbepoe n alfa, in DD-CKD adult pa ents, demonstra ng non-inferiority to darbepoe n alfa based on using a non-inferiority margin of -0.75
g/dL.
2
In INNO VATE’s Correc on/Conversion study of incident dialysis pa ents (n=369):
2
•
•
Primary Efficacy Endpoint Result: Vadadustat was non-inferior to darbepoe n alfa. The least square mean difference in Hb was -0.31 g/dL
(95% CI: -0.53, -0.10), achieving the pre-specified non-inferiority criterion of -0.75 g/dL. The mean (SD) Hb level at week 24 to week 36 was
10.36 (1.13) g/dL for vadadustat-treated pa ents compared to 10.61 (0.94) g/dL for darbepoe n alfa-treated pa ents.
Key Secondary Efficacy Endpoint Result: Vadadustat sustained the target Hb efficacy response at weeks 40 to 52 achieving non-inferiority
compared to darbepoe n alfa. The least square mean difference in Hb was -0.07 g/dL (95% CI: -0.34, 0.19). The mean (SD) Hb level at week
40 to week 52 was 10.51 (1.19) g/dL for vadadustat treated-pa ents compared to 10.55 (1.14) g/dL for darbepoe n alfa-treated pa ents.
In INNO VATE’s Conversion study of prevalent dialysis pa ents (n=3,554):
2
•
•
Primary Efficacy Endpoint Result: Vadadustat was non-inferior to darbepoe n alfa. The least square mean difference in Hb was -0.17 g/dL
(95% CI: -0.23, -0.10), achieving the pre-specified non-inferiority criterion of -0.75 g/dL. The mean (SD) Hb level at week 24 to week 36 was
10.36 (1.01) g/dL for vadadustat-treated pa ents compared to 10.53 (0.96) g/dL for darbepoe n alfa-treated pa ents.
Key Secondary Efficacy Endpoint Result: Vadadustat sustained efficacy in the Conversion study demonstra ng non-inferiority to
darbepoe n with a least square mean difference in Hb of -0.18 g/dL (95% CI: -0.25, -0.12). The mean (SD) Hb level at week 40 to week 52
was 10.40 (1.04) g/dL in the vadadustat-treated pa ents compared to 10.58 (0.98) g/dL for darbepoe n treated pa ents.
Akebia Therapeu cs, Inc. | Form 10-K | Page 12
Table of Contents
Primary Safety Major Adverse Cardiovascular Events (MACE) Endpoint Result
Vadadustat achieved the INNO VATE program’s primary safety endpoint of non-inferiority for MACE. In the primary analysis of me to first MACE event,
vadadustat demonstrated non-inferiority to darbepoe n alfa using a non-inferiority margin of 1.25 based on discussion with the FDA and a non-inferiority
margin of 1.3 based on discussion with the EMA.
2
The INNO VATE program (Correc on/Conversion and Conversion studies) of dialysis pa ents (n=3,902):
2
•
Vadadustat was non-inferior to darbepoe n alfa. The upper bound of the 95% confidence interval (CI) of the Hazard Ra o (HR) was below
the pre-specified non-inferiority margin of 1.25 for primary MACE analysis (HR 0.96, 95% CI: 0.83, 1.11.).
The incidence of treatment emergent adverse events, or TEAEs, during the Correc on/Conversion study in vadadustat treated pa ents was 83.8% and 85.5 %
in darbepoe n alfa treated pa ents. During the study, the most common TEAEs reported in vadadustat/darbepoe n alfa treated pa ents were hypertension
(16.2%/ 12.9%) and diarrhea (10.1%/ 9.7%). Serious TEAEs were lower in vadadustat treated pa ents at 49.7% compared to 56.5% for darbepoe n alfa
treated pa ents. The incidence of TEAEs during the Conversion study in the vadadustat treated pa ents was 88.3%, and 89.3% in darbepoe n alfa treated
pa ents. During the study, the most common TEAEs reported in vadadustat/darbepoe n alfa treated pa ents were diarrhea (13.0%/ 10.1%), pneumonia
(11.0%/ 9.7%), hypertension (10.6%/ 13.8%), and hyperkalemia (9.0%/ 10.8%). Serious TEAEs were slightly lower for vadadustat treated pa ents at 55.0% and
58.3% for darbepoe n alfa-treated pa ents. Pa ents with DD-CKD experienced an increased risk of thromboembolic events compared to darbepoe n alfa
with a me to first event HR of 1.20 (95% CI 0.96 –- 1.50) driven by thrombosis of vascular access.
2
INNO VATE results on key secondary safety endpoints showed that vadadustat also demonstrated non-inferiority to darbepoe n alfa in analyses of expanded
MACE, cardiovascular MACE, cardiovascular mortality, and all-cause mortality.
Top-line Results from Global Phase 3 PRO TECT Program within NDD-CKD Adult Pa ents
2
The two PRO TECT studies (Correc on and Conversion), which collec vely enrolled 3,476 pa ents, evaluated the efficacy and safety of vadadustat for the
treatment of anemia due to CKD in NDD-CKD adult pa ents.
2
Vadadustat achieved the primary and key secondary efficacy endpoint in each of the two PRO TECT studies, demonstra ng non-inferiority to darbepoe n alfa
as measured by a mean change in Hb between baseline and the primary evalua on period (weeks 24 to 36) and secondary evalua on period (weeks 40 to
52). Vadadustat did not meet the primary safety endpoint of the PRO TECT program, defined as non-inferiority of vadadustat versus darbepoe n alfa in me
to first occurrence of MACE, across both PRO TECT studies.
2
2
2
Primary and Key Secondary Efficacy Endpoint Results
Vadadustat achieved each of the PRO TECT studies' primary efficacy endpoints of mean change in Hb between baseline and the primary evalua on period
compared to darbepoe n alfa, in adult pa ents on dialysis, demonstra ng non-inferiority to darbepoe n alfa using an NI margin of -0.75 g/dL.
2
In PRO TECT's Correc on study (n=1,751):
2
•
•
Primary Efficacy Endpoint Result: Vadadustat was non-inferior to darbepoe n alfa. The least square mean difference in Hb was 0.05 g/dL
(95% CI: -0.04, 0.15), achieving the pre-specified NI criterion of -0.75 g/dL. The mean (SD) Hb level at week 24 to week 36 was 10.39 (0.99)
g/dL for vadadustat-treated pa ents compared to 10.35 (1.03) g/dL for darbepoe n alfa-treated pa ents.
Key Secondary Efficacy Endpoint Result: Vadadustat sustained the target Hb efficacy response at weeks 40 to 52 achieving non-inferiority
compared to darbepoe n alfa. The least square mean difference in Hb was 0.04 g/dL (95% CI: -0.06, 0.14). The mean (SD) Hb level at week
40 to week 52 was 10.48 (1.05) g/dL for vadadustat-treated pa ents compared to 10.45 (1.01) g/dL for darbepoe n alfa-treated pa ents.
In PRO TECT's Conversion study (n=1,725):
2
•
•
Primary Efficacy Endpoint Result: Vadadustat was non-inferior to darbepoe n alfa. The least square mean difference in Hb was -0.01 g/dL
(95% CI: -0.09, 0.07), achieving the pre-specified NI criterion of -0.75 g/dL. The mean (SD) Hb level at week 24 to week 36 was 10.77 (0.98)
g/dL for vadadustat-treated pa ents compared to 10.77 (0.99) g/dL for darbepoe n alfa-treated pa ents.
Key Secondary Efficacy Endpoint Result: Vadadustat sustained efficacy in the Conversion study demonstra ng non-inferiority to
darbepoe n with a least square mean difference in Hb of 0.00 g/dL (95% CI: -0.10, 0.09). The mean (SD) Hb level at week 40 to week 52
was 10.80 (1.04) g/dL in the vadadustat-treated pa ents compared to 10.79 (1.05) g/dL for darbepoe n alpha-treated pa ents.
Akebia Therapeu cs, Inc. | Form 10-K | Page 13
Table of Contents
Primary Safety Major Adverse Cardiovascular Events (MACE) Endpoint Result
The PRO TECT program (Correc on and Conversion studies) (n=3,471):
2
•
Primary Safety MACE Endpoint Result: Vadadustat did not meet the PRO2TECT program's primary safety endpoint of non-inferiority for
MACE. The upper bound of the 95% confidence interval of the Hazard Ra o (HR) was above the pre-specified NI margin of 1.25 for primary
MACE analysis (HR 1.17, 95% CI: 1.01, 1.36).
Analysis of MACE events conducted by Akebia in the PRO TECT program revealed that the greater number of MACE events observed among vadadustat
pa ents as compared to the ac ve comparator was primarily related to an excess of non-cardiovascular death and death-of-unknown-cause in regions
outside of the U.S. where significant differences in treatment pa erns for NDD-CKD pa ents were observed.
2
2
The PRO TECT analysis plan was prospec vely designed to analyze the effect of regional differences, most notably, well-known differences in Hb treatment
targets. Within PRO TECT, U.S. pa ents were treated to a target Hb range of 10 to 11 g/dL and non-U.S. pa ents were treated to a target Hb range of 10 to 12
g/dL. In October of 2020, we presented a pre-specified regional analysis that showed vadadustat was not associated with a clinically meaningful increase in
cardiovascular risk compared to darbepoe n alfa in U.S. pa ents treated to a target Hb range of 10 to 11 g/dL, in an analysis of MACE (HR 1.06, 95% CI: 0.87,
1.29).
2
The incidence of TEAEs during the Correc on study in the vadadustat-treated pa ents was 90.9%, and 91.6% in darbepoe n alfa-treated pa ents. During the
study, the most common TEAEs reported in vadadustat/darbepoe n alfa-treated pa ents were end-stage renal disease (34.7%/ 35.2%), hypertension (17.7%/
22.1.%), hyperkalemia (12.3.%/ 15.6%), urinary tract infec on (12.9%/ 12.0%), diarrhea (13.9%/ 10.0%), peripheral oedema (12.5%/ 10.5%), fall (9.6%/ 10%)
and nausea (10%/ 8.2%). Serious TEAEs were 65.3% for vadadustat-treated pa ents and 64.5% for darbepoe n alfa-treated pa ents. The incidence of TEAEs
during the Conversion study in vadadustat treated pa ents was 89.1% and 87.7% in darbepoe n alfa-treated pa ents. During the study, the most common
TEAEs reported in vadadustat/darbepoe n alfa-treated pa ents were end-stage renal disease (27.5%/ 28.4%), hypertension (14.4%/ 14.8%), urinary tract
infec on (12.2%/ 14.5%), diarrhea (13.8.%/ 8.8.%), peripheral oedema (9.9%/ 10.1%) and pneumonia (10.0%/ 9.7%). Serious TEAEs were 58.5% for
vadadustat-treated pa ents and 56.6% for darbepoe n alfa-treated pa ents.
Hepa c Safety Profile of Vadadustat in Clinical Studies
During the conduct of our Phase 3 program our team and hepa c experts analyzed hepa c cases (unblinded to treatment). Further, following the comple on
of our global Phase 3 clinical program for vadadustat, there was a review of hepa c safety across the vadadustat clinical program, which included eight
completed Phase 2 and 3 studies in NDD-CKD pa ents, 10 completed Phase 1, 2, and 3 studies, and two then-ongoing Phase 3b studies in DD-CKD pa ents,
and 18 completed studies in healthy subjects (17 Phase 1 and one Phase 3). This review consisted of a blinded re-assessment of hepa c events conducted by
a separate panel of hepa c experts. While hepatocellular injury a ributed to vadadustat was reported in less than 1% of pa ents, there was one case of
severe hepatocellular injury with jaundice, and we cannot guarantee that similar events will not happen in the future. Addi onally, the FDA expressed safety
concerns related to the risk of drug-induced liver injury in the CRL that it issued in March 2022.
Modified Dosing Studies
From May 2020 to January 2023, we also conducted addi onal studies of vadadustat evalua ng a modified approach to a once-daily and three- mes weekly
dosing, including assessment of a vadadustat star ng dose based on an individual’s pre-conversion ESA dose prior to study entry and higher tra on doses of
vadadustat (up to 1200 mg).
2
The FO CUS study evaluated the efficacy and safety of vadadustat in hemodialysis pa ents who were converted from a long-ac ng ESA to three- mes weekly
oral vadadustat dosing for the maintenance treatment of anemia. FO CUS was an open-label, ac ve-controlled, sponsor-blinded study that evaluated 456
hemodialysis pa ents who were randomized (1:1:1) into a vadadustat 600mg star ng dose, vadadustat 900mg star ng dose, or a long-ac ng ESA (Mircera®)
treatment arms.
2
The MO DIFY study evaluated the efficacy and safety of vadadustat in hemodialysis pa ents using a modified once-daily dosing regimen different from the
INNO VATE program dosing and a three- mes-weekly dosing regimen of oral vadadustat compared to darbepoe n alfa.
2
2
FO CUS Study
2
Primary and Secondary Efficacy Endpoint Results
2
In the FO CUS study, each vadadustat star ng dose regimen (600 mg, 900 mg) and the combined vadadustat-treated group achieved the primary efficacy
endpoint of the mean change in Hb between baseline and the primary evalua on period (weeks 20-26) compared to Mircera in adult pa ents on
hemodialysis, demonstra ng non-inferiority to Mircera based on a non-inferiority margin of -0.75 g/dL. Similarly, each star ng dose regimen of vadadustat
and the combined vadadustat-treated
Akebia Therapeu cs, Inc. | Form 10-K | Page 14
Table of Contents
group achieved the secondary efficacy endpoint of the mean change in Hb between baseline and the secondary evalua on period (weeks 46-52).
In the FO CUS study in hemodialysis pa ents (n=456):
2
•
•
Primary Efficacy Endpoint Results: Vadadustat demonstrated non-inferiority to Mircera. The least square mean difference in Hb was -0.43
g/dL (-0.67, -0.20) for the vadadustat 600 mg star ng dose group, -0.23 g/dL (-0.46, 0.01) for the vadadustat 900 mg star ng dose group,
and -0.33 g/dL (-0.53, -0.13) for the combined vadadustat-treated group, achieving the pre-specified non-inferiority margin of -0.75 g/dL.
The mean Hb level during the primary evalua on period was 10.11 (0.061) g/dL for the combined vadadustat-treated group compared to
10.41 (0.068) g/dL for Mircera-treated group.
Secondary Efficacy Endpoint Results: Vadadustat demonstrated non-inferiority to Mircera. The least square mean difference in Hb was
-0.27 g/dL (-0.54, -0.00) for the vadadustat 600 mg star ng dose group, -0.38 g/dL (-0.67, -0.10) for the vadadustat 900 mg star ng dose
group, and -0.33 g/dL (-0.56, -0.09) for the combined vadadustat-treated group. The mean Hb level during the secondary evalua on period
was 10.03 (0.066) g/dL for the combined vadadustat-treated group compared to 10.28 (0.076) g/dL for the Mircera-treated group.
Safety Results
2
In the FO CUS study, a total of 78.7% of pa ents experienced any TEAEs in the combined vadadustat-treated group, and 75.3% experienced any TEAEs in the
Mircera-treated group. The data demonstrated that 44.5% of pa ents experienced any serious TEAEs in the combined vadadustat-treated group, and 44.7%
of pa ents experienced any serious TEAEs in the Mircera-treated group. During the study, the most common TEAEs reported in vadadustat-/Mircera- treated
pa ents were COVID-19 (14.6%/16.0%), diarrhea (12.3%/8.0%) and hyperkalaemia (9.0%/10.7%).
MO DIFY Study
2
Primary and Secondary Efficacy Endpoint Results
2
In the MO DIFY study, the vadadustat once-daily, or QD, treatment (star ng dose: 300 or 450 mg) achieved the primary efficacy endpoint of the mean change
in Hb from baseline to the primary evalua on period (weeks 20-26) compared to darbepoe n alfa in adult pa ents on hemodialysis, demonstra ng non-
inferiority to darbepoe n alfa based on a non-inferiority margin of -0.75 g/dL. Vadadustat three- mes-weekly, or TIW, treatment (star ng dose: 600 or 750)
did not demonstrate noninferiority to darbepoe n alfa. Based on a sensi vity analysis using the per protocol popula on, both vadadustat dosing regimens
demonstrated noninferiority to darbepoe n alfa of the mean change in Hb between baseline and the primary evalua on period.
Neither dosing regimen of vadadustat achieved the secondary efficacy endpoint of the mean change in Hb between baseline and the secondary evalua on
period (weeks 46-52).
In the MO DIFY study in hemodialysis pa ents (n=319):
2
•
•
•
Primary Efficacy Endpoint Results: Vadadustat QD treatment was non-inferior to darbepoe n alfa. The least square mean difference in Hb
was -0.27 g/dL (-0.55, 0.01) for the vadadustat QD-treated group, mee ng the pre-specified non-inferiority margin of -0.75 g/dL. The least
square mean difference in Hb was -0.53 g/dL (-0.80, -0.25) for the vadadustat TIW-treated group. The mean Hb level during the primary
evalua on period was 10.23 (1.07) g/dL and 10.02 (0.87) g/dL for the vadadustat QD and vadadustat TIW groups respec vely, compared to
10.45 (0.83) g/dL for the darbepoe n alfa group.
Secondary Efficacy Endpoint Results: The secondary efficacy endpoint was the change in average Hb between baseline and the secondary
evalua on period (Weeks 46 to 52). The least square mean difference in Hb was -0.40 g/dL (-0.79, -0.02) for the vadadustat QD-treated
group and -0.42 g/dL (-0.81, -0.02) for the vadadustat TIW-treated group. Since noninferiority for the secondary efficacy endpoint of
vadadustat TIW to darbepoe n alfa was not established, no claims of noninferiority were made for the secondary efficacy endpoint.
Other efficacy Endpoint: The propor on of subjects with an average Hb value within the target range (US [10.0 to 11.0 g/dL] and Europe
[10.0 to 12.0 g/dL]) was similar in the vadadustat QD, vadadustat TIW and darbepoe n alfa treatment groups during the primary evalua on
period (weeks 20 to 26) (51.0%, 50.7%, and 54.5%, respec vely) and secondary evalua on period (weeks 46 to 52) (50.4%, 48.3%, and
51.3%, respec vely).
Safety Results
Akebia Therapeu cs, Inc. | Form 10-K | Page 15
Table of Contents
Among all randomized pa ents who received at least one dose of the study medica on (n=317), 84.8% and 84.6% of pa ents in the vadadustat QD and TIW
groups, respec vely, experienced any TEAEs, compared to 80.6% in the darbepoe n alfa group. The data showed that 44.8% of pa ents in the vadadustat QD
group and 45.2% in the vadadustat TIW group experienced any treatment-emergent serious adverse events, compared to 43.5% of pa ents in the
darbepoe n alfa group. The most commonly reported TEAEs in pa ents treated with vadadustat QD, vadadustat TIW, and darbepoe n alfa were COVID-19
(13.3%, 12.5%, and 13.0% respec vely), diarrhea (13.3%, 14.4%, and 5.6% respec vely), and anemia (7.6%, 10.6%, and 9.3% respec vely).
Pipeline
We con nue to add to our pipeline and por olio of novel therapeu cs through internal research, discovery and development. We have invested resources to
build out a preclinical por olio and have selected two candidates for further preclinical development: AKB-9090, a drug targe ng cri cal-care indica ons, and
AKB-10108, a drug targe ng condi ons related to premature birth. We intend to explore AKB-9090 for poten al use in AKI and ARDS, and AKB-10108 for
poten al use in ROP.
Acute Kidney Injury (AKI)
AKI is a sudden decline in the ability of the kidneys to work and perform their normal func ons. AKI occurs in 20-30% of the approximately two million
pa ents that undergo cardiac surgeries annually and there are no current treatments available for cardiovascular surgery-related AKI.
Stabiliza on of HIF by prolyl hydroxylase inhibi on leads to the release of erythropoie n, a shi to anaerobic metabolism (glycolysis) and decreased
inflammatory responses that collec vely lessen kidney ischemia-reperfusion injury and ameliorate the decline in kidney func on. Data from our preclinical
studies showed AKB-9090 to be highly ac ve in lessening the severity of AKI in an animal model of ischemia-reperfusion injury.
Acute Respiratory Distress Syndrome (ARDS)
ARDS is a life-threatening acute form of lung disease characterized by acute bilateral pulmonary edema and severe hypoxemia (low blood oxygen). Despite
improvement in suppor ve care, a third-party study indicated high hospital mortality rates for pa ents with ARDS admi ed to par cipa ng intensive care
units. The mortality rate among pa ents with ARDS in the study was: 34.9% with mild ARDS; 40.3% with moderate ARDS and 46.1% with severe ARDS. There
are currently no treatments available for ARDS except for suppor ve care.
Stabiliza on of HIF by prolyl hydroxylase inhibi on leads to the release of erythropoie n, increased extracellular adenosine signaling, increased glycoly c
ac vity and decreased inflamma on in lung epithelial cells that promote resolu on of the lung injury. Vadadustat lessened the severity of COVID-19
pneumonia in a clinical trial (NCT04478071) and improved outcomes in animal models of acute lung injury. We plan to conduct a trial with vadadustat for the
treatment of ARDS due to suspected aspira on, pathogen-associated pneumonia, or sepsis in hospitalized pa ents, which could further validate the
therapeu c approach for HIF stabiliza on in ARDS and provide clinical data to support clinical development of an alterna ve HIF-based molecule such as AKB-
9090 for ARDS. Based on the data and our strategic business considera ons, we may not pursue vadadustat as a treatment for ARDS.
Re nopathy of Prematurity (ROP)
ROP is the leading cause of blindness in preterm infants globally and occurs due to incomplete re nal development and abnormal blood vessel growth in the
re na. ROP is caused by the high oxygen therapy used to treat preterm babies, which prevents re na growth. Annually, there are approximately 100,000 new
cases of infant blindness worldwide due to ROP and currently no preventa ve therapy.
HIF-PH inhibitors can protect the re na by stabilizing HIF, which degrades during hyperoxia, allowing normal re nal development and preven ng abnormal
blood vessel growth that can lead to scarring, bleeding, re nal detachment and blindness. Data from our preclinical studies of AKB-10108 in mouse and rat
models of ROP showed significant improvements in re nal development under hyperoxic condi ons, as well as significant reduc ons in abnormal blood
vessel growth a er returning to normal oxygen levels.
Manufacturing and Supply
Overview
We neither own nor operate, and currently have no plans to own or operate, any manufacturing or distribu on facili es. We rely on third-party contract
manufacturing organiza ons, or CMOs, to produce all of our preclinical, clinical and commercial supply, and third-party distributors to distribute Auryxia. We
have established rela onships with several CMOs and expect to con nue to rely on either exis ng or alterna ve distributors and CMOs to distribute our
products and supply our ongoing and planned preclinical studies and clinical trials and for commercial produc on. Our CMOs have other clients and may have
other priori es that could affect their ability to perform the work sa sfactorily and/or on a mely basis. Both of these occurrences
Akebia Therapeu cs, Inc. | Form 10-K | Page 16
Table of Contents
would be beyond our control. All clinical and commercial supplies are manufactured under current Good Manufacturing Prac ces, or cGMPs, which is a
regulatory standard for the produc on of pharmaceu cals that will be used in humans.
Vadadustat
We currently rely on a single-source supplier for the direct manufacture of our drug substance and drug product for clinical and commercial supply of
vadadustat. We have entered into supply agreements with STA Pharmaceu cal Hong Kong Limited, or STA, for the manufacture of vadadustat drug substance
and drug product for commercial use. We plan to mi gate poten al commercial supply risks for vadadustat, if any, through inventory management and we
may enter into addi onal manufacturing arrangements for both drug substance and drug product if vadadustat is approved in the U.S.
Vadadustat is a small molecule. The synthesis of vadadustat is reliable and reproducible from star ng materials available from mul ple sources at
commercially relevant scale using no unusual manufacturing equipment. Vadadustat can be formulated into compressed tablets using proprietary processes.
As with any supply program, obtaining raw materials and finished drug product of the required quality and quan ty cannot be guaranteed, and we cannot
ensure that we will be successful in this endeavor.
Auryxia
The ac ve pharmaceu cal ingredient of Auryxia, ferric citrate, is a small molecule. The synthesis of ferric citrate is reliable and reproducible from star ng
materials available from mul ple sources at commercially relevant scale. Ferric citrate can be formulated into compressed tablets using proprietary
manufacturing processes. As with any supply program, obtaining raw materials and finished drug product of the required quality and quan ty cannot be
guaranteed, and we cannot ensure that we will be successful in this endeavor.
We u lize third par es for the commercial distribu on of Auryxia, including wholesale distributors and certain specialty pharmacy providers. We have also
engaged Cardinal Health as the exclusive third-party logis cs distribu on agent for commercial sales of Auryxia. The third-party logis cs provides services to
the Company that include storage, distribu on, processing product returns, customer service support, logis cs support, electronic data interface and system
access support
We have established CMO rela onships for the supply of Auryxia to help ensure that we will have sufficient material for ongoing commercial sales and clinical
trials. We currently rely on a single-source supplier for the manufacture of our drug substance for clinical and commercial supply of Auryxia. The drug
substance for Auryxia is supplied by Siegfried Evionnaz SA, pursuant to a supply agreement, as amended, with pricing structured on a per-kilogram basis.
Auryxia drug product is supplied by Patheon Manufacturing Services LLC (Thermo Fisher) pursuant to a Master Manufacturing Service Agreement with per-
bo le pricing structured on a ered basis, with the price reduced as the product volume increases. These agreements require that we sa sfy certain
minimum purchase requirements, but we are not obligated to use them as our exclusive suppliers. For more informa on about our manufacturing
agreements for Auryxia, see Part II, Item 7. Management’s Discussion and Analysis and Note 10, Commitments and Con ngencies, to our consolidated
financial statements in Part II, Item 8. Financial Statements and Supplementary Data.
License and Collabora on Agreements
Vadadustat License and Collabora on Agreements
Medice License Agreement
On May 24, 2023, or the Medice Effec ve Date, we entered into the Medice License Agreement with Medice, under which we granted to Medice an exclusive
license to develop and commercialize vadadustat for the treatment of anemia in adult pa ents with chronic kidney disease in the Medice Territory.
Under the Medice License Agreement, we received an up-front payment of $10.0 million and are eligible to receive the following payments:
(i) commercial milestone payments up to an aggregate of $100.0 million, and
(ii) ered royal es ranging from 10% to 30% of Medice's annual net sales of vadadustat in the Medice Territory, subject to reduc on in certain
circumstances.
The royal es will expire on a country-by-country basis upon the latest to occur of (i) the date of expira on of the last-to-expire valid claim of ours, Medice or
joint patent that covers vadadustat in such country in the Medice Territory, (ii) the date of expira on of data or regulatory exclusivity for vadadustat in such
country in the Medice Territory and (iii) the date that is 12 years from first commercial sale of vadadustat in such country in the Medice Territory.
Under the Medice License Agreement, we retain the right to develop vadadustat for non-dialysis pa ents with anemia due to chronic kidney disease in the
Medice Territory. If we develop vadadustat for non-dialysis pa ents and vadadustat receives marke ng approval for non-dialysis pa ents in the Medice
Territory, Medice will commercialize vadadustat for both
Akebia Therapeu cs, Inc. | Form 10-K | Page 17
Table of Contents
indica ons in the Medice Territory. In this instance, we would receive 70% of the net product margin of any sales of vadadustat in the non-dialysis pa ent
popula on, unless Medice requests to share the cost of the development necessary to gain approval to market vadadustat for non-dialysis pa ents in the
Medice Territory and the par es agree on alterna ve financial terms.
We and Medice established a joint steering commi ee to oversee the development and commercializa on of vadadustat in the Medice Territory.
The Medice License Agreement expires on the date of expira on of all payment obliga ons due thereunder with respect to vadadustat in the last country in
the Medice Territory, unless earlier terminated in accordance with the terms of the Medice License Agreement. Either party may, subject to a cure period,
terminate the Medice License Agreement in the event of the other party's uncured material breach. Medice has the right to terminate the Medice License
Agreement in its en rety for convenience upon twelve months' prior wri en no ce delivered on or a er the date that is twelve months a er the Medice
Effec ve Date.
The Medice License Agreement includes customary terms rela ng to, among others, indemnifica on, confiden ality, remedies, and representa ons and
warran es. The Medice License Agreement provides that we and Medice will enter into a supply agreement pursuant to which we will supply vadadustat to
Medice for commercial use in the Medice Territory. We are currently nego a ng the terms of the supply agreement with Medice.
MTPC Collabora on Agreement
In December 2015, we entered into a collabora on agreement with MTPC, as amended, or the MTPC Agreement, providing MTPC with exclusive
development and commercializa on rights to vadadustat in Japan and certain other Asian countries, or the MTPC Territory. In addi on, we supply vadadustat
to MTPC for both clinical and commercial use in the MTPC Territory, subject to MTPC’s op on to manufacture commercial drug product in the MTPC Territory.
On July 15, 2020, we entered into a supply agreement with MTPC for the commercial supply of vadadustat for use in Japan and certain other Asian countries,
as contemplated by the MTPC Agreement, which was amended effec ve as of December 5, 2022.
Unless earlier terminated, the MTPC Agreement will con nue in effect on a country-by-country basis un l the later of the following: (i) expira on of the last-
to-expire patent covering vadadustat in such country in the MTPC Territory; (ii) expira on of marke ng or regulatory exclusivity in such country in the MTPC
Territory; or (iii) ten years a er the first commercial sale of vadadustat in such country in the MTPC Territory. MTPC may terminate the MTPC Agreement upon
twelve months’ no ce. Either party may terminate the MTPC Agreement upon the material breach of the other party that is not cured within a specified me
period or upon the insolvency of the other party.
Under the terms of the MTPC Agreement, we are eligible to receive payments from MTPC of up to approximately $225.0 million in the aggregate based on
the achievement of certain development, regulatory and sales milestones, as well as ered royalty payments ranging from 13% to 20% on annual net sales of
vadadustat in the MTPC Territory, subject to reduc on upon launch of a generic product on a country-by-country basis.
In February 2021, we entered into a royalty interest acquisi on agreement with HealthCare Royalty Partners IV, L.P., or HCR, whereby we sold our right to
receive royal es and sales milestones for vadadustat in Japan and certain other Asian countries in the MTPC territory under the MTPC Agreement, subject to
certain caps and other terms and condi ons. For more informa on on our royalty interest acquisi on agreement with HCR, see Note 8, Deferred Revenue,
Refund Liability and Liability Related to Sale of Future Royal es, to our consolidated financial statements in Part II, Item 8. Financial Statements and
Supplementary Data of this Form 10-K.
CSL Vifor License Agreement
The Vifor Agreement grants CSL Vifor an exclusive license to sell vadadustat to the Supply Group in the Vifor Territory. We currently retain rights to
commercialize vadadustat for use in the non-dialysis dependent CKD market, to market vadadustat to the Supply Group and to market and sell to dialysis
organiza ons outside of the Supply Group. During the term of the Vifor Agreement, CSL Vifor is not permi ed to sell any HIF product that competes with
vadadustat in the Vifor Territory to the Supply Group. The Vifor Agreement provides that we will enter into a commercial supply agreement with CSL Vifor for
vadadustat pursuant to which we will supply all of CSL Vifor’s requirements for vadadustat in the Vifor Territory. We have not yet entered into a supply
agreement with CSL Vifor.
The Vifor Agreement is structured as a profit share arrangement between us and CSL Vifor in which we will receive approximately 66% of the profit, net of
certain pre-specified costs. In connec on with the amendment and restatement of the Vifor Agreement in February 2022, CSL Vifor made an upfront payment
to us of $25.0 million. In addi on, we entered into certain investment agreements with CSL Vifor, pursuant to which we sold CSL Vifor an aggregate of
7,571,429 shares of our common stock for a total of $70.0 million. The shares have not been registered pursuant to the Securi es Act of 1933, as amended, or
the Securi es Act, and were issued and sold in reliance upon the exemp on from registra on contained in
Akebia Therapeu cs, Inc. | Form 10-K | Page 18
Table of Contents
Sec on 4(a)(2) of the Securi es Act and Rule 506 promulgated thereunder as the transac on did not involve any public offering within the meaning of Sec on
4(a)(2) of the Securi es Act. Finally, CSL Vifor contributed $40.0 million to a working capital facility, or Working Capital Fund, established to par ally fund our
costs of purchasing vadadustat from our contract manufacturers. The amount available under the Working Capital Fund is reviewed at specified intervals and
is adjusted based on a number of factors including outstanding supply commitments for vadadustat for the Vifor Territory and agreed upon vadadustat
inventory levels held by us for the Vifor Territory. Addi onally, upon termina on or expira on of the Vifor Agreement for any reason other than convenience
by CSL Vifor (including following receipt of the CRL for vadadustat), we will be required to refund the outstanding balance of the Working Capital Fund on the
date of termina on or expira on.
Unless earlier terminated, the Vifor Agreement will expire upon the later of the expira on of all patents that claim or cover vadadustat or the expira on of
marke ng or regulatory exclusivity for vadadustat in the Vifor Territory. CSL Vifor may terminate the Vifor Agreement in its en rety upon 30 months’ prior
wri en no ce a er the first anniversary of the receipt of regulatory approval, if approved, from the FDA for vadadustat for dialysis-dependent CKD pa ents.
We may terminate the Vifor Agreement in its en rety for convenience, following the earlier of a certain period of me elapsing or following certain specified
regulatory events, and upon six months’ prior wri en no ce. If we terminate for convenience, subject to a specified excep on, we will pay a termina on fee
to CSL Vifor. In addi on, either party may, subject to a cure period, terminate the Vifor Agreement in the event of the other party’s uncured material breach
or bankruptcy. We may also terminate the Vifor Agreement upon the occurrence of certain other events.
Auryxia License and Collabora on Agreements
Averoa License Agreement
On December 22, 2022, we and Averoa entered into a license agreement, or Averoa License Agreement, pursuant to which we granted to Averoa an exclusive
license to develop and commercialize ferric citrate, or Averoa Licensed Product, in the EEA, Turkey, Switzerland and the United Kingdom, or Averoa Territory.
We and Averoa have established a joint steering commi ee to oversee the development, manufacturing and commercializa on of the Averoa Licensed
Product in the Averoa Territory. We expect Averoa will apply for marke ng authoriza on for ferric citrate in Europe.
Under the Averoa License Agreement, we are en tled to receive ered, escala ng royal es ranging from a mid-single digit percentage to a low double-digit
percentage of Averoa's annual net sales of the Averoa Licensed Product in the Averoa Territory, including certain minimum royalty amounts in certain years,
and subject to reduc on in certain circumstances. The royal es will expire on a country-by-country basis upon the last to occur of (a) ten years following the
date of first commercial sale of the Licensed Product in such country; (b) expira on of the last valid claim of our patent rights and joint patent rights in such
country; and (c) the date of expira on of the data, regulatory, or marke ng exclusivity period conferred by the applicable regulatory authority in such country
with respect to the Licensed Product. We have not received royal es from Averoa. As of December 31, 2023, we have not received any considera on under
this agreement.
The Averoa License Agreement expires on the date of expira on of all royalty obliga ons due thereunder with respect to the Averoa Licensed Product on a
country-by-country basis in the Averoa Territory, unless earlier terminated in accordance with the Averoa License Agreement.
The Averoa License Agreement provides that we and Averoa will enter into a supply agreement pursuant to which we will supply the Averoa Licensed Product
to Averoa for commercial use in the Averoa Territory. We will have the right to terminate the supply agreement upon twenty-four months' no ce. We have
not yet entered into a supply agreement with Averoa.
Sublicense Agreement with Japan Tobacco Inc. and Torii Pharmaceu cal Co., Ltd.
In September 2007, we entered into a Sublicense Agreement with JT and Torii, under which JT and Torii obtained the exclusive sublicense rights for the
development and commercializa on of ferric citrate in Japan. Effec ve June 8, 2009, we entered into an Amended and Restated Sublicense Agreement, which
was amended in June 2013, or the Revised Agreement, with JT and Torii.
In January 2014, JT and Torii received manufacturing and marke ng approval of ferric citrate from the Japanese Ministry of Health, Labour and Welfare. Ferric
citrate hydrate, which launched in May 2014 and is being marketed in Japan by Torii under the brand name Riona, is indicated as an oral treatment for the
improvement of hyperphosphatemia in pa ents with CKD, including NDD-CKD and DD-CKD. In July 2019, JT and Torii, reported posi ve top-line results from a
pivotal Phase 3 compara ve study evalua ng Riona for the treatment of IDA in adult pa ents in Japan, which was approved in March 2021. In May 2020, JT
and Torii filed an applica on for approval of IDA as an addi onal indica on for Riona in Japan. Under the terms of the Revised Agreement with JT and Torii, we
are eligible to receive royalty payments based on a ered low double-digit percentage of net sales of Riona in Japan inclusive of amounts that we must pay to
Panion on JT and Torii’s net sales of Riona under the Panion Amended License Agreement, subject to certain reduc ons upon expira on or termina on of the
Panion Amended License Agreement, and may also receive up to an addi onal $55.0 million upon the achievement of certain annual
Akebia Therapeu cs, Inc. | Form 10-K | Page 19
Table of Contents
net sales milestones. We recorded $5.4 million in license revenue related to royal es earned on net sales of Riona in Japan during the twelve months ended
December 31, 2023.
The sublicense under the Revised Agreement terminates upon the expira on of all underlying patent rights. Also, JT and Torii may terminate the Revised
Agreement with or without cause upon at least six months prior wri en no ce to us. Addi onally, either party may terminate the Revised Agreement for
cause upon 60 days’ prior wri en no ce a er the breach of any uncured material provision of the Revised Agreement, or a er certain insolvency events.
License Agreement with Panion & BF Biotech, Inc. for Which We Currently Pay Royal es
On April 17, 2019, we and Panion & BF Biotech, Inc., or Panion, entered into a second amended and restated license agreement, or the Panion Amended
License Agreement, which amended and restated in full the license agreement between us and Panion. The Panion Amended License Agreement provides us
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 certain Asian Pacific coun es, or the Licensor Territory. The Panion Amended License Agreement also provides
Panion with an exclusive license under our patents covering the rights to sublicense (with our wri en 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 us or any sublicensee royalty payments based on a mid-single digit percentage of net sales of ferric citrate in our
licensed territories. We are 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 expira on of each of our and Panion’s obliga ons to pay royal es thereunder. In addi on, we
may terminate the Panion Amended License Agreement (i) in its en rety or (ii) with respect to one or more countries in our licensed territory, in either case
upon 90 days’ no ce. We 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, during the term and un l the second anniversary of the expira on of our or Panion’s obliga on,
as applicable, to pay royal es in a country in which such party has ferric citrate for sale on the date of such expira on, 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 distribu on in such
country. In addi on, the Panion Amended License Agreement provides that each of us and Panion has the right, but not the obliga on, to conduct li ga on
against any infringer of certain patent rights under the Panion Amended License Agreement in certain territories.
During the year ended December 31, 2023, we recorded $10.0 million in royal es due to Panion rela ng to the sales of Auryxia in the U.S. and JT and Torii net
sales of Riona in Japan.
Cyclerion Therapeu cs License Agreement
In June 2021, we entered into the Cyclerion Agreement with Cyclerion Therapeu cs, Inc., or Cyclerion, under which Cyclerion granted us an exclusive global
license under certain intellectual property rights to research, develop and commercialize praliciguat, an inves ga onal oral soluble guanylate cyclase, or sGC,
s mulator.
Under the terms of the Cyclerion Agreement, we paid $3.0 million in cash upfront to Cyclerion and expensed the amount to research and development, or
R&D, expense in June 2021. In addi on, Cyclerion is eligible to receive up to an aggregate of $222.0 million from us in specified development and regulatory
milestone payments on a product-by-product basis. Cyclerion will also be eligible to receive specified commercial milestones as well as ered royal es ranging
from a mid-single-digit to mid-teen percentage of net sales, on a product-by-product basis, and subject to reduc on upon expira on of patent rights or the
launch of a generic product in the territory.
Unless earlier terminated, the Cyclerion Agreement will expire on a product-by-product and country-by-country basis upon the expira on of the last royalty
term, which ends upon the longest of (i) the expira on of the patents licensed under the Cyclerion Agreement, (ii) the expira on of regulatory exclusivity for
such product and (iii) 10 years from first commercial sale of such product. We may terminate the Cyclerion Agreement in its en rety or only with respect to a
par cular licensed compound or product upon 180 days' prior wri en no ce to Cyclerion. We and Cyclerion also have customary termina on rights, subject
to a cure period, in the event of the other party’s material breach of the Cyclerion Agreement or in the event of certain addi onal circumstances.
Intellectual Property
The proprietary nature of, and protec on for, our products, product candidates and our discovery programs, processes and know-how are important to our
business. Our policy is to seek to protect our proprietary posi on by, among other methods, filing patent applica ons related to our proprietary technology,
inven ons and improvements that are important to the
Akebia Therapeu cs, Inc. | Form 10-K | Page 20
Table of Contents
development and implementa on of our business. We also rely on know-how, con nuing technological innova on and poten al in-licensing opportuni es to
develop and maintain our proprietary posi on. Addi onally, we may benefit from a variety of statutory frameworks in the U.S., Europe and other countries
that provide periods of non-patent-based exclusivity for qualifying molecules.
Our commercial success will depend in part on obtaining and maintaining patent protec on of our current products as well as current and future product
candidates, methods of their use and the methods used to develop and manufacture them, as well as successfully defending these patents against third-party
challenges. Our ability to stop third par es from making, using, selling, offering to sell or impor ng our products depends on the extent to which we have
rights under valid and enforceable patents that cover these ac vi es. We cannot be sure that patents will be granted with respect to any of our pending
patent applica ons or with respect to any patent applica ons filed by us in the future, nor can we be sure that any of our exis ng patents or any patents that
may be granted to us in the future will be commercially useful in protec ng our product candidates, discovery programs and processes. Even once patents
successfully issue, third par es may challenge the validity, enforceability, inventorship, or scope thereof, which may result in such patents being narrowed,
invalidated or held not infringed or unenforceable. For this and more comprehensive risks related to our intellectual property, please see “Risk Factors—Risks
Related to our Intellectual Property” in Part I, Item 1A. Risk Factors.
Individual patents extend for varying periods of me depending on the date of filing of the patent applica on or the date of patent issuance and the legal
term of patents in the countries in which they are obtained. Generally, patents issued from applica ons filed in the U.S. are effec ve for 20 years from the
earliest filing date of a U.S. non-provisional applica on or an interna onal applica on filed under the Patent Coopera on Treaty. In addi on, in certain
instances, a patent term can be extended to recapture a por on of the term effec vely lost as a result of the FDA regulatory review period, however, the
restora on period cannot be longer than five years and the total patent term including the restora on period must not exceed 14 years following FDA
approval. The dura on of foreign patents varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest
interna onal filing date. Patent term recapture for loss of term as a result of the regulatory review period is available in some foreign jurisdic ons. In the U.S.,
a patent’s term may also be lengthened by patent term adjustment, which compensates a patentee for administra ve delays by the U.S. Patent and
Trademark Office, or USPTO, in gran ng a patent, or may be shortened if a patent is terminally disclaimed over an earlier-filed patent.
Changes in either the patent laws or interpreta ons of patent laws in the U.S. and other countries can diminish our ability to protect our inven ons and
enforce our intellectual property rights. Accordingly, we cannot predict the breadth or enforceability of claims that may be granted in our patents or in third-
party patents. The biotechnology and pharmaceu cal industries are characterized by extensive li ga on regarding patents and other intellectual property
rights. Our ability to maintain and solidify our proprietary posi on for our drugs and technology will depend on our success in obtaining effec ve claims and
enforcing those claims once granted. We do not know whether any of the patent applica ons that we may file or license from third par es will result in the
issuance of any patents. The issued patents that we own or license or may receive or acquire in the future may be challenged, invalidated or circumvented,
and the rights granted under any issued patents may not provide us with sufficient protec on or compe ve advantages against compe tors with similar
technology. Furthermore, our compe tors may be able to independently develop and commercialize similar drugs or duplicate our technology, business
model or strategy without infringing our patents. Because of the extensive me required for clinical development and regulatory review of a drug we may
develop, it is possible that, before any of our drugs can be commercialized, any related patent may expire or remain in force for only a short period following
commercializa on, thereby reducing any advantage of any such patent. The patent posi ons for vadadustat and Auryxia are summarized below.
Vadadustat Patent Por olio
We hold 19 issued patents covering the composi on of ma er, polymorph, method of trea ng anemia, pharmaceu cal composi ons of vadadustat, and
processes for manufacturing vadadustat in the U.S. and addi onal patents issued or pending in many other major jurisdic ons worldwide, including Europe,
Japan, China, South Korea, Brazil, Mexico, Russia, Israel and India. The expected expira on dates for these patents are between 2027 and 2039 plus any
extensions or adjustments of term available under na onal law.
We also hold patents and patent applica ons directed to star ng materials and intermediates in the processes for manufacturing vadadustat, dosing
regimens, formula ons and various other aspects rela ng to the treatment of anemia using vadadustat that are expected to expire between 2032 and 2042
exclusive of possible patent term extensions or adjustments.
We have ongoing opposi on proceedings rela ng to vadadustat. See Part I, Item 3. Legal Proceedings for further informa on rela ng to these ma ers.
Akebia Therapeu cs, Inc. | Form 10-K | Page 21
Table of Contents
Auryxia Patent Por olio
Pursuant to the Panion Amended License Agreement, we have the exclusive rights under a series of patents and patent applica ons to commercialize Auryxia
worldwide, excluding certain Asian-Pacific countries. These patents and patent applica ons include claims directed to composi ons of ma er, pharmaceu cal
composi ons, methods of treatment, as well as methods for the manufacture of Auryxia.
Our patent rights include 14 issued U.S. patents listed in the Orange Book covering the composi on of ma er, method of trea ng hyperphosphatemia, and
pharmaceu cal composi ons of Auryxia. The expected expira on dates for these patents are between 2024 and 2030 plus any addi onal patent term
extensions that may be available.
Pursuant to the sublicense with our Japanese partner, Japan Tobacco Inc., or JT, and its subsidiary, Torii Pharmaceu cal Co. Ltd., or Torii, we have exclusively
sublicensed certain Japanese patent rights to JT and Torii. These sublicensed rights include several Japanese patents and pending patent applica ons with
composi on of ma er claims, methods of synthesizing claims, and methods of use claims covering Riona, the trade name under which JT and Torii market
ferric citrate in Japan. The expected expira on dates for these patents and pending patent applica ons are between 2025 and 2028. To date, to our
knowledge, no contested proceedings or third-party claims have been lodged against any of these Japanese patents.
Pursuant to the sublicense with our European partner, Averoa, we have exclusively sublicensed certain European patent rights to Averoa. These sublicensed
rights include several European patents and pending patent applica ons with composi on of ma er claims and methods of use claims covering ferric citrate.
The expected expira on dates for these patents and pending patent applica ons are between 2024 and 2036. To date, to our knowledge, no contested
proceedings or third-party claims have been lodged against any of these European patents.
We received Paragraph IV cer fica on no ce le ers regarding abbreviated new drug applica ons, or ANDAs, submi ed to the FDA by third par es reques ng
approval for generic versions of Auryxia tablets (210 mg ferric iron per tablet). In response we filed certain complaints for patent infringement against six third
par es, and have entered into se lement and license agreements with each of the six ANDA filers. Each se lement agreement granted the defendants a
license to market a generic version of Auryxia in the U.S. beginning on March 20, 2025 (subject to FDA approval), or earlier under certain circumstances
customary for se lement agreements of this nature.
Other Intellectual Property Rights
We depend upon trademarks, trade secrets, know-how and con nuing technological advances to develop and maintain our compe ve posi on. To maintain
the confiden ality of trade secrets and proprietary informa on, we require our employees, scien fic advisors, consultants and collaborators, upon
commencement of a rela onship with us, to execute confiden ality agreements and, in the case of par es other than our research and development
collaborators, to agree to assign their inven ons to us. These agreements are designed to protect our proprietary informa on and to grant us ownership of
technologies that are developed in connec on with their rela onship with us. These agreements may not, however, provide protec on for our trade secrets
in the event of unauthorized disclosure of such informa on.
In addi on to patent protec on, we may u lize orphan drug regula ons, pediatric exclusivity or other provisions of the Food, Drug and Cosme c Act of 1938,
as amended, or FDCA, such as new chemical en ty exclusivity or new formula on exclusivity, to provide market exclusivity for a product candidate. In the
U.S., the FDA has the authority to grant addi onal data protec on for approved drugs where the sponsor conducts specified tes ng in pediatric or adolescent
popula ons. If granted, this pediatric exclusivity may provide an addi onal six months which are added to the term of data protec on as well as to the term
of a relevant patent, to the extent these protec ons have not already expired. We may also seek to u lize market exclusivi es in other territories. We cannot
assure you that our products or any product candidates we may acquire or in-license, will obtain such orphan drug designa on, pediatric exclusivity, new
chemical en ty exclusivity or any other market exclusivity in the U.S., European Union, or EU, or any other territory, or that we will be the first to receive the
respec ve regulatory approval for such drugs so as to be eligible for any market exclusivity protec on.
Know-How
In addi on to patents, we rely upon unpatented know-how and con nuing technological innova on to develop and maintain our compe ve posi on. We
seek to protect our proprietary informa on, in part, using confiden ality agreements with our collaborators, employees and consultants and inven on
assignment provisions in the confiden ality agreements with our employees. These agreements are designed to protect our proprietary informa on and, in
the case of the inven on assignment provisions, to grant us ownership of technologies that are developed by our employees. These agreements may be
breached, and we may not have adequate remedies for any breach.
To the extent that our commercial partners, collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes
may arise as to the rights in related or resul ng know-how and inven ons.
Akebia Therapeu cs, Inc. | Form 10-K | Page 22
Table of Contents
The Hatch-Waxman Act
Orange Book Lis ng
In seeking approval for a drug through an NDA, sponsors are required to list with the FDA each patent whose claims cover the sponsor’s product. Upon
approval of a drug, each of the patents listed in the applica on for the drug is then published in the FDA’s Approved Drug Products with Therapeu c
Equivalence Evalua ons, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by poten al generic compe tors in
support of approval of an ANDA. An ANDA provides for marke ng of a drug product that has the same ac ve ingredients in the same strengths and dosage
form as the listed drug and has been shown through bioequivalence tes ng to be therapeu cally equivalent to the listed drug. Other than the requirement
for bioequivalence tes ng, ANDA sponsors are usually not required to conduct, or submit results of, nonclinical or clinical tests to prove the safety or
effec veness of their drug product. Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug and can o en be
subs tuted by pharmacists under prescrip ons wri en for the original listed drug.
The ANDA sponsor is required to make certain cer fica ons to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book.
Specifically, the sponsor must cer fy that: (i) the required patent informa on has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not
expired but will expire on a par cular date and approval is sought a er patent expira on; or (iv) the listed patent is invalid or will not be infringed by the new
product. The ANDA sponsor may also elect to submit a Sec on viii statement, cer fying that its proposed ANDA label does not contain or carve out any
language regarding the patented method-of-use, rather than cer fy to a listed method-of-use patent.
If the sponsor does not challenge the listed patents, the ANDA will not be approved un l all the listed patents claiming the referenced product have expired. A
cer fica on that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid, is called a Paragraph IV
cer fica on. If the ANDA sponsor has provided a Paragraph IV cer fica on to the FDA, the sponsor must also send no ce of the Paragraph IV cer fica on to
the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may then ini ate a patent infringement
lawsuit in response to the no ce of the Paragraph IV cer fica on. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV
cer fica on automa cally prevents the FDA from approving the ANDA un l the earlier of 30 months from receiving the Paragraph IV cer fica on, expira on
of the patent, se lement of the lawsuit or a decision in the infringement case that is favorable to the ANDA sponsor. Also, the ANDA will not be approved
un l any applicable non-patent exclusivity listed in the Orange Book for the referenced product has expired.
Exclusivity
Upon NDA approval of a new chemical en ty, or NCE, which is a drug that contains an ac ve moiety that has not been approved by the FDA in any other NDA,
that drug receives five years of marke ng exclusivity during which me the FDA cannot accept any ANDA seeking approval of a generic version of that drug.
Certain changes to a drug, such as the addi on of a new indica on to the package insert, are associated with a three-year period of exclusivity during which
the FDA cannot approve an ANDA for a generic drug that includes such changes.
An ANDA may be submi ed one year before NCE exclusivity expires if a Paragraph IV cer fica on is filed. If there is no listed patent in the Orange Book, there
may not be a Paragraph IV cer fica on, and, thus, no ANDA may be filed before the expira on of the exclusivity period.
Patent Term Extension
A er NDA approval, owners of relevant drug patents or their agents may apply for up to a five-year patent extension for delays caused by FDA regulatory
review. The allowable patent term extension is calculated as half of the drug’s tes ng phase which is the me between Inves ga onal New Drug applica on,
or IND submission, and NDA submission, and all of the review phase, which is the me between NDA submission and approval, up to a maximum of five
years. The me can be shortened if the FDA determines that the sponsor did not pursue approval with due diligence. The total patent term a er the
extension may not exceed 14 years from the date of approval by virtue of the patent term extension.
We have filed applica ons under the patent term extension provisions of 35 U.S.C. § 156 for U.S. Patent Nos. 8,299,298, 8,093,423, 7,767,851 and 8,338,642
each of which covers Auryxia for delays caused by FDA regulatory review. If granted, we can u lize the patent term extension on one of these patents,
however, we cannot assure you that we can obtain any extension of the term of these patents. Upon expira on of these patents, compe tors who obtain the
requisite regulatory approval may poten ally offer products with the same composi on and/or method of use as our product, so long as the compe tors do
not infringe any other patents that we may own or license.
For patents that might expire before a determina on regarding patent term extension, the patent owner or its agent may request an interim patent term
extension. An interim patent extension increases the patent term by one year and may be renewed up to four mes. For each interim patent extension
granted, the post-approval patent extension is reduced by one
Akebia Therapeu cs, Inc. | Form 10-K | Page 23
Table of Contents
year. The director of the USPTO must determine that approval of the drug covered by the patent for which a patent extension is being sought is likely.
In addi on, certain jurisdic ons outside of the U.S., including Japan, have provisions that provide for patent term extension. In October 2014, following the
regulatory approval of Riona in Japan, the Japan Patent office granted the patent term extensions filed by our sublicensee, JT, for Japanese Patents Nos.
4964585 and 4173553. As a result of the extension of patent term, Japanese Patent No. 4173553 expired in November 2022 and Japanese Patent No.
4964585 will expire in November 2025 for hyperphosphatemia and December 2028 for iron deficiency anemia.
In the future, if and when our product candidates, including vadadustat, receive approval by the FDA or foreign regulatory authori es, we expect to apply for
patent term extensions on issued patents covering those drugs, depending upon the length of the clinical trials for each product candidate and other factors.
There can be no assurance that any of our pending patent applica ons will issue or that we will benefit from any patent term extension or favorable
adjustment to the term of any of our patents.
Compe on
The pharmaceu cal and biotechnology industries are highly compe ve, with several key players offering innova ve solu ons. The growing prevalence of
CKD and the increasing demand for be er anemia management solu ons con nue to drive compe on innova on in this market. Our compe tors include
public and private pharmaceu cal and biotechnology companies, academic ins tu ons, and public and private research ins tu ons. In addi on, companies
that are ac ve in different but related fields represent substan al compe on for us. Mergers and acquisi ons in the pharmaceu cal and biotechnology
industries may result in a larger concentra on of resources among a smaller number of our compe tors. These organiza ons, as well as others in the broader
industries, compete with us to recruit qualified personnel, a ract partners for joint ventures or other collabora ons and license compe ve technologies to
ours.
While major pharmaceu cal companies are con nuously inves ng in R&D and have significantly greater capital resources, larger R&D teams and facili es and
more experience in drug development, regula on, manufacturing and marke ng than we do; we believe our novel HIF-PH inhibitors have the poten al to
revolu onize the treatment landscape in mul ple areas, including anemia due to CKD. To compete successfully in these industries, we must con nue to
iden fy novel and unique drugs or treatment methods and complete the development of those drugs as treatments before our compe tors.
Vadadustat Compe tors
Drugs that may compete with vadadustat, if approved, include Epogen® (epoe n alfa) and Aranesp® (darbepoe n alfa), both commercialized by Amgen,
Procrit® (epoe n alfa) and Eprex® (epoe n alfa), commercialized by Johnson & Johnson in the U.S. and Europe, respec vely, and Mircera® (methoxy PEG-
epoe n beta), commercialized by CSL Vifor in the U.S. and Roche Holding Ltd. outside of the U.S. and Evrenzo (roxadustat) in Europe commercialized by
Astellas Pharma Inc.
(R)
In addi on, in the U.S., the FDA approved Jesduvroq (daprodustat), an oral HIF-PH inhibitor from GSK, for the once-a-day treatment of anemia due to CKD in
adults who have been receiving dialysis for at least four months. FibroGen Inc., or FibroGen, filed an NDA with the FDA for its product candidate, roxadustat,
to which the FDA issued a complete response le er indica ng the FDA will not approve the NDA in its present form.
We and our partners may also face compe on from poten al new anemia therapies. There are several other HIF-PH inhibitor product candidates in various
stages of development for anemia indica ons that may be in direct compe on with vadadustat, if and when approved and launched commercially. These
candidates are being developed by companies such as JT and Bayer HealthCare AG, or Bayer.
Furthermore, certain companies are developing new therapies for renal-related diseases that poten ally could reduce injectable ESA u liza on and thus limit
the market poten al for vadadustat if approved and launched commercially. Other new therapies are in development for trea ng condi ons, including renal
anemia, that may impact the market for anemia-targeted treatment.
In Japan, vadadustat is sold under the name Vafseo, which is approved for pa ents with CKD, including both DD-CKD and NDD-CKD, and competes with
roxadustat, daprodustat and enarodustat. Roxadustat is approved for the treatment of anemia due to CKD, including DD-CKD and NDD-CKD pa ents. In
addi on, daprodustat, GSK’s product candidate, and enarodustat, JT’s product candidate, are approved in Japan for the treatment of anemia due to CKD. In
addi on, Bayer HealthCare AG has submi ed a new drug applica on for its product candidate for the treatment of renal anemia in Japan. In China, FibroGen
launched roxadustat for the treatment of anemia due to CKD in DD-CKD pa ents and for the treatment of anemia due to CKD in NDD-CKD pa ents.
A biosimilar is a biologic product approved based on demonstra ng that it is highly similar to an exis ng, FDA-approved branded biologic product. The
patents for the exis ng, branded biologic product must expire in a given market before biosimilars may enter that market without the risk of being sued for
patent infringement. In addi on, an applica on for a
Akebia Therapeu cs, Inc. | Form 10-K | Page 24
Table of Contents
biosimilar product can only be approved by the FDA 12 years a er the exis ng, branded product was approved under a Biologics License Applica on, or BLA.
The patents for epoe n alfa, an injectable ESA, expired in 2004 in the EU, and the remaining patents expired between 2012 and 2016 in the U.S. Because
injectable ESAs are biologic products, introducing biosimilars into the injectable ESA market in the U.S. will cons tute addi onal compe on for vadadustat if
we are able to obtain approval for and commercially launch vadadustat. In the U.S., Pfizer’s biosimilar version of injectable ESAs, Retacrit® (epoe n alfa-epbx),
was approved by the FDA in May 2018 and launched in November 2018 and several biosimilar versions of injectable ESAs are available for sale in the EU.
Furthermore, if approved, vadadustat’s commercial opportuni es, may be reduced or eliminated if our compe tors develop and market products that are less
expensive, more effec ve, safer or offer greater pa ent convenience than vadadustat.
Auryxia Compe tors
Hyperphosphatemia Compe on
Auryxia is compe ng in the hyperphosphatemia market in the U.S. with other FDA-approved phosphate binders such as Renagel® (sevelamer hydrochloride)
and Renvela® (sevelamer carbonate), both marketed by Sanofi, PhosLo® and Phoslyra® (calcium acetate), marketed by Fresenius Medical Care North America,
Fosrenol® (lanthanum carbonate), marketed by Shire Pharmaceu cals Group plc, and Velphoro® (sucroferric oxyhydroxide), marketed by Fresenius Medical
Care North America, as well as over-the-counter calcium carbonate products such as TUMS® and metal-based op ons such as aluminum, lanthanum and
magnesium. Most of the phosphate binders listed above are now also available in generic forms. In addi on, other agents are in development, including
OPKO Health Inc.’s Alpharen™ Tablets (fermagate tablets) and Unicycive’s RENAZORB™ (lanthanum dioxycarbonate) or could otherwise enter the market that
may impact the market for Auryxia. In October 2023, the FDA approved XPHOZAH® (tenapanor), a phosphate absorp on inhibitor that is marketed by
Ardelyx, Inc. and indicated to reduce serum phosphorus in adults with CKD on dialysis as add-on therapy in pa ents who have an inadequate response to
phosphate binders or who are intolerant of any dose of phosphate binder therapy.
Iron Deficiency Anemia Compe on
Auryxia is compe ng in the IDA market in the U.S. with over-the-counter oral iron, ferrous sulfate, other prescrip on oral iron formula ons, including ferrous
gluconate, ferrous fumerate, and polysaccharide iron complex, and intravenous iron formula ons, including Feraheme® (ferumoxytol injec on), Venofer®
(iron sucrose injec on), Ferrlicit® (sodium ferric gluconate complex in sucrose injec on), Injectafer® (ferric carboxymaltose injec on), and Triferic® (ferric
pyrophosphate citrate). In addi on, other new therapies for the treatment of IDA may impact the market for Auryxia, such as Shield Therapeu c’ plc's
Feraccru® (ferric maltol), which is available in Europe for the treatment of IDA, and Accrufer® (ferric maltol), which was launched in the U.S. for the treatment
of IDA in July 2021.
Furthermore, Auryxia’s commercial opportuni es may be reduced or eliminated if our compe tors develop and market products that are less expensive,
more effec ve, safer or offer greater pa ent convenience than Auryxia. Other companies have product candidates in various stages of preclinical or clinical
development to treat diseases and complica ons of the diseases for which we are marke ng Auryxia. In addi on, we entered into se lement agreements
with each of our ANDA filers pursuant to which we granted licenses to market a generic version of Auryxia in the U.S. beginning in March 2025 (subject to FDA
approval), or earlier under certain circumstances customary for se lement agreements of this nature, which may materially adversely impact our business
and results of opera ons.
Government Regula on and Product Approvals
Government authori es in the U.S., at the federal, state and local level, and in other countries and jurisdic ons, including the EU, extensively regulate, among
other things, the research, development, tes ng, manufacture, quality control, approval, packaging, storage, recordkeeping, labeling, adver sing, promo on,
distribu on, marke ng, sales, pricing, reimbursement, post-approval monitoring and repor ng, and import and export of pharmaceu cal products. The
processes for obtaining regulatory approvals in the U.S. and in foreign countries and jurisdic ons, along with subsequent compliance with applicable statutes
and regula ons and other regulatory requirements, require the expenditure of substan al me and financial resources.
Review and Approval of Drug Products in the U.S.
In the U.S., the FDA approves and regulates drugs under the FDCA and applicable implemen ng regula ons and guidance.
Our product candidates must be approved by the FDA for therapeu c indica ons before we or our partners are able to market them in the U.S. A company,
ins tu on, or organiza on which takes responsibility for the ini a on and management of a clinical development program for such products is referred to as
a sponsor. A sponsor seeking approval to market and distribute a new drug product in the U.S. must typically undertake the following:
Akebia Therapeu cs, Inc. | Form 10-K | Page 25
Table of Contents
•
•
•
•
•
•
•
•
•
•
comple on of preclinical laboratory tests, animal studies and formula on studies in compliance with the FDA’s good laboratory prac ce, or
GLP, regula ons and consistent with Interna onal Council for Harmonisa on of Technical Requirements for Pharmaceu cals for Human
Use, or ICH, requirements;
design of a clinical protocol and submission to the FDA of an IND for human clinical tes ng, which must be reviewed and ac ve by the FDA
before human clinical trials may begin;
approval by an independent local or central ins tu onal review board, or IRB, represen ng each clinical site before each clinical trial may
be ini ated;
performance of adequate and well-controlled human clinical trials in accordance with good clinical prac ces, or GCP, to establish the safety
and efficacy of the proposed product candidate for each indica on;
prepara on and submission to the FDA of an NDA reques ng marke ng for one or more proposed indica ons;
review of the product candidate by an FDA advisory commi ee, where appropriate or if applicable;
sa sfactory comple on of one or more FDA inspec ons of the manufacturing facility or facili es at which the product candidate, or
components thereof, are produced to assess compliance with current Good Manufacturing Prac ces, or cGMP, requirements and to assure
that the facili es, methods and controls are adequate to preserve the product candidate’s iden ty, strength, quality and purity;
sa sfactory comple on of FDA audits of clinical trial sites and records to assure compliance with GCPs and good prac ces, or GxPs, the
integrity of the clinical data and that adequate controls and oversight are in place regarding manufacturing, clinical trials,
pharmacovigilance, safety, data management, vendor oversight, collec on and repor ng of serious adverse events and other ac vi es;
payment of user fees and securing FDA approval of an NDA; and
compliance with any post-approval requirements and/or commitments, including the poten al requirement to implement a risk evalua on
and mi ga on strategy, or REMS, and poten ally post-market requirement, or PMR, and post-market commitment, or PMC, studies.
Preclinical Tests
Before a sponsor begins tes ng a product candidate with poten al therapeu c value in humans, the product candidate enters the preclinical tes ng stage.
Preclinical tests include laboratory evalua ons of product chemistry, formula on and stability, as well as other studies to evaluate, among other things, the
toxicity of the product candidate. The conduct of the preclinical tests and formula on of the compounds for tes ng must comply with federal regula ons and
requirements, including GLP regula ons and standards and the U.S. Department of Agriculture’s Animal Welfare Act, if applicable. The results of the
preclinical tests, together with manufacturing informa on and analy cal data, are submi ed to the FDA as part of an IND and are generally referred to as
IND-enabling studies. Some long-term preclinical tes ng, such as animal tests of reproduc ve adverse events and carcinogenicity, and long-term toxicity
studies, may con nue a er the IND is submi ed.
The IND and IRB Processes
Clinical trials involve the administra on of the inves ga onal product to human pa ents under the supervision of qualified inves gators in accordance with
GCP requirements, which include, among other things, the requirement that all research pa ents provide their voluntary informed consent in wri ng before
their par cipa on in any clinical trial. Clinical trials are conducted under wri en study protocols detailing, among other things, the inclusion and exclusion
criteria, the objec ves of the study, the parameters to be used in monitoring safety and the effec veness criteria to be evaluated. In support of a request for
an IND, sponsors must submit a protocol for each clinical trial and any subsequent protocol amendments must be submi ed to the FDA as part of the IND.
An IND is an exemp on from the FDCA that allows an unapproved drug to be shipped through interstate commerce for use in an inves ga onal clinical trial
and a request for FDA authoriza on to administer an inves ga onal drug to humans. Such authoriza on must be obtained prior to interstate shipment and
administra on of any new drug that is not the subject of an approved NDA. In addi on to reviewing an IND to assure the safety and rights of pa ents, the FDA
also focuses on the quality of the inves ga on and whether it will be adequate to permit an evalua on of the drug’s safety and efficacy. The results of the
preclinical tests, together with manufacturing informa on, analy cal data, any available clinical data or literature and plans for clinical trials, among other
things, are submi ed to the FDA as part of an IND. The FDA requires a 30-day wai ng period a er the submission of each IND before clinical trials may begin.
This wai ng period is designed to allow the FDA to review the IND to determine whether human research pa ents will be exposed to unreasonable health
risks. At any me during this 30-day period, or therea er, the FDA may raise concerns or ques ons about the conduct of the trials as outlined in the IND and
impose a clinical hold or par al clinical hold or require that the sponsor amend the clinical protocol to include addi onal safety measurements. In this case,
the IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can begin (or resume if the clinical trial had been ongoing at the
me a clinical hold was imposed).
Akebia Therapeu cs, Inc. | Form 10-K | Page 26
Table of Contents
In addi on to the foregoing requirements related to the IND submission, an IRB represen ng each ins tu on par cipa ng in the clinical trial must review and
approve the plan for any clinical trial before it commences at that ins tu on, and the IRB must conduct a con nuing review and reapprove the trial at least
annually. The IRB must review and approve, among other things, the trial protocol and informed consent informa on to be provided to study pa ents. An IRB
must operate in compliance with FDA regula ons. An IRB can suspend or terminate approval of a clinical trial at its ins tu on, or an ins tu on it represents, if
the clinical trial is not being conducted in accordance with the IRB’s requirements or if the product candidate has been associated with unexpected serious
harm to pa ents.
A sponsor may choose, but is not required, to conduct a foreign clinical study under an IND. When a foreign clinical study is conducted under an IND, all IND
requirements must be met unless waived by the FDA. When a foreign clinical study is not conducted under an IND, the sponsor must ensure that the study
complies with certain regulatory requirements of the FDA in order to use the study as support for an IND or applica on for marke ng approval. Specifically,
the studies must be conducted in accordance with GCP, including undergoing review and receiving approval by an independent ethics commi ee and seeking
and receiving informed consent from subjects. GCP requirements encompass both ethical and data integrity standards for clinical trials. The FDA’s regula ons
are intended to help ensure the protec on of human subjects enrolled in non-IND foreign clinical trials, as well as the quality and integrity of the resul ng
data. They further help ensure that non-IND foreign studies are conducted in a manner comparable to that required for IND studies.
Repor ng Clinical Trial Results
Under the Public Health Service Act, or PHSA, sponsors of certain clinical trials of certain FDA-regulated products, including prescrip on drugs and biologics,
are required to register and disclose certain clinical trial informa on on a public registry (clinicaltrials.gov) maintained by the U.S. Na onal Ins tutes of
Health, or NIH. In par cular, informa on related to the product, pa ent popula on, phase of inves ga on, study sites and inves gators and other aspects of
the clinical trial is made public as part of the registra on of the clinical trial. Although sponsors are also obligated to disclose the results of their clinical trials
a er comple on, disclosure of the results can be delayed in some cases for up to two years a er the date of comple on of the trial. The NIH’s Final Rule on
registra on and repor ng requirements for clinical trials became effec ve in 2017, and both NIH and the FDA have signaled the government’s willingness to
begin enforcing those requirements against non-compliant clinical trial sponsors.
Specifically, the PHSA grants the Secretary of the U.S. Department of Health and Human Services, or HHS, the authority to issue a no ce of noncompliance to
a responsible party for failure to submit clinical trial informa on as required. The responsible party, however, is allowed 30 days to correct the noncompliance
and submit the required informa on. With the issuance of pre-no ces for voluntary correc ve ac on and several no ces of non-compliance during the past
two years, the FDA has signaled the government’s willingness to enforce these requirements against non-compliant clinical trial sponsors. While these no ces
of non-compliance did not result in civil monetary penal es, the failure to submit clinical trial informa on to clinicaltrials.gov, as required, is also a prohibited
act under the FDCA with viola ons subject to poten al civil monetary penal es of up to $10,000 for each day the viola on con nues. In addi on to civil
monetary penal es, viola ons may also result in other regulatory ac on, such as injunc on and/or criminal prosecu on or disqualifica on from federal
grants. Although the FDA has historically not enforced these repor ng requirements due to HHS’s long delay in issuing final implemen ng regula ons, those
regula ons have now been issued and the FDA has issued several No ces of Noncompliance to manufacturers during the past two years.
Expanded Access to an Inves ga onal Drug for Treatment Use
Expanded access, some mes called “compassionate use,” is the use of inves ga onal new drug products outside of clinical trials to treat pa ents with serious
or immediately life-threatening diseases or condi ons when there are no comparable or sa sfactory alterna ve treatment op ons. The rules and regula ons
related to expanded access are intended to improve access to inves ga onal drugs for pa ents who may benefit from inves ga onal therapies. FDA
regula ons allow access to inves ga onal drugs under an IND by the company or the trea ng physician for treatment purposes on a case-by-case basis for:
individual pa ents (single-pa ent IND applica ons for treatment in emergency se ngs and non-emergency se ngs); intermediate-size pa ent popula ons;
and larger popula ons for use of the drug under a treatment protocol or Treatment IND Applica on.
There is no obliga on for a sponsor to make its inves ga onal products available for expanded access; however, as required by amendments to the FDCA
included in the 21st Century Cures Act passed in 2016, if a sponsor has a policy regarding how it responds to expanded access requests with respect to
product candidates in development to treat serious diseases or condi ons, it must make that policy publicly available. Sponsors are required to make such
policies publicly available upon the earlier of ini a on of a Phase 2 or Phase 3 trial for a covered inves ga onal product; or 15 days a er the inves ga onal
product receives designa on from the FDA as a breakthrough therapy, fast track product, or regenera ve medicine advanced therapy.
Akebia Therapeu cs, Inc. | Form 10-K | Page 27
Table of Contents
On May 30, 2018, the Right to Try Act was signed into law. The law, among other things, provides a federal framework for certain pa ents to access certain
inves ga onal new drug products that have completed a Phase I clinical trial and that are undergoing inves ga on for FDA approval. Under certain
circumstances, eligible pa ents can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access
program. There is no obliga on for a drug manufacturer to make its product candidates available to eligible pa ents as a result of the Right to Try Act, but the
manufacturer must develop an internal policy and respond to pa ent requests according to that policy.
Human Clinical Trials in Support of an NDA
Clinical trials involve the administra on of the inves ga onal product to human pa ents under the supervision of qualified inves gators in accordance with
GCP requirements, which include, among other things, the requirement that all research pa ents provide their informed consent in wri ng before their
par cipa on in any clinical trial. Clinical trials are conducted under wri en study protocols detailing, among other things, the inclusion and exclusion criteria,
the objec ves of the study, the parameters to be used in monitoring safety and the effec veness criteria to be evaluated.
Human clinical trials are typically conducted in four sequen al phases, which may overlap or be combined:
•
•
•
•
Phase 1. The product candidate is ini ally introduced into a small number of healthy human pa ents or, in certain indica ons such as
cancer, pa ents with the target disease or condi on (e.g., cancer) and tested for safety, dosage tolerance, absorp on, metabolism,
distribu on, excre on and, if possible, to gain an early indica on of its effec veness and to determine op mal dosage.
Phase 2. The product candidate is administered to a limited pa ent popula on to iden fy possible adverse effects and safety risks, to
preliminarily evaluate the efficacy of the product candidate for specific targeted diseases and to determine dosage tolerance and op mal
dosage.
Phase 3. These clinical trials are commonly referred to as “pivotal” studies, which denote a study that presents the data that the FDA or
other relevant regulatory agency will use to determine whether or not to approve a product candidate. The product candidate is
administered to an expanded pa ent popula on, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to
generate enough data to sta s cally evaluate the efficacy and safety of the product candidate for approval, iden fy adverse effects,
establish the overall risk-benefit profile of the product candidate and to provide adequate informa on for the labeling of the product
candidate.
Phase 4. Post-approval studies may be conducted a er ini al marke ng approval. These studies are used to gain addi onal experience from
the treatment of pa ents in the intended therapeu c indica on.
A clinical trial may combine the elements of more than one phase and the FDA o en requires more than one Phase 3 trial to support marke ng approval of a
product candidate. Moreover, as noted above, a pivotal trial is a clinical trial that is believed to sa sfy FDA requirements for the evalua on of a product
candidate’s safety and efficacy such that it can be used, alone or with other pivotal or non-pivotal trials, to support regulatory approval. Generally, pivotal
trials are Phase 3 trials, but they may be Phase 2 trials if the design provides a well-controlled and reliable assessment of clinical benefit, par cularly in an
area of unmet medical need. A company’s designa on of a clinical trial as being of a par cular phase is not necessarily indica ve that the study will be
sufficient to sa sfy the FDA requirements of that phase because this determina on cannot be made un l the protocol and data have been submi ed to and
reviewed by the FDA.
In December 2022, with the passage of the Food and Drug Omnibus Reform Act, or FDORA, Congress required sponsors to develop and submit a diversity
ac on plan for each phase 3 clinical trial or any other “pivotal study” of a new drug or biological product. These plans are meant to encourage the enrollment
of more diverse pa ent popula ons in late-stage clinical trials of FDA-regulated products. Specifically, ac ons plans must include the sponsor’s goals for
enrollment, the underlying ra onale for those goals, and an explana on of how the sponsor intends to meet them. In addi on to these requirements, the
legisla on directs the FDA to issue new guidance on diversity ac on plans. Progress reports detailing the results of the clinical trials conducted under the IND
must be submi ed at least annually to the FDA and, more frequently, if serious adverse events occur. In addi on, IND safety reports must be submi ed to the
FDA for any of the following: serious and unexpected suspected adverse reac ons; findings from other studies or animal or in vitro tes ng that suggest a
significant risk in humans exposed to the drug; and any clinically important increase in the case of a serious suspected adverse reac on over that listed in the
protocol or inves gator brochure. The FDA, IRB or the sponsor or the data monitoring commi ee may suspend or terminate a clinical trial at any me on
various grounds, including a finding that the research pa ents are being exposed to an unacceptable health risk. The FDA will typically inspect one or more
clinical sites to assure compliance with GCP and the integrity of the clinical data submi ed.
In June 2023, the FDA issued dra guidance with updated recommenda ons for GCPs aimed at modernizing the design and conduct of clinical trials. The
updates are intended to help pave the way for more efficient clinical trials to facilitate the development of medical products. The dra guidance is adopted
from the ICH’s recently updated E6(R3) dra guideline that
Akebia Therapeu cs, Inc. | Form 10-K | Page 28
Table of Contents
was developed to enable the incorpora on of rapidly developing technological and methodological innova ons into the clinical trial enterprise. In addi on,
the FDA issued dra guidance outlining recommenda ons for the implementa on of decentralized clinical trials.
Interac ons with the FDA During the Clinical Development Program
Following the clearance of an IND and the commencement of clinical trials, a sponsor will con nue to have interac ons with the FDA and the sponsor may
meet with the FDA at certain points in the clinical development program. Specifically, sponsors may meet with the FDA prior to the submission of an IND, or a
pre-IND mee ng, at the end of Phase 2 clinical trials and before an NDA is submi ed, or a pre-NDA mee ng. Mee ngs at other mes may also be requested.
These mee ngs provide an opportunity for the sponsor to share informa on about the data gathered to date with the FDA and for the FDA to provide advice
on the next phase of development.
There are five types of mee ngs that occur between sponsors and the FDA. Type A mee ngs are those that are necessary for an otherwise stalled product
development program to proceed or to address an important safety issue. Type B mee ngs include pre-IND and pre-NDA mee ngs as well as end of phase
mee ngs such as end-of-phase 2 mee ngs. A Type C mee ng is any mee ng other than a Type A or Type B mee ng regarding the development and review of
a product, including for example mee ngs to facilitate early consulta ons on the use of a biomarker as a new surrogate endpoint that has never been
previously used as the primary basis for product approval in the proposed context of use. A Type D mee ng is focused on a narrow set of issues (typically
limited to no more than two focused topics) and should not require input from more than three disciplines or divisions. Finally, INTERACT mee ngs are
intended for novel products and development programs that present unique challenges in the early development of an inves ga onal product.
Such mee ngs may be conducted in person, via teleconference/videoconference, or wri en response only with minutes reflec ng the ques ons that the
sponsor posed to the FDA and the agency’s responses. The FDA has indicated that its responses, as conveyed in mee ng minutes and advice le ers, only
cons tute mere recommenda ons and/or advice made to a sponsor and, as such, sponsors are not bound by such recommenda ons and/or advice.
Nonetheless, from a prac cal perspec ve, a sponsor’s failure to follow the FDA’s recommenda ons for design of a clinical program may put the program at
significant risk of failure. In September 2023, the FDA issued dra guidance outlining the terms of such mee ngs in more detail.
Pediatric Studies
Under the Pediatric Research Equity Act, or PREA, applica ons and certain types of supplements to applica ons must contain data that are adequate to assess
the safety and effec veness of the product for the claimed indica ons in all relevant pediatric subpopula ons, and to support dosing and administra on for
each pediatric subpopula on for which the product is safe and effec ve. The sponsor must submit an ini al Pediatric Study Plan, or PSP, within 60 days of an
end-of-phase 2 mee ng or as may be agreed between the sponsor and the FDA. Those plans must contain an outline of the proposed pediatric study or
studies the sponsor plans to conduct, including study objec ves and design, age groups, relevant endpoints and sta s cal approach, or a jus fica on for not
including such detailed informa on, and any request for a deferral of pediatric assessments or a full or par al waiver of the requirement to provide data from
pediatric studies along with suppor ng informa on. The sponsor and the FDA must reach agreement on a final plan. A sponsor can submit amendments to an
agreed-upon ini al PSP at any me if changes to the pediatric plan need to be considered based on data collected from nonclinical trials, early phase clinical
trials, and/or other clinical development programs.
For inves ga onal products intended to treat a serious or life-threatening disease or condi on, the FDA must, upon the request of a sponsor, meet to discuss
prepara on of the ini al pediatric study plan or to discuss deferral or waiver of pediatric assessments. In addi on, the FDA will meet early in the development
process to discuss pediatric study plans with sponsors, and the FDA must meet with sponsors by no later than the end-of-phase 1 mee ng for serious or life-
threatening diseases and by no later than ninety days a er the FDA’s receipt of the study plan.
The FDA may, on its own ini a ve or at the request of the sponsor, grant deferrals for submission of some or all pediatric data un l a er approval of the
product for use in adults, or full or par al waivers from the pediatric data requirements. A deferral may be granted for several reasons, including a finding that
the product or therapeu c candidate is ready for approval for use in adults before pediatric trials are complete or that addi onal safety or effec veness data
needs to be collected before the pediatric trials begin. Pursuant to the Food and Drug Administra on Safety and Innova on Act of 2012, or FDASIA, the FDA
must send a PREA Non-Compliance le er to sponsors who have failed to submit their pediatric assessments required under PREA, have failed to seek or
obtain a deferral or deferral extension or have failed to request approval for a required pediatric formula on. FDASIA further requires the FDA to publicly post
the PREA Non-Compliance le er and sponsor’s response. Unless otherwise required by regula on, the pediatric data requirements do not apply to products
with orphan designa on, although FDA has recently taken steps to limit what it considers abuse of this statutory exemp on in PREA by announcing that it
does not intend to grant any addi onal orphan drug designa ons for rare pediatric subpopula ons of what is otherwise a common disease. The FDA also
maintains a list of diseases that are exempt from PREA requirements due to low prevalence of disease
Akebia Therapeu cs, Inc. | Form 10-K | Page 29
Table of Contents
in the pediatric popula on. In May 2023, the FDA issued new dra guidance that further describes the pediatric study requirements under PREA.
Acceptance and Review of an NDA
Assuming successful comple on of required clinical tes ng and other requirements, the results of the preclinical studies and clinical trials, together with
detailed informa on rela ng to the product’s chemistry, manufacture, controls and proposed labeling, among other things are submi ed to the FDA as part
of an NDA reques ng approval to market the product candidate for one or more indica ons. The fee required for the submission and review of an applica on
under the PDUFA is substan al (for example, for fiscal year 2024 this applica on fee is a li le more than $4.0 million), and the sponsor of an approved
applica on is also subject to an annual program fee, currently approximately $0.4 million per eligible prescrip on product. These fees are typically adjusted
annually, and exemp ons and waivers may be available under certain circumstances, such as where a waiver is necessary to protect the public health, where
the fee would present a significant barrier to innova on, or where the sponsor is a small business submi ng its first human therapeu c applica on for
review.
The FDA conducts a preliminary review of all applica ons within 60 days of receipt and must inform the sponsor at that me or before whether an applica on
is sufficiently complete to permit substan ve review. This is known as the filing decision. In the event that FDA determines that an applica on does not sa sfy
this standard, it will issue a Refuse to File determina on to the sponsor. The FDA may request addi onal informa on rather than accept an NDA for filing. In
this event, the applica on must be resubmi ed with the addi onal informa on. The resubmi ed applica on is also subject to review before the FDA accepts
it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substan ve review. The FDA has agreed to certain performance goals in the
review process of NDAs. Most such applica ons are meant to be reviewed within ten months from the date of filing, and most applica ons for “priority
review” products are meant to be reviewed within six months of filing. A product that has been designated as a breakthrough therapy may also be eligible for
review within six months if supported by clinical data at the me of submission of the NDA. The review process may be extended by the FDA for three
addi onal months to consider new informa on or clarifica on provided by the sponsor to address an outstanding deficiency iden fied by the FDA following
the original submission.
Before approving an NDA, the FDA typically will inspect the facility or facili es where the product is or will be manufactured. These pre-approval inspec ons
may cover all facili es associated with an NDA submission, including drug component manufacturing such as ac ve pharmaceu cal ingredients, finished drug
product manufacturing, control tes ng laboratories, as well as packaging and labeling facili es. The FDA will not approve an applica on unless it determines
that the manufacturing processes and facili es are in compliance with cGMP requirements and adequate to assure consistent produc on of the product
within required specifica ons. The PREVENT Pandemics Act, which was enacted in December 2022, clarifies that foreign drug manufacturing establishments
are subject to registra on and lis ng requirements even if a drug or biologic undergoes further manufacture, prepara on, propaga on, compounding, or
processing at a separate establishment outside the U.S. prior to being imported or offered for import into the U.S.
Addi onally, before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. The sponsor of the NDA may
also have their records, processes, procedures, training, and other aspects reviewed during an inspec on. The FDA must implement a protocol to expedite
review of responses to inspec on reports pertaining to certain drug applica ons, including applica ons for drugs in a shortage or drugs for which approval is
dependent on remedia on of condi ons iden fied in the inspec on report.
In addi on, as a condi on of approval, the FDA may require a sponsor to develop a REMS. REMS use risk minimiza on strategies beyond the professional
labeling to ensure that the benefits of the product outweigh the poten al risks.
Finally, the FDA may refer an applica on for a novel drug to an advisory commi ee or explain why such referral was not made. Typically, an advisory
commi ee is a panel of independent experts, including clinicians and other scien fic experts, that reviews, evaluates and provides a recommenda on as to
whether the applica on should be approved and under what condi ons. The FDA is not bound by the recommenda ons of an advisory commi ee, but it
considers such recommenda ons carefully when making decisions.
Fast Track, Breakthrough Therapy, Priority Review
The FDA is authorized to designate certain products for expedited review if they are intended to address an unmet medical need in the treatment of a serious
or life-threatening disease or condi on. These programs are referred to as fast track designa on, breakthrough therapy designa on, priority review
designa on.
Specifically, the FDA may designate a product for fast track review if it is intended, whether alone or in combina on with one or more other drugs, for the
treatment of a serious or life-threatening disease or condi on, and it demonstrates the poten al to address unmet medical needs for such a disease or
condi on. The fast track designa on may be withdrawn by the FDA if the FDA believes that the designa on is no longer supported by data emerging in the
clinical trial process.
Akebia Therapeu cs, Inc. | Form 10-K | Page 30
Table of Contents
Second, in 2012, Congress enacted the Food and Drug Administra on Safety and Improvement Act. This law established a new regulatory scheme allowing for
expedited review of products designated as “breakthrough therapies.” A product may be designated as a breakthrough therapy if it is intended, either alone
or in combina on with one or more other drugs, to treat a serious or life-threatening disease or condi on and preliminary clinical evidence indicates that the
product may demonstrate substan al improvement over exis ng therapies on one or more clinically significant endpoints, such as substan al treatment
effects observed early in clinical development. The FDA may take certain ac ons with respect to breakthrough therapies, including holding mee ngs with the
sponsor throughout the development process; providing mely advice to the product sponsor regarding development and approval; involving more senior
staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking other steps to design the clinical trials in an efficient
manner.
Third, the FDA may designate a product for priority review if it is a drug that treats a serious condi on and, if approved, would provide a significant
improvement in safety or effec veness. The FDA determines, on a case-by-case basis, whether the proposed drug represents a significant improvement when
compared with other available therapies. A priority designa on is intended to direct overall a en on and resources to the evalua on of such applica ons,
and to shorten the FDA’s review clock goal for taking ac on on a marke ng applica on from ten months to six months.
Priority Review Vouchers
A priority review voucher, or PRV, is a voucher that the FDA issues to a sponsor of a rare pediatric disease or tropical disease product applica on at the me
of the marke ng applica on approval. Vouchers are transferable to other sponsors that may apply it to their NDAs or biologics license applica on, or BLAs. A
PRV en tles the holder to designate a single human drug applica on submi ed under Sec on 505(b)(1) of the U.S. Federal Food, Drug, and Cosme c Act or
Sec on 351 of the Public Health Service Act as qualifying for a priority review. An FDA priority review may expedite the review process of a marke ng
applica on reducing the review me from ten months a er formal acceptance of the file to six months a er formal acceptance of the file. Applying the PRV
to a marke ng applica on does not ensure the FDA’s approval of the marke ng applica on and all requirements suppor ng the safety and efficacy of the
product must be met. Our NDA submission for vadadustat did not include a PRV.
Accelerated Approval Pathway
Drug or biologic products studied for their safety and effec veness in trea ng serious or life-threatening illnesses and that provide meaningful therapeu c
benefit over exis ng treatments may receive accelerated approval. Accelerated approval means that a product candidate may be approved on the basis of
adequate and well controlled clinical trials establishing that the product candidate has an effect on a surrogate endpoint that is reasonably likely to predict a
clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity or mortality or other clinical benefit, taking into
account the severity, rarity and prevalence of the condi on and the availability or lack of alterna ve treatments. As a condi on of approval, the FDA may
require that a sponsor of a drug or biologic product candidate receiving accelerated approval perform adequate and well controlled post-marke ng clinical
trials. In addi on, the FDA currently requires as a condi on for accelerated approval pre-approval of promo onal materials.
With the passage of FDORA in December 2022, Congress modified certain provisions governing accelerated approval of drug and biologic products.
Specifically, the new legisla on authorized the FDA to: require a sponsor to have its confirmatory clinical trial underway before accelerated approval is
awarded, require a sponsor of a product granted accelerated approval to submit progress reports on its post-approval studies to the FDA every six months
(un l the study is completed); and use expedited procedures to withdraw accelerated approval of an NDA or BLA a er the confirmatory trial fails to verify the
product’s clinical benefit. Further, FDORA requires the FDA to publish on its website “the ra onale for why a post-approval study is not appropriate or
necessary” whenever it decides not to require such a study upon gran ng accelerated approval.
In March 2023, the FDA issued dra guidance that outlines its current thinking and approach to accelerated approval. The agency indicated that although
single-arm trials have been commonly used to support accelerated approval, a randomized controlled trial is the preferred approach as it provides a more
robust efficacy and safety assessment and allows for direct comparisons to an available therapy. To that end, the FDA outlined considera ons for designing,
conduc ng, and analyzing data for trials intended to support accelerated approvals of oncology therapeu cs. While this guidance is currently only in dra
form and generally applies to oncology products and will ul mately not be legally binding even when finalized, sponsors typically observe the FDA’s guidance
closely to ensure that their inves ga onal products qualify for accelerated approval.
The FDA’s Decision on an NDA
The FDA reviews an applica on to determine, among other things, whether the product is safe and whether it is effec ve for its intended use(s), with the
la er determina on being made on the basis of substan al evidence. The term “substan al evidence” is defined under the FDCA as “evidence consis ng of
adequate and well-controlled inves ga ons, including clinical inves ga ons, by experts qualified by scien fic training and experience to evaluate the
effec veness of the product involved, on the basis of which it could fairly and responsibly be concluded by such experts that the product will have the effect it
Akebia Therapeu cs, Inc. | Form 10-K | Page 31
Table of Contents
purports or is represented to have under the condi ons of use prescribed, recommended, or suggested in the labeling or proposed labeling thereof.”
The FDA has interpreted this eviden ary standard to require at least two adequate and well-controlled clinical inves ga ons to establish effec veness of a
new product. Under certain circumstances, however, FDA has indicated that a single trial with certain characteris cs and addi onal informa on may sa sfy
this standard. This approach was subsequently endorsed by Congress in 1998 with legisla on providing, in per nent part, that “If [FDA] determines, based on
relevant science, that data from one adequate and well-controlled clinical inves ga on and confirmatory evidence (obtained prior to or a er such
inves ga on) are sufficient to establish effec veness, FDA may consider such data and evidence to cons tute substan al evidence.” This modifica on to the
law recognized the poten al for FDA to find that one adequate and well controlled clinical inves ga on with confirmatory evidence, including suppor ve data
outside of a controlled trial, is sufficient to establish effec veness. In December 2019, FDA issued dra guidance further explaining the studies that are
needed to establish substan al evidence of effec veness. Although the FDA has not yet finalized that guidance, it did issue addi onal dra guidance in
September 2023 that outlines considera ons for relying on confirmatory evidence in lieu of a second clinical study.
A er evalua ng the applica on and all related informa on, including the advisory commi ee recommenda ons, if any, and inspec on reports of
manufacturing facili es and clinical trial sites, the FDA will issue either a CRL or an approval le er. To reach this determina on, the FDA must determine that
the drug is effec ve and that its expected benefits outweigh its poten al risks to pa ents. This “benefit-risk” assessment is informed by the extensive body of
evidence about the product’s safety and efficacy in the NDA or BLA. This assessment is also informed by other factors, including: the severity of the
underlying condi on and how well pa ents’ medical needs are addressed by currently available therapies; uncertainty about how the premarket clinical trial
evidence will extrapolate to real-world use of the product in the post-market se ng; and whether risk management tools are necessary to manage specific
risks. In connec on with this assessment, the FDA review team will assemble all individual reviews and other documents into an “ac on package,” which
becomes the record for FDA review. The review team then issues a recommenda on, and a senior FDA official makes a decision.
A CRL indicates that the review cycle of the applica on is complete, and the applica on will not be approved in its present form. A CRL generally outlines the
deficiencies in the submission and may require substan al addi onal tes ng or informa on in order for the FDA to reconsider the applica on. The CRL may
require addi onal clinical or other data, addi onal pivotal Phase 3 clinical trial(s) and/or other significant and me- consuming requirements related to
clinical trials, preclinical studies or manufacturing. If a CRL is issued, the sponsor will have one year to respond to the deficiencies iden fied by the FDA, at
which me the FDA can deem the applica on withdrawn or, in its discre on, grant the sponsor an addi onal six month extension to respond. The FDA has
commi ed to reviewing resubmissions in response to an issued CRL in either two or six months depending on the type of informa on included. Even with the
submission of this addi onal informa on, however, the FDA ul mately may decide that the applica on does not sa sfy the regulatory criteria for approval.
The FDA has taken the posi on that a CRL is not final agency ac on making the determina on subject to judicial review. Rather, for those seeking to challenge
FDA’s CRL decision, the agency has indicated that sponsors may request a formal hearing on the CRL or they may file a request for reconsidera on or a
request for a formal dispute resolu on.
An approval le er, on the other hand, authorizes commercial marke ng of the product with specific prescribing informa on for specific indica ons. That is,
the approval will be limited to the condi ons of use (e.g., pa ent popula on, indica on) described in the FDA-approved labeling. Further, depending on the
specific risk(s) to be addressed, the FDA may require that contraindica ons, warnings or precau ons be included in the product labeling, require that post-
approval trials, including Phase 4 clinical trials, be conducted to further assess a product’s safety a er approval, require tes ng and surveillance programs to
monitor the product a er commercializa on or impose other condi ons, including distribu on and use restric ons or other risk management mechanisms
under a REMS which can materially affect the poten al market and profitability of the product. The FDA may prevent or limit further marke ng of a product
based on the results of post-marke ng trials or surveillance programs. A er approval, some types of changes to the approved product, such as adding new
indica ons, manufacturing changes and addi onal labeling claims, are subject to further tes ng requirements and FDA review and approval.
Under the Ensuring Innova on Act, which was signed into law in April 2021, the FDA must publish ac on packages summarizing its decisions to approve new
drugs and biologics within 30 days of approval of such products. To date, CRLs are not publicly available documents.
Post-Approval Requirements and Commitments
If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indica ons for use may otherwise
be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindica ons, warnings or precau ons be
included in the product labeling. In addi on, condi ons of NDA approval may include sponsor agreement to PMR or PMC studies, which are designed to
further assess drug safety and
Akebia Therapeu cs, Inc. | Form 10-K | Page 32
Table of Contents
effec veness and may require tes ng and surveillance programs to monitor the safety of approved products that have been commercialized. These may
include addi onal studies, registries, data collec on, analyses, and/or informa on.
Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and con nuing regula on by the FDA, including, among other things,
requirements rela ng to recordkeeping, periodic repor ng, product sampling and distribu on, adver sing and promo on and repor ng of adverse
experiences with the product. A er approval, most changes to the approved product, such as adding new indica ons or other labeling claims, are subject to
prior FDA review and approval. There also are con nuing, annual user fee requirements for any marketed products and the establishments at which such
products are manufactured, as well as new applica on fees for supplemental applica ons with clinical data.
In addi on, drug manufacturers and other en es involved in the manufacture and distribu on of approved drugs are required to register their
establishments with the FDA and state agencies and are subject to periodic unannounced inspec ons by the FDA and these state agencies for compliance
with cGMP requirements. Changes to the manufacturing process are strictly regulated and o en require prior FDA approval before being implemented. FDA
regula ons also require inves ga on and correc on of any devia ons from cGMP and impose repor ng and documenta on requirements upon the sponsor
and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must con nue to expend me, money, and effort in the
area of produc on and quality control to maintain cGMP compliance.
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems
occur a er the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unan cipated
severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to
add new safety informa on; imposi on of post-market studies or clinical trials to assess new safety risks; or imposi on of distribu on or other restric ons
under a REMS program. Other poten al consequences include, among other things:
•
•
•
•
•
restric ons on the marke ng or manufacturing of the product, suspension of the approval, or complete withdrawal of the product from the
market or product recalls;
fines, warning le ers or holds on post-approval clinical trials;
refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revoca on of product license approvals;
product seizure or deten on, or refusal to permit the import or export of products; or
injunc ons or the imposi on of civil or criminal penal es.
The FDA strictly regulates the marke ng, labeling, adver sing and promo on of prescrip on drug products placed on the market. This regula on includes,
among other things, standards and regula ons for direct-to-consumer adver sing, communica ons regarding unapproved uses, industry-sponsored scien fic
and educa onal ac vi es, and promo onal ac vi es involving the Internet and social media. Promo onal claims about a product candidate’s safety or
effec veness are prohibited before the product candidate is approved. A er approval, a drug product generally may not be promoted for uses that are not
approved by the FDA or in a manner that is inconsistent with the product’s prescribing informa on. In September 2021, the FDA published final regula ons
which describe the types of evidence that the agency will consider in determining the intended use of a drug product. In addi on, in October 2023, the FDA
published dra guidance outlining the agency’s non-binding policies governing the distribu on of scien fic informa on on unapproved uses to healthcare
providers. This dra guidance calls for such communica ons to be truthful, non-misleading, factual, and unbiased and include all informa on necessary for
healthcare providers to interpret the strengths and weaknesses and validity and u lity of the informa on about the unapproved use.
In the U.S., healthcare professionals are generally permi ed to prescribe drugs for such uses not described in the drug’s labeling, known as off-label uses,
because the FDA does not regulate the prac ce of medicine. However, FDA regula ons impose rigorous restric ons on manufacturers’ communica ons,
prohibi ng the promo on of off-label uses. It may be permissible, under very specific condi ons, for a manufacturer to engage in nonpromo onal, truthful
and non-misleading communica on regarding off-label informa on, such as distribu ng scien fic or medical journal informa on. In addi on, companies may
also promote informa on that it consistent with the prescribing informa on and have the ability to proac vely speak to formulary commi ee members of
payors regarding data for an unapproved drug or unapproved uses of an approved drug under some rela vely recent guidance from the FDA. Moreover, with
the passage of the Pre-Approval Informa on Exchange Act, or PIE Act, in December 2022, sponsors of products that have not been approved may proac vely
communicate to payors certain informa on about products in development to help expedite pa ent access upon product approval. Previously, such
communica ons were permi ed under FDA guidance but the new legisla on explicitly provides protec on to sponsors who convey certain informa on about
products in development to payors, including unapproved uses of approved products.
Akebia Therapeu cs, Inc. | Form 10-K | Page 33
Table of Contents
However, if a company is found to have promoted off-label uses, it may become subject to adverse public rela ons and administra ve and judicial
enforcement by the FDA, the Department of Jus ce, or the Office of the Inspector General of the Department of Health and Human Services, as well as state
authori es. This could subject a company to a range of penal es that could have a significant commercial impact, including civil and criminal fines and
agreements that materially restrict the manner in which a company promotes or distributes drug products. The federal government has levied large civil and
criminal fines against companies for alleged improper promo on and has also requested that companies enter into consent decrees or permanent injunc ons
under which specified promo onal conduct is changed or curtailed.
In addi on, the distribu on of prescrip on pharmaceu cal products is subject to a variety of federal and state laws, the most recent of which is s ll in the
process of being phased into the U.S. supply chain and regulatory framework. The Prescrip on Drug Marke ng Act, or PDMA, was the first federal law to set
minimum standards for the registra on and regula on of drug distributors by the states and to regulate the distribu on of drug samples. Today, both the
PDMA and state laws limit the distribu on of prescrip on pharmaceu cal product samples and impose requirements to ensure accountability in distribu on.
Congress more recently enacted the Drug Supply Chain Security Act, or DSCSA, which made significant amendments to the FDCA, including by replacing
certain provisions from the PDMA pertaining to wholesale distribu on of prescrip on drugs with a more comprehensive statutory scheme. The DSCSA now
requires uniform na onal standards for wholesale distribu on and, for the first me, for third-party logis cs providers; it also provides for preemp on of
certain state laws in the areas of licensure and prescrip on drug traceability.
Sec on 505(b)(2) NDAs
NDAs for most new drug products are based on two full clinical trials which must contain substan al evidence of the safety and efficacy of the proposed new
product for the proposed use. These applica ons are submi ed under Sec on 505(b)(1) of the FDCA. The FDA is, however, authorized to approve an
alterna ve type of NDA under Sec on 505(b)(2) of the FDCA. This type of applica on allows the sponsor to rely, in part, on the FDA’s previous findings of
safety and efficacy for a similar product, or published literature. Specifically, Sec on 505(b)(2) applies to NDAs for a drug for which the inves ga ons made to
show whether or not the drug is safe for use and effec ve in use and relied upon by the sponsor for approval of the applica on “were not conducted by or for
the sponsor and for which the sponsor has not obtained a right of reference or use from the person by or for whom the inves ga ons were conducted.”
Sec on 505(b)(2) authorizes the FDA to approve an NDA based on safety and effec veness data that were not developed by the sponsor. NDAs filed under
Sec on 505(b)(2) may provide an alternate and poten ally more expedi ous pathway to FDA approval for new or improved formula ons or new uses of
previously approved products. If the 505(b)(2) sponsor can establish that reliance on the FDA’s previous approval is scien fically appropriate, the sponsor may
eliminate the need to conduct certain preclinical studies or clinical trials of the new product. The FDA may also require companies to perform addi onal
studies or measurements to support the change from the approved product. The FDA may then approve the new product candidate for all or some of the
label indica ons for which the referenced product has been approved, as well as for any new indica on sought by the Sec on 505(b)(2) sponsor. Products
approved under Sec on 505(b)(2) are o en referred to as follow-on products.
Abbreviated New Drug Applica ons for Generic Drugs
In 1984, with the passage of the Hatch-Waxman Amendments to the FDCA, Congress established an abbreviated regulatory scheme authorizing the FDA to
approve generic drugs that are shown to contain the same ac ve ingredients as, and to be bioequivalent to, drugs previously approved by the FDA pursuant
to NDAs. To obtain approval of a generic drug, a sponsor must submit an ANDA to the agency. An ANDA is a comprehensive submission that contains, among
other things, data and informa on pertaining to the ac ve pharmaceu cal ingredient, bioequivalence, drug product formula on, specifica ons and stability
of the generic drug, as well as analy cal methods, manufacturing process valida on data and quality control procedures. ANDAs are “abbreviated” because
they generally do not include preclinical and clinical data to demonstrate safety and effec veness. Instead, in support of such applica ons, a generic
manufacturer may rely on the preclinical and clinical tes ng previously conducted for a drug product previously approved under an NDA, known as the
reference-listed drug, or RLD.
Under the Hatch-Waxman Act, the FDA may not approve an ANDA or 505(b)(2) applica on un l any applicable period of non-patent exclusivity for the RLD
has expired. The FDCA provides a period of five years of non-patent data exclusivity for a new drug containing a new chemical en ty, or NCE. For the purposes
of this provision, the FDA has consistently taken the posi on that an NCE is a drug that contains no ac ve moiety that has previously been approved by the
FDA in any other NDA. This interpreta on was confirmed with enactment of the Ensuring Innova on Act in April 2021. An ac ve moiety is the molecule or ion
responsible for the physiological or pharmacological ac on of the drug substance. In cases where such NCE exclusivity has been granted, a generic or follow-
on drug applica on may not be filed with the FDA un l the expira on of five years unless the submission is accompanied by a Paragraph IV cer fica on, in
which case the sponsor may submit its applica on four years following the original product approval.
Akebia Therapeu cs, Inc. | Form 10-K | Page 34
Table of Contents
The FDCA also provides for a period of three years of exclusivity if the NDA includes reports of one or more new clinical inves ga ons, other than
bioavailability or bioequivalence studies, that were conducted by or for the sponsor and are essen al to the approval of the applica on. This three-year
exclusivity period o en protects changes to a previously approved drug product, such as a new dosage form, route of administra on, combina on or
indica on. Three-year exclusivity would be available for a drug product that contains a previously approved ac ve moiety, provided the statutory requirement
for a new clinical inves ga on is sa sfied. Unlike five-year NCE exclusivity, an award of three-year exclusivity does not block the FDA from accep ng ANDAs or
505(b)(2) applica ons seeking approval for generic versions of the drug as of the date of approval of the original drug product. The FDA typically makes
decisions about awards of data exclusivity shortly before a product is approved.
The FDA must establish a priority review track for certain generic drugs, requiring the FDA to review a drug applica on within eight months for a drug that has
three or fewer approved drugs listed in the Orange Book and is no longer protected by any patent or regulatory exclusivi es, or is on the FDA’s drug shortage
list. The new legisla on also authorizes FDA to expedite review of ‘‘compe tor generic therapies’’ or drugs with inadequate generic compe on, including
holding mee ngs with or providing advice to the drug sponsor prior to submission of the applica on.
Hatch-Waxman Patent Cer fica on and the 30-Month Stay
As part of the submission of an NDA or certain supplemental applica ons, NDA sponsors are required to list with the FDA each patent with claims that cover
the sponsor’s product or an approved method of using the product. Upon approval of a new drug, each of the patents listed in the applica on for the drug is
then published in the Orange Book. The FDA’s regula ons governing patent lis ngs were largely codified into law with enactment of the Orange Book
Moderniza on Act in January 2021. When an ANDA sponsor files its applica on with the FDA, the sponsor is required to cer fy to the FDA concerning any
patents listed for the reference product in the Orange Book. Specifically, the ANDA sponsor must cer fy that: (i) the required patent informa on has not been
filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but will expire on a par cular date and approval is sought a er patent expira on;
or (iv) the listed patent is invalid or will not be infringed by the new product. Moreover, to the extent that the Sec on 505(b)(2) NDA sponsor is relying on
studies conducted for an already approved product, the sponsor also is required to cer fy to the FDA concerning any patents listed for the NDA-approved
product in the Orange Book to the same extent that an ANDA sponsor would.
If the generic drug or follow-on drug sponsor does not challenge the innovator’s listed patents, FDA will not approve the ANDA or 505(b)(2) applica on un l
all the listed patents claiming the referenced product have expired. A cer fica on that the new generic product will not infringe the already approved
product’s listed patents or that such patents are invalid or unenforceable is called a Paragraph IV cer fica on. If the ANDA sponsor has provided a Paragraph
IV cer fica on to the FDA, the sponsor must also send no ce of the Paragraph IV cer fica on to the NDA owner and patent holders once the ANDA has been
accepted for filing by the FDA. The NDA owner and patent holders may then ini ate a patent infringement lawsuit in response to the no ce of the Paragraph
IV cer fica on. The filing of a patent infringement lawsuit within 45 days a er the receipt of a Paragraph IV cer fica on automa cally prevents the FDA from
approving the ANDA or 505(b)(2) NDA un l the earliest of 30 months a er the receipt of the Paragraph IV no ce, expira on of the patent or a decision in the
infringement case that is favorable to the ANDA or 505(b)(2) NDA applica on.
Pediatric Studies and Exclusivity
Pediatric exclusivity is another type of non-patent marke ng exclusivity in the U.S. and, if granted, for drug products, provides for the a achment of an
addi onal six months of marke ng protec on to the term of any exis ng patent or regulatory exclusivity, including the non-patent and orphan exclusivity. This
six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to a wri en request from the FDA for such data. The data
do not need to show the product is effec ve in the pediatric popula on studied, rather, if the clinical trial is deemed to fairly respond to the FDA’s request,
the addi onal protec on is granted. If reports of requested pediatric studies are submi ed to and accepted by the FDA within the statutory me limits,
whatever statutory or regulatory periods of exclusivity or patent protec on cover the product are extended by six months. This is not a patent term
extension, but it effec vely extends the regulatory period during which the FDA cannot approve another applica on. With regard to patents, the six-month
pediatric exclusivity period will not a ach to any patents for which an ANDA or 505(b)(2) sponsor submi ed a Paragraph IV patent cer fica on, unless the
NDA sponsor or patent owner first obtains a court determina on that the patent is valid and infringed by the proposed product.
Patent Term Restora on and Extension
A patent claiming a new drug product may be eligible for a limited patent term extension under the Hatch-Waxman Act, which permits a patent restora on of
up to five years for patent term lost during product development and the FDA regulatory review. The restora on period granted is typically one-half the me
between the effec ve date of an IND and the submission date of an NDA, plus the me between the submission date of an NDA and the ul mate approval
date. Patent term restora on cannot be used to extend the remaining term of a patent past a total of 14 years from the product’s approval
Akebia Therapeu cs, Inc. | Form 10-K | Page 35
Table of Contents
date. Only one patent applicable to an approved drug product is eligible for the extension, and the applica on for the extension must be submi ed prior to
the expira on of the patent in ques on. A patent that covers mul ple drugs for which approval is sought can only be extended in connec on with one of the
approvals. The U.S. Patent and Trademark Office reviews and approves the applica on for any patent term extension or restora on in consulta on with the
FDA.
Federal and State Data Privacy Laws
There are mul ple privacy and data security laws that may impact our business ac vi es, in the U.S. and in other countries where we conduct trials or where
we may do business in the future. These laws are evolving and may increase both our obliga ons and our regulatory risks in the future. In the health care
industry generally, under the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Informa on Technology for
Economic and Clinical Health Act, or HIPAA, the HHS has issued regula ons to protect the privacy and security of protected health informa on, or PHI, used or
disclosed by covered en es including certain healthcare providers, health plans and healthcare clearinghouses. HIPAA also regulates standardiza on of data
content, codes and formats used in healthcare transac ons and standardiza on of iden fiers for health plans and providers. HIPAA also imposes certain
obliga ons on the business associates of covered en es that obtain protected health informa on in providing services to or on behalf of covered en es.
While we are not a covered en ty, as a business associate, we could be subject to penal es, including criminal penal es, and contractual damages if we
knowingly obtain or further disclose PHI from a covered en ty, such as a health care provider or clinical research site, and therefore we must ensure the
proper authoriza ons are in place before we, or our vendors or business partners, obtain access to any PHI. In addi on to federal privacy regula ons, there
are a number of state laws governing confiden ality and security of health informa on that may be applicable to our business. In addi on to possible federal
civil and criminal penal es for HIPAA viola ons, state a orneys general are authorized to file civil ac ons for damages or injunc ons in federal courts to
enforce HIPAA and seek a orney’s fees and costs associated with pursuing federal civil ac ons. In addi on, state a orneys general (along with private
plain ffs) have brought civil ac ons seeking injunc ons and damages resul ng from alleged viola ons of HIPAA’s privacy and security rules. State a orneys
general also have authority to enforce state privacy and security laws. New laws and regula ons governing privacy and security may be adopted in the future
as well.
In November 2020, California enacted legisla on that has been dubbed the first “GDPR-like” law in the U.S. Known as the California Consumer Privacy Act, or
CCPA, it creates new individual privacy rights for consumers (as that word is broadly defined in the law) and places increased privacy and security obliga ons
on en es handling personal data of consumers or households. The CCPA went into effect on January 1, 2020 and requires covered companies to provide
new disclosures to California consumers, provide such consumers rights as it relates to their personal informa on, and allow for a new cause of ac on for
data breaches. Addi onally, star ng on January 1, 2023, the California Privacy Rights Act, or CPRA, significantly modified the CCPA, including by expanding
consumers’ rights, par cularly with respect to certain sensi ve personal informa on and crea ng new principles, such as data minimiza on, purpose
limita on, and storage limita on. The CPRA also created a new state agency that will be vested with authority to implement and enforce the CCPA and the
CPRA. The CCPA and CPRA could impact our business ac vi es depending on how it is interpreted and exemplifies the vulnerability of our business to not only
cyber threats but also the evolving regulatory environment related to personal data and individually iden fiable health informa on. These provisions may
apply to some of our business ac vi es.
In addi on to California, eleven other states have passed comprehensive privacy laws similar to the CCPA and CPRA. These laws are either in effect or will go
into effect some me before the end of 2026. Like the CCPA and CPRA, these laws create obliga ons related to the processing of personal informa on, as well
as special obliga ons for the processing of “sensi ve” data, which includes health data in some cases. Some of the provisions of these laws may apply to our
business ac vi es. There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2024 legisla ve sessions
that will go into effect in 2025 and beyond, including New Hampshire and New Jersey. Other states will be considering similar laws in the future, and Congress
has also been deba ng passing a federal privacy law. There are also states that are specifically regula ng health informa on that may affect our business. For
example, Washington state passed a health privacy law in 2023 that will regulate the collec on and sharing of health informa on, and the law also has a
private right of ac on, which further increases the relevant compliance risk. Connec cut and Nevada have also passed similar laws regula ng consumer
health data, and more states (such as Vermont) are considering such legisla on in 2024. Other states will be considering these laws in the future, and
Congress has also been deba ng a proposed federal privacy law. These laws may impact our business ac vi es, including our iden fica on of research
subjects, rela onships with business partners and ul mately the marke ng and distribu on of our products, if and once approved.
Because of the breadth of these laws and the narrowness of the statutory excep ons and regulatory safe harbors available under such laws, it is possible that
some of our current or future business ac vi es, including certain clinical research, sales and marke ng prac ces and the provision of certain items and
services to our customers, could be subject to challenge under one or more of such privacy and data security laws. The heightening compliance environment
and the need to build and maintain robust and secure systems to comply with different privacy compliance and/or repor ng requirements in mul ple
jurisdic ons could increase the possibility that a healthcare company may fail to comply fully with one or more of these
Akebia Therapeu cs, Inc. | Form 10-K | Page 36
Table of Contents
requirements. If our opera ons are found to be in viola on of any of the privacy or data security laws or regula ons described above that are applicable to us,
or any other laws that apply to us, we may be subject to penal es, including poten ally significant criminal, civil and administra ve penal es, damages, fines,
imprisonment, contractual damages, reputa onal harm, diminished profits and future earnings, addi onal repor ng requirements and/or oversight if we
become subject to a consent decree or similar agreement to resolve allega ons of non-compliance with these laws, and the curtailment or restructuring of
our opera ons, any of which could adversely affect our ability to operate our business and our results of opera ons. To the extent that any product
candidates we may develop, once approved, are sold in a foreign country, we may be subject to similar foreign laws.
Review and Approval of Drug Products Outside the U.S.
In order to market any product outside of the U.S., a sponsor must also comply with numerous and varying regulatory requirements of other countries and
jurisdic ons regarding quality, safety and efficacy and governing, among other things, clinical trials, marke ng authoriza on, commercial sales and
distribu on of drug products. Whether or not it obtains FDA approval for a product, the company would need to obtain the necessary approvals by the
comparable foreign regulatory authori es before it can commence clinical trials or marke ng of the product in those countries or jurisdic ons. The approval
process ul mately varies between countries and jurisdic ons and can involve addi onal product tes ng and addi onal administra ve review periods. The
me required to obtain approval in other countries and jurisdic ons might differ from and be longer than that required to obtain FDA approval. Regulatory
approval in one country or jurisdic on does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country
or jurisdic on may nega vely impact the regulatory process in others.
Non-clinical Studies
Non-clinical studies are performed to demonstrate the health or environmental safety of new chemical or biological substances. Non-clinical (pharmaco-
toxicological) studies must be conducted in compliance with the principles of GLP as set forth in EU Direc ve 2004/10/EC (unless otherwise jus fied for
certain par cular medicinal products such as, for example, radio-pharmaceu cal precursors for radio-labeling purposes). In par cular, non-clinical studies,
both in vitro and in vivo, must be planned, performed, monitored, recorded, reported and archived in accordance with the GLP principles, which define a set
of rules and criteria for a quality system for the organiza onal process and the condi ons for non-clinical studies. These GLP standards reflect the
Organiza on for Economic Co-opera on and Development requirements.
Clinical Trial Approval in the EU
On January 31, 2022, the Clinical Trials Regula on (EU) No 536/2014 became effec ve in the EU and replaced the prior Clinical Trials Direc ve 2001/20/EC.
The Clinical Trials Regula on aims to simplify and streamline the authoriza on, conduct and transparency of clinical trials in the EU. Under the new
coordinated procedure for the approval of clinical trials, the sponsor of a clinical trial to be conducted in more than one Member State of the EU, or an EU
Member State, will only be required to submit a single applica on for approval. The submission will be made through the Clinical Trials Informa on System, a
new clinical trials portal overseen by the EMA and available to clinical trial sponsors, competent authori es of the EU Member States and the public.
Beyond streamlining the process, the new regula on includes a single set of documents to be prepared and submi ed for the applica on as well as simplified
repor ng procedures for clinical trial sponsors, and a harmonized procedure for the assessment of applica ons for clinical trials, which is divided in two parts.
Part I is assessed by the competent authori es of all EU Member States in which an applica on for authoriza on of a clinical trial has been submi ed, or EU
Member States concerned. Part II is assessed separately by each EU Member State concerned. Strict deadlines have been established for the assessment of
clinical trial applica ons. The role of the relevant ethics commi ees in the assessment procedure will con nue to be governed by the na onal law of the EU
Member State concerned. However, overall related melines will be defined by the Clinical Trials Regula on.
The Clinical Trials Regula on did not change the preexis ng requirement that a sponsor must obtain prior approval from the competent na onal authority of
the EU Member State in which the clinical trial is to be conducted. If the clinical trial is conducted in different EU Member States, the competent authori es in
each of these EU Member States must provide their approval for the conduct of the clinical trial. Furthermore, the sponsor may only start a clinical trial at a
specific clinical site a er the applicable ethics commi ee has issued a favorable opinion.
Par es conduc ng certain clinical trials must, as in the U.S., post clinical trial informa on in the EU at the EudraCT website: h ps://eudract.ema.europa.eu.
PRIME Designa on in the European Union
In March 2016, the EMA launched an ini a ve, the PRIority MEdicines, or PRIME, scheme, to facilitate development of product candidates in indica ons,
o en rare, for which few or no therapies currently exist. The PRIME scheme is intended to
Akebia Therapeu cs, Inc. | Form 10-K | Page 37
Table of Contents
encourage drug development in areas of unmet medical need and provides accelerated assessment of products represen ng substan al innova on reviewed
under the centralized procedure. Products from small- and medium-sized enterprises, or SMEs, may qualify for earlier entry into the PRIME scheme than
larger companies. Many benefits accrue to sponsors of product candidates with PRIME designa on, including but not limited to, early and proac ve
regulatory dialogue with the EMA, frequent discussions on clinical trial designs and other development program elements, and accelerated marke ng
authoriza on applica on, or MAA, assessment once a dossier has been submi ed. Importantly, a dedicated agency contact and rapporteur from the
Commi ee for Human Medicinal Products, or CHMP, or Commi ee for Advanced Therapies are appointed early in the PRIME scheme, facilita ng increased
understanding of the product at the EMA’s commi ee level. A kick-off mee ng ini ates these rela onships and includes a team of mul disciplinary experts at
the EMA to provide guidance on the overall development and regulatory strategies.
Pediatric Studies
Prior to obtaining a marke ng authoriza on in the EU, sponsors have to demonstrate compliance with all measures included in an EMA-approved Pediatric
Inves ga on Plan, or PIP, covering all subsets of the pediatric popula on, unless the EMA has granted a product-specific waiver, a class waiver or a deferral
for one or more of the measures included in the PIP. The respec ve requirements for all marke ng authoriza on procedures are set forth in Regula on (EC)
No 1901/2006, which is referred to as the Pediatric Regula on. This requirement also applies when a company wants to add a new indica on, pharmaceu cal
form or route of administra on for a medicine that is already authorized. The Pediatric Commi ee of the EMA, or PDCO, may grant deferrals for some
medicines, allowing a company to delay development of the medicine in children un l there is enough informa on to demonstrate its effec veness and
safety in adults. The PDCO may also grant waivers when development of a medicine in children is not needed or is not appropriate because (a) the product is
likely to be ineffec ve or unsafe in part or all of the pediatric popula on; (b) the disease or condi on occurs only in adult popula on; or (c) the product does
not represent a significant therapeu c benefit over exis ng treatments for pediatric popula on. Before a marke ng authoriza on applica on can be filed, or
an exis ng marke ng authoriza on can be amended, the EMA determines that companies actually comply with the agreed studies and measures listed in
each relevant PIP.
Marke ng Authoriza on
To obtain marke ng approval of a product under EU regulatory systems, a sponsor must submit an MAA either under a centralized or decentralized
procedure. The centralized procedure provides for the grant of a single marke ng authoriza on by the European Commission that is valid for all EU member
states. The centralized procedure is compulsory for specific products, including for medicines produced by certain biotechnological processes, products
designated as orphan medicinal products, advanced therapy products and products with a new ac ve substance indicated for the treatment of certain
diseases. For products with a new ac ve substance indicated for the treatment of other diseases and products that are highly innova ve or for which a
centralized process is in the interest of pa ents, the centralized procedure may be op onal.
Under the centralized procedure, the CHMP established at the EMA is responsible for conduc ng the ini al assessment of a product. The CHMP is also
responsible for several post-authoriza on and maintenance ac vi es, such as the assessment of modifica ons or extensions to an exis ng marke ng
authoriza on. Under the centralized procedure in the EU, the maximum meframe for the evalua on of an MAA is 210 days, excluding clock stops, when
addi onal informa on or wri en or oral explana on is to be provided by the sponsor in response to ques ons of the CHMP. Accelerated evalua on might be
granted by the CHMP in excep onal cases, when a medicinal product is of major interest from the point of view of public health and in par cular from the
viewpoint of therapeu c innova on. In this circumstance, the EMA ensures that the opinion of the CHMP is given within 150 days.
The decentralized procedure is available to sponsors who wish to market a product in various EU Member States where such product has not received
marke ng approval in any EU Member State before. The decentralized procedure provides for approval by one or more other, or concerned, member states
of an assessment of an applica on performed by one member state designated by the sponsor, known as the reference member state. Under this procedure,
a sponsor submits an applica on based on iden cal dossiers and related materials, including a dra summary of product characteris cs, and dra labeling
and package leaflet, to the reference member state and concerned member states. The reference member state prepares a dra assessment report and
dra s of the related materials within 210 days a er receipt of a valid applica on. Within 90 days of receiving the reference member state’s assessment report
and related materials, each concerned member state must decide whether to approve the assessment report and related materials.
If a member state cannot approve the assessment report and related materials on the grounds of poten al serious risk to public health, the disputed points
are subject to a dispute resolu on mechanism and may eventually be referred to the European Commission, whose decision is binding on all member states.
A marke ng authoriza on may be granted only to a sponsor established in the EU. Once the marke ng authoriza on is obtained in all member states of the
EU and study results are included in the product informa on, even when nega ve, the
Akebia Therapeu cs, Inc. | Form 10-K | Page 38
Table of Contents
product is eligible for six months’ supplementary protec on cer ficate extension. For orphan-designated medicinal products, the 10-year period of market
exclusivity is extended to 12 years.
Periods of Authoriza on and Renewals in the EU
A marke ng authoriza on is valid for five years, in principle, and it may be renewed a er five years on the basis of a reevalua on of the risk-benefit balance
by the EMA or by the competent authority of the relevant EU Member State. To that end, the marke ng authoriza on holder must provide the EMA or the
relevant competent authority of the EU Member State with a consolidated version of the file in respect of quality, safety and efficacy, including all varia ons
introduced since the marke ng authoriza on was granted, at least six months before the marke ng authoriza on ceases to be valid. Once renewed, the
marke ng authoriza on is valid for an unlimited period, unless the EC or the relevant competent authority of the EU Member State decides, on jus fied
grounds rela ng to pharmacovigilance, to proceed with one addi onal five-year renewal period. Any marke ng authoriza on that is not followed by the
marke ng of the medicinal product on the EU market (in the case of the centralized procedure) or on the market of the EU Member State which delivered the
marke ng authoriza on within three years a er authoriza on ceases to be valid.
Post-Approval Requirements
As in the U.S., both marke ng authoriza on, or MA, holders and manufacturers of medicinal products are subject to comprehensive regulatory oversight by
the EMA, the EC, and the competent authori es of EU Member States. The MA holder must, for example, comply with EU pharmacovigilance legisla on and
its related regula ons and guidelines which entail many requirements for conduc ng pharmacovigilance, or the assessment and monitoring of the safety of
medicinal products. In par cular, the MA holder must establish and maintain a pharmacovigilance system and appoint an individual qualified person for
pharmacovigilance who is responsible for the establishment and maintenance of that system, and oversees the safety profiles of medicinal products and any
emerging safety concerns. Key obliga ons include expedited repor ng of suspected serious adverse reac ons and submission of periodic safety update
reports, or PSURs.
All new MAAs must include a risk management plan, or RMP, describing the risk management system that the company will put in place and documen ng
measures to prevent or minimize the risks associated with the product. The regulatory authori es may also impose specific obliga ons as a condi on of the
MA. Such risk-minimiza on measures or post-authoriza on obliga ons may include addi onal safety monitoring, more frequent submission of PSURs, or the
conduct of addi onal clinical trials or post-authoriza on safety studies.
The manufacturing process for medicinal products in the EU is also highly regulated and regulators may shut down manufacturing facili es that they believe
do not comply with regula ons. Manufacturing requires a manufacturing authoriza on, and the manufacturing authoriza on holder must comply with
various requirements set out in the applicable EU laws, including compliance with EU GMP standards when manufacturing medicinal products and API.
In the EU, the adver sing and promo on of approved products are subject to laws governing promo on of medicinal products, interac ons with physicians,
misleading and compara ve adver sing, and unfair commercial prac ces. These laws require that promo onal materials and adver sing in rela on to
medicinal products comply with the product’s Summary of Product Characteris cs, or SmPC, as approved by the competent authori es. Promo on of a
medicinal product that does not comply with the SmPC is considered to cons tute off-label promo on, which is prohibited in the EU. Direct-to-consumer
adver sing of prescrip on medicines is also prohibited in the EU. Although general requirements for adver sing and promo on of medicinal products are
established under EU direc ves, the details are governed by regula ons in each EU Member State and can differ from one country to another.
The aforemen oned EU rules are generally applicable in the EEA.
Failure to comply with EU and EU Member State laws that apply to the conduct of clinical trials, manufacturing approval, MA of medicinal products and
marke ng of such products, both before and a er grant of the MA, manufacturing of pharmaceu cal products, statutory health insurance, bribery and an -
corrup on or with other applicable regulatory requirements may result in administra ve, civil or criminal penal es. These penal es could include delays or
refusal to authorize the conduct of clinical trials, or to grant MA, product withdrawals and recalls, product seizures, suspension, withdrawal or varia on of the
MA, total or par al suspension of produc on, distribu on, manufacturing or clinical trials, opera ng restric ons, injunc ons, suspension of licenses, fines and
criminal penal es.
Regulatory Data Exclusivity in the EU
In the EU, innova ve medicinal products authorized in the EU on the basis of a full marke ng authoriza on applica on (as opposed to an applica on for
marke ng authoriza on that relies on data available in the marke ng authoriza on dossier for another, previously approved, medicinal product) are en tled
to eight years of data exclusivity. During this period, sponsors for authoriza on of generics of these innova ve products cannot rely on data contained in the
marke ng authoriza on dossier submi ed for the innova ve medicinal product. Innova ve medicinal products are also en tled to a total of ten years’
Akebia Therapeu cs, Inc. | Form 10-K | Page 39
Table of Contents
market exclusivity. During this ten-year period no generic of this medicinal product can be placed on the EU market. The overall ten-year period will be
extended to a maximum of eleven years if, during the first eight years of those ten years, the marke ng authoriza on holder obtains an authoriza on for one
or more new therapeu c indica ons which, during the scien fic evalua on prior to authoriza on, is held to bring a significant clinical benefit in comparison
with exis ng therapies. Even if a compound is considered to be a NCE so that the innovator gains the prescribed period of data exclusivity, another company
may market another version of the product if such company obtained marke ng authoriza on based on an MAA with a complete independent data package
of pharmaceu cal tests, preclinical tests and clinical trials.
Pediatric Exclusivity
If a sponsor obtains a marke ng authoriza on in all EU Member States, or a marke ng authoriza on granted in the centralized procedure by the EC, and the
study results for the pediatric popula on are included in the product informa on, even when nega ve, the medicine is then eligible for an addi onal six-
month period of qualifying patent protec on through extension of the term of the Supplementary Protec on Cer ficate, or SPC, or alterna vely a one year
extension of the regulatory market exclusivity from ten to eleven years, as selected by the marke ng authoriza on holder.
Access Consor um
In October 2020, the Medicines and Healthcare products Regulatory Agency, or MHRA, joined the Access Consor um along with the Australian Therapeu c
Goods Administra on of Australia, Health Canada, Health Sciences Authority of Singapore and Swissmedic. The consor um is a coali on of these regulatory
authori es that work together to promote greater regulatory collabora on and alignment of regulatory requirements. The consor um’s goal is to maximize
interna onal co-opera on between partners in the consor um, reduce duplica on, and increase each agency’s capacity to ensure pa ents have mely access
to high quality, safe and effec ve therapeu c products. The MHRA commenced work-sharing applica ons with Access partners on January 1, 2021. Access
Consor um working group members have regular mee ngs to exchange informa on on regulatory issues and challenges faced by the par cipa ng regulatory
agencies, including issues on clinical trials, marke ng authoriza ons, product manufacturing site inspec ons, post-marke ng surveillance, joint development
of technical guidelines or regulatory standards, and collabora on on informa on pla orms. The Access consor um has developed three authoriza on
procedures: the New Ac ve Substance and Biosimilar Work Sharing Ini a ves and the Generic Medicine Work Sharing Ini a ve.
General Data Protec on Regula on
Many countries outside of the U.S. maintain rigorous laws governing the privacy and security of personal informa on. The collec on, use, disclosure, transfer,
or other processing of personal data, including personal health data, regarding individuals who are located in the EEA, and the processing of personal data
that takes place in the EEA, is subject to the European Union General Data Protec on Regula on, or GDPR, which became effec ve on May 25, 2018. The
GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data, and it imposes heightened requirements on
companies that process health and other sensi ve data, such as requiring in many situa ons that a company obtain the consent of the individuals to whom
the sensi ve personal data relate before processing such data. Examples of obliga ons imposed by the GDPR on companies processing personal data that fall
within the scope of the GDPR include providing informa on to individuals regarding data processing ac vi es, implemen ng safeguards to protect the
security and confiden ality of personal data, appoin ng a data protec on officer, providing no fica on of data breaches and taking certain measures when
engaging third-party processors.
The GDPR also imposes strict rules on the transfer of personal data to countries outside the EEA, including the U.S., and permits data protec on authori es to
impose large penal es for viola ons of the GDPR, including poten al fines of up to €20 million or 4% of annual global revenues, whichever is greater. The
GDPR also confers a private right of ac on on data subjects and consumer associa ons to lodge complaints with supervisory authori es, seek judicial
remedies, and obtain compensa on for damages resul ng from viola ons of the GDPR. Compliance with the GDPR is a rigorous and me-intensive process
that may increase the cost of doing business or require companies to change their business prac ces to ensure full compliance.
There are ongoing concerns about the ability of companies to transfer personal data from the EU to other countries. In July 2020, the Court of Jus ce of the
EU, or the CJEU, invalidated the EU-U.S. Privacy Shield framework, one of the mechanisms used to legi mize the transfer of personal data from the EEA to the
U.S. The CJEU decision also drew into ques on the long-term viability of an alterna ve means of data transfer, the standard contractual clauses, for transfers
of personal data from the EEA to the U.S. This CJEU decision may lead to increased scru ny on data transfers from the EU to the U.S. generally and increase
our costs of compliance with data privacy legisla on as well as our costs of nego a ng appropriate privacy and security agreements with our vendors and
business partners.
Addi onally, in October 2022, U.S. President Biden signed an execu ve order to implement a new EU-U.S. Data Privacy Framework, which would serve as a
replacement to the EU-U.S. Privacy Shield. The EU ini ated the process to adopt the EU-
Akebia Therapeu cs, Inc. | Form 10-K | Page 40
Table of Contents
U.S. Data Privacy Framework in December 2022. It is unclear if and when the framework will be finalized and whether it will be challenged in court. The
uncertainty around this issue may further impact our business opera ons in the EU.
As with other issues related to Brexit, there are open ques ons about how personal data will be protected in the UK and whether personal informa on can
transfer from the EU to the UK Following the withdrawal of the UK from the EU, the UK Data Protec on Act 2018 applies to the processing of personal data
that takes place in the UK and includes parallel obliga ons to those set forth by GDPR. While the Data Protec on Act 2018 in the UK that “implements” and
complements the GDPR has achieved Royal Assent on May 23, 2018 and is now effec ve in the UK, it is s ll unclear whether transfer of data from the EEA to
the UK will remain lawful under GDPR. The UK government has already determined that it considers all EU and EEA member states to be adequate for the
purposes of data protec on, ensuring that data flows from the UK to the EU/EEA remain unaffected. In addi on, a recent decision from the EC appears to
deem the UK as being “essen ally adequate” for purposes of data transfer from the EU to the UK, although this decision may be re-evaluated in the future.
Beyond GDPR, there are privacy and data security laws in a growing number of countries around the world. While many loosely follow GDPR as a model,
other laws contain different or conflic ng provisions. These laws will impact our ability to conduct our business ac vi es, including both our clinical trials and
any eventual sale and distribu on of commercial products.
Brexit and the Regulatory Framework in the United Kingdom
The UK’s withdrawal from the EU took place on January 31, 2020. The EU and the UK reached an agreement on their new partnership in the Trade and
Coopera on Agreement, or the Agreement, which was applied provisionally beginning on January 1, 2021, and which entered into force on May 1, 2021. The
Agreement focuses primarily on free trade by ensuring no tariffs or quotas on trade in goods, including healthcare products such as medicinal products.
Therea er, the EU and the UK will form two separate markets governed by two dis nct regulatory and legal regimes, except that Northern Ireland will
con nue to broadly follow EU laws as further described below. As such, the Agreement seeks to minimize barriers to trade in goods while accep ng that
border checks will become inevitable as a consequence that the UK is no longer part of the single market. As of January 1, 2021, the MHRA became
responsible for supervising medicines and medical devices in Great Britain, comprising England, Scotland, and Wales under domes c law whereas Northern
Ireland con nues to be subject to EU rules under the Northern Ireland Protocol.
On February 27, 2023, the UK government and the EC announced a poli cal agreement in principle to replace the Northern Ireland Protocol with a new set of
arrangements, known as the “Windsor Framework”. This new framework fundamentally changes the exis ng system under the Northern Ireland Protocol,
including with respect to the regula on of medicinal products in the UK In par cular, the MHRA will be responsible for approving all medicinal products
des ned for the UK market (i.e., Great Britain and Northern Ireland), and the EMA will no longer have any role in approving medicinal products des ned for
Northern Ireland. A single UK-wide MA will be granted by the MHRA for all medicinal products to be sold in the UK, enabling products to be sold in a single
pack and under a single authoriza on throughout the UK. The Windsor Framework was approved by the EU-UK Joint Commi ee on March 24, 2023, so the
UK government and the EU will enact legisla ve measures to bring it into law. On June 9, 2023, the MHRA announced that the medicines aspects of the
Windsor Framework will apply beginning on January 1, 2025. The Human Medicines Regula ons 2012 (SI 2012/1916) (as amended), or HMR, is the primary
legal instrument for the regula on of medicines in the UK. The HMR has incorporated into the domes c law the body of EU law instruments governing
medicinal products that pre-existed prior to the UK’s withdrawal from the EU.
EU laws which have been transposed into UK law through secondary legisla on con nue to be applicable as “retained EU law.” However, new legisla on such
as the (EU) Clinical Trials Regula on will not be applicable in Great Britain. Since a significant propor on of the regulatory framework for pharmaceu cal
products in the UK covering the quality, safety, and efficacy of pharmaceu cal products, clinical trials, MAs, commercial sales, and distribu on of
pharmaceu cal products is derived from EU direc ves and regula ons, Brexit may have a material impact upon the regulatory regime with respect to the
development, manufacture, importa on, approval, and commercializa on of our product candidates in the UK. For example, the UK is no longer covered by
the centralized procedures for obtaining EU-wide MAs from the EMA, and a separate MA will be required to market our product candidates in the UK. A new
interna onal recogni on framework has been in place since January 1, 2024, whereby the MHRA will have regard to decisions on the approval of MAs made
by the EMA and certain other regulators when determining an applica on for a new Great Britain MA.
Pharmaceu cal Coverage, Pricing and Reimbursement
In the U.S. and markets in other countries, pa ents who are prescribed treatments for their condi ons and providers performing the prescribed services
generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Significant uncertainty exists as to the coverage and
reimbursement status of products approved by the FDA and other government authori es. Thus, even if a product candidate is approved, sales of the product
will depend, in part, on the extent to which third-party payors, including government health programs in the U.S. such as Medicare and Medicaid, commercial
health insurers and managed care organiza ons, provide coverage, and establish adequate reimbursement levels for, the
Akebia Therapeu cs, Inc. | Form 10-K | Page 41
Table of Contents
product. The process for determining whether a payor will provide coverage for a product may be separate from the process for se ng the price or
reimbursement rate that the payor will pay for the product once coverage is approved. Third-party payors are increasingly challenging the prices charged,
examining the medical necessity, and reviewing the cost-effec veness of medical products and services and imposing controls to manage costs. Third-party
payors may limit coverage to specific products on an approved list, also known as a formulary, which might not include all of the approved products for a
par cular indica on. In addi on, third-party payors may impose prior authoriza on or step edit requirements requiring pa ents to have tried other therapies
prior to our products for coverage. Payors may also decline to include our products or product candidates on their formulary, which means that unless
healthcare providers seek a medical excep on for coverage, the payors will not pay for the product.
In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive
pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effec veness of the product, in addi on to the costs required to obtain
FDA or other comparable marke ng approvals. Nonetheless, product candidates may not be considered medically necessary or cost effec ve. A decision by a
third-party payor not to cover a product candidate could reduce physician u liza on once the product is approved and have a material adverse effect on
sales, results of opera ons and financial condi on. Addi onally, a payor’s decision to provide coverage for a product does not imply that an adequate
reimbursement rate will be approved. Further, one payor’s determina on to provide coverage for a drug product does not assure that other payors will also
provide coverage and reimbursement for the product, and the level of coverage and reimbursement can differ significantly from payor to payor.
Dialysis-related drugs are included in the ESRD prospec ve payment system, or PPS, bundled payment and are grouped into func onal categories such as
anemia management and bone and mineral metabolism, except that oral-only drugs are exempted from inclusion un l 2025. In a final ESRD PPS rule
published in October 2019, CMS confirmed that it will expand the TDAPA to most new dialysis drugs approved by the FDA a er January 1, 2020. The TDAPA
provides separate payment for eligible new drugs for two years based on the drug’s Average Sales Price, or ASP, that will be in addi on to the base rate in
order to facilitate the adop on of innova ve therapies. Although there are several details that need further clarifica on, including precise ming related to
receiving codes to allow for reimbursement under TDAPA, which are assigned on a quarterly basis, the rule provides support for our assump on that new
anemia treatments, including those in the HIF-PH inhibitor class, will be included in the ESRD PPS bundle and will be eligible for separate payment ini ally
under TDAPA, and we expect to receive TDAPA designa on for vadadustat six months post-filing acceptance if approved by the FDA.
As an oral drug, Auryxia is covered by Medicare under Part D. Under the ESRD PPS, CMS generally makes a single bundled payment to the dialysis facility for
each dialysis treatment that covers all items and services rou nely required for dialysis treatments furnished to Medicare beneficiaries in Medicare-cer fied
ESRD facili es or at their home. The inclusion of oral medica ons without injectable or intravenous equivalents such as Auryxia in the bundled payment was
ini ally delayed by CMS un l January 1, 2014, and through several subsequent legisla ve ac ons has been delayed un l January 1, 2025. Absent further
legisla on or regula on on this ma er, beginning in January 2025, oral ESRD-related drugs without injectable or intravenous equivalents, including Auryxia
and all other phosphate lowering medica ons, will be included in the ESRD bundle and separate Medicare payment for these drugs will no longer be
available, as is the case today under Medicare Part D. ESRD facili es may nonetheless receive a TDAPA for new renal dialysis drugs and biological products
that meet certain criteria for a period of two years. The TDAPA will provide separate payment based on the drug’s ASP that will be in addi on to the base rate
in order to facilitate the adop on of innova ve therapies. There can be no assurances that CMS will not again delay the inclusion of these oral ESRD-related
drugs in the bundled payment. Even if Auryxia is deemed eligible by CMS, revenue for sales of Auryxia could be significantly less in the TDAPA period than it
would be if Auryxia is not bundled into the ESRD PPS. Moreover, in the post-TDAPA period, CMS currently expects to increase the single bundled payment
base rate paid to the dialysis facility for each dialysis treatment to reflect that oral only phosphate lowering drugs will be reimbursed as part of the single
bundled payment for Medicare pa ents. There can be no assurances that any increase in the single bundled payment base rate will be sufficient to
adequately reimburse the dialysis facili es for Auryxia at a price that is profitable for us.
The containment of healthcare costs also has become a priority of federal, state and foreign governments and the prices of drugs have been a focus in this
effort. Governments have shown significant interest in implemen ng cost-containment programs, including price controls, restric ons on reimbursement and
requirements for subs tu on of generic products. Adop on of price controls and cost-containment measures, and adop on of more restric ve policies in
jurisdic ons with exis ng controls and measures, could further limit a company’s revenue generated from the sale of any approved products. Coverage
policies and third-party reimbursement rates may change at any me. Even if favorable coverage and reimbursement status is a ained for one or more
products for which a company or its collaborators receive marke ng approval, less favorable coverage policies and reimbursement rates may be implemented
in the future.
Outside the U.S., ensuring adequate coverage and payment for a product also involves challenges. Pricing of prescrip on pharmaceu cals is subject to
governmental control in many countries. Pricing nego a ons with governmental authori es can extend well beyond the receipt of regulatory marke ng
approval for a product and may require a clinical trial that compares
Akebia Therapeu cs, Inc. | Form 10-K | Page 42
Table of Contents
the cost effec veness of a product to other available therapies. The conduct of such a clinical trial could be expensive and result in delays in
commercializa on.
In the EU, pricing and reimbursement schemes vary widely from country to country. Some countries provide that products may be marketed only a er a
reimbursement price has been agreed. Some countries may require the comple on of addi onal studies that compare the cost-effec veness of a par cular
product candidate to currently available therapies or so-called health technology assessments, in order to obtain reimbursement or pricing approval. For
example, the EU provides op ons for its EU Member States to restrict the range of products for which their na onal health insurance systems provide
reimbursement and to control the prices of medicinal products for human use. EU Member States may approve a specific price for a product or it may instead
adopt a system of direct or indirect controls on the profitability of the company placing the product on the market. Other EU Member States allow companies
to fix their own prices for products but monitor and control prescrip on volumes and issue guidance to physicians to limit prescrip ons.
Recently, many countries in the EU have increased the amount of discounts required on pharmaceu cals and these efforts could con nue as countries
a empt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced by many countries in the EU. The downward
pressure on health care costs in general, par cularly prescrip on drugs, has become intense. As a result, increasingly high barriers are being erected to the
entry of new products. Poli cal, economic and regulatory developments may further complicate pricing nego a ons, and pricing nego a ons may con nue
a er reimbursement has been obtained. Reference pricing used by various EU Member States, and parallel trade, i.e., arbitrage between low-priced and high-
priced EU Member States, can further reduce prices. There can be no assurance that any country that has price controls or reimbursement limita ons for
pharmaceu cal products will allow favorable reimbursement and pricing arrangements for any products, if approved in those countries.
Dialysis Organiza ons Protocols
Dialysis organiza ons have their own formularies that list primary or preferred therapeu c op ons based on contrac ng status with drug manufacturers.
While a prescriber may make their own independent decision to prescribe what they determine most appropriate for a given pa ent, any non-formulary
therapeu c op ons are only available through an excep on process based on clinical need. Similar to how payor coverage may affect the sales of a product,
formulary status within dialysis organiza ons may affect what products are prescribed within that specific organiza on. Therefore, if a product is not on a
formulary, the prescribers within that organiza on may be less likely to prescribe that product or may have a difficult me prescribing that product, resul ng
in less sales. Further, one dialysis organiza on’s determina on to add a product to their formulary does not assure that other dialysis organiza ons will also
add the product to theirs. There is always a risk a dialysis organiza on will not contract with a drug manufacturer for a specific product, resul ng in that
product not being on that organiza on’s formulary. Addi onally, dialysis organiza ons typically assess a product’s efficacy before adding it to their formulary.
Their process for assessing a product may differ among organiza ons and the ming of such assessment could delay adding such treatment to formulary,
further affec ng product sales.
Healthcare Law and Regula on
Healthcare providers and third-party payors play a primary role in the recommenda on and prescrip on of drug products that are granted marke ng
approval. Arrangements with providers, consultants, third-party payors and customers are subject to broadly applicable fraud and abuse, an -kickback, false
claims laws, repor ng of payments to physicians, teaching hospitals and other healthcare providers, pa ent privacy laws and regula ons, and other
healthcare laws and regula ons that may constrain business and/or financial arrangements. Restric ons under applicable federal and state healthcare laws
and regula ons include the following:
•
•
•
the federal An -Kickback Statute, which prohibits, among other things, persons and en es from knowingly and willfully solici ng, offering,
paying, receiving or providing remunera on, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual
for, or the purchase, order or recommenda on of, any good or service, for which payment may be made, in whole or in part, under a
federal healthcare program such as Medicare and Medicaid;
the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penal es laws, which prohibit
individuals or en es from, among other things, knowingly presen ng, or causing to be presented, to the federal government, claims for
payment that are false, fic ous or fraudulent or knowingly making, using or causing to be made or used a false record or statement to
avoid, decrease or conceal an obliga on to pay money to the federal government
HIPAA, which created addi onal federal criminal laws that prohibit, among other things, knowingly and willfully execu ng, or a emp ng to
execute, a scheme to defraud any healthcare benefit program or making false statements rela ng to healthcare ma ers;
Akebia Therapeu cs, Inc. | Form 10-K | Page 43
Table of Contents
•
•
•
•
•
•
HIPAA, as amended by the Health Informa on Technology for Economic and Clinical Health Act, and their respec ve implemen ng
regula ons, including the Final Omnibus Rule published in January 2013, which impose obliga ons, including mandatory contractual terms,
with respect to safeguarding the privacy, security and transmission of individually iden fiable health informa on;
the federal false statements statute, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making
any materially false statement in connec on with the delivery of or payment for healthcare benefits, items or services;
the U.S. Foreign Corrupt Prac ces Act, or FCPA, which prohibits companies and their intermediaries from making, or offering or promising
to make improper payments to non-U.S. officials for the purpose of obtaining or retaining business or otherwise seeking favorable
treatment;
the federal transparency requirements, known as the federal Physician Payments Sunshine Act (renamed the Open Payments Act), under
the Pa ent Protec on and Affordable Care Act, as amended by the Health Care Educa on Reconcilia on Act, or ACA, which requires certain
manufacturers of drugs, devices, biologics and medical supplies to report annually to the CMS within the U.S. Department of Health and
Human Services, informa on related to payments and other transfers of value made by that en ty to physicians, other healthcare providers
and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;
the PDMA and its implementa on regula ons, as well as the DSCSA, which regulate the distribu on and tracing of prescrip on drugs and
prescrip on drug samples at the federal level, and set minimum standards for the regula on of drug distributors by the states; and
analogous state and foreign laws and regula ons, such as state an -kickback and false claims laws, which may apply to healthcare items or
services that are reimbursed by third-party payors, including private insurers, and state gi ban and disclosure law requirements that differ
from the federal Physician Payments Sunshine Act in terms of the nature and type of transfers of value that are reportable and the types of
covered recipients.
Viola ons of these laws are punishable by criminal and/or civil sanc ons, including, in some instances, exclusion from par cipa on in federal and state health
care programs, such as Medicare and Medicaid. Ensuring compliance is me consuming and costly. Similar healthcare laws and regula ons exist in the EU and
other jurisdic ons, including repor ng requirements detailing interac ons with and payments to healthcare providers and laws governing the privacy and
security of personal informa on.
Some state laws require pharmaceu cal companies to comply with the pharmaceu cal industry’s voluntary compliance guidelines, such as the
Pharmaceu cal Research and Manufacturers of America Code on Interac ons with Health Care Professionals, known as the PhRMA Code. State and foreign
laws also govern the privacy and security of health informa on in some circumstances, many of which differ from each other in significant ways and o en are
not preempted by HIPAA, thus complica ng compliance efforts.
Healthcare Reform in the U.S.
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. There have been a number of federal and state proposals during the last
few years regarding the pricing of pharmaceu cal and biopharmaceu cal products, limi ng coverage and reimbursement for drugs and other medical
products, government control and other changes to the healthcare system in the U.S.
By way of example, the U.S. and state governments con nue to propose and pass legisla on designed to reduce the cost of healthcare.
In March 2010, the U.S. Congress enacted the ACA, which, among other things, includes changes to the coverage and payment for products under
government health care programs. Other legisla ve changes have been proposed and adopted since the ACA was enacted. In August 2011, the Budget
Control Act of 2011, among other things, created measures for spending reduc ons by Congress. A Joint Select Commi ee on Deficit Reduc on, tasked with
recommending a targeted deficit reduc on of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the
legisla on’s automa c reduc on to several government programs. This includes aggregate reduc ons of Medicare payments to providers of up to 2% per
fiscal year, which will remain in effect through 2031 pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act. Under current
legisla on, the actual reduc ons in Medicare payments may vary up to 4%.
The Consolidated Appropria ons Act, which was signed into law by President Biden in December 2022, made several changes to sequestra on of the
Medicare program. Sec on 1001 of the Consolidated Appropria ons Act delays the 4% Statutory Pay-As-You-Go Act of 2010 sequester for two years, through
the end of calendar year 2024. Triggered by enactment of the
Akebia Therapeu cs, Inc. | Form 10-K | Page 44
Table of Contents
American Rescue Plan Act of 2021, the 4% cut to the Medicare program would have taken effect in January 2023. The Consolidated Appropria ons Act’s
health care offset tle includes Sec on 4163, which extends the 2% Budget Control Act of 2011 Medicare sequester for six months into fiscal year 2032 and
lowers the payment reduc on percentages in fiscal years 2030 and 2031.
Since enactment of the ACA, there have been, and con nue to be, numerous legal challenges and Congressional ac ons to repeal and replace provisions of
the law. For example, with enactment of the Tax Cuts and Jobs Act of 2017, or the Tax Act, which was signed by the prior administra on on December 22,
2017, Congress repealed the “individual mandate.” The repeal of this provision, which requires most Americans to carry a minimal level of health insurance,
became effec ve in 2019. On November 10, 2020, the U.S. Supreme Court heard oral arguments as to whether the individual mandate por on of the ACA is
an essen al and inseverable feature of the ACA, and therefore because the mandate was repealed as part of the Tax Act, the remaining provisions of the ACA
are invalid as well. On February 10, 2021, the Biden Administra on withdrew the federal government’s support for overturning the ACA. On June 17, 2021,
the Supreme Court struck down the lower court rulings finding that the plain ffs did not have standing to challenge the cons tu onality of the ACA. Li ga on
and legisla on over the ACA are likely to con nue, with unpredictable and uncertain results.
The prior administra on also took execu ve ac ons to undermine or delay implementa on of the ACA, including direc ng federal agencies with authori es
and responsibili es under the ACA to waive, defer, grant exemp ons from, or delay the implementa on of any provision of the ACA that would impose a fiscal
or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceu cals or medical devices. On January 28,
2021, however, President Biden rescinded those orders and issued a new execu ve order that directs federal agencies to reconsider rules and other policies
that limit access to healthcare, and consider ac ons that will protect and strengthen that access. Under this order, federal agencies are directed to re-
examine: policies that undermine protec ons for people with pre-exis ng condi ons, including complica ons related to COVID-19; demonstra ons and
waivers under Medicaid and the ACA that may reduce coverage or undermine the programs, including work requirements; policies that undermine the Health
Insurance Marketplace or other markets for health insurance; policies that make it more difficult to enroll in Medicaid and under the ACA; and policies that
reduce affordability of coverage or financial assistance, including for dependents.
Pharmaceu cal Prices in the U.S.
The prices of prescrip on pharmaceu cals have also been the subject of considerable discussion in the U.S. There have been several recent U.S. congressional
inquiries, as well as proposed and enacted state and federal legisla on designed to, among other things, bring more transparency to pharmaceu cal pricing,
review the rela onship between pricing and manufacturer pa ent programs, and reduce the costs of pharmaceu cals under Medicare and Medicaid. In 2020,
the prior administra on issued several execu ve orders intended to lower the costs of prescrip on products and certain provisions in these orders have been
incorporated into regula ons. These regula ons include an interim final rule implemen ng a most favored na on model for prices that would e Medicare
Part B payments for certain physician-administered pharmaceu cals to the lowest price paid in other economically advanced countries, effec ve January 1,
2021. That rule, however, has been subject to a na onwide preliminary injunc on and, on December 29, 2021, CMS issued a final rule to rescind it. With
issuance of this rule, CMS stated that it will explore all op ons to incorporate value into payments for Medicare Part B pharmaceu cals and improve
beneficiaries' access to evidence-based care.
In addi on, in October 2020, HHS and the FDA published a final rule allowing states and other en es to develop a Sec on 804 Importa on Program, or SIP,
to import certain prescrip on drugs from Canada into the U.S. That regula on was challenged in a lawsuit by the Pharmaceu cal Research and Manufacturers
of America, or PhRMA, but the case was dismissed by a federal district court in February 2023 a er the court found that PhRMA did not have standing to sue
HHS. Nine states (Vermont, Colorado, Florida, Maine, New Mexico, New Hampshire, North Dakota, Texas and Wisconsin) have passed laws allowing for the
importa on of drugs from Canada. Certain of these states have submi ed Sec on 804 Importa on Program proposals and are awai ng FDA approval. On
January 5, 2023, the FDA approved Florida’s plan for Canadian drug importa on.
Further, the HHS finalized a regula on removing safe harbor protec on for price reduc ons from pharmaceu cal manufacturers to plan sponsors under Part
D, either directly or through pharmacy benefit managers, unless the price reduc on is required by law. The final rule would also eliminate the current safe
harbor for Medicare drug rebates and create new safe harbors for beneficiary point-of-sale discounts and pharmacy benefit manager service fees. It originally
was set to go into effect on January 1, 2022, but with passage of the Infla on Reduc on Act of 2022, or IRA, has been delayed by Congress to January 1, 2032.
On July 9, 2021, President Biden signed Execu ve Order 14063, which focuses on, among other things, the price of pharmaceu cals. The Order directs HHS to
create a plan within 45 days to combat “excessive pricing of prescrip on pharmaceu cals and enhance domes c pharmaceu cal supply chains, to reduce the
prices paid by the federal government for such pharmaceu cals, and to address the recurrent problem of price gouging.” On September 9, 2021, HHS
released its plan to reduce pharmaceu cal prices. The key features of that plan are to: (a) make pharmaceu cal prices more affordable
Akebia Therapeu cs, Inc. | Form 10-K | Page 45
Table of Contents
and equitable for all consumers and throughout the health care system by suppor ng pharmaceu cal price nego a ons with manufacturers; (b) improve and
promote compe on throughout the prescrip on pharmaceu cal industry by suppor ng market changes that strengthen supply chains, promote biosimilars
and generic drugs, and increase transparency; and (c) foster scien fic innova on to promote be er healthcare and improve health by suppor ng public and
private research and making sure that market incen ves promote discovery of valuable and accessible new treatments.
The IRA has implica ons for Medicare Part D, which is a program available to individuals who are en tled to Medicare Part A or enrolled in Medicare Part B to
give them the op on of paying a monthly premium for outpa ent prescrip on drug coverage. Among other things, the IRA requires manufacturers of certain
drugs to engage in price nego a ons with Medicare (beginning in 2026), with prices that can be nego ated subject to a cap; imposes rebates under Medicare
Part B and Medicare Part D to penalize price increases that outpace infla on (first due in 2023); and replaces the Part D coverage gap discount program with a
new discoun ng program (beginning in 2025). The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to
regula on, for the ini al years.
Specifically, with respect to price nego a ons, Congress authorized Medicare to nego ate lower prices for certain costly single-source drug and biologic
products that do not have compe ng generics or biosimilars and are reimbursed under Medicare Part B and Part D. CMS may nego ate prices for ten high-
cost drugs paid for by Medicare Part D star ng in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in
2029 and beyond. This provision applies to drug products that have been approved for at least 9 years and biologics that have been licensed for 13 years, but
it does not apply to drugs and biologics that have been approved for a single rare disease or condi on. Further, the legisla on subjects drug manufacturers to
civil monetary penal es and a poten al excise tax for failing to comply with the legisla on by offering a price that is not equal to or less than the nego ated
“maximum fair price” under the law or for taking price increases that exceed infla on. The legisla on also requires manufacturers to pay rebates for drugs in
Medicare Part D whose price increases exceed infla on. The new law also caps Medicare out-of-pocket drug costs at an es mated $4,000 a year in 2024 and,
therea er beginning in 2025, at $2,000 a year.
On June 6, 2023, Merck filed a lawsuit against HHS and CMS asser ng that, among other things, the IRA’s Drug Price Nego a on Program for Medicare
cons tutes an uncompensated taking in viola on of the Fi h Amendment of the Cons tu on. Subsequently, a number of other par es, including the U.S.
Chamber of Commerce, Bristol Myers Squibb Company, the Pharmaceu cal Research and Manufacturers of America, Astellas, Novo Nordisk, Janssen
Pharmaceu cals, Novar s, AstraZeneca and Boehringer Ingelheim, also filed lawsuits in various courts with similar cons tu onal claims against HHS and CMS.
Li ga on involving these and other provisions of the IRA will con nue with unpredictable and uncertain results.
At the state level, individual states are increasingly aggressive in passing legisla on and implemen ng regula ons designed to control pharmaceu cal and
biological product pricing, including price or pa ent reimbursement constraints, discounts, restric ons on certain product access and marke ng cost
disclosure and transparency measures, and, in some cases, designed to encourage importa on from other countries and bulk purchasing. A number of states,
for example, require drug manufacturers and other en es in the drug supply chain, including health carriers, pharmacy benefit managers, wholesale
distributors, to disclose informa on about pricing of pharmaceu cals. In addi on, regional healthcare organiza ons and individual hospitals are increasingly
using bidding procedures to determine what pharmaceu cal products and which suppliers will be included in their prescrip on pharmaceu cal and other
healthcare programs. These measures could reduce the ul mate demand for our products, once approved, or put pressure on our product pricing. We expect
that addi onal state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state
governments will pay for healthcare products and services, which could result in reduced demand for our product candidates or addi onal pricing pressures.
Healthcare Reform and Pharmaceu cal Prices in the EU
In the EU, similar poli cal, economic, and regulatory developments to those in the U.S. may affect our ability to profitably commercialize our product
candidates, if approved. In many countries, including those of the EU, the pricing of prescrip on pharmaceu cals is subject to governmental control and
access. In these countries, pricing nego a ons with governmental authori es can take considerable me a er the receipt of an MA. To obtain reimbursement
or pricing approval in some countries, pharmaceu cal firms may be required to conduct a clinical trial that compares the cost-effec veness of the product to
other available therapies. In addi on to con nuing pressure on prices and cost containment measures, legisla ve developments at the EU or EU Member
State level may result in significant addi onal requirements or obstacles. The delivery of healthcare in the EU, including the establishment and opera on of
health services and the pricing and reimbursement of medicines, is almost exclusively a ma er for na onal, rather than EU, law and policy. Na onal
governments and health service providers have different priori es and approaches to the delivery of health care and the pricing and reimbursement of
products in that context. In general, however, the healthcare budgetary constraints in most EU Member States have resulted in restric ons on the pricing and
reimbursement of medicines by relevant health service providers. Coupled with ever-increasing EU and na onal regulatory burdens on those wishing to
develop and market products, this could restrict or
Akebia Therapeu cs, Inc. | Form 10-K | Page 46
Table of Contents
regulate post-approval ac vi es and affect the ability of pharmaceu cal companies to commercialize their products. In interna onal markets, reimbursement
and healthcare payment systems vary significantly by country, and many countries have ins tuted price ceilings on specific products and therapies.
In the EU, poten al reduc ons in prices and changes in reimbursement levels could be the result of different factors, including reference pricing used by
various EU Member States, parallel distribu on and parallel trade can further reduce prices. It could also result from the applica on of external reference
pricing mechanisms, which consist of arbitrage between low-priced and high-priced EU Member States. There can be no assurance that any country that has
price controls or reimbursement limita ons for pharmaceu cal products will allow favorable reimbursement and pricing arrangements for any product
candidates, if approved in those countries.
Health technology assessment, or HTA, of medicinal products in the EU is an essen al element of the pricing and reimbursement decision-making process in a
number of EU Member States. The outcome of HTA has a direct impact on the pricing and reimbursement status granted to the medicinal product. A nega ve
HTA by a leading and recognized HTA body concerning a medicinal product could undermine the prospects to obtain reimbursement for such product not only
in the EU Member State in which the nega ve assessment was issued, but also in other EU Member States.
In 2011, Direc ve 2011/24/EU was adopted at the EU level. This direc ve establishes a voluntary network of na onal authori es or bodies responsible for
HTA in the individual EU Member States. The network facilitates and supports the exchange of scien fic informa on concerning HTAs. Further to this, on
December 13, 2021, Regula on No 2021/2282 on HTA, amending Direc ve 2011/24/EU, was adopted. While the regula on entered into force in January
2022, it will only begin to apply from January 2025 onwards, with preparatory and implementa on-related steps to take place in the interim. Once applicable,
it will have a phased implementa on depending on the concerned products. The regula on intends to boost coopera on among EU Member States in
assessing health technologies, including new medicinal products as well as certain high-risk medical devices, and provide the basis for coopera on at the EU
level for joint clinical assessments in these areas. It will permit EU Member States to use common HTA tools, methodologies, and procedures across the EU,
working together in four main areas, including joint clinical assessment of the innova ve health technologies with the highest poten al impact for pa ents,
joint scien fic consulta ons whereby developers can seek advice from HTA authori es, iden fica on of emerging health technologies to iden fy promising
technologies early, and con nuing voluntary coopera on in other areas. Individual EU Member States will con nue to be responsible for assessing non-
clinical (e.g., economic, social, ethical) aspects of health technology, and making decisions on pricing and reimbursement.
Laws Rela ng to Foreign Trade
We are subject to various federal and foreign laws that govern our interna onal business prac ces. These laws include the FCPA, which prohibits U.S.
companies and their representa ves from paying, offering to pay, promising, or authorizing the payment of anything of value to any foreign government
official, government staff member, poli cal party, or poli cal candidate for the purposes of obtaining or retaining business, or to otherwise obtain favorable
treatment or influence a person working in an official capacity. In many countries, the health care professionals we regularly interact with may meet the
FCPA’s defini on of a foreign government official. Addi onally, interac ons with or on the part of our partners, collaborators, contract research organiza ons,
vendors or other agents may also implicate the FCPA. The FCPA also requires public companies to make and keep books and records that accurately and fairly
reflect their transac ons and to devise and maintain an adequate system of internal accoun ng controls. Compliance with the FCPA is expensive and difficult,
par cularly in countries in which corrup on is a recognized problem. In addi on, the FCPA presents unique challenges in the pharmaceu cal industry
because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain
payments made by pharmaceu cal companies to hospitals in connec on with clinical trials and other work have been deemed to be improper payments to
government officials and have led to FCPA enforcement ac ons.
Our interna onal opera ons could also be subject to compliance with na onal laws of other countries, such as the United Kingdom Bribery Act. of 2010, or
UK Bribery Act. The UK Bribery Act applies to any company “carrying on business” in the UK, irrespec ve of where the offending conduct occurs. The UK
Bribery Act applies to bribery ac vi es both in the public and private sector and prohibits the provision of an “advantage” intended to induce or reward
“improper performance” of the recipient’s func on. The failure by a company to prevent third par es from providing a bribe on its behalf could also
cons tute an offense. Penal es under the UK Bribery Act include poten ally unlimited fines for companies and criminal sanc ons for corporate officers under
certain circumstances.
There are local an bribery and an corrup on laws in countries where we are conduc ng clinical trials, such as Brazil and Russia, and many of these also carry
the risk of significant financial or criminal penal es. Our clinical trial opera ons could also result in enforcement ac ons by U.S., UK, or other governmental
authori es. There are also trade laws within the U.S. and in other regions that regulate the sale, purchase, import, export, reexport, transfer and shipment of
goods, currency, products, materials, services and technology. Viola ons of these laws can lead to serious consequences, including substan al fines.
Akebia Therapeu cs, Inc. | Form 10-K | Page 47
Table of Contents
Other Regula ons
We are also subject to numerous federal, state and local laws rela ng to such ma ers as safe working condi ons, manufacturing prac ces, environmental
protec on, fire hazard control, and disposal of hazardous or poten ally hazardous substances. We may incur significant costs to comply with such laws and
regula ons now or in the future.
Seasonality
Fluctua ons in wholesaler inventory levels impact our product sales. In recent years, product revenues during the fourth quarter tend to be stronger than
other quarters as our distributors increase their inventory levels, resul ng in inventory draw-down by wholesalers in the subsequent first quarter. In addi on,
in December 2022 and December 2023, we changed our contrac ng strategy which can further impact first quarter sales.
In general, our first quarter usually has lower revenues than the preceding fourth quarter, the second and third quarters have higher revenues than the first
quarter, and the fourth quarter revenues are the highest in the year. While seasonality may affect quarterly comparisons within a fiscal year, it generally is not
material to our annual consolidated results. However, we expect Auryxia to be included in the ESRD bundle star ng in January 2025, and coupled with Auryxia
loss exclusivity in March 2025, may impact our customer buying pa erns and therefore their buying pa erns may be different during 2024 than historical
prac ces.
Employees and Human Capital Resources
As of December 31, 2023, we had 167 employees. None of our employees are represented by any collec ve bargaining unit. We believe that we maintain
good rela ons with our employees.
We face compe on for our personnel from our compe tors and other companies throughout our industry. Over the last several years, the challenges in
recrui ng and retaining employees across the pharmaceu cal and biotechnology industries have increased substan ally due to current industry job market
dynamics.
Reten on, growth, training and development of our employees are integral to our success. We offer compe ve compensa on, including base salary and
incen ve bonuses. We conduct bi-annual internal and external pay reviews to ensure fair and equitable pay for our employees, which includes an internal pay
equity analysis, as well as a review of our employees' pay against external market data. To foster a stronger sense of ownership and align the interests of
employees with shareholders, we grant restricted stock units and common stock op ons to eligible employees under our broad-based stock incen ve
program, and employees may purchase stock pursuant to our employee stock purchase plan. Further, our benefits packages are designed to a ract, mo vate
and reward talented individuals who possess the skills necessary to support our business objec ves, assist in the achievement of our strategic goals and
create value for our stockholders. Our compensa on program is designed to differen ate us from our compe on, incen vize achievement of corporate goals
and individual performance and demonstrate our corporate values. In addi on, we are commi ed to developing our team members and provide
development and leadership opportuni es to our employees to cul vate talent throughout the Company.
We are commi ed to our employees’ health, safety and well-being. Our work paradigm is flexible and designed to accommodate a range of work profiles. Our
workforce is primarily hybrid and fully remote, including field-based, with certain employees being office based. We offer a wide variety of compe ve
benefits to support our employees' physical, mental and financial well-being. Our benefits package is comprehensive in coverage and offers op ons to
support all employees in staying healthy, planning for their future and developing their careers. Our management con nues to assess and respond to the
evolving needs of our workforce.
Environmental, Social and Governance
Our commitment to diversity, equality and inclusion starts with our execu ve leadership. Two members of our Board of Directors are women, and women
comprise approximately 50% of our senior management team. In addi on, approximately 25% of our employees are ethnically diverse and one member of
our Board of Directors is African American.
With the goal of ensuring every employee is included, supported and treated equitably, we developed a team (IDEA – Inclusion, Diversity & Equity Alliance) to
support and guide Akebia as a diverse, inclusive and culturally intelligent workplace. Over the past three years this team has worked with execu ve leadership
to iden fy areas for growth and educa on and move forward several ini a ves that will enable us to con nue to build an inclusive workplace and a diverse
workforce. Our other ini a ves include learning, coaching, cultural awareness ac vi es and development opportuni es for all of our employees.
Our Cambridge office has a Fitwel Cer fica on, a healthy building cer fica on system, and is level two cer fied. Addi onally, we consolidated our office
footprint to reduce our use of energy and other resources and have ini ated recycling programs, including single stream recycling and recycling cans at every
desk. Furthermore, we offer a commuter benefit to all of our
Akebia Therapeu cs, Inc. | Form 10-K | Page 48
Table of Contents
hybrid and office-based employees to encourage employees to use public transporta on and offer bicycle parking free of charge in the onsite garage.
In addi on, we support kidney pa ent communi es where we live and work. In the U.S., we have a pa ent services program, Akebia Cares, designed to
provide one-on-one support to help communicate individual benefits and available resources for pa ents today facing financial obstacles that keep them
from accessing important medica ons. In 2023, we provided over $7.0 million worth of Auryxia for free to approximately 15,000 pa ents needing assistance.
We also have a cross-func onal Sponsorship Review Commi ee that reviews and approves sponsorships and dona ons based on the relevance of each
projects to our purpose, business objec ves and the communi es we serve. We support and work closely with mul ple kidney pa ent advocacy
organiza ons. We believe our involvement with and support of pa ent advocacy programs demonstrates our commitment to our purpose of be ering the life
of each person impacted by kidney disease.
Available Informa on
Our website address is www.akebia.com. The informa on on our website or that may be accessed by links on our website is not incorporated by reference
into this Form 10-K. We make available, free of charge and through our website, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, and any amendments to any such reports filed or furnished pursuant to Sec on 13(a) or 15(d) of the Securi es Exchange Act of 1934, as
amended, as soon as reasonably prac cable a er they are electronically filed with or furnished to the U.S. Securi es and Exchange Commission, or SEC.
Corporate Informa on
Akebia was incorporated in Delaware in 2007 and became a public company in 2014. Our mailing address and principal execu ve offices and our laboratory
are located at 245 First Street, Cambridge, Massachuse s 02142. Our telephone number is (617) 871-2098.
We are required to file annual, quarterly and current reports, proxy statements and other informa on with the SEC. The SEC maintains a website at
www.sec.gov that contains reports, proxy and informa on statements, and other informa on regarding issuers that file electronically with the SEC. Our
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and other informa on, including
amendments and exhibits to such reports, filed or furnished pursuant to the Securi es Exchange Act of 1934 are also available free of charge in the “SEC
Filings” sec on of our website located at h p://www.akebia.com, as soon as reasonably prac cable a er the reports are electronically filed with or furnished
to the SEC. The informa on on our website is not part of this Annual Report on Form 10-K.
Akebia Therapeu cs, Inc. | Form 10-K | Page 49
Table of Contents
Item 1A. Risk Factors.
We face a variety of risks and uncertain es in our business. Addi onal risks and uncertain es not presently known to us or that we currently believe to be
immaterial may also become important factors that affect our business, reputa on, results of opera ons, financial condi on and stock price which can be
materially and adversely affected. If any of the following risks occurs, our business, financial condi on, financial statements, results of opera ons and future
growth prospects could be materially and adversely affected.
Risks Related to our Financial Posi on, Need for Addi onal Capital and Growth Strategy
We have incurred significant losses since our incep on and an cipate that we will con nue to incur losses and cannot guarantee when, if ever, we will
become profitable or a ain posi ve cash flows.
Investment in pharmaceu cal product development and commercializa on is highly specula ve because it may require upfront capital expenditures and
significant R&D expenses. Despite the investment in assets and R&D, there is significant risk that a product candidate will fail to gain marke ng approval or
that an approved product will not be commercially viable. Since our incep on, we have devoted most of our resources to research and development, or R&D,
including our preclinical and clinical development ac vi es, commercializing Auryxia and providing general and administra ve support for these opera ons.
We have funded our opera ons principally through product sales, payments received from our collabora on and licensing partners, borrowings under term
loans, sales of our common stock, including through our employee stock purchase plan, a working capital payment from Vifor (Interna onal) Ltd. (now a part
of CSL Limited), or CSL Vifor, and a royalty transac on. Prior to our 2018 merger, or the Merger, with Keryx Biopharmaceu cals, Inc., or Keryx, whereby Keryx
became our wholly owned subsidiary, we had no products approved for commercial sale and had not generated any revenue from the sale of products. We
are not currently profitable and we have incurred net losses each year since our incep on, including a net loss of $51.9 million for the year ended December
31, 2023. As of December 31, 2023, we had an accumulated deficit of $1.6 billion. We cannot guarantee when, if ever, we will become profitable.
In March 2022, we received a complete response le er, or CRL, from the United States, or U.S., Food and Drug Administra on, or FDA, regarding our new
drug applica on, or NDA, for vadadustat, our lead inves ga onal product candidate, for the treatment of anemia associated with CKD. The FDA concluded
that the data in the NDA did not support a favorable benefit-risk assessment of vadadustat for dialysis and non-dialysis pa ents. In October 2022, we
submi ed a Formal Dispute Resolu on Request, or FDRR, to the FDA and focused on the favorable balance between the benefits and risks of vadadustat for
the treatment of anemia due to CKD in adult pa ents on dialysis in light of safety concerns expressed by the FDA in the CRL for dialysis pa ents related to the
rate of adjudicated thromboembolic events driven by vascular access thrombosis for vadadustat compared to the ac ve comparator and the risk of drug-
induced liver injury. In May 2023, the Office of New Drugs, or OND, denied our appeal but provided a path forward for us to resubmit the NDA for vadadustat
for the treatment of anemia due to CKD for dialysis dependent pa ents without the need for us to generate addi onal clinical data. In September 2023, we
filed our resubmission to our NDA, and in October 2023, the FDA acknowledged that the resubmission was complete and set a user fee goal date, or PDUFA
date, of March 27, 2024. There can be no assurances that we will obtain approval for vadadustat in a mely manner, on favorable terms, or at all. As a result,
the regulatory approval process for vadadustat in the U.S. is highly uncertain. If we do not obtain approval of vadadustat in the U.S., or if the approval is
delayed, it would have a material adverse impact on our business. Even if we are able to obtain approval, the expense and me to do so could adversely
impact our ability to successfully commercialize vadadustat or conduct our other business opera ons and our financial condi on could be materially harmed.
Our ability to generate product revenue and achieve profitability depends on our ability to manage expenses and the overall success of Auryxia, vadadustat, if
approved, and any current or future product candidates, including those that may be in-licensed or acquired, which depends on several factors, including:
•
•
•
•
•
our ability to obtain approval for vadadustat in the U.S. in a mely manner or at all;
obtaining adequate or favorable pricing and reimbursement from private and governmental payors for Auryxia, vadadustat, if approved, and any
other product or product candidate, including those that may be in-licensed or acquired;
obtaining and maintaining market acceptance of Auryxia, vadadustat, if approved, and any other product candidate, including those that may be in-
licensed or acquired;
the size of any market in which Auryxia, vadadustat and any other product or product candidate, including those that may be in-licensed or acquired,
receives approval and obtaining adequate market share in those markets;
the ming and scope of marke ng approvals for vadadustat, if approved, and any other product candidate, if approved, including those that may be
in-licensed or acquired;
• maintaining marke ng approvals for Auryxia, vadadustat, if approved, and any other product, including those that may be in-licensed or acquired;
Akebia Therapeu cs, Inc. | Form 10-K | Page 50
Table of Contents
•
actual or perceived advantages or disadvantages of our products or product candidates as compared to alterna ve treatments, including their
respec ve safety, tolerability and efficacy profiles, the poten al convenience and ease of administra on and cost;
• maintaining an acceptable safety and tolerability profile of our approved products, including the frequency and severity of any side effects;
•
•
•
•
•
the willingness of the target pa ent popula on to try new therapies and of physicians to prescribe these therapies, based, in part, on their
percep on of our clinical trial data and/or the actual or perceived safety, tolerability and efficacy profile;
establishing and maintaining supply and manufacturing rela onships with third par es that can provide adequate supplies of products that are
compliant with good manufacturing prac ces, or GMPs, to support the clinical development and the market demand for Auryxia, vadadustat, if
approved, and any other product and product candidate, including those that may be in-licensed or acquired;
current and future restric ons or limita ons on our approved or future indica ons and pa ent popula ons or other adverse regulatory ac ons or in
the event that the FDA requires Risk Evalua on and Mi ga on Strategies, or REMS, or risk management plans that use restric ve risk minimiza on
strategies;
the effec veness of our collaborators' and our sales, marke ng, manufacturing and distribu on strategies and opera ons;
compe ng effec vely with any products for the same or similar indica ons as our products;
• maintaining, protec ng and expanding our por olio of intellectual property rights, including patents and trade secrets; and
•
the adverse impact of the recent COVID-19 pandemic on CKD pa ents and the phosphate binder market in which we compete.
Our collabora on, license and other revenue also depends on our partners’ ability to successfully market and sell vadadustat and Auryxia in the territories in
which they have licensed our products. For example, in May 2023, we entered into a license agreement with MEDICE Arzneimi el Pü er GmbH & Co. KG, or
Medice, pursuant to which we granted Medice an exclusive license to develop and commercialize vadadustat for the treatment of anemia in pa ents with
chronic kidney disease in the European Economic Area, or the EEA, the United Kingdom, Switzerland and Australia, or Medice Territory. If Medice’s launch of
vadadustat in the Medice Territory is delayed or their sales are lower than an cipated, we may not receive the revenue that we expect from Medice on the
ming an cipated, or at all. In addi on, under the Second Amended and Restated License Agreement that we entered into with CSL Vifor, in February 2022,
or the Vifor Agreement, we granted CSL Vifor an exclusive license to sell vadadustat to Fresenius Medical Care North America and its affiliates, including
Fresenius Kidney Care Group LLC, to certain third-party dialysis organiza ons approved by us, to independent dialysis organiza ons that are members of
group purchase organiza ons, and to certain non-retail specialty pharmacies in the U.S., which represents a significant por on of the poten al market for
vadadustat. If vadadustat is approved, but CSL Vifor is not successful in commercializing vadadustat in a mely manner, or at all, our expected revenue related
to vadadustat would be adversely impacted.
In addi on, pursuant to the Vifor Agreement, CSL Vifor contributed $40.0 million to a working capital facility, or Working Capital Fund, established to par ally
fund our costs of purchasing pre-launch vadadustat inventory from our contract manufacturers. The amount available under the Working Capital Fund is
reviewed at specified intervals and is adjusted based on a number of factors including outstanding supply commitments for vadadustat for the U.S. and
agreed upon vadadustat inventory levels held by us for the U.S. Addi onally, upon termina on or expira on of the Vifor Agreement for any reason other than
convenience by CSL Vifor (including following receipt of the CRL for vadadustat), we will be required to refund the outstanding balance of the Working Capital
Fund on the date of termina on or expira on. If we are required to repay all or part of the Working Capital Fund sooner than an cipated, it could have a
material adverse impact on our consolidated financial statements.
Our ability to achieve profitability also depends on our ability to manage our expenses. We expect to con nue to incur addi onal opera ng expenses,
including addi onal R&D expenses related to our pipeline, addi onal costs related to vadadustat, and R&D and selling, general and administra ve expenses
for ongoing development and commercializa on of Auryxia, which could lead to opera ng losses for the foreseeable future. We will con nue to incur
substan al expenditures rela ng to con nued commercializa on and post-marke ng requirements for Auryxia and vadadustat, if we are able to obtain
marke ng approval for vadadustat, and any other products, including those that may be in-licensed or acquired, as well as costs rela ng to the R&D of any
other product candidate, including those that may be in-licensed or acquired. Our prior losses have had, and expected future losses will con nue to have, an
adverse effect on our stockholders’ (deficit) equity and working capital.
In addi on to any further costs not currently contemplated in our opera ng plan, our ability to achieve profitability and our financial posi on will depend, in
part, on the rate of our future expenditures, our ability to obtain approval for vadadustat in
Akebia Therapeu cs, Inc. | Form 10-K | Page 51
Table of Contents
the U.S., the ming of our product revenue, collabora on, license and other revenue, the ming and amount of any repayment of the Working Capital Fund
from CSL Vifor, our con nued compliance with the terms of the BlackRock Credit Agreement and our ability to obtain addi onal funding, should it be needed.
In addi on, we expect to con nue to incur significant expenses if and as we:
•
•
•
con nue our commercializa on ac vi es for Auryxia and vadadustat, if we are able to obtain marke ng approval for vadadustat following our
resubmission to our NDA, and any other product or product candidate, including those that may be in-licensed or acquired;
conduct and enroll pa ents in any clinical trials, including post-marke ng studies or any other clinical trials for Auryxia, vadadustat or any other
product or product candidate, including those that may be in-licensed or acquired;
seek marke ng approvals for vadadustat and any other product candidate, including those that may be in-licensed or acquired;
• maintain marke ng approvals for Auryxia and vadadustat, if we are able to obtain marke ng approval for vadadustat, and any other product,
including those that may be in-licensed or acquired;
• manufacture Auryxia, vadadustat and any other product or product candidate, including those that may be in-licensed or acquired, for commercial
sale and clinical trials;
•
•
•
conduct discovery and development ac vi es for addi onal product candidates or pla orms that may lead to the discovery of addi onal product
candidates;
engage in transac ons, including strategic, merger, collabora on, acquisi on and licensing transac ons, pursuant to which we would market and
develop commercial products, or develop and commercialize other product candidates and technologies;
repay, and pay any associated pre-payment penal es, if applicable, the term loans in an aggregate principal amount of up to $55.0 million, or the
Term Loans, as of January 29, 2024, that were made available to us pursuant to an Agreement for the Provision of a Loan Facility, or the BlackRock
Credit Agreement, with Kreos Capital VII (UK) Limited, which are funds and accounts managed by BlackRock Inc., collec vely, BlackRock;
• make royalty, milestone or other payments under our current and any future in-licensing agreements;
• maintain, protect and expand our intellectual property por olio;
• make decisions with respect to our personnel, including the reten on of key employees;
• make decisions with respect to our infrastructure, including to support our opera ons as a fully integrated, publicly traded biopharmaceu cal
company; and
•
experience any addi onal delays or encounter issues with any of the above.
We have and will con nue to expend significant resources on our legal proceedings, as described below under Part I, Item 3. Legal Proceedings, or any other
legal proceedings brought by or against us in the future.
Our expenses could increase beyond expecta ons if we are required by the FDA, the European Medicines Agency, or the EMA, or other regulatory authori es,
or if we otherwise believe it is necessary, to change our manufacturing processes or assays, to amend or replace our study protocols, to perform studies
different from or larger than those currently planned, to conduct any addi onal clinical trials, whether in order to obtain approval or as a post-approval study,
including any addi onal clinical trial that we decide to conduct for vadadustat, if there are any delays in comple ng our clinical trials or if there are further
delays in or issues with obtaining marke ng approval for vadadustat in the U.S. beyond our PDUFA date.
Because of the numerous risks and uncertain es associated with pharmaceu cal product development and commercializa on, we are unable to accurately
predict the ming or amount of increased expenses or the associated revenue. The net losses we incur may fluctuate significantly from quarter to quarter and
year to year, such that a period-to-period comparison of our results of opera ons may not be a good indica on of our future performance. In any par cular
quarter, our product revenue, the progress of our clinical development and our opera ng results could be below the expecta ons of securi es analysts or
investors, which could cause our stock price to decline.
In addi on, our ability to generate revenue would be nega vely affected if the size of our addressable pa ent popula on is not as significant as we es mate,
the indica on approved by regulatory authori es is narrower than we sought or the pa ent popula on for treatment is narrowed by compe on, physician
choice, coverage or reimbursement, or payor or treatment guidelines. Even though we generate product revenue from Auryxia and royal es from Riona and
Vafseo in Japan, may generate royal es from Vafseo in Europe and other territories where it is approved, and may generate revenue and royal es from the
sale of any products that may be approved in the future, including those that may be in-licensed or acquired, we may never generate revenue and royal es
that are significant enough for us to become and remain profitable, and we may need to obtain addi onal financing to con nue to fund our opera ng plan.
Akebia Therapeu cs, Inc. | Form 10-K | Page 52
Table of Contents
We may require substan al addi onal financing to fund our business. A failure to obtain this necessary capital when needed, or on acceptable terms,
could force us to delay, limit, reduce or terminate our product development or commercializa on efforts.
As of December 31, 2023, our cash and cash equivalents were $42.9 million. We expect to con nue to expend substan al amounts of cash for the foreseeable
future as we con nue to commercialize Auryxia; pursue approval for vadadustat in the U.S. with the FDA and develop and commercialize vadadustat in the
U.S., if approved; and develop and commercialize any other product or product candidate, including those that may be in-licensed or acquired. These
expenditures will include costs associated with R&D, manufacturing, poten ally obtaining marke ng approvals and marke ng products approved for sale. In
addi on, other unan cipated costs may arise. Because the outcomes of our current and an cipated clinical trials are highly uncertain, we cannot reasonably
es mate the actual amount of funding necessary to successfully complete clinical development for any current or future product candidates, including the
outcome of our NDA resubmission, or to complete post-marke ng studies for Auryxia and vadadustat, if approved. Our future capital requirements depend
on many factors, including:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the scope, progress, results and costs of conduc ng clinical trials or any post-marke ng requirements or any other clinical trials for Auryxia,
vadadustat and any other product or product candidate, including those that may be in-licensed or acquired;
the cost and ming of commercializa on ac vi es, including product manufacturing, marke ng, sales and distribu on costs, for Auryxia, vadadustat,
if approved, and any other product or product candidate, including those that may be in-licensed or acquired;
the results of our mee ngs with the FDA, the EMA and other regulatory authori es and any consequen al effects, including on ming of and ability
to obtain and maintain marke ng approval, study design, study size and resul ng opera ng costs;
any difficul es or delays in conduc ng our clinical trials, or enrolling pa ents in our clinical trials, for Auryxia, vadadustat or any other product
candidates;
the outcome of our efforts to obtain marke ng approval for vadadustat in the U.S. and in other jurisdic ons and any other product candidates,
including those that may be in-licensed or acquired, including any addi onal clinical trials or post-approval commitments imposed by regulatory
authori es;
the ming of, and the costs involved in obtaining, marke ng approvals for vadadustat, including in the U.S. and certain other markets, and any other
product candidate, including those that may be in-licensed or acquired, including to fund the prepara on, filing and prosecu on of regulatory
submissions;
the costs of maintaining marke ng approvals for Auryxia or any other product, including those that may be in-licensed or acquired;
the number of generic versions of Auryxia that enter the market following loss of exclusivity, or LoE, for Auryxia in March 2025, and the ming of,
and the magnitude of, the impact on the product revenue from Auryxia, including the impact on the price of Auryxia;
the cost of securing and valida ng commercial manufacturing for any of our product candidates, including those that may be in-licensed or acquired,
and maintaining our manufacturing arrangements for Auryxia and vadadustat or any other product, including those that may be in-licensed or
acquired, or securing and valida ng addi onal arrangements;
the costs involved in preparing, filing and prosecu ng patent applica ons and maintaining, defending and enforcing our intellectual property rights,
including li ga on costs and the outcome of such li ga on;
the costs involved in any legal proceedings to which we are a party;
our status as a publicly traded company on the Nasdaq Capital Market;
our decisions with respect to personnel;
our decisions with respect to infrastructure; and
the extent to which we engage in transac ons, including strategic, merger, collabora on, acquisi on and licensing transac ons, pursuant to which
we could develop and market commercial products, or develop other product candidates and technologies.
We may need to obtain substan al addi onal financing to fund our business. If we are unable to raise capital when needed or on a rac ve terms, we could
be forced to delay, reduce or eliminate our R&D programs or any future commercializa on efforts. We failed to mely file our Quarterly Report on Form 10-Q
for the three months ended June 30, 2023, or the Second Quarter 10-Q. Because of that failure to file, we are not currently eligible to file or use a Registra on
Statement on Form S-3. This may make it more difficult for us to conduct a public offering of our securi es.
Akebia Therapeu cs, Inc. | Form 10-K | Page 53
Table of Contents
We believe our exis ng cash resources and the cash we expect to generate from product, royalty, supply and license revenues as well as the borrowings and
poten al future borrowings that are available under the BlackRock Credit Agreement and the working capital liability are sufficient to fund our current
opera ng plan for at least twenty-four months if vadadustat is approved in the U.S and for at least twelve months from filing the Form 10-K, if vadadustat is
not approved in the U.S. However, if our opera ng performance deteriorates significantly from the levels expected in our opera ng plan, or if vadadustat is
not approved in the U.S., it would have an adverse effect on our liquidity and capital resources and could affect our ability to con nue as a going concern in
the future. Our forecast of the period of me through which our financial resources will be adequate to support our opera ons is a forward-looking
statement and involves numerous risks and uncertain es, and actual results could vary as a result of a number of factors, many of which are outside our
control. We have based this es mate on assump ons that may be substan ally different than actual results, and we could u lize our available capital
resources sooner than we currently expect. In addi on, if we fail to sa sfy any of the covenants under the BlackRock Credit Agreement, and the loan is
accelerated, or if certain pre-specified events occur and we are required to make principal payments to BlackRock sooner than we currently an cipate, such
event could have a material adverse effect on our business. There can be no assurance that the current opera ng plan will be achieved in the me frame
an cipated by us, or that our cash resources and cash we expect to generate will fund our opera ng plan for the period an cipated by us, or that addi onal
funding will be available on terms acceptable to us, or at all.
Any addi onal fundraising efforts may divert our management’s a en on away from their day-to-day ac vi es, which may adversely affect our ability to
develop and commercialize Auryxia and any other products or product candidates, including vadadustat and those that may be in-licensed or acquired, or to
con nue to seek regulatory approval for vadadustat. Also, addi onal funds may not be available to us in sufficient amounts or on acceptable terms or at all. In
addi on, raising funds in the current economic environment may present addi onal challenges. For example, any sustained disrup on in the capital markets
from adverse macroeconomic condi ons and an uncertain geopoli cal environment, such as rising infla on, increasing interest rates, slower economic
growth or recession, global supply chain disrup ons, the ongoing Russia-Ukraine war, the war in the Middle East and tensions between China and Taiwan,
could nega vely impact our ability to raise capital, and we cannot predict the extent or dura on of such macroeconomic disrup ons. If we are unable to raise
addi onal capital in sufficient amounts when needed or on terms acceptable to us, we may have to significantly delay, scale back or discon nue the
development and/or commercializa on of Auryxia and any other products or product candidates, including vadadustat and those that may be in-licensed or
acquired, or to take any ac ons with respect to vadadustat depending on future decisions with respect to vadadustat in the U.S. Any of these events could
significantly harm our business, financial condi on and prospects.
Raising addi onal capital may cause dilu on to our exis ng stockholders, restrict our opera ons or require us to relinquish rights to our product and
product candidates on unfavorable terms to us.
We expect to finance future cash needs through product revenue and royalty and license revenue, and we may seek to sell public or private equity, enter into
new debt transac ons, explore poten al strategic transac ons or a combina on of these approaches or other strategic alterna ves. To the extent that we
raise addi onal capital through the sale of equity or conver ble debt securi es, the ownership interests of our common stockholders will be diluted, our fixed
payment obliga ons may increase, any such securi es may have rights senior to those of our common stock, and the terms may include liquida on or other
preferences and an -dilu on protec ons that adversely affect the rights of our common stockholders. Addi onal debt financing, if available, may involve
agreements that would restrict our opera ons and poten ally impair our compe veness, such as limita ons on our ability to incur addi onal debt, make
capital expenditures, declare dividends, acquire, sell or license intellectual property rights, and other opera ng restric ons that could adversely impact our
ability to conduct our business. If we raise addi onal funds through strategic transac ons, we may have to relinquish valuable rights to our por olio and
future revenue streams, and enter into agreements that would restrict our opera ons and strategic flexibility. If we raise addi onal funds through strategic
transac ons with third par es, we may have to do so at an earlier stage than otherwise would be desirable. In connec on with any such strategic
transac ons, we may be required to relinquish valuable rights to our product and product candidates, future revenue streams or research programs or grant
licenses on terms that are not favorable to us. If we are unable to raise addi onal funds when needed, we may not be able to pursue planned development
and commercializa on ac vi es and we may need to grant rights to develop and market product candidates that we would otherwise prefer to develop and
market ourselves.
If we fail to comply with the con nued lis ng requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our
ability to access the capital markets could be nega vely impacted.
We must sa sfy Nasdaq’s con nued lis ng requirements, including, among other things, a minimum closing bid price of $1.00 per share and mely filing of all
periodic financial reports, or risk delis ng, which would have a material adverse effect on our business. If we fail to maintain compliance with Nasdaq's
con nued lis ng requirements, it could affect our ability to raise capital on acceptable terms, or at all. In the event we are delisted from Nasdaq, the only
established trading market for our common stock would be eliminated, and we would be forced to list our shares on the OTC Markets or another quota on
Akebia Therapeu cs, Inc. | Form 10-K | Page 54
Table of Contents
medium, depending on our ability to meet the specific lis ng requirements of those quota on systems. As a result, an investor would likely find it more
difficult to trade or obtain accurate price quota ons for our shares. Delis ng would likely also reduce the visibility, liquidity, and value of our common stock,
reduce ins tu onal investor interest in our Company, and may increase the vola lity of our common stock. Delis ng could also cause a loss of confidence of
poten al industry partners, lenders, and employees, which could further harm our business and our future prospects.
On May 9, 2023, we received a le er from Nasdaq sta ng that we had not regained compliance with the minimum bid price rule during the compliance
period and was subject to delis ng. On May 22, 2023, we received a le er from the Office of General Counsel of Nasdaq informing us that Nasdaq confirmed
that we had regained compliance with the $1.00 per share minimum bid price requirement.
On August 11, 2023, we received a no fica on le er from Nasdaq informing us that since we had not yet filed our Second Quarter 10-Q, we are not in
compliance with Nasdaq's lis ng rule requiring mely filing of all required periodic financial reports with the U.S. Securi es and Exchange Commission, or the
SEC. On August 30, 2023, we received a le er from the Office of General Counsel of Nasdaq informing us that Nasdaq confirmed that we had regained
compliance with Nasdaq's lis ng rule requiring mely filing of all required periodic financial reports with the SEC.
Although the minimum bid price deficiency and Nasdaq periodic repor ng requirement ma ers are now closed, there can be no assurance that we will be
able to con nue to comply with the Nasdaq con nued lis ng requirements.
We may not be successful in our efforts to iden fy, acquire, in-license, discover, develop and commercialize addi onal products or product candidates or
our decisions to priori ze the development of certain product candidates over others may not be successful, which could impair our ability to grow.
Although we con nue to focus a substan al amount of our efforts on the commercializa on of Auryxia and the pursuit of approval for vadadustat in the U.S.
with the FDA, a key element of our long-term growth strategy is to develop addi onal product candidates and acquire, in-license, develop and/or market
addi onal products and product candidates.
Research programs to iden fy product candidates require substan al technical, financial and human resources, regardless of whether product candidates are
ul mately iden fied. Our R&D programs may ini ally show promise, yet fail to yield product candidates for clinical development or commercializa on for
many reasons, including the following:
•
the research methodology used may not be successful in iden fying poten al indica ons and/or product candidates;
• we may not be able or willing to assemble sufficient resources to acquire or discover addi onal product candidates;
•
•
•
•
•
•
a product candidate may be shown to have harmful side effects, a lack of efficacy or other characteris cs that indicate that they are unlikely to be
drugs that will receive marke ng approval and/or achieve market acceptance;
a product candidate we develop and seek regulatory approval for, including vadadustat, may not be approved by the FDA on a mely basis, or at all;
product candidates we develop may nevertheless be covered by third party patents or other exclusive rights;
the market for a product candidate may change during our program so that the con nued development of that product candidate is no longer
commercially reasonable;
a product candidate may not be capable of being produced in commercial quan es at an acceptable cost, or at all; or
a product candidate may not be accepted as safe and effec ve by pa ents, the medical community, or third party payors, if applicable.
If any of these events occur, we may be forced to abandon our R&D efforts for one or more of our programs, or we may not be able to iden fy, discover,
develop or commercialize addi onal product candidates, including those that may be in-licensed or acquired, which may have a material adverse effect on
our business.
Because we have limited financial and managerial resources, especially as a result of the CRL for vadadustat that we received in March 2022 and the
reduc ons in workforce that we implemented in 2022, we have focused on products, research programs and product candidates for specific indica ons. As a
result, we have had to, and in the future may need to, forgo or delay pursuit of opportuni es with other product candidates or for other indica ons, or may
out license rights to product candidates, that later prove to have greater commercial poten al. For example, as a result of receipt of the CRL and
implementa on of the reduc ons in workforce, we delayed certain research ac vi es. Our resource alloca on decisions may cause us to fail to capitalize on
viable commercial products or profitable market opportuni es on a mely basis, or at all. Our spending on current and future R&D programs and product
candidates for specific indica ons may not yield any commercially viable products.
Because our internal research capabili es are limited, we may be dependent upon other pharmaceu cal and biotechnology companies, academic scien sts
and ins tu ons, and other researchers to sell or license product candidates, products or
Akebia Therapeu cs, Inc. | Form 10-K | Page 55
Table of Contents
technology to us. As a result, our rights to these product candidates may be limited or we may be required to make future payments to such third par es if
we are successful in developing such product candidates. The success of this strategy depends partly upon our ability to iden fy, select, and acquire promising
product candidates and products. The process of iden fying, selec ng, nego a ng and implemen ng a license or acquisi on of a product candidate or an
approved product is lengthy and complex. Other companies, including some with substan ally greater financial, marke ng and sales resources, may compete
with us for the license or acquisi on of a product candidate or an approved product. We have limited resources to iden fy and execute the acquisi on or in-
licensing of third party products, businesses, and technologies and integrate them into our current infrastructure.
Moreover, we may devote resources to poten al acquisi ons or in-licensing opportuni es that are never completed, or we may fail to realize the an cipated
benefits of such efforts. Any product candidate that we acquire may require addi onal development efforts prior to commercial sale, including extensive
clinical tes ng and approval by the FDA, the EMA, the Japanese Pharmaceu cals and Medical Devices Agency, or PMDA, or other regulatory authori es, or
post-approval tes ng or other requirements if approved. All product candidates are prone to risks of failure typical of pharmaceu cal product development,
including the possibility that a product candidate will not be shown to be sufficiently safe and effec ve for approval by regulatory authori es. In addi on, we
cannot provide assurance that any of our products will be manufactured in a cost effec ve manner, achieve market acceptance or not require substan al
post-marke ng clinical trials.
Accordingly, there can be no assurance that we will ever be able to iden fy, acquire, in-license or develop suitable addi onal products or product candidates,
which could materially adversely affect our future growth and prospects. We may focus our efforts and resources on poten al products, product candidates
or other programs that ul mately prove to be unsuccessful.
We may engage in strategic transac ons to acquire assets, businesses, or rights to products, product candidates or technologies or form collabora ons or
make investments in other companies or technologies that could harm our opera ng results, dilute our stockholders’ ownership, increase our debt, or
cause us to incur significant expense.
As part of our business strategy, we may engage in addi onal strategic transac ons to expand and diversify our por olio, including through the merger,
acquisi on or in-license of assets, businesses, or rights to products, product candidates or technologies or through strategic alliances or collabora ons, similar
to the Merger and our exis ng and prior collabora on and license arrangements. We may not iden fy suitable strategic transac ons, or complete such
transac ons in a mely manner, on favorable terms, on a cost-effec ve basis, or at all. Moreover, we may devote resources to poten al opportuni es that are
never completed or we may incorrectly judge the value or worth of such opportuni es. Even if we successfully execute a strategic transac on, we may not be
able to realize the an cipated benefits of such transac on and may experience losses related to our investments in such transac ons. Integra on of an
acquired company or assets into our exis ng business may not be successful and may disrupt ongoing opera ons, require the hiring of addi onal personnel
and the implementa on and integra on of addi onal internal systems and infrastructure, and require management resources that would otherwise focus on
developing our exis ng business. Even if we are able to achieve the long-term benefits of a strategic transac on, our expenses and short-term costs may
increase materially and adversely affect our liquidity. Any of the foregoing could have a detrimental effect on our business, results of opera ons and financial
condi on. For example, on June 4, 2021, we entered into a license agreement, the Cyclerion Agreement, with Cyclerion Therapeu cs Inc., or Cyclerion,
pursuant to which Cyclerion granted us an exclusive global license under certain intellectual property rights to research, develop and commercialize
praliciguat, an inves ga onal oral soluble guanylate cyclase, or sGC, s mulator. Although we have progressed preclinical studies for praliciguat, we need to do
addi onal work to manufacture product for clinical trials than originally an cipated before we can ini ate the trials, and when the clinical trials are started,
we may be unsuccessful in developing praliciguat. If any of the assump ons that we made in valuing the transac on, including the costs or ming of
development of praliciguat as a result of the addi onal manufacturing work or otherwise, or the poten al benefits of praliciguat, were incorrect, we may not
recognize the an cipated benefits of the transac on and our business could be harmed.
In addi on, future transac ons may entail numerous opera onal, financial and legal risks, including:
•
•
•
•
•
incurring substan al debt, dilu ve issuances of securi es or deple on of cash to pay for acquisi ons;
exposure to known and unknown liabili es, including con ngent liabili es, possible intellectual property infringement claims, viola ons of laws, tax
liabili es and commercial disputes;
higher than expected acquisi on and integra on costs;
difficulty in integra ng opera ons, processes, systems and personnel of any acquired business;
increased amor za on expenses or, in the case of a write-down of the value of acquired assets, impairment losses, such as the Auryxia intangible
asset impairment in the second quarter of 2020 and corresponding adjustments to the es mated useful life of the developed product rights for
Auryxia;
•
impairment of rela onships with key suppliers or customers of any acquired business due to changes in management and ownership;
Akebia Therapeu cs, Inc. | Form 10-K | Page 56
Table of Contents
•
•
•
•
inability to retain personnel, customers, distributors, vendors and other business partners integral to an in-licensed or acquired product, product
candidate or technology;
poten al failure of the due diligence processes to iden fy significant problems, liabili es or other shortcomings or challenges;
entry into indica ons or markets in which we have no or limited development or commercial experience and where compe tors in such markets
have stronger market posi ons; and
other challenges associated with managing an increasingly diversified business.
If we are unable to successfully manage any transac on in which we may engage, our ability to develop new products and con nue to expand and diversify
our por olio may be limited.
Risks Related to our Financial Arrangements
Our obliga ons in connec on with the BlackRock Credit Agreement and requirements and restric ons in the BlackRock Credit Agreement could adversely
affect our financial condi on and restrict our opera ons.
We entered into the BlackRock Credit Agreement, which provides for a senior secured term loan facility, in the aggregate principal amount of up to
$55.0 million, or the Term Loan Facility. The ini al tranche of $37.0 million, or the Tranche A Loan, closed on January 29, 2024, or the Closing Date. In addi on
to the Tranche A Loan, the Term Loan Facility includes addi onal tranches available as follows: $8.0 million available in a single draw through December 31,
2024, or the Tranche B Loan, and $10.0 million available in a single draw through December 31, 2024, or the Tranche C Loan and, together with the Tranche A
Loan and the Tranche B Loan, the Term Loans. See Note 7, Indebtedness, to our audited consolidated financial statements in Part II, Item 8. Financial
Statements of this Form 10-K for addi onal informa on regarding our obliga ons under the BlackRock Credit Agreement.
Each Term Loan draw is subject to various condi ons precedent, including (x) the absence of any defaults or events of default and our con nued compliance
with the terms and provisions of the BlackRock Credit Agreement, (y) in the case of the Tranche B Loan and Tranche C Loan, receipt of marke ng approval for
vadadustat from the FDA, and (z) in the case of Tranche C, receipt of a certain amount of cumula ve gross cash proceeds a er the Closing Date in the form of
equity or equity linked securi es in one or more series of transac ons. The Term Loan Facility has an ini al maturity date of March 31, 2025, which will be
automa cally extended to January 29, 2028 if we receive FDA approval on or prior to June 30, 2024, or the Maturity Date. If vadadustat is not approved by
the FDA by June 30, 2024, we will be required to repay the Term Loan Facility sooner than an cipated.
The BlackRock Credit Agreement contains certain representa ons and warran es, affirma ve covenants, nega ve covenants, financial covenants, events of
default and other provisions and condi ons that are customarily required for similar financings. The financial covenants under the BlackRock Credit
Agreement require us to either (i) maintain cash and cash equivalents, measured as of the last day of each fiscal month, greater than or equal to $15.0 million
or (ii) earn consolidated revenue, measured as of the last day of each fiscal month for the trailing twelve-month period, of $150.0 million. Failure to maintain
compliance with these or other covenants would result in an event of default under the BlackRock Credit Agreement, which could result in enforcement
ac on, including accelera on of amounts due under the BlackRock Credit Agreement.
The Term Loan Facility will accrue interest at a floa ng annual rate equal to the sum of (x) term Secured Overnight Financing Rate for a tenor of one month
(subject to a floor of 4.25% per annum) plus (y) a margin of 6.75% per annum (subject to an overall cap of 15.00% per annum on the all-in interest rate).
During the con nuance of any payment event of default under the BlackRock Credit Agreement, the interest rate on such overdue sum will automa cally
increase by an addi onal 3.0% per annum, and may be subject to an addi onal late fee of 2.0% of such overdue sum. The Term Loan Facility does not
amor ze during the period commencing on the Closing Date and ending on December 31, 2025 (which was extended to December 31, 2026 at our op on), or
the Interest Only Period. We are required to pay interest and, a er the Interest Only Period, principal on the first calendar day of each month. In the event of
certain prespecified events, the repayment schedule will be accelerated. For example, if FDA approval is not obtained on or prior to June 30, 2024, the
Interest Only Period will automa cally terminate on October 1, 2024, and we will be required to repay the Term Loans in seven equal monthly payments
(comprised of principal and interest), commencing on October 1, 2024 and ending on the Maturity Date. If any of these events occur, and we are required to
repay principal sooner than an cipate, it would have an adverse effect on our business.
In the event there is an accelera on of our and certain of our subsidiaries’ liabili es under the BlackRock Credit Agreement as a result of an event of default
or otherwise, we may not have sufficient funds or may be unable to arrange for addi onal financing to repay the liabili es or to make any accelerated
payments, and BlackRock could seek to enforce security interests in the collateral securing the BlackRock Credit Agreement, which would have a material
adverse effect on our business, financial condi on and results of opera ons.
Akebia Therapeu cs, Inc. | Form 10-K | Page 57
Table of Contents
In addi on, our obliga ons in connec on with the BlackRock Credit Agreement could have addi onal significant adverse consequences, including, among
other things:
•
•
•
•
restric ng our ac vi es, including limita ons on transferring certain of our assets, engaging in certain transac ons, termina ng certain agreements,
incurring certain addi onal indebtedness, crea ng certain liens, paying cash dividends or making certain other distribu ons and investments;
limi ng our flexibility in planning for, or reac ng to, changes in our business and our industry;
placing us at a possible compe ve disadvantage compared to our compe tors who have a smaller amount of debt or compe tors with comparable
debt at more favorable interest rates; and
limi ng our ability to borrow addi onal amounts for working capital, capital expenditures, R&D efforts, acquisi ons, debt service requirements,
execu on of our business strategy and other purposes.
Any of these factors could materially and adversely affect our business, financial condi on and results of opera ons.
Our Royalty Interest Acquisi on Agreement with HealthCare Royalty Partners IV, L.P. contains various covenants and other provisions, which, if violated,
could materially adversely affect our financial condi on.
In February 2021, we entered into a royalty interest acquisi on agreement, or the Royalty Agreement, with HealthCare Royalty Partners IV, L.P., or HCR,
pursuant to which we sold to HCR our right to receive royal es and sales milestones for vadadustat, collec vely the Royalty Interest Payments, in each case,
payable to us under our Collabora on Agreement dated December 11, 2015, or the MTPC Agreement, with Mitsubishi Tanabe Pharma Corpora on, or MTPC,
subject to an annual maximum “cap” of $13.0 million, or the Annual Cap, and an aggregate maximum “cap” of $150.0 million, or the Aggregate Cap. Under
the Royalty Agreement, we are required to comply with various covenants, including obliga ons to take certain ac ons, such as ac ons with respect to the
Royalty Interest Payments, the MTPC Agreement, our agreement with MTPC for the commercial supply of vadadustat drug product, and our intellectual
property. In addi on, the Royalty Agreement includes customary events of default upon the occurrence of enumerated events, including failure to perform
certain covenants and the occurrence of insolvency events. Upon the occurrence of an event of default, HCR would have the ability to exercise all available
remedies in law and equity, which could have a material adverse effect on our financial condi on.
Risks Related to Commercializa on
Our business is substan ally dependent on the commercial success of Auryxia and vadadustat, if approved. If we are unable to con nue to successfully
commercialize Auryxia or vadadustat, if approved and commercialized, our results of opera ons and financial condi on will be materially harmed.
Our business and our ability to generate product revenue largely depend on our, and our collaborators’, ability to successfully commercialize Auryxia and
vadadustat. Our ability to generate revenue depends on our ability to execute on our commercializa on plans, and the size of the market for, and the level of
market acceptance of, Auryxia, and vadadustat, if approved, and any other product or product candidate, including those that may be in-licensed or acquired.
If the size of any market for which a product or product candidate is approved decreases or is smaller than we an cipate, our revenue and results of
opera ons could be materially adversely affected.
Given the concentra on of dialysis clinics in large networks, with DaVita, Inc., or DaVita, and Fresenius Kidney Care Group LLC, accoun ng for a vast majority
of the dialysis popula on in the U.S., treatment is usually driven by medical protocols that are implemented across the en re network of clinics. Dialysis
organiza ons require large data sets to adopt medical protocols. If dialysis organiza ons do not add vadadustat, if approved, to their medical protocols in a
mely manner, or at all, our opera ons could be materially adversely affected.
If oral phosphate binders, including Auryxia, are included in the end-stage renal disease, or ESRD, Prospec ve Payment System, or PPS, bundle payment, it will
take me for dialysis organiza ons to implement internal mechanisms to dispense phosphate binders which could divert their a en on from focusing on
other therapeu c areas such as anemia management, which in turn could nega vely impact the market for phosphate binders, including Auryxia. In addi on,
dialysis organiza ons may choose lower cost binders over Auryxia, or binders that may have features or benefits more aligned with the dialysis organiza on's
opera onal ac vi es, which could nega vely impact Auryxia revenue.
In addi on, we currently have exclusive rights under a series of patents and patent applica ons to commercialize Auryxia in the U.S. that protect us from
generic drug compe on un l March 2025. Following LoE in March 2025, the number of generic versions of Auryxia that enter the market will affect our
revenue from Auryxia. We believe CMS's decision to include phosphate binders in the dialysis bundle could poten ally lead to higher sales of Auryxia a er the
LoE date than in other LoE scenarios, and plan to work with payors and providers to con nue the use of Auryxia beyond LoE. However, our ability to con nue
to generate revenue from sales of Auryxia following LoE will depend on many factors, including our ability to
Akebia Therapeu cs, Inc. | Form 10-K | Page 58
Table of Contents
successfully contract with dialysis organiza ons, the ming and number of generics that enter the market and other products on the market that we compete
with. If we are unable to maintain sales of Auryxia following LoE, our results of opera ons and financial condi on will be materially harmed.
We believe our revenue growth was nega vely impacted by the recent COVID-19 pandemic in 2021, 2022 and 2023 primarily as the CKD pa ent popula ons
that we serve experienced both high hospitaliza on and mortality rates due to COVID-19, and the pandemic had an adverse impact on the phosphate binder
market in which Auryxia competes. Labor shortages and costs have also adversely impacted dialysis providers. These impacts have refocused clinical efforts in
addressing bone and mineral disorders like hyperphosphatemia to more acute opera onal issues to ensure pa ents receive dialysis treatments and s ll some
pa ents have been rescheduled or missed treatments due to labor shortages. We believe, this and poten ally other factors, led to the reduc on in the
phosphate binder market, which has not experienced growth since early 2020. While we are unable to quan fy the impact of the recent COVID-19 pandemic
on future revenues and revenue growth, the recent COVID-19 pandemic and the ongoing impacts from the recent COVID-19 pandemic con nue to adversely
and dispropor onately impact CKD pa ents and the phosphate binder market. Therefore, we expect the impacts from the pandemic to con nue to have a
nega ve impact on our revenue growth for the foreseeable future.
Market acceptance is also cri cal to our ability to generate significant product revenue. Any product may achieve only limited market acceptance or none at
all. If Auryxia, or any of our future products, including vadadustat, if approved, is not accepted by the market to the extent that we expect or market
acceptance decreases, we may not be able to generate significant product revenue and our business would be materially harmed. Market acceptance of
Auryxia, vadadustat, if approved, or any other approved product depends on a number of factors, including:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
the availability of adequate coverage and reimbursement by, and the availability of discounts, rebates and price concessions to third party payors,
pharmacy benefit managers, or PBMs, and governmental authori es;
the safety and efficacy of the product, as demonstrated in clinical trials and in the post-marke ng se ng;
the prevalence and complica ons of the disease treated by the product;
the clinical indica ons for which the product is approved and the product label approved by regulatory authori es, including any warnings or
limita ons that may be required on the label as a consequence of poten al safety risks associated with the product;
the countries in which marke ng approvals are obtained;
the claims we and our partners are able to make regarding the safety and efficacy of the product;
the success of our physician and pa ent communica ons and educa on programs;
acceptance by physicians and pa ents of the product as a safe and effec ve treatment and the willingness of the target pa ent popula on to try
new therapies and of physicians to prescribe new therapies;
for vadadustat, if approved, use at dialysis organiza ons and their willingness to include vadadustat in their protocols;
the cost, safety and efficacy of the product in rela on to alterna ve treatments;
the ming of receipt of marke ng approvals and product launch rela ve to compe ng products and poten al generic entrants;
rela ve convenience and ease of administra on;
the frequency and severity of adverse side effects;
favorable or adverse publicity about our products or favorable or adverse publicity about compe ng products;
the effec veness of our and our partners’ sales, marke ng, manufacturing and distribu on strategies and opera ons; and
the restric ons on the use of the product together with other medica ons, if any.
In addi on, our ability to generate net product revenue depends on our ability to control the expenses associated with commercializing a product, including
internal expenses, manufacturing costs, rebates, product returns and other adjustments. We do not have control over many of the expenses required to
commercialize our products, and if we experience increased costs or expenses, we may not be able to afford the commercial ac vi es required to successfully
commercialize our products, which could have an adverse effect on our business. In addi on, our net product revenue requires judgement and includes
es mates for rebates and product returns, which can fluctuate from quarter-to-quarter and year-over-year. If our net product revenue is lower than
an cipated, including as a result of higher expenses, our business could be harmed.
Several healthcare facili es, including DaVita, have previously restricted access for non-pa ents as a result of the recent COVID-19 pandemic, resul ng in
restricted access for certain members of our sales force. As a result, we con nue to engage with some healthcare providers and other customers virtually
where possible. The restric ons on our customer-facing
Akebia Therapeu cs, Inc. | Form 10-K | Page 59
Table of Contents
employees’ in-person interac ons with healthcare providers have, and could con nue to, nega vely impact our access to healthcare providers and ul mately
our sales, including with respect to vadadustat, if approved. Such precau onary measures have since been relaxed at certain healthcare facili es and, as a
result, members of our sales force have resumed in person interac ons with those customers. Nevertheless, some restric ons remain, and more restric ons
may be put in place again due to a resurgence in COVID-19 cases, including those involving new variants of COVID-19, which may be more contagious and
more severe than prior strains of the virus. Given this uncertain environment and the dispropor onate impact of the recent COVID-19 pandemic on CKD
pa ents, we are ac vely monitoring the demand in the U.S. for Auryxia and will be for vadadustat, if approved, including the poten al for further declines or
changes in prescrip on trends and customer orders, which could have a material adverse effect on our business, results of opera ons, and financial condi on.
If we are unable to maintain or expand, or, if vadadustat is approved, ini ate, sales and marke ng capabili es or enter into addi onal agreements with
third par es, we may not be successful in commercializing Auryxia, vadadustat, if approved, or any other product candidates that may be approved.
In order to market Auryxia and any other approved product, we intend to con nue to invest in sales and marke ng, which will require substan al effort and
significant management and financial resources. We have built a commercial infrastructure and sales force in the U.S. for Auryxia, our only commercial
product. However, following receipt of the CRL, we implemented a reduc on of our workforce in April and May 2022 by approximately 42% across all areas of
the Company (47% inclusive of the closing of the majority of open posi ons), including several members of our sales and marke ng team and management.
In November 2022, we also implemented a reduc on of our workforce, by approximately 14% consis ng of individuals within our commercial organiza on,
and we shi ed to a strategic account management focused model for our commercial efforts. If the remaining sales and marke ng team cannot successfully
commercialize Auryxia, or if addi onal sales and marke ng employees decide to leave, it could have a material adverse effect on Auryxia revenue and our
financial condi on.
If we obtain regulatory approval to market vadadustat in the U.S., we believe that we can leverage the current commercial founda on for vadadustat in the
U.S., with incremental addi onal hires in our sales force and medical affairs department, but if we are unable to do so successfully it would materially harm
our business. Addi onally, training a sales force to successfully sell and market a new commercial product is expensive and me-consuming and could delay
any commercial launch of such product candidate or distract the sales force from promo ng Auryxia. We may underes mate the size of the sales force
required for a successful product launch and we may need to expand our sales force to a greater extent or earlier than we currently plan and at a higher cost
than we an cipated. In 2021 and early 2022, we incurred commercializa on expenses for vadadustat that were premature or unnecessary as a result of the
receipt of the CRL for vadadustat, and may in the future incur addi onal commercializa on expenses prematurely or unnecessarily if we do not receive
marke ng approval for vadadustat in the meframe we expect, or at all.
We devote significant effort to recrui ng individuals with experience in the sales and marke ng of pharmaceu cal products. Compe on for personnel with
these skills is significant and retaining qualified personnel with experience in our industry is difficult. Further, our reduc ons in workforce may further
exacerbate these condi ons and interfere with our ability to find and retain qualified personnel. As a result, we may not be able to retain our exis ng
employees or hire new employees quickly enough to meet our needs. At the same me, we may face high turnover, requiring us to expend me and
resources to source, train and integrate new employees.
There are risks involved with maintaining our own sales and marke ng capabili es, including the following:
•
•
•
poten al inability to recruit, train and retain adequate numbers of effec ve sales and marke ng personnel;
poten al lack of complementary products to be offered by sales personnel, which may put us at a compe ve disadvantage rela ve to companies
with more extensive product lines, especially as a result of the receipt of the CRL for vadadustat; and
costs and expenses associated with maintaining our own sales and marke ng organiza on.
If we are unable to maintain our own sales and marke ng capabili es, we will not be successful in commercializing Auryxia, vadadustat, if approved, and any
other product candidate that may be approved.
Furthermore, if we are unable to maintain our arrangements with third par es with respect to sales and marke ng, if we are unsuccessful in entering into
addi onal arrangements with third par es to sell and market our products or we are unable to do so on terms that are favorable to us, or if such third par es
are unable to carry out their obliga ons under such arrangements, it will be difficult to successfully commercialize our product and product candidates,
including vadadustat, if approved. For example, if, in connec on with the Vifor Agreement, we experience difficul es with CSL Vifor, or if CSL Vifor is not
successful in commercializing vadadustat, if approved, in the dialysis organiza ons for which they are responsible in a mely manner, or at all, our revenue
related to vadadustat will be adversely impacted.
Akebia Therapeu cs, Inc. | Form 10-K | Page 60
Table of Contents
Our, or our partners', failure to obtain or maintain adequate coverage, pricing and reimbursement for Auryxia, vadadustat, if approved, or any other
future approved products, could have a material adverse effect on our or our collabora on partners’ ability to sell such approved products profitably and
otherwise have a material adverse impact on our business.
Market acceptance and sales of any approved products, including Auryxia and, if approved, vadadustat, depends significantly on the availability of adequate
coverage and reimbursement from third party payors and may be affected by exis ng and future healthcare reform measures. Governmental authori es,
third party payors, and PBMs decide which drugs they will cover, as well as establish formularies or implement other mechanisms to manage u liza on of
products and determine reimbursement levels. We cannot be sure that coverage or adequate reimbursement will be available for Auryxia, vadadustat, if
approved, or any of our poten al future products. Even if we obtain coverage for an approved product, third party payors may not establish adequate
reimbursement amounts, which may reduce the demand for our product and prompt us to have to reduce pricing for the product. If reimbursement is not
available or is limited, we may not be able to successfully commercialize certain of our products. Coverage and reimbursement by a governmental authority,
third-party payor or PBMs may depend upon a number of factors, including the determina on that use of a product is:
•
•
•
•
a covered benefit under the health plan;
safe, effec ve and medically necessary;
appropriate for the specific pa ent; and
cost effec ve.
Obtaining coverage and reimbursement approval for a product from a governmental authority, PBM or a third-party payor is a me consuming and costly
process that could require us to provide suppor ng scien fic, clinical and cost-effec veness data for the use of our products to the payor. In the U.S., there
are mul ple governmental authori es, PBMs and third-party payors with varying coverage and reimbursement levels for pharmaceu cal products, and the
ming of commencement of reimbursement by a governmental payor can be dependent on the assignment of codes via the Healthcare Common Procedural
Coding System, which codes are assigned on a quarterly basis. Within Medicare, for oral drugs dispensed by pharmacies and also administered in facili es,
coverage and reimbursement may vary depending on the se ng. CMS, local Medicare administra ve contractors, Medicare Part D plans and/or PBMs
opera ng on behalf of Medicare Part D plans, may have some responsibility for determining the medical necessity of such drugs, and therefore coverage, for
different pa ents. Different reimbursement methodologies may apply, and CMS may have some discre on in interpre ng their applica on in certain se ngs.
As an oral drug, Auryxia is covered by Medicare under Part D for the treatment of pa ents with hyperphosphatemia. In January 2011, CMS implemented the
ESRD PPS, a prospec ve payment system for dialysis treatment. Under the ESRD PPS, CMS generally makes a single bundled payment to the dialysis facility for
each dialysis treatment that covers all items and services rou nely required for dialysis treatments furnished to Medicare beneficiaries in Medicare-cer fied
ESRD facili es or at their home. The inclusion of oral medica ons without injectable or intravenous equivalents such as Auryxia in the bundled payment was
ini ally delayed by CMS un l January 1, 2014, and through several subsequent legisla ve ac ons has been delayed un l January 1, 2025.
Absent further legisla on or regula on on this ma er, beginning in January 2025, oral ESRD-related drugs without injectable or intravenous equivalents,
including Auryxia and all other phosphate lowering medica ons, will be included in the ESRD bundle and separate Medicare payment for these drugs will no
longer be available, as is the case today under Medicare Part D. ESRD facili es may nonetheless receive a TDAPA for new renal dialysis drugs and biological
products that meet certain criteria for a period of two years. The TDAPA will provide separate payment based on the drug’s Average Sales Price, or ASP, that
will be in addi on to the base rate in order to facilitate the adop on of innova ve therapies. There can be no assurances that CMS will not again delay the
inclusion of these oral ESRD-related drugs in the bundled payment. Even if Auryxia is deemed eligible by CMS, revenue for sales of Auryxia could be
significantly less in the TDAPA period than it would be if Auryxia is not bundled into the ESRD PPS. Moreover, in the post-TDAPA period, CMS currently expects
to increase the single bundled payment base rate paid to the dialysis facility for each dialysis treatment to reflect that oral only phosphate lowering drugs will
be reimbursed as part of the single bundled payment for Medicare pa ents. There can be no assurances that any increase in the single bundled payment base
rate will be sufficient to adequately reimburse the dialysis facili es for Auryxia at a price that is profitable for us.
In addi on, in September 2018, CMS decided that Auryxia would no longer be covered by Medicare for the treatment of iron deficiency anemia, or IDA, in
adult pa ents with NDD-CKD, or the CMS Decision. While this decision does not impact CMS coverage for the control of serum phosphorus levels in adult
pa ents with DD-CKD, or the Hyperphosphatemia Indica on, it requires Part D Plan sponsors to impose prior authoriza on or other steps to ensure that
Auryxia is reimbursed only for the Hyperphosphatemia Indica on. We decided beginning in 2022 to terminate certain Part D contracts, as pa ents no longer
had the access benefit given the prior authoriza on, or PA, requirement. Now pa ents must go through a medical exemp on process, which is very similar to
a prior authoriza on review. While we believe this had, and may con nue to have, a nega ve
Akebia Therapeu cs, Inc. | Form 10-K | Page 61
Table of Contents
impact on our overall sales volume, we believe it had a significant posi ve impact on our net selling price. However, if we experience addi onal nega ve
impacts on our sales volume as a result of this change, it could have a nega ve impact on our product revenue.
Medicaid reimbursement of drugs varies by state. Private third-party payor reimbursement policies also vary and may or may not be consistent with Medicare
reimbursement methodologies. Manufacturers of outpa ent prescrip on drugs may be required to provide discounts or rebates under government
healthcare programs or to certain third-party payors in order to obtain coverage of such products.
Addi onally, we may be required to enter into contracts with third party payors and/or PBMs offering rebates or discounts on our products in order to obtain
favorable formulary status and we may not be able to agree upon commercially reasonable terms with such third party payors or PBMs, or provide data
sufficient to obtain favorable coverage and reimbursement for many reasons, including that we may be at a compe ve disadvantage rela ve to companies
with more extensive product lines. In addi on, third party payors, PBMs and other en es that purchase our products may impose restric ons on our ability
to raise prices for our products over me without incurring addi onal costs. Four distributors, Fresenius Medical Care Rx, McKesson Corpora on, Cardinal
Health, Inc. and Cencora, Inc., formerly known as AmerisourceBergen Drug Corpora on, in the aggregate, accounted for a significant percentage of our gross
revenue during the year ended December 31, 2023. If we are not able to maintain our arrangements with these key distributors on favorable terms, on a
mely basis or at all, or if there is any adverse change in one or more of these distributors’ business prac ces or financial condi on, it would adversely impact
the market opportunity for Auryxia, our product revenues and opera ng results.
In addi on, vadadustat was approved in Japan for the treatment of adult pa ents with anemia due to CKD and is being marketed by MTPC in Japan under the
trade name Vafseo. Pricing and reimbursement strategy is a key component of MTPC’s commercializa on plans for Vafseo in Japan. If coverage and
reimbursement terms change, MTPC may not be able to, or may decide not to, con nue commercializa on of Vafseo in Japan. Furthermore, vadadustat was
approved in Europe and Australia for the treatment of anemia due to CKD in DD-CKD pa ents. In Europe, reimbursement is obtained on a country-by-country
basis and it is a me consuming process. Medice is working on securing pricing and reimbursement in key markets in Europe, but there is no guarantee of the
ming or extent of reimbursement that they will receive, if at all.
We currently believe it is likely that vadadustat, if approved, will be reimbursed using the Transi onal Drug Add-on Payment Adjustment, or TDAPA, followed
by inclusion in the bundled reimbursement model for Medicare beneficiaries, but reimbursement under TDAPA it is subject to review and approval by CMS.
For those that obtain dialysis through commercial insurance during the 30-month coordina on period or through Medicaid prior to Medicare becoming
primary payor a er 90 days, pa ents may access vadadustat through contracts we nego ate with third party payors for reimbursement of vadadustat, which
would be subject to the risks and uncertain es described above. Addi onally, applying for and obtaining reimbursement under the TDAPA is expected to take
six months following filing acceptance, which will affect adop on, uptake and product revenue for vadadustat during that me, and if there are updates to
the TDAPA rule that decrease the basis for reimbursement or eligibility criteria during the transi on period or if the TDAPA is eliminated, then our profitability
may be adversely affected. For example, the Medicare Payment Advisory Commission, or MedPAC, an independent legisla ve branch advisory body to
Congress on issues related to the Medicare program, has recommended that TDAPA not be provided to newly approved drug products considered to fall
within “func onal categories” for which costs are already accounted for in the bundled reimbursement model, such as for anemia management drugs.
Further, if vadadustat is approved in the U.S., we expect it to be included in the fixed reimbursement model for a bundle of dialysis services, or the bundle,
which will require us to enter into contracts to supply vadadustat to specific dialysis providers, instead of through distributors, which we believe could be
challenging. The dialysis market is unique and is dominated by two providers: DaVita and Fresenius Medical Care, which account for a vast majority of the
dialysis popula on in the U.S. Under the Vifor Agreement, we granted CSL Vifor an exclusive license to sell vadadustat to Fresenius Medical Care North
America and its affiliates, including Fresenius Kidney Care Group LLC, to certain third-party dialysis organiza ons approved by us, to independent dialysis
organiza ons that are members of group purchase organiza ons, and to certain non-retail specialty pharmacies in the U.S. We refer to Fresenius Medical Care
North America and its affiliates, these organiza ons and specialty pharmacies collec vely as the “Supply Group." See Note 8, Deferred Revenue, Refund
Liability and Liability Related to Sale of Future Royal es, to our consolidated financial statements in Part II, Item 8. Financial Statements of this Form 10-K for
addi onal informa on regarding the Vifor Agreement. If vadadustat is approved, and we are not able to maintain the Vifor Agreement or enter into a supply
agreement with DaVita or other dialysis clinics, or if Vifor is not able to successfully contract with the Supply Group, our business may be materially harmed.
Similar to how payor coverage may affect the sales of a product, formulary status within dialysis organiza ons may affect what products are prescribed within
that specific organiza on. Therefore, if a product is not on a formulary, the prescribers within that organiza on may be less likely to prescribe that product or
may have a difficult me prescribing that product, resul ng in less sales. Further, one dialysis organiza on’s determina on to add a product to their formulary
does not assure that other dialysis organiza ons will also add the product to theirs. There is always a risk a dialysis organiza on will not
Akebia Therapeu cs, Inc. | Form 10-K | Page 62
Table of Contents
contract with a drug manufacturer for a specific product, resul ng in that product not being on that organiza on’s formulary. If any dialysis organiza on does
not add vadadustat, if approved, to the formulary, our business may be materially harmed.
In addi on, we may be unable to sell Auryxia or vadadustat, if approved, to dialysis providers on a profitable basis if CMS significantly reduces the level of
reimbursement for dialysis services and providers choose to use alterna ve therapies or look to re-nego ate their contracts with us. Our profitability may also
be affected if our costs of produc on increase faster than increases in reimbursement levels. Adequate coverage and reimbursement of our products by
government and private insurance plans are central to pa ent and provider acceptance of any products for which we receive marke ng approval. Exis ng
compe ve products may enter into sole source agreements with dialysis providers that impact the ability for new product innova ons and new compe tors
may face price pressure based on exis ng contracts with dialysis providers.
Further, in many countries outside the U.S., a drug must be approved for reimbursement before it can be marketed or sold in that country. In some cases, the
prices that we intend to charge for our products are also subject to approval. Approval by the EMA or another regulatory authority does not ensure approval
by reimbursement authori es in that jurisdic on, and approval by one reimbursement authority outside the U.S. does not ensure approval by any other
reimbursement authori es. However, the failure to obtain reimbursement in one jurisdic on may nega vely impact our ability to obtain reimbursement in
another jurisdic on. In addi on, we plan to rely on a partner to obtain approval by reimbursement authori es outside the U.S. Our partners may not be able
to obtain such reimbursement approvals on a mely basis, if at all, and favorable pricing in certain countries depends on a number of factors, some of which
are outside of our partners' control. In May 2023, we entered into the license agreement with Medice, pursuant to which we granted Medice an exclusive
license to develop and commercialize vadadustat for the treatment of anemia in pa ents with chronic kidney disease in the Medice Territory. If Medice is not
able to obtain favorable pricing in the Medice Territory, or if such approvals are delayed, it will affect Medice’s sales of vadadustat in the Medice Territory,
which could have an adverse effect on our results of opera ons.
We face substan al compe on, which may result in others discovering, developing or commercializing products before, or more successfully than, we do.
The development and commercializa on of new drugs is highly compe ve and subject to rapid and significant technological change. Our future success
depends on our ability to demonstrate and maintain a compe ve advantage with respect to the development and commercializa on of Auryxia, vadadustat,
if approved, and any other product or product candidate, including those that may be in-licensed or acquired. Our objec ve is to con nue to commercialize
Auryxia and develop and commercialize new products with clinically proven efficacy, convenience, tolerability and/or safety. In many cases, any approved
products that we commercialize will compete with exis ng, market-leading products. If exis ng or new compe tors of Auryxia take market share from us, it
could have an adverse impact on Auryxia revenue and our business.
Auryxia is compe ng in the hyperphosphatemia market in the U.S. with other FDA-approved phosphate binders such as Renagel® (sevelamer hydrochloride)
and Renvela® (sevelamer carbonate), both marketed by Sanofi, PhosLo® and Phoslyra® (calcium acetate), marketed by Fresenius Medical Care North America,
Fosrenol® (lanthanum carbonate), marketed by Shire Pharmaceu cals Group plc, and Velphoro® (sucroferric oxyhydroxide), marketed by Fresenius Medical
Care North America, as well as over-the-counter calcium carbonate products such as TUMS® and metal-based op ons such as aluminum, lanthanum and
magnesium. Most of the phosphate binders listed above are now also available in generic forms. In addi on, other agents are in development, including
OPKO Health Inc.’s Alpharen™ Tablets (fermagate tablets) and Unicycive’s RENAZORB™ (lanthanum dioxycarbonate), or could otherwise enter the market that
may impact the market for Auryxia. In October 2023, the FDA approved XPHOZAH® (tenapanor), a phosphate absorp on inhibitor that is marketed by
Ardelyx, Inc. and indicated to reduce serum phosphorus in adults with CKD on dialysis as add-on therapy in pa ents who have an inadequate response to
phosphate binders or who are intolerant of any dose of phosphate binder therapy, which may impact the market for Auryxia.
Auryxia is compe ng in the IDA market in the U.S. with over-the-counter oral iron, ferrous sulfate, other prescrip on oral iron formula ons, including ferrous
gluconate, ferrous fumerate, and polysaccharide iron complex, and intravenous iron formula ons, including Feraheme® (ferumoxytol injec on), Venofer®
(iron sucrose injec on), Ferrlicit® (sodium ferric gluconate complex in sucrose injec on), Injectafer® (ferric carboxymaltose injec on), and Triferic® (ferric
pyrophosphate citrate). In addi on, other new therapies for the treatment of IDA may impact the market for Auryxia, such as Shield Therapeu cs plc's
Feraccru® (ferric maltol), which is available in Europe for the treatment of IDA and Accrufer® (ferric maltol), which was launched in the U.S. for the treatment
of IDA in July 2021.
Furthermore, Auryxia’s commercial opportuni es may be reduced or eliminated if our compe tors develop and market products that are less expensive,
more effec ve, safer or offer greater pa ent convenience than Auryxia. Other companies have product candidates in various stages of preclinical or clinical
development to treat diseases and complica ons of the diseases for which we are marke ng Auryxia. In addi on, we and our licensors, Panion & BF Biotech,
Inc., or Panion, and, as applicable, Dr. Hsu, entered into se lement agreements with all but one of the third par es who submi ed Paragraph IV cer fica on
no ce le ers regarding Abbreviated New Drug Applica ons, or ANDAs, submi ed to the FDA, pursuant to which we granted licenses to market a generic
version of Auryxia in the U.S. beginning in March 2025 (subject to FDA approval), or earlier under certain circumstances customary for se lement agreements
of this nature. While we expect that the availability
Akebia Therapeu cs, Inc. | Form 10-K | Page 63
Table of Contents
of generic versions of Auryxia will nega vely impact our net product revenue for Auryxia and our results of opera ons, it is difficult to es mate the impact of
generics on Auryxia net product revenue, and if the impact is greater than we currently an cipate, it may materially adversely impact our business and results
of opera ons.
Drugs that may compete with vadadustat, if approved, include Epogen® (epoe n alfa) and Aranesp® (darbepoe n alfa), both commercialized by Amgen,
Procrit® (epoe n alfa) and Eprex® (epoe n alfa), commercialized by Johnson & Johnson in the U.S. and Europe, respec vely, and Mircera® (methoxy PEG-
epoe n beta), commercialized by CSL Vifor in the U.S. and Roche Holding Ltd. outside of the U.S. and Evrenzo® (roxadustat) in Europe commercialized by
Astellas Pharma Inc. Further, in February 2023 the FDA approved daprodustat, an oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH, inhibitor
marketed as Jesduvroq by GlaxoSmithKline plc, or GSK, in the U.S., as a once-a-day treatment of anemia due to CKD in adult pa ents who have been receiving
dialysis for at least four months.
We and our partners may also face compe on from poten al new anemia therapies. There are several other HIF-PH inhibitor product candidates in various
stages of development for anemia indica ons that may be in direct compe on with vadadustat if and when they are approved and launched commercially.
These candidates are being developed by companies such as Japan Tobacco Interna onal, or JT, and Bayer HealthCare AG, or Bayer. For example, FibroGen
filed an NDA for its product candidate, roxadustat, with the FDA, to which the FDA issued a complete response le er indica ng the FDA will not approve the
NDA in its present form and requested that an addi onal clinical trial for roxadustat be conducted prior to resubmission of the NDA or addi onal response to
the FDA's complete response le er. In Europe however, roxadustat is approved for the treatment of anemia in pa ents with CKD. If we obtain approval for
vadadustat in the U.S., and roxadustat is also approved by the FDA, then roxadustat will compete with vadadustat.
Furthermore, certain companies are developing poten al new therapies for renal-related diseases that could poten ally reduce injectable erythropoiesis
s mula ng agent, or ESA, u liza on and thus limit the market poten al for vadadustat if they are approved and launched commercially. Other new therapies
are in development for the treatment of condi ons inclusive of renal anemia that may impact the market for anemia-targeted treatment.
In Japan, vadadustat is sold under the name Vafseo, which is approved for pa ents with CKD, including both DD-CKD and NDD-CKD, and competes with
roxadustat, daprodustat and enarodustat. Roxadustat is approved for the treatment of anemia due to CKD in pa ents on dialysis, or DD-CKD, and pa ents not
on dialysis, or NDD-CKD. In addi on, daprodustat, GSK’s product candidate, and enarodustat, JT’s product candidate, are approved in Japan for the treatment
of anemia due to CKD, and molidustat, Bayer HealthCare AG's product, is approved in Japan for the treatment of renal anemia. In China, roxadustat is
commercialized for the treatment of anemia due to CKD in DD-CKD pa ents and for the treatment of anemia due to CKD in NDD-CKD pa ents.
A biosimilar is a biologic product that is approved based on demonstra ng that it is highly similar to an exis ng, FDA-approved branded biologic product. The
patents for the exis ng, branded biologic product must expire in a given market before biosimilars may enter that market without the risk of being sued for
patent infringement. In addi on, an applica on for a biosimilar product can only be approved by the FDA 12 years a er the exis ng, branded product was
approved under a Biologics License Applica on, or BLA. The patents for epoe n alfa, an injectable ESA, expired in 2004 in the EU, and the remaining patents
expired between 2012 and 2016 in the U.S. The introduc on of biosimilars into the injectable ESA market in the U.S. will cons tute addi onal compe on for
vadadustat if we are able to obtain approval for and commercially launch vadadustat. In the U.S., Pfizer’s biosimilar version of injectable ESAs, Retacrit®
(epoe n alfa-epbx), was approved by the FDA in May 2018 and launched in November 2018 and several biosimilar versions of injectable ESAs are available for
sale in the EU.
Many of our poten al compe tors have significantly greater financial, manufacturing, marke ng, drug development, technical and human resources than we
do. Large pharmaceu cal companies, in par cular, have extensive experience in clinical tes ng, obtaining marke ng approvals, recrui ng pa ents and
manufacturing pharmaceu cal products. Large and established companies such as Amgen, Roche and GSK, among others, compete in the market for drug
products to treat kidney disease. In par cular, these companies have greater experience and exper se in conduc ng preclinical tes ng and clinical trials,
obtaining marke ng approvals, manufacturing such products on a broad scale and marke ng approved products. These companies also have significantly
greater research and marke ng capabili es than we do and may also have products that have been approved or are in late stages of development and have
collabora ve arrangements in our target markets with leading companies and research ins tu ons. Established pharmaceu cal companies may also invest
heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make the product candidates that we are
developing obsolete. Smaller and other early-stage companies may also prove to be significant compe tors. As a result of all of these factors, our compe tors
may succeed in obtaining patent protec on and/or marke ng approval, or discovering, developing and commercializing compe ve products, before, or
more effec vely than, we do. If we are not able to compete effec vely against poten al compe tors, our business will not grow and our financial condi on
and opera ons will suffer.
Akebia Therapeu cs, Inc. | Form 10-K | Page 64
Table of Contents
The commercializa on of Riona and Vafseo in Japan, Vafseo in Europe and other territories where it is approved, and our current and poten al future
efforts with respect to the development and commercializa on of our products and product candidates outside of the U.S. subject us to a variety of risks
associated with interna onal opera ons, which could materially adversely affect our business.
Our Japanese sublicensee, JT, and its subsidiary, Torii Pharmaceu cal Co., Ltd., or Torii, commercialize Riona, the trade name for ferric citrate hydrate in Japan,
as an oral treatment for the improvement of hyperphosphatemia in pa ents with CKD, including DD-CKD and NDD-CKD, and for the treatment of adult
pa ents with IDA in Japan. In Japan and certain other countries in Asia, we granted MTPC exclusive rights to commercialize vadadustat, which has been
approved and is being marketed by MTPC in Japan under the trade name Vafseo. We also granted Averoa SAS, or Averoa, an exclusive license to develop and
commercialize ferric citrate in the EEA, Turkey, Switzerland and the UK.
In 2023, the marke ng authoriza on for vadadustat was granted by the EMA, the United Kingdom Medicines and Healthcare Products Regulatory Agency, or
the MHRA, the Swiss Agency for Therapeu c Products, or Swissmedic, and the Australian Therapeu c Goods Administra on, or TGA. In May 2023, we entered
into the license agreement with Medice, pursuant to which we granted Medice an exclusive license to develop and commercialize vadadustat for the
treatment of anemia in pa ents with chronic kidney disease in the Medice Territory, and we transferred the marke ng authoriza on issued by the EMA and
Swissmedic to Medice. We will transfer the other marke ng authoriza ons for the Medice Territory to Medice, if approved. In addi on, we have conducted
and in the future plan to conduct clinical trials outside of the U.S. for Auryxia, vadadustat and any other product or product candidate that may be in-licensed
or acquired. As a result of these and other ac vi es, we are or may become subject to addi onal risks in developing and commercializing Auryxia and
vadadustat outside the U.S., including, among others:
•
•
•
•
•
•
•
•
•
•
•
•
poli cal, regulatory, compliance and economic developments, weakness or instability that could restrict our ability to manufacture, market and sell
our products;
changes in interna onal medical reimbursement policies and programs;
changes in healthcare policies of foreign jurisdic ons;
trade protec on measures, including import or export licensing requirements and tariffs and our compliance therewith;
our ability to develop or manage rela onships with qualified local distributors and trading companies;
diminished protec on of intellectual property in some countries outside of the U.S.;
differing labor regula ons and business prac ces;
compliance with laws, including the U.S. Foreign Corrupt Prac ces Act, or FCPA, the UK Bribery Act or similar local regula on, the EU General Data
Protec on Regula on, or GDPR, and similar data protec on laws, and tax, employment, immigra on and labor laws;
economic weakness, including infla on, increasing interest rates, or poli cal instability in par cular foreign economies and markets;
foreign currency fluctua ons, which could result in increased opera ng expenses and reduced revenues, and other obliga ons incident to doing
business in another country;
produc on shortages resul ng from any events affec ng raw material supply or manufacturing capabili es abroad; and
business interrup ons resul ng from geopoli cal ac ons, including war and terrorism, global pandemics, or natural disasters including earthquakes,
typhoons, floods and fires.
In addi on, we receive revenues from royalty payments converted to U.S. dollars based on net sales of Riona and Vafseo in Japanese yen. The exchange rates
between the Japanese yen on the one hand, and the U.S. dollar, on the other hand, have changed substan ally in recent years and may fluctuate substan ally
in the future. Our results of opera ons could be adversely affected over me by certain movements in exchange rates, par cularly if the Japanese yen
depreciates against the U.S. dollar.
Any of these factors may, individually or as a group, have a material adverse effect on our business and results of opera ons. As and if we con nue to expand
our commercializa on efforts, we may encounter new risks.
Akebia Therapeu cs, Inc. | Form 10-K | Page 65
Table of Contents
Risks Related to Product Development
Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and we will incur addi onal costs in connec on with, and
may experience delays in comple ng, or ul mately be unable to complete, the development of vadadustat and any other product candidates.
The risk of failure in drug development is high. Before obtaining marke ng approval from regulatory authori es for the sale of any product candidate, we
must complete preclinical development and conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans.
Preclinical studies and clinical trials are expensive, difficult to design and implement, can take several years to complete, and their outcomes are inherently
uncertain. Failure can occur at any me during the process.
We may be unable to successfully complete clinical trials of Auryxia, vadadustat and other product candidates or to successfully obtain approval of vadadustat
or other product candidates, if the results of those trials and studies are not posi ve or are only modestly posi ve, or if there are concerns with the profile
due to efficacy or safety. Further, the results of preclinical studies and early clinical trials of our product candidates may not be predic ve of the results of
later-stage clinical trials, interim results of a clinical trial do not necessarily predict final results, and results of Phase 3 clinical trials for one indica on may not
be predic ve of results of Phase 3 clinical trials for another indica on. For example, we announced posi ve top-line results from INNO VATE and vadadustat
achieved the primary and key secondary efficacy endpoint in each of the two PRO TECT studies, but the PRO TECT program did not meet the primary major
adverse cardiovascular event, or MACE, safety endpoint. Many companies in the biopharmaceu cal industry have suffered significant setbacks in late-stage
clinical trials a er achieving posi ve results in early-stage development, and we may face similar setbacks. Moreover, preclinical and clinical data are o en
suscep ble to varying interpreta ons and analyses, and many companies that have believed their product candidates performed sa sfactorily in preclinical
studies and clinical trials have nonetheless failed to obtain marke ng approval of their product candidates. In addi on, in March 2022, we received the CRL
for vadadustat indica ng that the FDA had determined that it could not approve the NDA in its present form, thus delaying any poten al approval of
vadadustat. In October 2022, we submi ed the FDRR to the FDA. In May 2023, the OND denied our appeal but provided a path forward for us to resubmit the
NDA for vadadustat for the treatment of anemia due to CKD for dialysis dependent pa ents without the need for us to generate addi onal clinical data. In
September 2023, we filed our resubmission to our NDA, and in October 2023, the FDA acknowledged that the resubmission was complete and set a PDUFA
date of March 27, 2024. However, it is impossible to predict when or if vadadustat or any of our other product candidates will prove effec ve or safe in
humans or will receive marke ng approval or on what terms. If we are unsuccessful in obtaining approval for vadadustat in the U.S., it would have an adverse
effect on our results of opera ons.
2
2
2
Beyond seeking U.S. approval, we have several lifecycle management and indica on expansion opportuni es currently under evalua on for vadadustat,
including the poten al for alterna ve dosing and label expansion for the treatment of anemia due to CKD in adult pa ents not on dialysis. However, we may
be required to complete addi onal clinical trials before seeking approval for these indica ons, which are me consuming and expensive, and even if
vadadustat is approved as a treatment for anemia due to CKD for dialysis dependent pa ents, we may not be successfully in any of these areas in the
meframe an cipated by us, or at all.
We may experience numerous unforeseen events during, or as a result of, preclinical development or clinical trials that could delay, prevent or make more
challenging our ability to receive or maintain marke ng approval or commercialize our product candidates. We may be required to complete addi onal
clinical trials for Auryxia, vadadustat and any other product or product candidate, including those that may be in-licensed or acquired, in order to obtain or
maintain required regulatory approvals. Our preclinical studies and clinical trials may take longer to complete than currently an cipated, or may be delayed,
suspended, required to be repeated, prematurely terminated or may not successfully demonstrate safety and/or efficacy needed to obtain or maintain
regulatory approval for a variety of other reasons, such as:
•
•
•
•
•
•
the costs may be greater than we an cipate;
the number of pa ents required for clinical trials may be larger than we an cipate;
enrollment in our clinical trials may be slower than we an cipate, or par cipants may drop out of these clinical trials at a higher rate than we
an cipate;
our third party contractors, such as our CROs, may fail to comply with regulatory requirements, perform effec vely, or meet their contractual
obliga ons to us in a mely manner, or at all, or we may fail to communicate effec vely or provide the appropriate level of oversight of such third
party contractors;
the supply or quality of our star ng materials, drug substance and drug product necessary to conduct clinical trials of our product candidates may be
insufficient or inadequate;
regulators, independent data monitoring commi ees, or IDMCs, ins tu onal review boards, or IRBs, safety commi ees, or ethics commi ees, may
require that we suspend or terminate our clinical trials for various reasons, including noncompliance with regulatory requirements, unforeseen
safety issues or adverse side effects, failure to
Akebia Therapeu cs, Inc. | Form 10-K | Page 66
Table of Contents
demonstrate a benefit from using our product candidate, or a finding that the par cipants are being exposed to unacceptable health risks;
•
•
clinical trials of our product candidates may produce nega ve or inconclusive results or results that may be interpreted in a manner different than
we interpret them, and we may decide, or regulators may require us, to conduct addi onal clinical trials, repeat a clinical trial or abandon product
development programs;
lack of adequate funding to con nue a clinical trial, including unforeseen costs due to enrollment delays, requirements to conduct addi onal clinical
trials or repeat a clinical trial and increased expenses associated with the services of our CROs and other third par es;
• we may fail to ini ate, delay of or failure to complete a clinical trial as a result of an Inves ga onal New Drug applica on, or IND, being placed on
clinical hold by the FDA, the EMA, the PMDA, or other regulatory authori es, or for other reasons, such as failure to recruit or enroll suitable
pa ents or pa ents' failure to return for post-treatment follow up;
• we may determine to change or expand a clinical trial, including a er it has begun;
•
•
•
•
•
•
•
•
•
clinical trial sites and inves gators devia ng from the clinical protocol, failing to conduct the trial in accordance with regulatory requirements, or
dropping out of a trial, or failure by us or our CROs to communicate effec vely or provide the appropriate level of oversight of such clinical sites and
inves gators;
there may be an inability, delay, or failure in iden fying and maintaining a sufficient number of clinical trial sites, many of which may already be
engaged in other clinical programs;
there may be a delay or failure in reaching agreement with the FDA, the EMA, the PMDA or other regulatory authori es on a clinical trial design
upon which we are able to execute;
there may be a delay or failure in obtaining authoriza on to commence a clinical trial or inability to comply with condi ons imposed by a regulatory
authority regarding the scope or design of a clinical trial;
there may be delays in reaching, or failure to reach, agreement on acceptable terms with prospec ve clinical trial sites and prospec ve CROs, the
terms of which can be subject to extensive nego a on and may vary significantly among different CROs and clinical trial sites;
the FDA, the EMA, the PMDA or other regulatory authori es may require us to submit addi onal data or impose further requirements before
permi ng us to ini ate a clinical trial or during an ongoing clinical trial;
the FDA, the EMA, the PMDA or other regulatory authori es may disagree with our clinical trial design and our interpreta on of data from clinical
trials, or may change the requirements for approval even a er it has reviewed and commented on the design for our clinical trials;
third par es with which we work may fail to comply with good prac ce quality guidelines and regula ons, or GxP, including good laboratory
prac ce, good clinical prac ce, or GCP, and current good manufacturing prac ce, or cGMP; or
there may be changes in governmental regula ons or administra ve ac ons.
If any of the foregoing occurs, the following may occur:
•
regulators may require that we conduct addi onal clinical trials, repeat clinical trials or conduct other studies beyond those that we currently
contemplate;
• we may be delayed in obtaining marke ng approval for vadadustat or other product candidates;
• we may not obtain marke ng approval for vadadustat or other product candidates at all;
• we may obtain approval for indica ons or pa ent popula ons that are not as broad as intended or desired;
• we may obtain approval with labeling that includes significant use or distribu on restric ons or safety warnings that would reduce the poten al
market for any approved product or inhibit our ability to successfully commercialize any approved product;
•
a REMS or FDA-imposed risk management plan that use risk minimiza on strategies to ensure that the benefits of certain prescrip on drugs
outweigh their risks, may be required;
• we may be subject to addi onal post-marke ng restric ons and/or requirements; or
•
the product may be removed from the market a er obtaining marke ng approval.
Our product development costs may also increase if we experience development delays or delays in receiving the requisite marke ng approvals. Our
preclinical studies or clinical trials may need to be restructured or may not be completed on schedule, or at all. Significant preclinical or clinical trial delays
also could shorten any periods during which we may have the exclusive right to commercialize vadadustat, if approved, or any other product candidate,
including those that may be in-
Akebia Therapeu cs, Inc. | Form 10-K | Page 67
Table of Contents
licensed or acquired, or allow our compe tors to bring products to market before we do. This could impair our ability to successfully commercialize our
product candidates and may harm our business and results of opera ons.
We may find it difficult to enroll pa ents in our clinical trials, which could delay or prevent clinical trials of Auryxia, vadadustat or any other product or
product candidate, including those that may be in-licensed or acquired.
Iden fying and qualifying pa ents to par cipate in clinical trials is cri cal to our success. The ming of our clinical trials depends, in part, on the speed at
which we can recruit pa ents to par cipate in our clinical trials. Pa ents may be unwilling to par cipate in our clinical trials because of concerns about
inves ga onal research studies, the me and commitment needed to par cipate in a study, adverse events observed with the product candidate under study,
the current standard of care, compe tor products and/or other inves ga onal agents, in each case for the same indica ons and/or similar pa ent
popula ons. In addi on, in the case of clinical trials of any product candidate, pa ents currently receiving treatment with the current standard of care or a
compe tor product may be reluctant to par cipate in a clinical trial with an inves ga onal drug. Addi onally, it is o en more difficult to enroll special or
par cular subpopula ons of pa ents, such as pediatric or elderly pa ents, due to a number of factors including parental or other caregiver considera ons,
concerns and burdens. For example, we enrolled sites in a post-approval pediatric study for the Hypophosphatemia Indica on of Auryxia in the second
quarter of 2022, which began pa ent recruitment in the third quarter of 2022, but enrollment of eligible pediatric pa ents in study sites con nues to be very
slow despite efforts to do so.
Finally, compe on for clinical trial sites may limit our access to pa ents appropriate for our clinical trials. As a result, the meline for recrui ng pa ents and
conduc ng studies may be delayed. These delays could result in increased costs, delays in advancing our development of any product or product candidate,
or termina on of the clinical trial altogether.
We may not be able to iden fy, recruit and enroll a sufficient number of pa ents, or those with required or desired characteris cs, to complete our clinical
trials in a mely manner. Pa ent enrollment is affected by many factors, including:
•
•
•
•
•
•
•
•
•
•
•
•
severity of the disease under inves ga on;
design of the study protocol;
size and nature of the pa ent popula on;
eligibility criteria for, and design of, the study in ques on, including study complexity;
perceived risks and benefits of the product or product candidate under study, including as a result of adverse effects observed in similar or
compe ng therapies;
proximity and availability of clinical trial sites for prospec ve pa ents;
availability of compe ng therapies and clinical trials and clinicians’ and pa ents’ percep ons as to the poten al advantages of the product or
product candidate being studied in rela on to available therapies or other product candidates in development;
efforts to facilitate mely enrollment in clinical trials;
par cipa on length and demands on pa ents and caregivers;
site staffing shortages and turnover;
clinical trial sites and inves gators failing to perform effec vely; and
pa ent referral prac ces of physicians.
We may not be able to ini ate or complete clinical trials in a mely manner, or at all, if we cannot enroll a sufficient number of eligible pa ents to par cipate
in the clinical trials required by regulatory agencies. If we have difficulty enrolling a sufficient number of pa ents to conduct our clinical trials as planned, we
may need to delay, limit or terminate ongoing or planned clinical trials, any of which may delay approval, or result in failure to maintain or obtain approval, of
our products or product candidates, which would have a material adverse effect on our business.
Further, if we are slow or unable to adapt to changes in exis ng requirements or the adop on of new requirements or policies governing clinical trials, our
development plans may be impacted. For example, in December 2022, with the passage of Food and Drug Omnibus Reform Act, Congress required sponsors
to develop and submit a diversity ac on plan for each phase 3 clinical trial or any other “pivotal study” of a new drug or biological product. These plans are
meant to encourage the enrollment of more diverse pa ent popula ons in late-stage clinical trials of FDA-regulated products.
Conduc ng clinical trials outside of the U.S., as we have done historically and as we may decide to do in the future, presents addi onal risks and
complexi es and, if we decide to conduct a clinical trial outside of the U.S. in the future, we may not complete such trials successfully, in a mely manner,
or at all, which could affect our ability to obtain regulatory approvals.
Our ability to successfully ini ate, enroll and complete a clinical trial in any country outside of the U.S. is subject to numerous addi onal risks unique to
conduc ng business in jurisdic ons outside the U.S., including:
Akebia Therapeu cs, Inc. | Form 10-K | Page 68
Table of Contents
•
•
•
•
difficulty in establishing or managing rela onships with qualified CROs, physicians and clinical trial sites;
difficulty in complying with different local standards for the conduct of clinical trials;
difficulty in complying with various and complex import laws and regula ons when shipping drug to certain countries; and
the poten al burden of complying with a variety of laws, medical standards and regulatory requirements, including the regula on of pharmaceu cal
and biotechnology products and treatments.
Data obtained from studies conducted in the U.S. may not be accepted by the EMA, the PMDA and other regulatory authori es outside of the U.S. Also,
certain jurisdic ons require data from studies conducted in their country in order to obtain approval in that country. Further, when a foreign clinical trial is not
conducted under an IND, the sponsor must ensure that the study complies with certain regulatory requirements of the FDA in order to use the study as
support for an IND or applica on for marke ng approval. Specifically, the studies must be conducted in accordance with GCP, including undergoing review
and receiving approval by an independent ethics commi ee, and seeking and receiving informed consent from subjects. Thus, to the extent that we rely on
data from foreign clinical trials that are not the subject of an IND but are used to support of an NDA, there is a risk that FDA may not review such data in
connec on with its review of the NDA.
If we or our collabora on partners have difficulty conduc ng future clinical trials in jurisdic ons outside the U.S. as planned, we may need to delay, limit or
terminate such clinical trials, any of which could have an adverse effect on our business.
Auryxia, vadadustat or any other product or product candidate, including those that may be in-licensed or acquired, may cause undesirable side effects or
have other proper es that may delay or prevent marke ng approval or limit their commercial poten al.
Undesirable effects caused by, or other undesirable proper es of, Auryxia, vadadustat or any other product or product candidate, including those that may be
in-licensed or acquired, or compe ng commercial products or product candidates in development that u lize a common mechanism of ac on could cause us
or regulatory authori es to interrupt, delay or halt clinical trials, could result in a more restric ve label or the delay, denial or withdrawal of marke ng
approval by the FDA or other regulatory authori es, and could lead to poten al product liability claims. In addi on, results of our clinical trials could reveal a
high frequency of undesirable effects or unexpected characteris cs. For example, in March 2022, we received the CRL from the FDA for our NDA for
vadadustat in which the FDA concluded that the data in the NDA did not support a favorable benefit-risk assessment of vadadustat for dialysis and non-
dialysis pa ents. The FDA expressed safety concerns no ng failure to meet non-inferiority in MACE in the non-dialysis pa ent popula on, the increased risk of
thromboembolic events, driven by vascular access thrombosis in dialysis pa ents, and the risk of drug-induced liver injury. In October 2022, we submi ed the
FDRR to the FDA and focused on the favorable balance between the benefits and risks of vadadustat for the treatment of anemia due to CKD in adult pa ents
on dialysis in light of safety concerns expressed by the FDA in the CRL for dialysis pa ents related to the rate of adjudicated thromboembolic events driven by
vascular access thrombosis for vadadustat compared to the ac ve comparator and the risk of drug-induced liver injury. In May 2023, the OND denied our
appeal but provided a path forward for us to resubmit the NDA for vadadustat for the treatment of anemia due to CKD for dialysis dependent pa ents
without the need for us to generate addi onal clinical data. In September 2023, we filed our resubmission to our NDA, and in October 2023, the FDA
acknowledged that the resubmission was complete and set a PDUFA date of March 27, 2024. There can be no assurances that we will be successful in our
NDA resubmission. If we are unable to overcome these concerns, vadadustat may not be approved by the FDA on favorable terms, or at all, and our financial
condi on could be materially harmed.
If we or others iden fy undesirable effects caused by, or other undesirable proper es of, Auryxia, vadadustat, or any other product or product candidate,
including those that may be in-licensed or acquired, or if known undesirable effects are more frequent or severe than in the past, or if any of the foregoing
are perceived to have occurred, either before or a er receipt of marke ng approval, a number of poten ally significant nega ve consequences could result,
including:
•
•
•
•
•
our product candidates may not be approved by regulatory authori es;
our clinical trials may be put on hold;
pa ent recruitment could be slowed, and enrolled pa ents may not want to complete the clinical trial;
regulatory authori es may require warnings on the label, such as the warning on Auryxia’s label regarding iron overload;
REMS or FDA-imposed risk management plans that use restric ve risk minimiza on strategies may be required;
• we may decide to, or be required to, send drug warnings or safety alerts to physicians, pharmacists and hospitals (or the FDA or other regulatory
authori es may choose to issue such alerts), or we may decide to conduct a product recall or be requested to do so by the FDA or other regulatory
authority;
Akebia Therapeu cs, Inc. | Form 10-K | Page 69
Table of Contents
•
reformula on of the product, addi onal non-clinical or clinical trials, restric ve changes in labeling or changes to or re-approvals of manufacturing
facili es may be required;
• we may be precluded from pursuing addi onal development opportuni es to enhance the clinical profile of a product within its indicated
popula ons, or studying the product or product candidate in addi onal indica ons and popula ons or in new formula ons; and
• we could be inves gated by the government or sued and held liable for harm caused to pa ents, including in class ac on lawsuits; and
•
our reputa on may suffer.
Any of these events could prevent us from achieving or maintaining, whether on a restricted basis or at all, marke ng approval and, ul mately, market
acceptance or penetra on of Auryxia, vadadustat or any other product or product candidate, including those that may be in-licensed or acquired. In addi on,
any of these events could substan ally increase our costs, and could significantly impact our ability to successfully commercialize Auryxia, vadadustat or any
other product and product candidate, including those that may be in-licensed or acquired, and generate product revenue.
The pa ent popula ons treated with Auryxia and poten al pa ent popula ons for vadadustat, if approved, have CKD, a serious disease that increases the risk
of cardiovascular disease including heart a acks and stroke and, in its most severe form, results in, kidney failure and the need for dialysis or kidney
transplant. Many pa ents with CKD are elderly with comorbidi es making them suscep ble to significant health risks. Therefore, the likelihood of these
pa ents having adverse events, including serious adverse events is high.
2
With respect to the global INNO VATE Phase 3 program, the incidence of treatment emergent adverse events, or TEAEs, during the Correc on and Conversion
study in vadadustat treated pa ents was 83.8% and 85.5% in darbepoe n alfa treated pa ents. During the study, the most common TEAEs reported in
vadadustat/darbepoe n alfa treated pa ents were hypertension (16.2%/ 12.9%) and diarrhea (10.1%/ 9.7%). Serious TEAEs were lower in vadadustat treated
pa ents at 49.7% compared to 56.5% for darbepoe n alfa treated pa ents. The incidence of TEAEs during the prevalent dialysis pa ent study (Conversion) in
the vadadustat treated pa ents was 88.3%, and 89.3% in darbepoe n alfa treated pa ents. During the study, the most common TEAEs reported in
vadadustat/darbepoe n alfa treated pa ents were diarrhea (13.0%/ 10.1%), pneumonia (11.0%/ 9.7%), hypertension (10.6%/ 13.8%), and hyperkalemia
(9.0%/ 10.8%). Serious TEAEs were slightly lower for vadadustat treated pa ents at 55.0% and 58.3% for darbepoe n alfa-treated pa ents. Pa ents with DD-
CKD experienced an increased risk of thromboembolic events compared to darbepoe n alfa with a me to first event HR of 1.20 (95% CI 0.96 - 1.50) driven by
thrombosis of vascular access.
2
With respect to the global PRO TECT Phase 3 program, the incidence of TEAEs during the erythropoiesis s mula ng agent, or ESA, untreated pa ents study
(Correc on) in the vadadustat-treated pa ents was 90.9%, and 91.6% in darbepoe n alfa-treated pa ents. During the study, the most common TEAEs
reported in vadadustat/darbepoe n alfa-treated pa ents were end-stage renal disease (34.7%/ 35.2%), hypertension (17.7%/ 22.1.%), hyperkalemia (12.3.%/
15.6%), urinary tract infec on (12.9%/ 12.0%), diarrhea (13.9%/ 10.0%), peripheral oedema (12.5%/ 10.5%), fall (9.6%/ 10%) and nausea (10%/ 8.2%). Serious
TEAEs were 65.3% for vadadustat-treated pa ents and 64.5% for darbepoe n alfa-treated pa ents. The incidence of TEAEs during the ESA-treated pa ents
study (Conversion) in vadadustat treated pa ents was 89.1% and 87.7% in darbepoe n alfa-treated pa ents. During the study, the most common TEAEs
reported in vadadustat/darbepoe n alfa-treated pa ents were end-stage renal disease (27.5%/ 28.4%), hypertension (14.4%/ 14.8%), urinary tract infec on
(12.2%/ 14.5%), diarrhea (13.8.%/ 8.8.%), peripheral oedema (9.9%/ 10.1%) and pneumonia (10.0%/ 9.7%). Serious TEAEs were 58.5% for vadadustat-treated
pa ents and 56.6% for darbepoe n alfa-treated pa ents.
For example, during the conduct of our Phase 3 program our team and hepa c experts analyzed hepa c cases (unblinded to treatment) and, following the
comple on of our global Phase 3 clinical program for vadadustat, there was a review of hepa c safety across the vadadustat clinical program, which included
eight completed Phase 2 and 3 studies in NDD-CKD pa ents, 10 completed Phase 1, 2, and 3 studies, and two then-ongoing Phase 3b studies in DD-CKD
pa ents, and 18 completed studies in healthy subjects (17 Phase 1 and one Phase 3). This review consisted of a blinded re-assessment of hepa c events
conducted by a separate panel of hepa c experts. While hepatocellular injury a ributed to vadadustat was reported in less than 1% of pa ents, there was
one case of severe hepatocellular injury with jaundice, and we cannot guarantee that similar events will not happen in the future. Addi onally, the FDA
expressed safety concerns related to the risk of drug-induced liver injury in the CRL that it issued in March 2022.
Serious adverse events considered related to vadadustat, including those noted in the CRL, and any other product candidates could have material adverse
consequences on the development and poten al approval of vadadustat or our other product candidates and our business as a whole. Our understanding of
adverse events in prior clinical trials of our product candidates may change as we gather more informa on, the FDA may not agree with our assessment of
adverse events and addi onal unexpected adverse events may be observed in future clinical trials or in the market.
Akebia Therapeu cs, Inc. | Form 10-K | Page 70
Table of Contents
Any of the above safety data or other occurrences could delay or prevent us from achieving or maintaining marke ng approval, harm or prevent sales of
Auryxia or, if approved, vadadustat or any other product or product candidate, including those that may be in-licensed or acquired, increase our expenses and
impair or prevent our ability to successfully commercialize Auryxia, vadadustat or any other products or product candidates.
In addi on, any post-marke ng clinical trials conducted, if successful, may expand the pa ent popula ons treated with Auryxia, vadadustat or any other
product we acquire or for which we receive marke ng approval, within or outside of their current indica ons or pa ent popula ons, which could result in the
iden fica on of previously unknown undesirable effects, increased frequency or severity of known undesirable effects, or result in the iden fica on of
unexpected safety signals. In addi on, as vadadustat, if approved, and any other products are commercialized, they will be used in significantly larger pa ent
popula ons, in less rigorously controlled environments and, in some cases, by less experienced and less expert trea ng prac oners, than in clinical trials,
which could result in increased or more serious adverse effects being reported. As a result, regulatory authori es, healthcare prac oners, third party payors
or pa ents may perceive or conclude that the use of Auryxia, vadadustat, if approved, or any other products are associated with serious adverse effects,
undermining our commercializa on efforts.
Risks Related to Regulatory Approval
We may not be able to obtain marke ng approval for vadadustat or any other product candidate, or we may experience significant delays in doing so, any
of which would materially harm our business.
Clinical trials, manufacturing and marke ng of any product or product candidate are subject to extensive and rigorous review and regula on by numerous
governmental authori es in the U.S. and other jurisdic ons. Before obtaining marke ng approval for the commercial sale of any product candidate, we must
demonstrate through extensive preclinical tes ng and clinical trials that the product candidate is safe and effec ve for use in each target indica on. This
process can take many years and marke ng approval may never be achieved. Of the large number of drugs in development in the U.S. and in other
jurisdic ons, only a small percentage successfully complete the FDA’s and other jurisdic ons’ marke ng approval processes and are commercialized.
Accordingly, even if we are able to obtain the requisite capital to con nue to fund our development efforts, we may be unable to successfully obtain
regulatory approval for vadadustat or any other product or product candidate, including those that may be in-licensed or acquired.
We are not permi ed to market vadadustat in the U.S. unless and un l we receive approval from the FDA or in any other jurisdic on un l the requisite
approval from regulatory authori es in such jurisdic on is received. As a condi on to receiving marke ng approval for vadadustat, we may be required by the
FDA or other regulatory authori es to conduct addi onal preclinical studies or clinical trials.
In March 2022, we received the CRL from the FDA regarding our NDA for vadadustat for the treatment of anemia due to CKD. The FDA concluded that the
data in the NDA did not support a favorable benefit-risk assessment of vadadustat for dialysis and non-dialysis pa ents. In October 2022, we submi ed the
FDRR to the FDA and focused on the favorable balance between the benefits and risks of vadadustat for the treatment of anemia due to CKD in adult pa ents
on dialysis in light of safety concerns expressed by the FDA in the CRL for dialysis pa ents related to the rate of adjudicated thromboembolic events driven by
vascular access thrombosis for vadadustat compared to the ac ve comparator and the risk of drug-induced liver injury. In May 2023, the OND denied our
appeal but provided a path forward for us to resubmit the NDA for vadadustat for the treatment of anemia due to CKD for dialysis dependent pa ents
without the need for us to generate addi onal clinical data. In September 2023, we filed our resubmission to our NDA, and in October 2023, the FDA
acknowledged that the resubmission was complete and set a PDUFA date of March 27, 2024. There can be no assurances that we will obtain approval for
vadadustat in a mely manner, on favorable terms, or at all. As a result, the regulatory approval process for vadadustat in the U.S. is highly uncertain. Even if
we are able to obtain approval, it will only be for pa ents with DD-CKD and, in any event, the expense and me to do so could adversely impact our ability to
successfully commercialize vadadustat, and our financial condi on could be materially harmed.
Further, vadadustat and any other product candidate may not receive marke ng approval in the U.S. even if it is approved in other countries. For example,
although vadadustat is approved in Japan for the treatment of anemia due to CKD in DD-CKD and NDD-CKD adult pa ents and in Europe for the treatment of
anemia due to CKD in DD-CKD pa ents, such approval does not guarantee approval in the U.S. by the FDA for these indica ons or at all. In addi on, while
each regulatory authority makes their own assessment as to the safety and efficacy of a drug, FDA’s concern about the safety or efficacy of vadadustat or any
other product candidate could impact the regulatory authority’s decision in another country.
Obtaining marke ng approval in the U.S. and other jurisdic ons for any product candidate depends upon numerous factors, many of which are subject to the
substan al discre on of the regulatory authori es, including that regulatory agencies may not complete their review processes in a mely manner and,
following comple on of the review process, may not grant marke ng approval or such marke ng approval may be limited. Furthermore, approval of a drug
does not ensure successful commercializa on. For example, on September 23, 2015, the European Commission, or EC, approved Fexeric for the control
Akebia Therapeu cs, Inc. | Form 10-K | Page 71
Table of Contents
of hyperphosphatemia in adult pa ents with CKD. Pursuant to the sunset clause under EU law, the EC’s approval of Fexeric in the EU was con ngent on,
among other things, our commencing marke ng of Fexeric within three years; although we successfully nego ated an extension to December 23, 2019, we
did not commence marke ng Fexeric by such date and therefore the Fexeric approval in the EU has ceased to be valid.
In addi on, the safety concerns associated with the current standard of care for the indica ons for which we are seeking marke ng approval for vadadustat
may affect the FDA’s or other regulatory authori es’ review of the safety results of vadadustat. Addi onally, these regulatory authori es may not agree with
our assessment of adverse events. Further, the policies or regula ons, or the type and amount of clinical data necessary to gain approval, may change during
the course of a product candidate’s clinical development and may vary among jurisdic ons. It is possible that vadadustat will never obtain marke ng approval
in the U.S. or certain other jurisdic ons or for some or all of the indica ons for which we seek approval.
For example, changes in or the enactment of addi onal statutes, promulga on of regula ons or issuance of guidance during preclinical or clinical
development, or comparable changes in the regulatory review process for each submi ed product applica on, may cause delays in the approval or rejec on
of an applica on. For example, in December 2022, with the passage of Food and Drug Omnibus Reform Act, Congress required sponsors to develop and
submit a diversity ac on plan for each Phase 3 clinical trial or any other “pivotal study” of a new drug or biological product. Further, on January 31, 2022, the
new Clinical Trials Regula on (EU) No 536/2014 became applicable in the EU and replaced the prior Clinical Trials Direc ve 2001/20/EC. The new regula on
aims at simplifying and streamlining the authoriza on, conduct and transparency of clinical trials in the EU. Under the new coordinated procedure for the
approval of clinical trials, the sponsor of a clinical trial to be conducted in more than one EU Member State will only be required to submit a single applica on
for approval. The submission will be made through the Clinical Trials Informa on System, a new clinical trials portal overseen by the EMA and available to
clinical trial sponsors, competent authori es of the EU Member States and the public. We have not previously secured authoriza on to conduct clinical
studies in the EU pursuant to this new regula on and, accordingly, there is a risk that we may be delayed in commencing such studies.
The FDA or other regulatory authori es may delay, limit or deny approval of vadadustat for many reasons including, among others:
• we may not be able to demonstrate that vadadustat is safe and effec ve in trea ng adult pa ents with anemia due to CKD to the sa sfac on of the
relevant regulatory authority;
•
•
•
•
•
•
•
•
•
•
the results of our clinical trials may only be modestly posi ve, or there may be concerns with the profile due to efficacy or safety;
the results of our clinical trials may not meet the level of sta s cal or clinical significance required by the relevant regulatory authority for review
and/or marke ng approval;
the relevant regulatory authority may disagree with our interpreta on of data from our preclinical studies and clinical trials;
the relevant regulatory authority may disagree with the number, design, size, conduct or implementa on of our clinical trials;
the relevant regulatory authority may not approve the formula on, labeling or specifica ons we request for vadadustat;
the relevant regulatory authority may approve vadadustat or any other product candidate for use only in a small pa ent popula on or for fewer or
more limited indica ons than we request;
the relevant regulatory authority may require that we conduct addi onal clinical trials or repeat one or more clinical trials;
the FDA or other relevant regulatory authority may require development of a REMS as a condi on of approval or post-approval;
the relevant regulatory authority may grant approval con ngent on the performance of costly post-marke ng clinical trials;
the relevant regulatory authority's onsite inspec ons may be delayed due to the recent COVID-19 pandemic or otherwise;
• we, or our CROs or other vendors, may fail to comply with GxP or fail to pass any regulatory inspec ons or audits;
• we or our third party manufacturers may fail to perform in accordance with the FDA’s or other relevant regulatory authority's cGMP requirements
and guidance;
•
the FDA may disagree with inclusion of data obtained from certain regions outside the U.S. to support the NDA for poten al reasons such as
differences in clinical prac ce from U.S. standards;
Akebia Therapeu cs, Inc. | Form 10-K | Page 72
Table of Contents
•
•
•
•
•
the relevant regulatory authority could deem that our financial rela onships with certain principal inves gators cons tute a conflict of interest, such
that the data from those principal inves gators may not be used to support our applica ons;
as part of any future regulatory process, the FDA may ask an Advisory Commi ee to review por ons of the NDA, the FDA may have difficulty
scheduling an Advisory Commi ee mee ng in a mely manner or, if convened, an FDA Advisory Commi ee could recommend non-approval,
condi ons of approval or restric ons on approval, and the FDA may ul mately agree with the recommenda ons;
the relevant regulatory authority’s review process and decision-making regarding vadadustat and any other product candidate may be impacted by
the results of our and our compe tors’ clinical trials and safety concerns of marketed products used to treat the same indica ons as the indica ons
for which vadadustat and any other product candidate are being developed;
the relevant regulatory authority may not approve the manufacturing processes or facili es of third party manufacturers with whom we contract; or
the policies or regula ons of the relevant regulatory authority may significantly change in a manner that renders our clinical data insufficient for
approval or requires us to amend or submit new clinical protocols.
If we experience further delays in obtaining approval of, or if we fail to obtain approval of vadadustat for some or all of the indica ons for which we have
sought approval, the commercial prospects for vadadustat may be harmed and our ability to generate revenues will be materially impaired, which could have
a material adverse effect on our business. For example, our resubmission to our NDA for vadadustat in September 2023 focused on the favorable balance
between the benefits and risks of vadadustat for the treatment of anemia due to CKD in adult pa ents on dialysis.
Finally, our ability to develop and market new drug products may be impacted by ongoing li ga on challenging the FDA’s approval of mifepristone.
Specifically, on April 7, 2023, the U.S. District Court for the Northern District of Texas stayed the approval by the FDA of mifepristone, a drug product which
was originally approved in 2000 and whose distribu on is governed by various condi ons adopted under a REMS. In reaching that decision, the district court
made a number of findings that may nega vely impact the development, approval and distribu on of drug products in the U.S. Among other determina ons,
the district court held that plain ffs were likely to prevail in their claim that FDA had acted arbitrarily and capriciously in approving mifepristone without
sufficiently considering evidence bearing on whether the drug was safe to use under the condi ons iden fied in its labeling. Further, the district court read
the standing requirements governing li ga on in federal court as permi ng a plain ff to bring a lawsuit against the FDA in connec on with its decision to
approve an NDA or establish requirements under a REMS based on a showing that the plain ff or its members would be harmed to the extent that FDA’s drug
approval decision effec vely compelled the plain ffs to provide care for pa ents suffering adverse events caused by a given drug.
On April 12, 2023, the district court decision was stayed, in part, by the U.S. Court of Appeals for the Fi h Circuit. Therea er, on April 21, 2023, the U.S.
Supreme Court entered a stay of the district court’s decision, in its en rety, pending disposi on of the appeal of the district court decision in the Court of
Appeals for the Fi h Circuit and the disposi on of any pe on for a writ of cer orari to the Supreme Court. The Court of Appeals for the Fi h Circuit held oral
argument in the case on May 17, 2023 and, on August 16, 2023, issued its decision. The court declined to order the removal of mifepristone from the market,
finding that a challenge to the FDA’s ini al approval in 2000 is barred by the statute of limita ons. But the court did hold that plain ffs were likely to prevail in
their claim that changes allowing for expanded access of mifepristone that FDA authorized in 2016 and 2021 were arbitrary and capricious. On September 8,
2023, the Jus ce Department and a manufacturer of mifepristone filed pe ons for a writ of cer orari, reques ng that the U.S. Supreme Court review the
court’s decision. On December 13, 2023, the U.S. Supreme Court granted these pe ons for writ of cer orari for the appeals court.
Products approved for marke ng are subject to extensive post-marke ng regulatory requirements and could be subject to post-marke ng restric ons or
withdrawal from the market, and we may be subject to penal es, including withdrawal of marke ng approval, if we fail to comply with regulatory
requirements or if we experience unan cipated problems with our products, or product candidates, when and if any of them is approved.
Marke ng approvals may be subject to limita ons on the approved indicated uses for which the product may be marketed or other condi ons of approval, or
contain requirements or commitments for poten ally costly post-marke ng studies and surveillance to monitor the safety and efficacy of the product,
including REMS, or registries or observa onal studies. For example, in connec on with the FDA approvals of Auryxia, we ini ally commi ed to the FDA to
conduct certain post-approval pediatric studies of Auryxia under the Pediatric Research Equity Act of 2003, or PREA. Under PREA, an NDA or supplement to
an NDA for certain drug products must contain data to assess the safety and effec veness of the drug product in all relevant pediatric subpopula ons and to
support dosing and administra on for each pediatric subpopula on for which the product is safe and effec ve, unless the sponsor receives a deferral or
waiver from the FDA. A deferral may be granted for several reasons, including a finding that the product or therapeu c candidate is ready for approval for use
in adults before pediatric
Akebia Therapeu cs, Inc. | Form 10-K | Page 73
Table of Contents
trials are complete or that addi onal safety or effec veness data needs to be collected before the pediatric trials begin. With regard to the
Hyperphosphatemia Indica on for Auryxia, we ini ally commi ed to comple ng the original post-approval pediatric study and submi ng a final report to the
FDA by December 31, 2019. However, we did not complete the study according to the original schedule and therefore did not submit the required final report
by December 31, 2019. Consequently, we received a no fica on of noncompliance with PREA. We have since been released from the original post marke ng
requirement, or PMR, and a new PMR was issued that provided that the final report is due in April 2024. Therefore, this PMR trial is no longer considered
delayed and is open and ac vely enrolling pa ents. In June 2023 we requested an extension of me for the submission of the final report and such request
was denied by the FDA in August 2023. Therefore, the final report for this PMR trial is s ll due in April 2024, and we are unlikely to complete the trial by that
me. With regard to our IDA Indica on, we ini ally commi ed to comple ng the post-approval pediatric study and submi ng a final report to the FDA by
January 2023. We did not meet a milestone rela ng to this post-approval pediatric study of Auryxia in a mely manner and received a no fica on from the
FDA. Subsequently, the FDA agreed to extend the pediatric clinical trial melines for the IDA Indica on. We subsequently communicated to the FDA that we
would be delaying the start of the clinical trial in the IDA Indica on while we work to produce smaller size tablets. In response, the FDA issued a par al clinical
hold un l we manufacture the smaller tablets and provide the FDA with relevant informa on regarding the smaller sized tablets for review. The FDA li ed the
par al clinical hold in June 2022, however, we have not commenced start-up of this study pending resolu on of the manufacturing of the smaller size tablets.
If we are unable to complete these studies successfully by the applicable deadline, or have further delays in comple ng these studies, we will need to inform
the FDA, have further discussions and, if the FDA finds that we failed to comply with pediatric study requirements, in viola on of applicable law, it could
ins tute enforcement proceedings to seize or enjoin the sale of Auryxia or seek civil penal es, which would have a material adverse impact on our ability to
commercialize Auryxia and our ability to generate revenues from Auryxia.
In addi on, the manufacturing processes, labeling, packaging, distribu on, adverse event repor ng, storage, adver sing, promo on and recordkeeping for
Auryxia, vadadustat, if approved, and any other product for which we receive regulatory approval will be subject to extensive and ongoing regulatory
requirements and guidance. These requirements and guidance include manufacturing processes and procedures (including record keeping), the
implementa on and opera on of quality systems to control and assure the quality of the product, submissions of safety and other post-marke ng
informa on and reports, as well as con nued compliance with cGMPs and GCPs for any clinical trials that we conduct post-approval. If we, our contract
manufacturing organiza ons, or CMOs, or other third par es we engage fail to adhere to such regulatory requirements and guidance, we could suffer
significant consequences, including product seizures or recalls, loss of product approval, fines and sanc ons, reputa onal damage, loss of customer
confidence, shipment delays, inventory shortages, inventory write-offs and other product-related charges and increased manufacturing costs, and our
development or commercializa on efforts may be materially harmed.
Post-approval discovery of previously unknown problems with an approved product, including adverse events of unan cipated severity or frequency or
rela ng to manufacturing opera ons or processes, or failure to comply with regulatory requirements, may result in, among other things:
•
restric ons on the marke ng, distribu on, use or manufacturing of the product;
• withdrawal of the product from the market, or product recalls;
•
•
restric ons on the labeling or marke ng of a product;
fines, res tu on or disgorgement of profits or revenues;
• warning or un tled le ers or clinical holds;
•
•
•
•
refusal by the FDA or other regulatory authori es to approve pending applica ons or supplements to approved applica ons filed by us, or
suspension or revoca on of product approvals;
product seizure or deten on, or refusal to permit the import or export of products;
REMS; and
injunc ons or the imposi on of civil or criminal penal es.
For example, we previously had three limited, voluntary recalls of Auryxia. These and any other recalls or any supply, quality or manufacturing issues in the
future could result in significant nega ve consequences, including reputa onal harm, loss of customer confidence, and a nega ve impact on our financials,
any of which could have a material adverse effect on our business and results of opera ons, and may impact our ability to supply Auryxia in Japan, Vafseo in
Japan and Europe or vadadustat, if approved in other countries, for commercial and clinical use.
Non-compliance with the FDA, the EMA, the PMDA and other regulatory authori es’ requirements regarding safety monitoring or pharmacovigilance can also
result in significant financial penal es.
The FDA’s policies and those of other regulatory authori es may change, and addi onal government regula ons may be enacted. We cannot predict the
likelihood, nature or extent of government regula ons that may arise from future legisla on
Akebia Therapeu cs, Inc. | Form 10-K | Page 74
Table of Contents
or administra ve ac on, either in the U.S. or in other jurisdic ons. If we are slow or unable to adapt to changes in exis ng requirements or the adop on of
new requirements or policies, or are not able to maintain regulatory compliance, we may lose any marke ng approval that we may have obtained and we
may not achieve or sustain profitability, which would materially adversely affect our business.
Risks Related to Governmental Regula on and Compliance
We are subject to complex regulatory schemes that require significant resources to ensure compliance and our failure to comply with applicable laws could
subject us to government scru ny or enforcement, poten ally resul ng in costly inves ga ons, fines, penal es or sanc ons, contractual damages,
reputa onal harm, administra ve burdens and diminished profits and future earnings.
In general, a variety of laws apply to us or may otherwise restrict our ac vi es, including the following:
•
•
•
•
•
•
•
laws and regula ons governing the conduct of preclinical studies and clinical trials in the U.S. and other countries in which we are conduc ng such
studies;
an -corrup on and an -bribery laws, including the FCPA, the UK Bribery Act and various other an -corrup on laws in countries outside of the U.S.;
data privacy laws exis ng in the U.S., the EU, the UK and other countries in which we operate, including the U.S. Health Insurance Portability and
Accountability Act of 1996, or HIPAA, as amended by the Health Informa on Technology for Economic and Clinical Health Act, or HITECH, state
privacy and data protec on laws, such as the California Consumer Privacy Act, or CCPA, as amended by the California Privacy Rights Act of 2020, or
CPRA, as well as other state consumer protec on laws, GDPR, any addi onal applicable EU member state, or EU Member State, data protec on laws
in force from me to me, the retained EU law version of the General Data Protec on Regula on as saved into United Kingdom law by virtue of
sec on 3 of the United Kingdom's European Union (Withdrawal) Act 2018, or the EU GDPR;
federal and state laws requiring the submission of accurate product prices and no fica ons of price increases;
federal and state securi es laws;
environmental, health and safety laws and regula ons; and
interna onal trade laws, which are laws that regulate the sale, purchase, import, export, re-export, transfer and shipment of goods, products,
materials, services and technology.
In addi on, our rela onships with healthcare providers, physicians and third party payors expose us to broadly applicable fraud and abuse laws that may
constrain the business or financial arrangements and rela onships through which we market, sell and distribute Auryxia and vadadustat, if approved, and any
other products for which we may obtain marke ng approval. As such, these arrangements are subject to applicable an -kickback, fraud and abuse, false
claims, transparency, health informa on privacy and security, and other healthcare laws and regula ons at federal, state and interna onal levels. These
restric ons include, but are not limited to, the following:
•
•
•
•
•
the Food, Drug and Cosme c Act of 1938, as amended, or FDCA, which among other things, strictly regulates drug product marke ng and promo on
and prohibits manufacturers from marke ng such products for off-label use;
federal laws that require pharmaceu cal manufacturers to report certain calculated product prices to the government or provide certain discounts
or rebates to government authori es or private en es, o en as a condi on of reimbursement under government healthcare programs, and laws
requiring no fica on of price increases;
the federal An -Kickback Statute, which prohibits, among other things, persons from knowingly and willfully solici ng, offering, receiving or
providing remunera on, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the
purchase, order or recommenda on or arranging of, any good or service, for which payment may be made under a federal healthcare program such
as Medicare and Medicaid;
the federal False Claims Act, which imposes criminal and civil penal es, including through civil whistleblower or qui tam ac ons, against individuals
or en es for, among other things, knowingly presen ng, or causing to be presented, false or fraudulent claims for payment by a federal healthcare
program or making a false statement or record material to payment of a false claim or avoiding, decreasing or concealing an obliga on to pay money
to the federal government, with poten al liability including mandatory treble damages and significant per-claim penal es, and viola ons of the
FDCA, the federal government pricing laws, and the federal An -Kickback Statute trigger liability under the federal False Claims Act;
HIPAA, which imposes criminal and civil liability for execu ng a scheme to defraud any healthcare benefit program or making false statements
rela ng to healthcare ma ers;
Akebia Therapeu cs, Inc. | Form 10-K | Page 75
Table of Contents
•
•
•
HIPAA, as amended by the HITECH, and their respec ve implemen ng regula ons, also imposes obliga ons, including mandatory contractual terms,
with respect to safeguarding the privacy, security and transmission of individually iden fiable health informa on;
the federal Open Payments Act (the former Physician Payments Sunshine Act) requires applicable manufacturers of covered drugs to report
payments and other transfers of value to physicians, other healthcare providers and teaching hospitals, as well as ownership and investment
interests held by physicians and their immediate family members;
analogous state and foreign laws and regula ons, such as state an -kickback and false claims laws and gi ban and transparency statutes, which may
apply to sales or marke ng arrangements and claims involving healthcare items or services reimbursed by state Medicaid or other programs, or non-
governmental third party payors, including private insurers, and which are not preempted by federal laws and o en differ from state to state, thus
complica ng compliance efforts; and
• U.S. state laws restric ng interac ons with healthcare providers and other members of the healthcare community or requiring pharmaceu cal
manufacturers to implement certain compliance standards, which vary from state to state.
Because of the breadth of these U.S. laws, and their non-U.S. equivalents, and the narrowness of the statutory excep ons and safe harbors available, it is
possible that some of our business ac vi es could be subject to challenge under one or more of such laws. In addi on, recent healthcare reforms have
strengthened these laws. For example, the Health Care Reform Act, among other things, amended the intent requirement of the federal An -Kickback
Statute. A person or en ty no longer needs to have actual knowledge of the statute or specific intent to violate the law. The Health Care Reform Act also
amended the False Claims Act, such that viola ons of the An -Kickback Statute are now deemed viola ons of the False Claims Act.
Some state laws require pharmaceu cal companies to comply with the pharmaceu cal industry’s voluntary compliance guidelines, such as the
Pharmaceu cal Research and Manufacturers of America Code on Interac ons with Health Care Professionals, known as the PhRMA Code. Addi onally, some
state and local laws require the registra on and specific training of pharmaceu cal sales representa ves in the jurisdic on. State and foreign laws also govern
the privacy and security of health informa on in some circumstances, many of which differ from each other in significant ways and o en are not preempted
by HIPAA.
Efforts to ensure that our business complies with applicable healthcare laws and regula ons involves substan al costs and requires us to expend significant
resources. One of the poten al areas for governmental scru ny involves federal and state requirements for pharmaceu cal manufacturers to submit accurate
price reports to the government. Because our processes for calcula ng applicable government prices and the judgments involved in making these calcula ons
involve subjec ve decisions and complex methodologies, these calcula ons are subject to risk of errors and differing interpreta ons. In addi on, they are
subject to review and challenge by the applicable governmental agencies, or poten al qui tam complaints, and it is possible that such reviews could result in
changes, recalcula ons, or defense costs that may have adverse legal or financial consequences. It is possible that governmental authori es will conclude that
our business prac ces may not comply with current or future statutes, regula ons or case law involving applicable fraud and abuse or other healthcare laws
and regula ons. If our opera ons are found to be in viola on of any of these laws or any other governmental regula ons that may apply to us, we may be
subject to significant civil, criminal and administra ve penal es, damages, fines, imprisonment, exclusion of products from government funded healthcare
programs, such as Medicare and Medicaid, and the curtailment or restructuring of our opera ons, any of which could materially adversely affect our business
and would result in increased costs and diversion of management a en on and could nega vely impact the development, regulatory approval and
commercializa on of Auryxia or vadadustat, any of which could have a material adverse effect on our business. Further, if any of the physicians or other
healthcare providers or en es with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal,
civil or administra ve sanc ons, including exclusions from par cipa on in government funded healthcare programs.
We will incur significant liability if it is determined that we are promo ng any “off-label” use of Auryxia or any other product we may develop, in-license or
acquire or if it is determined that any of our ac vi es violates the federal An -Kickback Statute.
Physicians are permi ed to prescribe drug products for uses that differ from those approved by the FDA or other applicable regulatory agencies. Although the
FDA and other regulatory agencies do not regulate a physician’s choice of treatments, the FDA and other regulatory agencies do restrict manufacturer
communica ons regarding unapproved uses of an approved drug. Companies are not permi ed to promote drugs for unapproved uses or in a manner that is
inconsistent with the FDA-approved labeling. There are also restric ons about making compara ve or superiority claims based on safety or efficacy that are
not supported by substan al evidence. Accordingly, we may not promote Auryxia in the U.S. for use in any indica ons other than the Hyperphosphatemia
Indica on and the IDA Indica on, and all promo onal claims must be consistent with the FDA-approved labeling for Auryxia.
Akebia Therapeu cs, Inc. | Form 10-K | Page 76
Table of Contents
Promo ng a drug off-label is a viola on of the FDCA and can give rise to liability under the federal False Claims Act, as well as under addi onal federal and
state laws and insurance statutes. The FDA, the Department of Jus ce and other regulatory and enforcement authori es enforce laws and regula ons
prohibi ng promo on of off-label uses and the promo on of products for which marke ng approval has not been obtained, as well as the false adver sing or
misleading promo on of drugs. In September 2021, the FDA published final regula ons which describe the types of evidence that the agency will consider in
determining the intended use of a drug product. In addi on, laws and regula ons govern the distribu on and tracing of prescrip on drugs and prescrip on
drug samples, including the Prescrip on Drug Marke ng Act of 1976 and the Drug Supply Chain Security Act, which regulate the distribu on and tracing of
prescrip on drugs and prescrip on drug samples at the federal level and set minimum standards for the regula on of drug distributors by the states. A
company that is found to have improperly promoted off-label uses or to have otherwise engaged in false or misleading promo on or improper distribu on of
drugs will be subject to significant liability, poten ally including civil and administra ve remedies as well as criminal sanc ons. It may also be subject to
exclusion and debarment from federal healthcare reimbursement programs.
Notwithstanding the regulatory restric ons on off-label promo on, the FDA and other regulatory authori es allow companies to engage in truthful, non-
misleading, and non-promo onal scien fic communica ons concerning their products in certain circumstances. For example, in October 2023, the FDA
published dra guidance outlining the agency’s non-binding policies governing the distribu on of scien fic informa on on unapproved uses to healthcare
providers. This dra guidance calls for such communica ons to be truthful, non-misleading, factual, and unbiased and include all informa on necessary for
healthcare providers to interpret the strengths and weaknesses and validity and u lity of the informa on about the unapproved use. In addi on, under some
rela vely recent guidance from the FDA and the Pre-Approval Informa on Exchange Act, or PIE Act, signed into law as part of the Consolidated
Appropria ons Act of 2023, or the Consolidated Appropria ons Act, companies may also promote informa on that is consistent with the prescribing
informa on and proac vely speak to formulary commi ee members of payors regarding data for an unapproved drug or unapproved uses of an approved
drug. We intend to engage in these discussions and communicate with healthcare providers, payors and other cons tuencies in compliance with all applicable
laws, regulatory guidance and industry best prac ces. Although we believe we have put in place a robust compliance program and processes designed to
ensure that all such ac vi es are performed in a legal and compliant manner, such program and processes may not be sufficient to deter or detect all
viola ons, and we will need to carefully navigate the FDA’s various regula ons, guidance and policies, along with recently enacted legisla on, to ensure
compliance with restric ons governing promo on of our products.
In addi on, if a company’s ac vi es are determined to have violated the federal An -Kickback Statute, this can also give rise to liability under the federal False
Claims Act and such viola ons can result in significant fines, criminal and civil remedies, and exclusion from Medicare and Medicaid. There is increased
government focus on rela onships between the pharmaceu cal industry and physicians, pharmacies (especially specialty pharmacies), and other sources of
referrals. Common industry ac vi es, such as speaker programs, insurance assistance and support, rela onships with founda ons providing copayment
assistance, and rela onships with pa ent organiza ons and pa ents are receiving increased governmental a en on. If any of our rela onships or ac vi es is
determined to violate applicable federal and state an -kickback laws, false claims laws, or other laws or regula ons, the company and/or company execu ves,
employees, and other representa ves could be subject to significant fines and criminal sanc ons, imprisonment, and poten al exclusion from Medicare and
Medicaid, and could harm our reputa on or result in significant legal expenses and distrac on of management.
Disrup ons in the FDA, regulatory authori es outside the U.S. and other government agencies caused by global health concerns or funding shortages
could prevent new products and services from being developed or commercialized in a mely manner, which could nega vely impact our business.
The ability of the FDA and regulatory authori es outside the U.S. to review and approve new products can be affected by a variety of factors, including global
health concerns, government budget and funding levels, staffing shortages, statutory, regulatory, and policy changes and other events that may otherwise
affect the FDA’s or other regulatory authori es' ability to perform rou ne func ons. Average review mes at the FDA have fluctuated in recent years as a
result of certain of these factors. In addi on, government funding of other government agencies that fund R&D ac vi es is subject to the poli cal process,
which is inherently fluid and unpredictable. Disrup ons at the FDA and other agencies may increase the me necessary for new drugs to be reviewed or
approved by necessary government agencies, which would adversely affect our business. If a prolonged government shutdown occurs, it could significantly
impact the ability of the FDA or other regulatory authori es to mely review and process our, or our collabora on partners', regulatory submissions, which
could have a material adverse effect on our business.
If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory authori es from conduc ng their regular
inspec ons, reviews, or other regulatory ac vi es, it could significantly impact the ability of the FDA or other regulatory authori es to mely review and
process our regulatory submissions, which could have a material adverse effect on our business.
Akebia Therapeu cs, Inc. | Form 10-K | Page 77
Table of Contents
Compliance with privacy and data security requirements could result in addi onal costs and liabili es to us or inhibit our ability to collect and process data
globally, and the failure to comply with such requirements could subject us to significant fines and penal es, which may have a material adverse effect on
our business, financial condi on or results of opera ons.
The regulatory framework for the collec on, use, safeguarding, sharing, transfer and other processing of informa on worldwide is rapidly evolving and is
likely to remain uncertain for the foreseeable future. Globally, virtually every jurisdic on in which we operate has established its own data security and
privacy frameworks with which we must comply. For example, the collec on, use, disclosure, transfer, or other processing of personal data regarding
individuals in the EU, including personal health data, is subject to the GDPR, which took effect across all member states of the EEA, in May 2018. Following
the withdrawal of the UK from the EU, the UK Data Protec on Act 2018 applies to the processing of personal data that takes place in the UK and includes
parallel obliga ons to those set forth by GDPR. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal
data when required, including requirements rela ng to processing health and other sensi ve data, obtaining consent of the individuals to whom the personal
data relates, when required, providing informa on to individuals regarding data processing ac vi es, implemen ng safeguards to protect the security and
confiden ality of personal data, providing no fica on of data breaches, and taking certain measures when engaging third party processors. The GDPR
increases our obliga ons as a sponsor in clinical trials in the EEA by expanding the defini on of personal data to include coded data and requiring changes to
informed consent prac ces and more detailed no ces for clinical trial pa ents and inves gators. The GDPR also permits data protec on authori es to require
destruc on of improperly gathered or used personal informa on and/or impose substan al fines for viola ons of the GDPR, which can be up to four percent
of the total worldwide annual turnover of a group of companies from the preceding financial year or 20 million Euros, whichever is greater, and it also confers
a private right of ac on on data subjects and consumer associa ons to lodge complaints with supervisory authori es, seek judicial remedies, and obtain
compensa on for damages resul ng from viola ons of the GDPR. In addi on, the GDPR provides that EU Member States may make their own further laws
and regula ons limi ng the processing of personal data, including gene c, biometric or health data and permits EU Member States to adopt further penal es
for viola ons that are not subject to the administra ve fines outlined in the GDPR.
The GDPR also imposes strict rules on the transfer of personal data to countries outside the EU, including the U.S. and, as a result, increases the scru ny that
we should apply to transfers of personal data from such sites to countries that are considered to lack an adequate level of data protec on, such as the U.S.
There is ongoing uncertainty about the transfer mechanisms that companies rely upon to enable the legal transfer of personal data from the EU to other
countries. For example, in July 2020, the Court of Jus ce of the European Union, or the CJEU, invalidated the EU-U.S. Privacy Shield, one of the mechanisms
used to legi mize the transfer of personal data from the EEA to the U.S. Although a new Data Privacy Framework has been adopted, as court decisions and
regulatory guidance evolves, challenges remain with respect to GDPR compliance. Companies must con nue to monitor the regulatory landscape and
implement necessary changes, all of which may be costly and may put the company out of compliance while any changes are being implemented.
Following the withdrawal of the UK from the EU, the UK Data Protec on Act 2018 applies to the processing of personal data that takes place in the UK and
includes parallel obliga ons to those set forth by GDPR. In rela on to data transfers, both the UK and the EU have determined, through separate “adequacy”
decisions, that data transfers between the two jurisdic ons are in compliance with the UK Data Protec on Act and the GDPR, respec vely. The UK and the
U.S. have also agreed to a U.S.-UK “Data Bridge”, which func ons similarly to the EU-U.S. Data Privacy Framework and provides an addi onal legal mechanism
for companies to transfer data from the UK to the U.S. In addi on to the UK, Switzerland has approved an adequacy decision in rela on to the Swiss-U.S. Data
Privacy Framework (which would func on similarly to the EU-U.S. Data Privacy Framework and the U.S.-UK Data Bridge in rela on to data transfers from
Switzerland to the U.S.). Any changes or updates to these developments have the poten al to impact our business.
Addi onally, in October 2022, President Biden signed an execu ve order to implement the EU-U.S. Data Privacy Framework, which serves as a replacement to
the EU-U.S. Privacy Shield. The EU ini ated the process to adopt an adequacy decision for the EU-U.S. Data Privacy Framework in December 2022, and the EC
adopted the adequacy decision on July 10, 2023. The adequacy decision permits U.S. companies who self-cer fy to the EU-U.S. Data Privacy Framework to
rely on it as a valid data transfer mechanism for data transfers from the EU to the U.S. However, some privacy advocacy groups have already challenged or
suggested that they will be challenging the EU-U.S. Data Privacy Framework. If these challenges are successful, they may not only impact the EU-U.S. Data
Privacy Framework, but also further limit the viability of the standard contractual clauses and other data transfer mechanisms. The uncertainty around this
issue has the poten al to impact our business interna onally.
Given the breadth and depth of changes in data protec on obliga ons, complying with the GDPR’s requirements is rigorous and me intensive and requires
significant resources and a review of our technologies, systems and prac ces, as well as those of any third party collaborators, service providers, contractors
or consultants that process or transfer personal data collected in the EU. The GDPR and other changes in laws or regula ons associated with the enhanced
protec on of certain types of sensi ve data, such as healthcare data or other personal informa on from our clinical trials, could require us to change our
Akebia Therapeu cs, Inc. | Form 10-K | Page 78
Table of Contents
business prac ces and put in place addi onal compliance mechanisms, may interrupt or delay our development, regulatory and commercializa on ac vi es
and increase our cost of doing business, and could lead to government enforcement ac ons, private li ga on and significant fines and penal es against us
and could have a material adverse effect on our business, financial condi on or results of opera ons.
Similar privacy and data security requirements are either in place or underway in the U.S. There are a broad variety of data protec on laws that may be
applicable to our ac vi es, and a range of enforcement agencies at both the state and federal levels that can review companies for privacy and data security
concerns. The Federal Trade Commission, or the FTC, and state A orneys General all are aggressive in reviewing privacy and data security protec ons for
consumers. For example, the FTC has been par cularly focused on the unpermi ed processing of health and gene c data through its recent enforcement
ac ons and is expanding the types of privacy viola ons that it interprets to be “unfair” under Sec on 5 of the Federal Trade Commission Act, as well as the
types of ac vi es it views to trigger the Health Breach No fica on Rule (which the FTC also has the authority to enforce). The agency is also in the process of
developing rules related to commercial surveillance and data security that may impact our business. We will need to account for the FTC’s evolving rules and
guidance for proper privacy and data security prac ces in order to mi gate our risk for a poten al enforcement ac on, which may be costly. If we are subject
to a poten al FTC enforcement ac on, we may be subject to a se lement order that requires us to adhere to very specific privacy and data security prac ces,
which may impact our business. We may also be required to pay fines as part of a se lement (depending on the nature of the alleged viola ons). If we violate
any consent order that we reach with the FTC, we may be subject to addi onal fines and compliance requirements.
New laws also are being considered at both the state and federal levels. For example, the CCPA, which went into effect on January 1, 2020, and the CPRA,
which amends CCPA by expanding the scope and applicability, while also introducing new privacy protec ons, is crea ng similar risks and obliga ons as those
created by GDPR. In November 2020, California voters passed a ballot ini a ve for the CPRA, which went into effect on January 1, 2023 and significantly
expanded the CCPA to incorporate addi onal GDPR-like provisions including requiring that the use, reten on and sharing of personal informa on of California
residents be reasonably necessary and propor onate to the purposes of collec on or processing, gran ng addi onal protec ons for sensi ve personal
informa on, and requiring greater disclosures related to no ce to residents regarding reten on of informa on. The CPRA also creates a new agency that is
specifically responsible for enforcing the new law and other California privacy laws. Because of this, we may need to engage in addi onal ac vi es (e.g., data
mapping) to iden fy the personal informa on we are collec ng and the purposes for which such informa on is collected. In addi on, we will need to ensure
that our policies recognize the rights granted to consumers (as that phrase is broadly defined in the CCPA and can include business contact informa on).
In addi on to California, at least eleven other states have passed comprehensive privacy laws similar to the CCPA and CPRA. These laws are either in effect or
will go into effect some me before the end of 2026. Like the CCPA and CPRA, these laws create obliga ons related to the processing of personal informa on,
as well as special obliga ons for the processing of “sensi ve” data (which includes health data in some cases). Some of the provisions of these laws may apply
to our business ac vi es. There are also states that are strongly considering or have already passed comprehensive privacy laws during the 2023 legisla ve
sessions that will go into effect in 2025 and beyond, including New Hampshire and New Jersey. Other states will be considering these laws in the future, and
Congress has also been deba ng passing a federal privacy law. There are also states that are specifically regula ng health informa on that may affect our
business. For example, Washington state passed a health privacy law in 2023 that will regulate the collec on and sharing of health informa on, and the law
also has a private right of ac on, which further increases the relevant compliance risk. Connec cut and Nevada have also passed similar laws regula ng
consumer health data and addi onal states (including Vermont) are considering such legisla on for 2024. These laws may impact our business ac vi es,
including our iden fica on of research subjects, rela onships with business partners and ul mately the marke ng and distribu on of our products.
A broad range of legisla ve measures also have been introduced at the federal level. Accordingly, failure to comply with current and any future federal and
state laws regarding privacy and security of personal informa on could expose us to fines and penal es. We also face a threat of poten al consumer class
ac ons related to these laws and the overall protec on of personal data. Even if we are not determined to have violated these laws, inves ga ons into these
issues typically require the expenditure of significant resources and generate nega ve publicity, which could harm our reputa on and our business.
Legisla ve and regulatory healthcare reform may increase the difficulty and cost for us to obtain marke ng approval of and commercialize our product
candidates and affect the prices we may obtain for any products that are approved in the U.S. or foreign jurisdic ons.
In the U.S. and some foreign jurisdic ons, there have been a number of legisla ve and regulatory changes and proposed changes regarding the healthcare
system that could prevent or delay marke ng approval of vadadustat, or any other product candidate, restrict or regulate post-approval ac vi es and affect
our ability to profitably sell Auryxia and vadadustat, if approved. The pharmaceu cal industry has been a par cular focus of these efforts and has been
significantly affected by legisla ve ini a ves. Current laws, as well as other healthcare reform measures that may be adopted in the future, may result
Akebia Therapeu cs, Inc. | Form 10-K | Page 79
Table of Contents
in more rigorous coverage criteria and addi onal downward pressure on the price that we receive for any FDA approved product, such as Auryxia or
vadadustat, if approved, or any reimbursement that physicians receive for administering any approved product.
In the U.S. the Medicare Prescrip on Drug, Improvement, and Moderniza on Act of 2003, or the MMA, changed the way Medicare covers and pays for
pharmaceu cal products. The legisla on expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology
based on average sales prices for physician-administered drugs. In addi on, this legisla on provided authority for limi ng the number of drugs that will be
covered in any therapeu c class. Cost reduc on ini a ves and other provisions of this legisla on could decrease the coverage and price that we receive for
Auryxia and any other approved products. While the MMA applies only to drug benefits for Medicare beneficiaries, private payors o en follow Medicare
coverage policy and payment limita ons in se ng their own reimbursement rates. Therefore, any reduc on in reimbursement that results from the MMA
may result in a similar reduc on in payments from private payors.
In March 2010, President Obama signed into law the Pa ent Protec on and Affordable Care Act, as amended by the Health Care and Educa on Reconcilia on
Act of 2010, or, collec vely, the ACA. In addi on, other legisla ve and regulatory changes have been proposed and adopted since the ACA was enacted. These
changes include the Budget Control Act of 2011, which, among other things, led to aggregate reduc ons to Medicare payments to providers of up to 2% per
fiscal year, which will remain in effect through 2031.
Under current legisla on, the actual reduc ons in Medicare payments may vary up to 4%. The Consolidated Appropria ons Act, which was signed into law by
President Biden in December 2022, made several changes to sequestra on of the Medicare program. Sec on 1001 of the Consolidated Appropria ons Act
delays the 4% Statutory Pay-As-You-Go Act of 2010 (PAYGO) sequester for two years, through the end of calendar year 2024. Triggered by enactment of the
American Rescue Plan Act of 2021, the 4% cut to the Medicare program would have taken effect in January 2023. The Consolidated Appropria ons Act’s
health care offset tle includes Sec on 4163, which extends the 2% Budget Control Act of 2011 Medicare sequester for six months into fiscal year 2032 and
lowers the payment reduc on percentages in fiscal years 2030 and 2031.
The American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several types of providers and increased the statute of
limita ons period for the government to recover overpayments to providers from three to five years. In addi on, other legisla ve and regulatory changes
have been proposed, but not yet adopted. For example, in July 2019, the U.S. Department of Health and Human Services, or HHS, proposed regulatory
changes in kidney health policy and reimbursement. Any new legisla ve or regulatory changes may result in addi onal reduc ons in Medicare and other
healthcare funding and otherwise affect the prices we may obtain for Auryxia or vadadustat, if approved, or the frequency with which Auryxia and
vadadustat, if approved, is prescribed or used.
The costs and prices of prescrip on pharmaceu cals have also been the subject of considerable discussion in the U.S. To date, there have been several recent
U.S. congressional inquiries and proposed and enacted state and federal legisla on designed to, among other things, bring more transparency to drug pricing,
review the rela onship between pricing and manufacturer pa ent programs, reduce the costs of drugs under Medicare and reform government program
reimbursement methodologies for drug products. At the federal level, Congress and the current administra on have each indicated that it will con nue to
seek new legisla ve and/or administra ve measures to control drug costs.
For example, the former administra on issued several execu ve orders intended to lower the costs of prescrip on products and certain provisions in these
orders have been incorporated into regula ons. These regula ons include an interim final rule implemen ng a most favored na on model for prices that
would e Medicare Part B payments for certain physician-administered pharmaceu cals to the lowest price paid in other economically advanced countries,
effec ve January 1, 2021. That rule, however, has been subject to a na onwide preliminary injunc on and, on December 29, 2021, CMS issued a final rule to
rescind it. With issuance of this rule, CMS stated that it will explore all op ons to incorporate value into payments for Medicare Part B pharmaceu cals and
improve beneficiaries' access to evidence-based care.
In addi on, in October 2020, the HHS and the FDA published a final rule allowing states and other en es to develop a Sec on 804 Importa on Program to
import certain prescrip on drugs from Canada into the U.S. That regula on was challenged in a lawsuit by the Pharmaceu cal Research and Manufacturers of
America, or PhRMA, but the case was dismissed by a federal district court in February 2023 a er the court found that PhRMA did not have standing to sue
HHS. Nine states (Colorado, Florida, Maine, New Hampshire, New Mexico, North Dakota, Texas, Vermont and Wisconsin) have passed laws allowing for the
importa on of drugs from Canada. Certain of these states have submi ed Sec on 804 Importa on Program proposals and are awai ng FDA approval. On
January 5, 2023, the FDA approved Florida’s plan for Canadian drug importa on.
Further, on July 9, 2021, President Biden signed Execu ve Order 14063, which focuses on, among other things, the price of pharmaceu cals. The Order
directs HHS to create a plan within 45 days to combat “excessive pricing of prescrip on pharmaceu cals and enhance domes c pharmaceu cal supply chains,
to reduce the prices paid by the federal government for such pharmaceu cals, and to address the recurrent problem of price gouging.” On September 9,
2021, HHS released its
Akebia Therapeu cs, Inc. | Form 10-K | Page 80
Table of Contents
plan to reduce pharmaceu cal prices. The key features of that plan are to: (a) make pharmaceu cal prices more affordable and equitable for all consumers
and throughout the health care system by suppor ng pharmaceu cal price nego a ons with manufacturers; (b) improve and promote compe on
throughout the prescrip on pharmaceu cal industry by suppor ng market changes that strengthen supply chains, promote biosimilars and generic drugs,
and increase transparency; and (c) foster scien fic innova on to promote be er healthcare and improve health by suppor ng public and private research and
making sure that market incen ves promote discovery of valuable and accessible new treatments.
On August 16, 2022, the Infla on Reduc on Act of 2022, or IRA, was signed into law by President Biden. The new legisla on has implica ons for Medicare
Part D, which is a program available to individuals who are en tled to Medicare Part A or enrolled in Medicare Part B to give them the op on of paying a
monthly premium for outpa ent prescrip on drug coverage. Among other things, the IRA imposes rebates under Medicare Part B and Medicare Part D to
penalize price increases that outpace infla on (first due in 2023); and replaces the Part D coverage gap discount program with a new discoun ng program
(beginning in 2025). The IRA permits the Secretary of HHS to implement many of these provisions through guidance, as opposed to regula on, for the ini al
years. We consider many factors when we implement a price increase for a product, including historical and poten al future infla on rates. However, there
are many variables that are outside of our control and if we increase the price of Auryxia or vadadustat, if approved, faster than the pace of infla on, we
would be subject to addi onal rebates under Medicare, which could have a material adverse effect on our product revenues.
As an oral drug, Auryxia is covered by Medicare under Part D. In January 2011, CMS implemented the ESRD PPS, a prospec ve payment system for dialysis
treatment. Under the ESRD PPS, CMS generally makes a single bundled payment to the dialysis facility for each dialysis treatment that covers all items and
services rou nely required for dialysis treatments furnished to Medicare beneficiaries in Medicare-cer fied ESRD facili es or at their home. The inclusion of
oral medica ons without injectable or intravenous equivalents such as Auryxia in the bundled payment was ini ally delayed by CMS un l January 1, 2014,
and through several subsequent legisla ve ac ons has been delayed un l January 1, 2025.
Absent further legisla on or regula on on this ma er, beginning in January 2025, oral ESRD-related drugs without injectable or intravenous equivalents,
including Auryxia and all other phosphate lowering medica ons, will be included in the ESRD bundle and separate Medicare payment for these drugs will no
longer be available, as is the case today under Medicare Part D. ESRD facili es may nonetheless receive a TDAPA for new renal dialysis drugs and biological
products that meet certain criteria for a period of two years. The TDAPA will provide separate payment based on the drug's ASP that will be in addi on to the
base rate in order to facilitate the adop on of innova ve therapies. There can be no assurances that CMS will determine that Auryxia will qualify for TDAPA
status or that CMS will not again delay the inclusion of these oral ESRD-related drugs in the bundled payment. Even if Auryxia is deemed eligible by CMS,
revenue for sales of Auryxia could be significantly less in the TDAPA period than it would be if Auryxia is not bundled into the ESRD PPS. Moreover, in the post-
TDAPA period, CMS currently expects to increase the single bundled payment base rate paid to the dialysis facility for each dialysis treatment to reflect that
oral only phosphate lowering drugs will be reimbursed as part of the single bundled payment for Medicare pa ents. There can be no assurances that any
increase in the single bundled payment base rate will be sufficient to adequately reimburse the dialysis facili es for Auryxia at a price that is profitable for us.
Specifically, with respect to price nego a ons, Congress authorized Medicare to nego ate lower prices for certain costly single-source drug and biologic
products that do not have compe ng generics or biosimilars and are reimbursed under Medicare Part B and Part D. CMS may nego ate prices for ten high-
cost drugs paid for by Medicare Part D star ng in 2026, followed by 15 Part D drugs in 2027, 15 Part B or Part D drugs in 2028, and 20 Part B or Part D drugs in
2029 and beyond. This provision applies to drug products that have been approved for at least 9 years and biologics that have been licensed for 13 years, but
it does not apply to drugs and biologics that have been approved for a single rare disease or condi on. Further, the legisla on subjects drug manufacturers to
civil monetary penal es and a poten al excise tax for failing to comply with the legisla on by offering a price that is not equal to or less than the nego ated
“maximum fair price” under the law or for taking price increases that exceed infla on. The legisla on also requires manufacturers to pay rebates for drugs in
Medicare Part D whose price increases exceed infla on. The new law also caps Medicare out-of-pocket drug costs at an es mated $4,000 a year in 2024 and,
therea er beginning in 2025, at $2,000 a year.
On June 6, 2023, Merck & Co. Inc., or Merck, filed a lawsuit against HHS and CMS asser ng that, among other things, the IRA’s Drug Price Nego a on
Program for Medicare cons tutes an uncompensated taking in viola on of the Fi h Amendment of the Cons tu on. Subsequently, a number of other par es,
including the U.S. Chamber of Commerce, the Chamber, Bristol Myers Squibb Company, the PhRMA, Astellas, Novo Nordisk, Janssen Pharmaceu cals,
Novar s, AstraZeneca and Boehringer Ingelheim, also filed lawsuits in various courts with similar cons tu onal claims against HHS and CMS. We expect that
li ga on involving these and other provisions of the IRA will con nue, with unpredictable and uncertain results. Accordingly, while it is currently unclear how
the IRA will be effectuated, we cannot predict with certainty what impact any federal or state health reforms will have on us, but such changes could impose
new or more stringent regulatory requirements on our ac vi es or result in reduced reimbursement for our products, any of which could adversely affect our
business, results of opera ons and financial condi on.
Akebia Therapeu cs, Inc. | Form 10-K | Page 81
Table of Contents
At the state level, individual states are increasingly aggressive in passing legisla on and implemen ng regula ons designed to control pharmaceu cal and
biological product pricing, including price or pa ent reimbursement constraints, discounts, restric ons on certain product access, marke ng cost disclosure
and transparency measures, and, in some cases, designed to encourage importa on from other countries and bulk purchasing. A number of states, for
example, require drug manufacturers and other en es in the drug supply chain, including health carriers, pharmacy benefit managers, wholesale
distributors, to disclose informa on about pricing of pharmaceu cals. In addi on, regional healthcare authori es and individual hospitals are increasingly
using bidding procedures to determine what pharmaceu cal products and which suppliers will be included in their prescrip on drug and other healthcare
programs. These measures could reduce the ul mate demand for our products or put pressure on our product pricing.
It is likely that federal and state legislatures within the U.S. and foreign governments will con nue to consider changes to exis ng healthcare legisla on. We
expect that addi onal state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state
governments will pay for healthcare products and services, which could result in reduced demand for Auryxia and any product candidates for which we
receive marke ng approval or addi onal pricing pressures. We cannot predict the reform ini a ves that may be adopted in the future or whether ini a ves
that have been adopted will be repealed or modified. The con nuing efforts of the government, insurance companies, managed care organiza ons and other
payors of healthcare services to contain or reduce costs of healthcare may adversely affect:
•
•
•
•
•
the demand for Auryxia and any products candidates for which we receive marke ng approval;
our ability to set a price that we believe is fair for our products;
our ability to obtain and maintain coverage and reimbursement approval for Auryxia or any other approved product;
our ability to generate revenues and achieve or maintain profitability; and
the level of taxes that we are required to pay.
In addi on, in some countries, including EU Member States, the pricing of prescrip on pharmaceu cals is subject to governmental control. In these countries,
pricing nego a ons with governmental authori es can take a significant amount of me a er receipt of marke ng approval for a product. In addi on, there
can be considerable pressure by governments and other stakeholders on prices and reimbursement levels, including as part of cost containment measures.
Poli cal, economic and regulatory developments may further complicate pricing nego a ons, and pricing nego a ons may con nue a er reimbursement has
been obtained. Reference pricing used by various EU Member States and parallel distribu on, or arbitrage between low-priced and high-priced EU Member
States, can further reduce prices, and in certain instances render commercializa on in certain markets infeasible or disadvantageous from a financial
perspec ve. In some countries, we or our collaborators may be required to conduct a clinical trial or other studies that compare the cost-effec veness of our
product and/or our product candidates to other available products in order to obtain or maintain reimbursement or pricing approval. Publica on of discounts
by third party payors or government authori es may lead to further pressure on the prices or reimbursement levels. If reimbursement of our products is
unavailable or limited in scope or amount, or if pricing is set at unsa sfactory levels, the commercial launch of our product and/or product candidates could
be delayed, possibly for lengthy periods of me, we or our collaborators may not launch at all in a par cular country, we may not be able to recoup our
investment in one or more product candidates, and there could be a material adverse effect on our business.
Our repor ng and payment obliga ons under the Medicaid Drug Rebate Program and other governmental drug pricing programs are complex and may
involve subjec ve decisions. Any failure to properly comply with those obliga ons could subject us to penal es and sanc ons.
As a condi on of reimbursement by various federal and state health insurance programs, we are required to calculate and report certain pricing informa on
to federal and state agencies. The regula ons governing the calcula ons, price repor ng and payment obliga ons are complex and subject to interpreta on
by various government and regulatory agencies, as well as the courts. Reasonable assump ons have been made where there is lack of regula ons or clear
guidance and such assump ons involve subjec ve decisions and es mates. We are required to report any revisions to our calcula on, price repor ng and
payment obliga ons previously reported or paid. Such revisions could affect our liability to federal and state payors and also adversely impact our reported
financial results of opera ons in the period of such restatement. Further, a number of states have either implemented or are considering implementa on of
drug price transparency legisla on that may prevent or limit our ability to take price increases at certain rates or frequencies. Requirements under such laws
include advance no ce of planned price increases, repor ng price increase amounts and factors considered in taking such increases, wholesale acquisi on
cost informa on disclosure to prescribers, purchasers, and state agencies, and new product no ce and repor ng. Such legisla on could limit the price or
payment for certain drugs, and a number of states are authorized to impose civil monetary penal es or pursue other enforcement mechanisms against
manufacturers for the un mely, inaccurate, or incomplete repor ng of drug pricing informa on or for otherwise failing to comply with drug price
transparency
Akebia Therapeu cs, Inc. | Form 10-K | Page 82
Table of Contents
requirements. If we are found to have violated state law requirements, we may become subject to significant penal es or other enforcement mechanisms,
which could have a material adverse effect on our business.
Uncertainty exists as new laws, regula ons, judicial decisions, or new interpreta ons of exis ng laws, or regula ons related to our calcula ons, price
repor ng or payments obliga ons increases the chances of a legal challenge, restatement or inves ga on. If we become subject to inves ga ons,
restatements, or other inquiries concerning our compliance with price repor ng laws and regula ons, we could be required to pay or be subject to addi onal
reimbursements, penal es, sanc ons or fines, which could have a material adverse effect on our business, financial condi on and results of opera ons. In
addi on, it is possible that future healthcare reform measures could be adopted, which could result in changes to how we calculate or report certain pricing
informa on to federal and state agencies, or increased pressure on pricing and reimbursement of our products and thus have an adverse impact on our
financial posi on or business opera ons.
Further, state Medicaid programs may be slow to invoice pharmaceu cal companies for calculated rebates resul ng in a lag between the me a sale is
recorded and the me the rebate is paid. This results in us having to carry a liability on our consolidated balance sheets for the es mate of rebate claims
expected for Medicaid pa ents. If actual claims are higher than current es mates, our financial posi on and results of opera ons could be adversely affected.
In addi on to retroac ve rebates and the poten al for 340B Program refunds, if we are found to have knowingly submi ed any false price informa on related
to the Medicaid Drug Rebate Program to CMS, we may be liable for civil monetary penal es. Such failure could also be grounds for CMS to terminate our
Medicaid drug rebate agreement, pursuant to which we par cipate in the Medicaid program. In the event that CMS terminates our rebate agreement, federal
payments may not be available under government programs, including Medicaid or Medicare Part B, for our covered outpa ent drugs.
Addi onally, if we overcharge the government in connec on with the Federal Supply Schedule pricing program or Tricare Retail Pharmacy Program, whether
due to a misstated Federal Ceiling Price or otherwise, we are required to refund the difference to the government. Failure to make necessary disclosures
and/or to iden fy contract overcharges can result in allega ons against us under the FDCA and other laws and regula ons. Unexpected refunds to the
government, and responding to a government inves ga on or enforcement ac on, would be expensive and me-consuming, and could have a material
adverse effect on our business, financial condi on, results of opera ons and growth prospects.
Our collaborators are also subject to similar requirements outside of the U.S. and thus the a endant risks and uncertain es. If our collaborators suffer
material and adverse effects from such risks and uncertain es, our rights and benefits for our licensed products could be nega vely impacted, which could
have a material and adverse impact on our revenues.
With the passage of the CREATES Act, we are exposed to possible li ga on and damages by compe tors who may claim that we are not providing
sufficient quan es of our approved products on commercially reasonable, market-based terms for tes ng in support of their abbreviated new drug
applica ons, or ANDAs, 505(b)(2) NDAs and biosimilar product applica ons.
In December 2019, former President Trump signed legisla on intended to facilitate the development of generic and biosimilar products. The bill, previously
known as the CREATES Act, authorizes sponsors of ANDAs, 505(b)(2) NDAs or biosimilar product applica ons to file lawsuits against companies holding NDAs
or BLAs that decline to provide sufficient quan es of an approved reference drug or biological product on commercially reasonable, market-based terms.
Drug or biological products on FDA’s drug shortage list are exempt from these new provisions unless the product has been on the list for more than six
con nuous months or the FDA determines that the supply of the product will help alleviate or prevent a shortage.
To bring an ac on under the statute, the developer of a product candidate that seeks to develop the product and seek approval under an ANDA, 505(b)(2)
NDA, or biosimilar product applica on must take certain steps to request the reference product from the reference product manufacturer, which, in the case
of products covered by a REMS with elements to assure safe use, include obtaining authoriza on from the FDA for the acquisi on of the reference product. If
the reference product manufacturer does not provide the reference product and the ANDA, 505(b)(2) NDA, or biosimilar product sponsor does bring an
ac on for failure to provide a reference product, there are certain affirma ve defenses available to the reference product manufacturer, which must be
shown by a preponderance of evidence, including that the NDA or BLA holder sells the reference product through agents, distributors, or wholesalers and has
placed no restric ons, explicit or implicit, on selling the reference product to ANDA, 505(b)(2) or biosimilar sponsors. If the sponsor prevails in li ga on, it is
en tled to a court order direc ng the reference product manufacturer to provide, without delay, sufficient quan es of the applicable product on
commercially reasonable, market-based terms, plus reasonable a orney fees and costs.
Addi onally, the new statutory provisions authorize a federal court to award the product developer an amount “sufficient to deter” the reference product
manufacturer from refusing to provide sufficient product quan es on commercially reasonable, market-based terms, up to a certain maximum amount
based on revenue earned while in noncompliance, if the court finds, by a preponderance of the evidence, that the reference product manufacturer did not
have a legi mate business jus fica on to delay providing the product or failed to comply with the court’s order. For the purposes of the statute, the
Akebia Therapeu cs, Inc. | Form 10-K | Page 83
Table of Contents
term “commercially reasonable, market-based terms” is defined as (1) the nondiscriminatory price at or below the most recent wholesale acquisi on cost for
the product, (2) a delivery schedule that meets the statutorily defined metable, and (3) no addi onal condi ons on the sale.
Although we intend to comply fully with the terms of these statutory provisions, we are s ll exposed to poten al li ga on and damages by compe tors who
may claim that we are not providing sufficient quan es of our approved products on commercially reasonable, market-based terms for tes ng in support of
ANDAs, 505(b)(2) NDA applica ons or biosimilar product applica ons. Such li ga on would subject us to addi onal li ga on costs, damages and reputa onal
harm, which could lead to lower revenues. The CREATES Act may facilitate future compe on with Auryxia and any of our product candidates, if approved,
which could impact our ability to maximize product revenue.
If we fail to comply with environmental, health and safety laws and regula ons, we could become subject to fines or penal es or incur costs that could
harm our business.
We are subject to numerous environmental, health and safety laws and regula ons, including those governing laboratory procedures and the handling, use,
storage, treatment and disposal of hazardous materials and wastes. Our opera ons involve the use of hazardous and flammable materials, including
chemicals and biological materials. Our opera ons also produce hazardous waste products. We generally contract with third par es for the use and disposal
of these materials and wastes. We cannot eliminate the risk of contamina on or injury from these materials. In the event of contamina on or injury resul ng
from the use of hazardous materials by our employees, contractors or consultants, we could be held liable for any resul ng damages, and any liability could
exceed our resources. We also could incur significant costs associated with civil or criminal fines and penal es for failure to comply with such laws and
regula ons.
Although we maintain workers’ compensa on insurance to cover us for costs and expenses we may incur due to injuries to our employees resul ng from the
use of hazardous materials, this insurance may not provide adequate coverage against poten al liabili es. We do not maintain insurance for environmental
liability or toxic tort claims that may be asserted against us in connec on with our storage or disposal of biological, hazardous or radioac ve materials.
In addi on, we may incur substan al costs in order to comply with current or future environmental, health and safety laws and regula ons. These current or
future laws and regula ons may impair our research, development or produc on efforts. Our failure to comply with these laws and regula ons also may
result in substan al fines, penal es or other sanc ons.
Risks Related to our Reliance on Third Par es
We depend on collabora ons with third par es for the development and commercializa on of Auryxia, Riona, Vafseo and vadadustat and if these
collabora ons are not successful or if our collaborators terminate their agreements with us, we may not be able to capitalize on the market poten al of
Auryxia, Riona, Vafseo and vadadustat, and our business could be materially harmed.
We sublicensed the rights to commercialize Riona to JT and Torii in Japan. We also entered into a collabora on agreement with MTPC to develop and
commercialize vadadustat in Japan and certain other Asian countries. In addi on, we entered into the Vifor Agreement pursuant to which we granted CSL
Vifor an exclusive license to sell vadadustat to the Supply Group in the U.S. We also granted to Averoa an exclusive license to develop and commercialize ferric
citrate in the EEA, Turkey, Switzerland and the United Kingdom. Furthermore, in May 2023, we entered into a license agreement with Medice, pursuant to
which we granted Medice an exclusive license to develop and commercialize vadadustat for the treatment of anemia in pa ents with chronic kidney disease
in the Medice Territory. We may form or seek other strategic alliances, joint ventures, or collabora ons, or enter into addi onal licensing arrangements with
third par es that we believe will complement or augment our and our partners' commercializa on efforts with respect to Auryxia, Riona, Vafseo and our
partners' development and, if approved, commercializa on efforts with respect to vadadustat and any other product candidates. We may not be able to
maintain our collabora ons for development and commercializa on. For example, on May 13, 2022, Otsuka Pharmaceu cal Co. Ltd., or Otsuka, elected to
terminate our collabora on agreements with them, and we subsequently nego ated a Termina on and Se lement Agreement with Otsuka. This termina on
by Otsuka may have delayed the launch of vadadustat in Europe or other territories previously licensed to Otsuka or adversely affect how we are perceived in
scien fic and financial communi es. For example, in August 2023, Medice informed us that their launch of Vafseo in certain countries in the Medice Territory
was going to be later than previously an cipated due to the ac vi es required to enable the launch. If we are unable to maintain our collabora ons, we may
not be able to capitalize on the market poten al of our products or product candidates, and our business could be materially harmed.
In addi on, our current and any future collabora ons may not be successful due to a number of important factors, including the following:
•
collaborators may have significant discre on in determining the efforts and resources that they will apply to these collabora ons;
Akebia Therapeu cs, Inc. | Form 10-K | Page 84
Table of Contents
•
•
•
•
•
•
•
•
•
collabora ons may be terminated in accordance with the terms of the collabora on agreements and, if terminated, may make it difficult for us to
a ract new collaborators or adversely affect how we are perceived in scien fic and financial communi es, and may result in a need for addi onal
capital and expansion of our internal capabili es to pursue further development or commercializa on of the applicable products and product
candidates;
if permi ed by the terms of the collabora on agreements, collaborators may elect not to con nue or renew development or commercializa on
programs based on clinical trial results, changes in their strategic focus, availability of funding or other external factors such as a business
combina on that diverts resources or creates compe ng priori es;
if permi ed by the terms of the collabora on agreements, collaborators may delay clinical trials, provide insufficient funding for a clinical trial
program, stop a clinical trial, abandon a product candidate, repeat or conduct new clinical trials or require a new formula on of a product candidate
for clinical tes ng;
a collaborator with marke ng and distribu on rights to our products may not commit sufficient resources to their marke ng and distribu on;
if permi ed by the terms of the collabora on agreements, we and our collaborator may have a difference of opinion regarding the development or
commercializa on strategy for a par cular product or product candidate, and our collaborator may have ul mate decision making authority;
disputes may arise between a collaborator and us that cause the delay or termina on of ac vi es related to research, development, supply or
commercializa on of Auryxia, Riona, Vafseo or vadadustat and any other product candidate, or that result in costly li ga on or arbitra on that
diverts management a en on and resources;
collabora ons may not lead to development or commercializa on of products and product candidates, if approved, in the most efficient manner or
at all;
inefficiencies or structural changes in internal opera ons or processes of our collaborators may lead to increased expenses associated with
commercializing a product, including manufacturing costs, rebates, returns and other adjustments which would nega vely impact net product
revenue;
a significant change in the senior management team, a change in the financial condi on or a change in the business opera ons, including a change
in control or internal corporate restructuring, of any of our collaborators, could result in delayed melines, re-priori za on of our programs,
decreasing resources or funding allocated to support our programs, or termina on of the collabora ons; and
•
collaborators may not comply with all applicable regulatory and legal requirements.
If any of these events occur, the market poten al of Auryxia, Riona, Vafseo or vadadustat, if and where approved, and any other products or product
candidates, could be reduced, and our business could be materially harmed. Collabora ons may also divert resources, including the a en on of management
and other employees, from other parts of our business, which could have an adverse effect on other parts of our business, and we cannot be certain that the
benefits of the collabora on will outweigh the poten al risks.
We may seek to establish addi onal collabora ons and, if we are not able to establish them on commercially reasonable terms, or at all, we may have to
alter our development and commercializa on plans.
We may decide to enter into addi onal collabora ons for the development and commercializa on of Auryxia or our product candidates, including vadadustat,
both within and outside of the U.S. For example, in May 2023, we entered into the license agreement with Medice, pursuant to which we granted Medice an
exclusive license to develop and commercialize vadadustat for the treatment of anemia in pa ents with chronic kidney disease in the Medice Territory. Any of
these rela onships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securi es that dilute our
exis ng stockholders, divert management’s a en on, or disrupt our business.
We may not be successful in entering into addi onal collabora ons as a result of many factors, including the following:
•
•
•
•
•
•
•
compe on in seeking appropriate collaborators;
a reduced number of poten al collaborators due to recent business combina ons in the pharmaceu cal industry;
an inability to nego ate collabora ons on acceptable terms, on a mely basis or at all;
any interna onal rules, regula ons, guidance, laws, risks or uncertain es with respect to poten al partners outside of the U.S.;
a poten al collaborator’s evalua on of Auryxia, vadadustat or any other product or product candidate may differ substan ally from ours;
a poten al collaborator’s evalua on of our financial stability and resources;
a poten al collaborator’s resources and exper se; and
Akebia Therapeu cs, Inc. | Form 10-K | Page 85
Table of Contents
•
restric ons due to an exis ng collabora on agreement.
If we are unable to enter into addi onal collabora ons in a mely manner, or at all, we may have to delay or curtail the commercializa on of Auryxia or the
development and poten al commercializa on of any of our product candidates, including vadadustat, if approved, reduce or delay our development
programs, or increase our expenditures and undertake addi onal development or commercializa on ac vi es at our own expense. For example, following
the termina on of our collabora on agreements with Otsuka in 2022, we incurred addi onal expenses in connec on with the development of vadadustat in
Europe and other countries. If we elect to increase our expenditures to fund development or commercializa on ac vi es on our own, we may need to obtain
addi onal capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop or
commercialize Auryxia or our other product candidates, including vadadustat, if approved.
Even if we enter into addi onal collabora on agreements and strategic partnerships or license our intellectual property, we may not be able to maintain them
or they may be unsuccessful, which could delay our melines or otherwise adversely affect our business.
Royal es from commercial sales of vadadustat under our MTPC Agreement will likely fluctuate and will impact our rights to receive future payments under
our Royalty Agreement with HCR.
Pursuant to the Royalty Agreement with HCR, we sold to HCR our right to receive the Royalty Interest Payments payable to us under the MTPC Agreement,
subject to the Annual Cap and the Aggregate Cap. A er HCR receives Royalty Interest Payments equal to the Annual Cap in a given calendar year, we will
receive 85% of the Royalty Interest Payments for the remainder of that year. A er HCR receives Royalty Interest Payments equal to the Aggregate Cap, or we
pay the Aggregate Cap to HCR (net of the Royalty Interest Payments already received by HCR), the Royalty Interest Payments will revert back to us, and HCR
would have no further right to any Royalty Interest Payments. We received $44.8 million from HCR (net of certain transac on expenses) under the Royalty
Agreement, and we were eligible to receive up to an addi onal $5.0 million in each year from 2021 through 2023 under the Royalty Agreement if specified
sales milestones were achieved for vadadustat in the territory covered by the MTPC Agreement, subject to the sa sfac on of certain customary condi ons,
and we did not achieve such milestones.
The royalty revenues under the MTPC Agreement may fluctuate considerably because they depend upon, among other things, the rate of growth of sales of
vadadustat in the territory covered by the MTPC Agreement. Nega ve fluctua ons in these royalty revenues could delay, diminish or eliminate our ability to
receive 85% of the Royalty Interest Payments a er the Annual Cap is achieved in a given calendar year, or our ability to receive 100% of the Royalty Interest
Payments a er the Aggregate Cap is achieved.
We rely upon third par es to conduct all aspects of our product manufacturing and commercial distribu on, and in many instances only have a single
supplier or distributor, and the loss of these manufacturers or distributors, their failure to supply us on a mely basis, or at all, or their failure to
successfully carry out their contractual du es or comply with regulatory requirements, cGMP requirements or guidance could cause delays in or
disrup ons to our supply chain and substan ally harm our business.
We do not have any manufacturing facili es and do not expect to independently manufacture any products or product candidates. We currently rely, and
expect to con nue to rely, on third party manufacturers to produce all of our commercial, clinical and preclinical supply. We also u lize third par es for the
commercial distribu on of Auryxia, including wholesale distributors and certain specialty pharmacy providers. Our reliance on third party manufacturers, who
have control over the manufacturing process, increases the risk that we will not have or be able to maintain or distribute sufficient quan es of Auryxia and
vadadustat or the ability to obtain such quan es at an acceptable cost or quality, which could delay, prevent or impair our and our partners' development or
commercializa on efforts.
We currently rely on a single source supplier for each of Auryxia drug substance and drug product and vadadustat drug substance and drug product, and
alternate sources of supply may not be readily available. We have also engaged Cardinal Health, Inc. as the exclusive third-party logis cs distribu on agent for
commercial sales of Auryxia. If any of the following occurs, we may not have sufficient quan es of Auryxia and/or vadadustat to support our clinical trials,
development, commercializa on, or obtaining and maintaining marke ng approvals, which could materially and adversely impact our business and results of
opera ons:
• we are unsuccessful in maintaining our current supply arrangements for commercial quan es of Auryxia and vadadustat;
• we are unsuccessful in valida ng new sites;
•
our commercial supply arrangements for Auryxia or vadadustat are terminated;
Akebia Therapeu cs, Inc. | Form 10-K | Page 86
Table of Contents
•
•
•
any of our third party manufacturers are unable to fulfill the terms of their agreements with us due to technical issues, natural disasters or other
reasons, including with respect to quality and quan ty, or are unable or unwilling to con nue to manufacture on the manufacturing lines included in
our regulatory filings;
any of our third party manufacturers breach our supply agreements, do not comply with quality or regulatory requirements and guidance, including
cGMP or are subject to regulatory review or ceases their opera ons for any reason; or
any of our third party distributors fail to perform or encounter any damage or other disrup on at their facili es.
If we, or any of our third party manufacturers or distributors cannot or do not perform as agreed or expected, or any of our customers were to experience
further shutdowns, delays or other business disrup ons, including as a result of catastrophic events, including pandemics, terrorist a acks, wars or other
armed conflicts, geopoli cal tensions or natural disasters, if they misappropriate our proprietary informa on, if they terminate their engagements with us, if
we terminate our engagements with them, or if there is a significant disagreement, we may be forced to manufacture or distribute the materials ourselves,
for which we currently do not have the capabili es or resources, or enter into agreements with other third party manufacturers or distributors, which we may
not be able to do in a mely manner or on favorable or reasonable terms, if at all. If any of these events occur, especially with respect to one of our sole
source suppliers, we may not have sufficient quan es of product for the commercializa on of Auryxia and/or vadadustat, if approved, or may experience
delays in the development of our products or product candidates, which could materially and adversely impact our business and results of opera on. For
example, one of our manufacturers has no fied us that it will be discon nuing opera ons at one site at a future date and then we will only be able to
manufacture at their other site. In some cases, there may be a limited number of qualified replacement manufacturers, or the technical skills or equipment
required to manufacture a product or product candidate may be unique or proprietary to the original manufacturer and we may have difficulty transferring
such skills or technology to another third party, or a feasible alterna ve may not exist. These factors would increase our reliance on our current
manufacturers or require us to obtain necessary regulatory approvals and licenses in order to have another third party manufacture Auryxia or vadadustat. If
we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facili es and procedures that
comply with quality standards and with all applicable regula ons and guidelines. The delays and costs associated with the qualifica on of a new manufacturer
and valida on of manufacturing processes would nega vely affect our ability to supply clinical trials, obtain and maintain marke ng approval, or
commercialize or sa sfy pa ent demand for Auryxia and vadadustat, where approved, in a mely manner, within budget, or at all.
In addi on, the cost of obtaining Auryxia and vadadustat is subject to adjustment based on our third party manufacturers’ costs of obtaining raw materials
and producing the product. We have limited control over the produc on costs of Auryxia and vadadustat, including the costs of raw materials, and have seen
increases in the produc on costs of Auryxia and vadadustat, and any significant increase in the cost of obtaining our products could materially adversely
affect our revenue for Auryxia and vadadustat, if approved.
Moreover, issues that may arise in any scale-up and technology transfer and con nued commercial scale manufacture of our products may lead to significant
delays in our development, marke ng approval and commercial melines for new products or affect commercial supply of Auryxia and nega vely impact our
financial performance. For example, a produc on-related issue resulted in an interrup on in the supply of Auryxia in the third and fourth quarters of 2016.
This supply interrup on nega vely impacted our revenues in 2016. This supply interrup on was resolved, and we have taken and con nue to take ac ons
designed to prevent future interrup ons in the supply of Auryxia. However, we recently experienced issues in manufacturing Auryxia, and if we con nue to
experience manufacturing issues, or incur addi onal costs, or our ac ons to prevent future interrup ons are not successful, we may experience addi onal
supply issues. In addi on, before we can manufacture product at a new site, we must validate the process at that site. If the process valida on is
unsuccessful, or takes longer than we an cipate, we may have to expend addi onal resources and could experience a supply interrup on. Any future supply
interrup ons, whether quality or quan ty based, for Auryxia or vadadustat, if and where approved, would nega vely and materially impact our reputa on
and financial condi on.
There are a limited number of manufacturers that are capable of manufacturing Auryxia and vadadustat for us and complying with cGMP regula ons and
guidance and other stringent regulatory requirements and guidance enforced by the FDA, EMA, PMDA and other regulatory authori es. These requirements
include, among other things, quality control, quality assurance and the maintenance of records and documenta on, which occur in addi on to our own
quality assurance releases. The facili es and processes used by our third party manufacturers to manufacture Auryxia may be inspected by the FDA and other
regulatory authori es at any me, and the facili es and processes used by our third party manufacturers to manufacture vadadustat will be inspected by the
FDA, the EMA and other regulatory authori es prior to or a er we submit our marke ng applica ons. Although we have general visibility into the
manufacturing processes of our third party manufacturers, we do not ul mately control such manufacturing processes of, and have li le control over, our
third party manufacturers, including, without limita on, their compliance with cGMP requirements and guidance for the manufacture of certain star ng
materials,
Akebia Therapeu cs, Inc. | Form 10-K | Page 87
Table of Contents
drug substance and finished drug product. Similarly, although we review final produc on, we have li le control over the ability of our third party
manufacturers to maintain adequate quality control, quality assurance and qualified personnel. Our third party manufacturers may experience problems with
their manufacturing and distribu on opera ons and processes, including, for example, quality issues, such as product specifica on and stability failures,
procedural devia ons, improper equipment installa on or opera on, u lity failures, contamina on, natural disasters and public health epidemics. We may
also encounter difficul es rela ng to our own quality processes and procedures, including regulatory compliance, lot release, quality control and quality
assurance, as well as shortages of qualified personnel. If our third party manufacturers cannot successfully manufacture material that conforms to our
specifica ons and regulatory requirements and guidance, or if we or our third party manufacturers experience manufacturing, opera ons and/or quality
issues, including an inability or unwillingness to con nue manufacturing our products at all, in accordance with agreed-upon processes or on currently
validated manufacturing lines, we may not be able to supply pa ent demand or maintain marke ng approval for Auryxia, secure and maintain marke ng
approval for vadadustat, and we might be required to expend addi onal resources to obtain material from other manufacturers. If any of these events occur,
our reputa on and financial condi on would be nega vely and materially impacted. In addi on, during the year ended December 31, 2022, we had higher
write-downs to inventory reserves related to Auryxia drug substance that will not be forward processed into drug product. If we have addi onal write-downs
to inventory reserves in the future, it could nega vely impact our ability to supply Auryxia, and our financial condi on could be harmed.
If the FDA or other regulatory authori es do not approve the facili es being used to manufacture vadadustat, or if the EMA or other regulatory authori es
withdraws any approval of the facili es being used to manufacture Auryxia and/or Vafseo, we may need to find alterna ve manufacturing facili es, which
would significantly impact our ability to con nue commercializing Auryxia or Vafseo in Japan, or to commercialize Vafseo in Europe and other countries, or to
develop, obtain marke ng approval for or market vadadustat or our other product candidates, if approved.
Moreover, our failure or the failure of our third party manufacturers or distributors to comply with applicable regula ons or guidance, or our failure to
oversee or facilitate such compliance, could result in sanc ons being imposed on us or our third party manufacturers or distributors, including, where
applicable, clinical holds, fines, injunc ons, civil penal es, delays in, suspension of or withdrawal of approvals, license revoca on, seizures or recalls of
Auryxia or Vafseo in Japan, opera ng restric ons, receipt of a Form 483 or warning le er, or criminal prosecu ons, any of which could significantly and
adversely affect the supply of Auryxia or vadadustat. For example, we previously conducted three limited, voluntary recalls of Auryxia. These and any other
recalls or any supply, quality or manufacturing issues in the future and any related write-downs of inventory or other consequences could result in significant
nega ve consequences, including reputa onal harm, loss of customer confidence, and a nega ve impact on our financials, any of which could have a material
adverse effect on our business and results of opera ons, and may impact our ability to supply Auryxia, Vafseo in Japan, Europe or other countries or
vadadustat, if approved in other countries, for clinical and commercial use. Also, if our star ng materials, drug substance or drug product are damaged or lost
while in our or our third party manufacturers’ or distributors' control, it may adversely impact our ability to supply Auryxia or vadadustat, and we may incur
significant financial harm.
In addi on, Auryxia, Vafseo and vadadustat may compete with other products and product candidates for access to third party manufacturing facili es. A
third party manufacturer or distributor may also encounter delays or opera onal issues brought on by sudden internal resource constraints, labor disputes,
shi ing priori es or shi ing regulatory protocols. Certain of these third party manufacturing facili es may be contractually prohibited from manufacturing
Auryxia, Vafseo or vadadustat due to exclusivity provisions in agreements with our compe tors. Any of the foregoing could nega vely impact our third party
manufacturers' or distributors' ability to meet our demand, which could adversely impact our ability to supply Auryxia, Vafseo or vadadustat, and we may
incur significant financial harm.
Our current and an cipated future dependence on third par es for the manufacture and distribu on of Auryxia, Vafseo and vadadustat may adversely affect
our and our partners' ability to commercialize Auryxia, Vafseo and vadadustat, where approved, on a mely and compe ve basis and may reduce any future
profit margins.
We rely upon third par es to conduct our clinical trials and certain of our preclinical studies. If they do not successfully carry out their contractual du es,
comply with regulatory requirements or meet expected deadlines, we may not be able to obtain or maintain marke ng approval for Auryxia, vadadustat
or any of our product candidates, and our business could be substan ally harmed.
We do not have the ability to independently conduct certain preclinical studies and clinical trials. We are currently relying, and expect to con nue to rely,
upon third par es, such as CROs, clinical data management organiza ons, medical ins tu ons and clinical inves gators, to conduct our current and future
preclinical studies and clinical trials. The third par es upon whom we rely may fail to perform effec vely, or terminate their engagement with us, for a
number of reasons, including the following:
•
•
if they experience staffing difficul es;
if we fail to communicate effec vely or provide the appropriate level of oversight;
Akebia Therapeu cs, Inc. | Form 10-K | Page 88
Table of Contents
•
•
if they undergo changes in priori es or corporate structure including as a result of a merger or acquisi on or other transac on, or become financially
distressed; or
if they form rela onships with other en es, some of which may be our compe tors.
If the third par es upon whom we rely to conduct our trials fail to adhere to clinical trial protocols or to regulatory requirements, the quan ty, quality or
accuracy of the data obtained by the third par es may be compromised. We are exposed to risk of fraud or other misconduct by such third par es.
Any of these events could cause our preclinical studies and clinical trials, including post-approval clinical trials, to be extended, delayed, suspended, required
to be repeated or terminated, or we may receive un tled warning le ers or be the subject of an enforcement ac on, which could result in our failing to
obtain and maintain marke ng approval of vadadustat or any other product candidates on a mely basis, or at all, or fail to maintain marke ng approval of
Auryxia, or any other products, any of which would adversely affect our business opera ons. In addi on, if the third par es upon whom we rely fail to
perform effec vely or terminate their engagement with us, we may need to enter into alterna ve arrangements, which could delay, perhaps significantly, the
development and commercializa on of vadadustat, if approved, or any other product candidates.
Even though we do not directly control the third par es upon whom we rely to conduct our preclinical studies and clinical trials and therefore cannot
guarantee the sa sfactory and mely performance of their obliga ons to us, we are nevertheless responsible for ensuring that each of our clinical trials and
preclinical studies is conducted in accordance with the applicable protocol, legal and regulatory requirements, including GxP requirements, and scien fic
standards, and our reliance on these third par es, including CROs, will not relieve us of our regulatory responsibili es. If we or any of our CROs, their
subcontractors, or clinical or preclinical trial sites fail to comply with applicable GxP requirements, the clinical data generated in our trials may be deemed
unreliable or insufficient, our clinical trials could be put on hold, and/or the FDA, the EMA or other regulatory authori es may require us to perform
addi onal clinical trials before approving our marke ng applica ons. In addi on, our clinical and preclinical trials must be conducted with drug product that
meets certain specifica ons and is manufactured under applicable cGMP regula ons. These requirements include, among other things, quality control,
quality assurance, and the sa sfactory maintenance of records and documenta on.
We also rely upon third par es to store and distribute drug product for our clinical trials. For example, we use third par es to store product at various sites in
the U.S. to distribute to our clinical trial sites. Any performance failure on the part of our storage or distributor partners could delay clinical development,
marke ng approval or commercializa on, resul ng in addi onal costs and depriving us of poten al product revenue.
If the licensor of certain intellectual property rela ng to Auryxia terminates, modifies or threatens to terminate exis ng contracts or rela onships with us,
our business may be materially harmed.
We do not own all of the rights to our product, Auryxia. We have licensed and sublicensed certain rights, patent and otherwise, to Auryxia from a third party,
Panion, who in turn licenses certain rights to Auryxia from one of the inventors of Auryxia. The license agreement with Panion, or the Panion License
Agreement, requires us to meet development milestones and imposes development and commercializa on due diligence requirements on us. In addi on,
under the Panion License Agreement, we must pay royal es based on a mid-single digit percentage of net sales of product resul ng from the licensed
technologies, including Auryxia, and pay the patent filing, prosecu on and maintenance costs related to the license. If we do not meet our obliga ons in a
mely manner, or if we otherwise breach the terms of the Panion License Agreement, Panion could terminate the agreement, and we would lose the rights to
Auryxia. For example, following announcement of the Merger, Panion no fied us in wri ng that Panion would terminate the Panion License Agreement on
November 21, 2018 if we did not cure the breach alleged by Panion, specifically, that we failed to use commercially reasonable best efforts to commercialize
Auryxia outside the U.S. We disagreed with Panion’s claims, and the par es entered discussions to resolve this dispute. On October 24, 2018, prior to the
consumma on of the Merger, we and Panion entered into a le er agreement, or the Panion Le er Agreement, pursuant to which Panion agreed to rescind
any and all prior termina on threats or no ces rela ng to the Panion License Agreement and waived its rights to terminate the license agreement based on
any breach by us of our obliga on to use commercially reasonable efforts to commercialize Auryxia outside the U.S. un l the par es executed an amendment
to the Panion License Agreement in accordance with the terms of the Panion Le er Agreement, following consumma on of the Merger. On April 17, 2019, we
and Panion entered into an amendment and restatement of the Panion License Agreement, or the Panion Amended License Agreement, which reflects
certain revisions consistent with the terms of the Panion Le er Agreement. See Note 10, Commitments and Con ngencies, to our consolidated financial
statements in Part II, Item 8. Financial Statements of this Form 10-K for addi onal informa on regarding the Panion Amended License Agreement. Even
though we entered into the Panion Amended License Agreement, there are no assurances that Panion will not allege other breaches of the Panion Amended
License Agreement or otherwise a empt to terminate the Panion Amended License Agreement in the future. In addi on, if Panion breaches its agreement
with the inventor from whom it licenses rights to Auryxia, Panion could lose its license, which could impair or delay our ability to develop and commercialize
Auryxia.
Akebia Therapeu cs, Inc. | Form 10-K | Page 89
Table of Contents
From me to me, we may have disagreements with Panion, or Panion may have disagreements with the inventor from whom it licenses rights to Auryxia,
regarding the terms of the agreements or ownership of proprietary rights, which could impact the commercializa on of Auryxia, could require or result in
li ga on or arbitra on, which would be me-consuming and expensive, could lead to the termina on of the Panion Amended License Agreement, or force us
to nego ate a revised or new license agreement on terms less favorable than the original. In addi on, in the event that the owners and/or licensors of the
rights we license were to enter into bankruptcy or similar proceedings, we could poten ally lose our rights to Auryxia or our rights could otherwise be
adversely affected, which could prevent us from con nuing to commercialize Auryxia.
Risks Related to our Intellectual Property
If we are unable to adequately protect our intellectual property, third par es may be able to use our intellectual property, which could adversely affect our
ability to compete in the market.
Our commercial success will depend in part on our ability, and the ability of our licensors, to obtain and maintain patent protec on on our drug product and
technologies, and to successfully defend these patents against third party challenges. We seek to protect our proprietary products and technology by filing
patent applica ons in the U.S. and certain foreign jurisdic ons. The process for obtaining patent protec on is expensive and me consuming, and we may not
be able to file and prosecute all necessary or desirable patent applica ons in a cost effec ve or mely manner. In addi on, we may fail to iden fy patentable
subject ma er early enough to obtain patent protec on. Further, license agreements with third par es may not allow us to control the prepara on, filing and
prosecu on of patent applica ons, or the maintenance or enforcement of patents. Such third par es may decide not to enforce such patents or enforce such
patents without our involvement. Thus, these patent applica ons and patents may not, under these circumstances, be prosecuted or enforced in a manner
consistent with the best interests of the company.
Our pending patent applica ons may not issue as patents and may not issue in all countries in which we develop, manufacture or poten ally sell our product
or in countries where others develop, manufacture and poten ally sell products using our technologies. Moreover, our pending patent applica ons, if issued
as patents, may not provide addi onal protec on for our product.
The patent posi ons of pharmaceu cal and biotechnology companies can be highly uncertain and involve complex legal and factual ques ons. No consistent
policy regarding the breadth of claims allowed in pharmaceu cal and biotechnology patents has emerged to date. Changes in the patent laws or the
interpreta on of the patent laws in the U.S. and other jurisdic ons may diminish the value of our patents or narrow the scope of our patent protec on.
Accordingly, the patents we own or license may not be sufficiently broad to prevent others from prac cing our technologies or from developing compe ng
products. Furthermore, others may independently develop similar or alterna ve drug products or technologies or design around our patented drug product
and technologies which may have an adverse effect on our business. If our compe tors prepare and file patent applica ons in the U.S. that claim technology
also claimed by us, we may have to par cipate in interference or deriva on proceedings in front of the U.S. Patent and Trademark Office, or USPTO, to
determine priority of inven on, which could result in substan al cost, even if the eventual outcome is favorable to us. Because of the extensive me required
for development, tes ng and regulatory review of a poten al product, it is possible that any related patent may expire prior to, or remain in existence for only
a short period following, commercializa on, which may significantly diminish our ability to exclude others from commercializing products that are similar or
iden cal to ours. The patents we own or license may be challenged or invalidated or may fail to provide us with any compe ve advantage. Since we have
licensed or sublicensed many patents from third par es, we may not be able to enforce such licensed patents against third party infringers without the
coopera on of the patent owner and the licensor, which may not be forthcoming. In addi on, we may not be successful or mely in obtaining any patents for
which we submit applica ons.
Generally, the first to file a patent applica on is en tled to the patent if all other requirements of patentability are met. However, prior to March 16, 2013, in
the U.S., the first to invent was en tled to the patent. Since publica ons of discoveries in the scien fic literature o en lag behind the actual discoveries, and
patent applica ons in the U.S. and other jurisdic ons are typically not published un l 18 months a er filing, or in some cases not at all, we cannot know with
certainty whether we were the first to make the inven ons claimed in our patents or pending patent applica ons, or that we were the first to file for patent
protec on of such inven ons. Moreover, the laws enacted by the Leahy-Smith America Invents Act of 2011, which reformed certain patent laws in the U.S.,
introduce procedures that permit compe tors to challenge our patents in the USPTO a er grant, including inter partes review and post grant review. Similar
laws exist outside of the U.S. The laws of the European Patent Conven on, for example, provide for post-grant opposi on procedures that permit compe tors
to challenge, or oppose, our European patents administra vely at the European Patent Office, or EPO.
We may become involved in addressing patentability objec ons based on third party submission of references, or we may become involved in defending our
patent rights in opposi ons, deriva on proceedings, reexamina on, inter partes review, post grant review, interference proceedings or other patent office
proceedings or li ga on, in the U.S. or elsewhere, challenging our patent rights or the patent rights of others. An adverse result in any such proceeding or
li ga on could reduce
Akebia Therapeu cs, Inc. | Form 10-K | Page 90
Table of Contents
the scope of, or invalidate, our patent rights, allow third par es to commercialize our technology or products and compete directly with us, without payment
to us.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged on
such a basis in the courts or patent offices in the U.S. and abroad. As a result of such challenges, we may lose exclusivity or freedom-to-operate or patent
claims may be narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to prevent third par es from using or
commercializing similar or iden cal products, or limit the dura on of the patent protec on for our products.
Periodic maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the life me of the patent.
The USPTO and governmental patent agencies in other jurisdic ons also require compliance with a number of procedural, documentary, fee payment (such as
annui es) and other similar provisions during the patent applica on process. While an inadvertent lapse in many cases can be cured by payment of a late fee
or by other means in accordance with the applicable rules, there are situa ons in which non-compliance can result in abandonment or lapse of the patent or
patent applica on, resul ng in par al or complete loss of patent rights in the relevant jurisdic on. Non-compliance events that could result in abandonment
or lapse of a patent or patent applica on include, but are not limited to, failure to respond to official ac ons within prescribed me limits, non-payment of
fees, and failure to properly legalize and submit formal documents. In such an event, our compe tors might be able to enter the market sooner than we
expect, which would have a material adverse effect on our business.
In addi on, patents protec ng our product candidate might expire before or shortly a er such candidate is commercialized. Thus, our patent por olio may
not provide sufficient rights to exclude others from commercializing products similar or iden cal to ours.
We also rely on trade secrets and know-how to protect our intellectual property where we believe patent protec on is not appropriate or obtainable. Trade
secrets are difficult to protect. While we require our employees, licensees, collaborators and consultants to enter into confiden ality agreements, this may
not be sufficient to adequately protect our trade secrets or other proprietary informa on. In addi on, in some cases, we share certain ownership and
publica on rights to data rela ng to some of our products and product candidates with research collaborators, licensees and other third par es. If we cannot
maintain the confiden ality of this informa on, our ability to receive patent protec on or protect our trade secrets or other proprietary informa on will be at
risk.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecu ng and defending patents on our products and product candidates in all countries throughout the world would be prohibi vely expensive.
Consequently, the breadth of our intellectual property rights in some countries outside the U.S. may be less extensive than those in the U.S. In addi on, the
laws of some countries do not protect intellectual property rights to the same extent as laws in the U.S. As a result, we may not be able to prevent third
par es from prac cing our inven ons in all countries outside the U.S., or from selling or impor ng products made using our inven ons in and into the U.S. or
other countries. Compe tors may use our technologies in countries where we have not obtained patent protec on to develop their own products and,
further, may infringe our patents in territories where we have patent protec on, but where enforcement is not as strong as in the U.S. These products may
compete with our products and our patents or other intellectual property rights may not be effec ve or sufficient to prevent them from compe ng.
Many companies have encountered significant problems in protec ng and defending intellectual property rights in certain countries. The legal systems of
certain countries, par cularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property, par cularly
those rela ng to pharmaceu cal and biotechnology products, which could make it difficult for us to stop the infringement of our patents or the marke ng of
compe ng products in viola on of our proprietary rights generally. Proceedings to enforce our patent rights in countries outside of the U.S. could result in
substan al costs and divert our efforts and a en on from other aspects of our business, could put our patents at risk of being invalidated or interpreted
narrowly and our patent applica ons at risk of not issuing, and could provoke third par es to assert claims against us. We may not prevail in any lawsuits that
we ini ate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual
property rights around the world may be inadequate to obtain a significant commercial advantage for our products and product candidates from the
intellectual property that we develop or license.
The intellectual property that we own or have licensed and related non-patent exclusivity rela ng to our current and future products is, and may be,
limited, which could adversely affect our ability to compete in the market and adversely affect the value of Auryxia, vadadustat, if approved, or other
future products.
The patent rights and related non-patent exclusivity that we own or have licensed rela ng to Auryxia, vadadustat, or other future products, are, or may be
limited in ways that may affect our ability to exclude third par es from compe ng against us.
Akebia Therapeu cs, Inc. | Form 10-K | Page 91
Table of Contents
For example, a third party may design around our owned or licensed composi on of ma er patent claims or market a product for the methods of use not
covered by our owned or licensed patents.
Obtaining proof of direct infringement by a compe tor for a method of use patent requires us to demonstrate that the compe tors make and market a
product for the patented use(s). Alterna vely, we can prove that our compe tors induce or contribute to others in engaging in direct infringement. Proving
that a compe tor contributes to or induces infringement of a patented method by another has addi onal proof requirements. For example, proving
inducement of infringement requires proof of intent by the compe tor. If we are required to defend ourselves against claims or to protect our own
proprietary rights against others, it could result in substan al costs to us and the distrac on of our management. An adverse ruling in any li ga on or
administra ve proceeding could prevent us or our partners from marke ng and selling Auryxia, Vafseo or vadadustat, if approved, or other future products,
increase the risk that a generic or other similar version of Auryxia, Vafseo or vadadustat, if approved, or other future products could enter the market to
compete with Auryxia, Vafseo or vadadustat, if approved, or other future products, limit our or our partners' development and commercializa on of Auryxia,
Vafseo or vadadustat, if approved, or other future products, or otherwise harm our compe ve posi on and result in addi onal significant costs.
Moreover, physicians may prescribe a compe ve iden cal product for indica ons other than the one for which the product has been approved, or “off-label”
indica ons, that are covered by the applicable patents. Although such off-label prescrip ons may directly infringe or contribute to or induce infringement of
method of use patents, such infringement is difficult to prevent.
In addi on, any limita ons of our patent protec on described above may adversely affect the value of our drug product and may inhibit our ability to obtain a
collabora on partner at terms acceptable to us, if at all.
In addi on to patent rights in the U.S., we may seek non-patent exclusivity for vadadustat and other future products under other provisions of the FDCA such
as new chemical en ty, or NCE, exclusivity, or exclusivity for a new use or new formula on, but there is no guarantee that vadadustat or any other future
products will receive such exclusivity. The FDCA provides a five-year period of non-patent exclusivity within the U.S. to the first sponsor to gain approval of an
NDA for an NCE. A drug is an NCE if the FDA has not previously approved any other new drug containing the same ac ve moiety, which consists of the
molecule(s) or ion(s) responsible for the ac on of the drug substance (but not including those por ons of the molecule that cause it to be a salt or ester or
which are not bound to the molecule by covalent or similar bonds). During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2)
NDA submi ed by another company for another version of such drug where the sponsor does not own or have a legal right of reference to all the data
required for approval.
An ANDA that references an NDA product with NCE exclusivity may be submi ed a er four years if it contains a cer fica on of patent invalidity or non-
infringement. The FDCA also provides three years of exclusivity for an NDA, par cularly a 505(b)(2) NDA or supplement to an exis ng NDA, if new clinical
inves ga ons, other than bioavailability studies, that were conducted or sponsored by the sponsor are deemed by the FDA to be essen al to the approval of
the applica on (for example, for new indica ons, dosages, or strengths of an exis ng drug). This three-year exclusivity covers only the condi ons associated
with the new clinical inves ga ons and does not prohibit the FDA from approving ANDAs for drugs containing the original ac ve agent. The three-year
exclusivity period, unlike five-year exclusivity, does not prevent the submission of a compe ng ANDA or 505(b)(2) NDA. Instead, it only prevents the FDA from
gran ng final approval to such a product un l expira on of the exclusivity period. Five-year and three-year exclusivity will not delay the submission (in the
case of five-year exclusivity) or the approval (in the case of three-year exclusivity) of a full NDA submi ed under sec on 505(b)(1) of the FDCA; however, a
sponsor submi ng a full NDA would be required to conduct all of its own studies needed to independently support a finding of safety and effec veness for
the proposed product, or have a full right of reference to all studies not conducted by the sponsor.
In cases where NCE exclusivity has been granted to a new drug product, the 30-month stay triggered by such li ga on is extended by the amount of me such
that seven years and six months will elapse from the date of approval of the NDA for that product. Without NCE exclusivity, the 30-month stay on FDA final
approval of an ANDA runs from the date on which the sponsor of the reference listed drug receives no ce of a Paragraph IV cer fica on from the ANDA
sponsor.
In addi on to NCE, in the U.S., the FDA has the authority to grant addi onal regulatory exclusivity protec on for approved drugs where the sponsor conducts
specified tes ng in pediatric or adolescent popula ons. If granted, this pediatric exclusivity may provide an addi onal six months which are added to the term
of any non-patent exclusivity that has been awarded as well as to the regulatory protec on related to the term of a relevant patent, to the extent these
protec ons have not already expired.
We cannot assure you that Auryxia, vadadustat, if approved, or any of our poten al future products will obtain such pediatric exclusivity, NCE exclusivity or
any other market exclusivity in the U.S., EU or any other territory, or that we will be the first to receive the respec ve regulatory approval for such drugs so as
to be eligible for any non-patent exclusivity protec on. We
Akebia Therapeu cs, Inc. | Form 10-K | Page 92
Table of Contents
also cannot assure you that Auryxia, vadadustat, if approved, or any of our poten al future products will obtain patent term extension.
The market entry of one or more generic compe tors or any third party’s a empt to challenge our intellectual property rights will likely limit Auryxia sales
and have an adverse impact on our business and results of opera on.
Although the composi on and use of Auryxia is currently claimed by 14 issued patents that are listed in the FDA’s Orange Book, we cannot assure you that we
will be successful in defending against third par es a emp ng to invalidate or design around our patents or asser ng that our patents are invalid or
otherwise unenforceable or not infringed, or in compe ng against third par es introducing generic equivalents of Auryxia or any of our poten al future
products. If our Orange Book-listed patents are successfully challenged by a third party and a generic version of Auryxia is approved and launched sooner than
we an cipate, revenue from Auryxia could decline significantly, which would have a material adverse effect on our sales, results of opera ons and financial
condi on.
We previously received Paragraph IV cer fica on no ce le ers regarding ANDAs submi ed to the FDA reques ng approval for generic versions of Auryxia
tablets (210 mg ferric iron per tablet). We filed complaints for patent infringement rela ng to such ANDAs, and subsequently entered into se lement and
license agreements with all such ANDA filers that allow such ANDA filers to market a generic version of Auryxia in the U.S. beginning on March 20, 2025. It is
possible that we may receive Paragraph IV cer fica on no ce le ers from addi onal ANDA filers and may not ul mately be successful in an ANDA li ga on.
Generic compe on for Auryxia or any of our poten al future products could have a material adverse effect on our sales, results of opera ons and financial
condi on.
Li ga on and administra ve proceedings, including third party claims of intellectual property infringement and opposi on/invalida on proceedings
against third party patents, may be costly and me consuming and may delay or harm our drug discovery, development and commercializa on efforts.
We may be forced to ini ate li ga on to enforce our contractual and intellectual property rights, or we may be sued by third par es asser ng claims based on
contract, tort or intellectual property infringement. Compe tors may infringe our patents or misappropriate our trade secrets or confiden al informa on. We
may not be able to prevent infringement of our patents or misappropria on of our trade secrets or confiden al informa on, par cularly in countries where
the laws may not protect those rights as fully as in the U.S. In addi on, third par es may have or may obtain patents in the future and claim that our products
or other technologies infringe their patents. If we are required to defend against suits brought by third par es, or if we sue third par es to protect our rights,
we may be required to pay substan al li ga on costs, and our management’s a en on may be diverted from opera ng our business. In addi on, any legal
ac on against our licensor, licensees or us that seeks damages or an injunc on of commercial ac vi es rela ng to Auryxia, vadadustat or any other product
candidates or other technologies, including those that may be in-licensed or acquired, could subject us to monetary liability, a temporary or permanent
injunc on preven ng the development, marke ng and sale of such products or such technologies, and/or require our licensor, licensees or us to obtain a
license to con nue to develop, market or sell such products or other technologies. In addi on, in an infringement proceeding, a court may decide that a
patent of ours is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do
not cover the technology in ques on. We cannot predict whether our licensor, licensees or we would prevail in any of these types of ac ons or that any
required license would be made available on commercially acceptable terms, if at all.
Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third par es. However, there may be patents of
third par es of which we are currently unaware with claims to compounds, materials, formula ons, methods of manufacture or methods for treatment
related to the use or manufacture of our product candidates. Also, because patent applica ons can take many years to issue, there may be currently pending
patent applica ons which may later result in issued patents that our product candidates may infringe. The pharmaceu cal and biotechnology industries are
characterized by extensive li ga on over patent and other intellectual property rights. We have in the past and may in the future become a party to, or be
threatened with, future adversarial li ga on or other proceedings regarding intellectual property rights with respect to our product and product candidates.
As the pharmaceu cal and biotechnology industries expand and more patents are issued, the risk increases that our product candidates may give rise to
claims of infringement of the patent rights of others.
While our product candidates are in preclinical studies and clinical trials, we believe that the use of our product candidates in these preclinical studies and
clinical trials in the U.S. falls within the scope of the exemp ons provided by 35 U.S.C. Sec on 271(e), which provides that it shall not be an act of
infringement to make, use, offer to sell, or sell within the U.S. or import into the U.S. a patented inven on solely for uses reasonably related to the
development and submission of informa on to the FDA. There is an increased possibility of a patent infringement claim against us with respect to commercial
products. Our por olio includes one commercial product, Auryxia. We received the CRL from the FDA regarding our NDA for vadadustat in March 2022, and
we resubmi ed our NDA in September 2023. If in the future vadadustat is approved, vadadustat could be commercialized. We a empt to ensure that our
products and product candidates and the methods we employ to
Akebia Therapeu cs, Inc. | Form 10-K | Page 93
Table of Contents
manufacture them, as well as the methods for their use which we intend to promote, do not infringe other par es’ patents and other proprietary rights.
There can be no assurance they do not, however, and compe tors or other par es may assert that we infringe their proprietary rights in any event.
FibroGen has filed patent applica ons in the U.S. and other countries directed to purportedly new methods of using previously known heterocyclic
carboxamide compounds for purposes of trea ng or affec ng specified condi ons, and some of these applica ons have since issued as patents. In November
2023, we and our collabora on partner, MTPC, entered into a Se lement and Cross License Agreement, or the Se lement Agreement, with FibroGen and its
collabora on partner, Astellas. The Se lement Agreement resolves all patent disputes between us, MTPC, FibroGen and Astellas in the EU, the contrac ng
states to the European Patent Conven on, the UK and Japan, or the Se lement Territory. We discuss the status of the opposi on and proceedings against
certain FibroGen patents in Part I, Item 3. Legal Proceedings of this Form 10-K. We may in the future ini ate invalidity ac ons or other legal proceedings with
respect to FibroGen patents outside of the Se lement Territory. If we are not successful in such proceedings, FibroGen could try to claim that our products
infringe their patent rights.
Third par es, including FibroGen, may in the future claim that our product and product candidates and other technologies infringe upon their patents and
may challenge our ability to commercialize Auryxia and vadadustat, if approved. Par es making claims against us or our licensees may seek and obtain
injunc ve or other equitable relief, which could effec vely block our or their ability to con nue to commercialize Auryxia or further develop and
commercialize vadadustat or any other product candidates, including those that may be in-licensed or acquired. If any third party patents were held by a
court of competent jurisdic on to cover the manufacturing process of any of our products or product candidates, any molecules formed during the
manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product or product
candidate unless we obtained a license under the applicable patents, or un l such patents expire or they are finally determined to be held invalid or
unenforceable. Similarly, if any third party patent were held by a court of competent jurisdic on to cover aspects of our formula ons, processes for
manufacture or our intended methods of use, the holders of any such patent may be able to block or impair our ability to develop and commercialize the
applicable product candidate unless we obtained a license or un l such patent expires or is finally determined to be held invalid or unenforceable. We may
also elect to enter into a license in order to se le li ga on or in order to resolve disputes prior to li ga on. Furthermore, even in the absence of li ga on, we
may need to obtain licenses from third par es to advance our research or allow commercializa on of our products or product candidates. Should a license to
a third party patent become necessary, we cannot predict whether we would be able to obtain a license or, if a license were available, whether it would be
available on commercially reasonable terms. If such a license is necessary and a license under the applicable patent is unavailable on commercially
reasonable terms, or at all, our ability to commercialize our product or product candidate may be impaired or delayed, which could in turn significantly harm
our business.
Further, defense of infringement claims, regardless of their merit, would involve substan al li ga on expense and would be a substan al diversion of
employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substan al damages, including
treble damages and a orneys’ fees for willful infringement, pay royal es or redesign our products, which may be impossible or require substan al me and
monetary expenditure.
In addi on, there may be a challenge or dispute regarding inventorship or ownership of patents or applica ons currently iden fied as being owned by or
licensed to us. Defense of these claims, regardless of their merit, would involve substan al li ga on expense and would be a substan al diversion of
employee resources from our business. Interference proceedings provoked by third par es or brought by the USPTO may be necessary to determine the
priority of inven ons with respect to our patents or patent applica ons.
Various administra ve proceedings are also available for challenging patents, including interference, reexamina on, inter partes review, and post-grant review
proceedings before the USPTO or opposi ons and other comparable proceedings in foreign jurisdic ons. Compe tors may ini ate an administra ve
proceeding challenging our issued patents or pending patent applica ons, which can be expensive and me-consuming to defend. An adverse result in any
current or future defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and held
not infringed and could put our patent applica ons at risk of not issuing. In addi on, an unfavorable outcome in any current or future proceeding in which we
are challenging third party patents could require us to cease using the patented technology or to a empt to license rights to it from the prevailing party. Our
business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms or at all. Even if we are successful, par cipa on
in interference or other administra ve proceedings before the USPTO or a foreign patent office may result in substan al costs and distract our management
and other employees.
We are currently involved in opposi on proceedings in the European Patent Office and Indian Patent Office. These proceedings may be ongoing for a number
of years and may involve substan al expense and diversion of employee resources from our business. In addi on, we may become involved in addi onal
opposi on proceedings or other legal or administra ve proceedings in the future. For more informa on, see the other risk factors under “Risks Related to our
Intellectual Property”.
Akebia Therapeu cs, Inc. | Form 10-K | Page 94
Table of Contents
Furthermore, because of the substan al amount of discovery required in connec on with intellectual property li ga on and some administra ve
proceedings, there is a risk that some of our confiden al informa on could be compromised by disclosure during discovery. In addi on, there could be public
announcements of the results of hearings, mo ons or other interim proceedings or developments. If securi es analysts or investors perceive these results to
be nega ve, it could have a substan al adverse effect on the price of our common stock.
We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confiden al informa on of
third par es.
We have received confiden al and proprietary informa on from poten al collaborators, prospec ve licensees and other third par es. In addi on, we employ
individuals who were previously employed at other biotechnology or pharmaceu cal companies. We may be subject to claims that we or our employees,
consultants or independent contractors have inadvertently or otherwise used or disclosed confiden al informa on of these third par es or our employees’
former employers. We may also be subject to claims that former employees, collaborators or other third par es have an ownership interest in our patents or
other intellectual property. We may be subject to ownership disputes in the future arising, for example, from conflic ng obliga ons of consultants or others
who are involved in developing our product candidates. Li ga on may be necessary to defend against these claims. If we fail in defending any such claims, in
addi on to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual
property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against these claims, li ga on could
result in substan al cost and be a distrac on to our management and employees.
Risks Related to our Business and Managing Growth
If we fail to a ract, retain and mo vate senior management and qualified personnel, we may be unable to successfully develop, obtain and/or maintain
marke ng approval of and commercialize vadadustat or commercialize Auryxia.
Recrui ng and retaining qualified personnel is cri cal to our success. We are also highly dependent on our execu ves, certain members of our senior
management and certain members of our commercial organiza on. The loss of the services of our execu ves, senior managers or other employees could
impede the achievement of our research, development, regulatory and commercializa on objec ves and seriously harm our ability to successfully implement
our business strategy. Specifically, following receipt of the CRL, we implemented a reduc on of our workforce in April and May 2022 by approximately 42%
across all areas of our Company (47% inclusive of the closing of the majority of open posi ons), including several members of management. In November
2022, we also implemented a reduc on of our workforce, by approximately 14% consis ng of individuals within our commercial organiza on as a result of
our decision to shi to a strategic account management focused model for our commercial efforts. In addi on, uncertainty related to the outcome of
regulatory decisions, could increase a ri on. Losing members of management and other key personnel subjects us to a number of risks, including the failure
to coordinate responsibili es and tasks, the necessity to create new management systems and processes, the impact on corporate culture, and the reten on
of historical knowledge.
Furthermore, replacing execu ves, senior managers and other key employees may be difficult and may take an extended period of me because of the
limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, obtain and/or maintain marke ng
approval of and commercialize Auryxia, vadadustat and other product candidates. Our future financial performance and our ability to develop, obtain and/or
maintain marke ng approval of and commercialize Auryxia and vadadustat and to compete effec vely will depend, in part, on our ability to manage any
future growth effec vely. To that end, we must be able to hire, train, integrate, and retain addi onal qualified personnel with sufficient experience. We may
be unable to hire, train, retain or mo vate these personnel on acceptable terms given the intense compe on for our personnel from our compe tors and
other companies throughout our industry, par cularly in our geographic region. Over the last several years, the challenges in recrui ng and retaining
employees across the pharmaceu cal and biotechnology industries have increased substan ally due to current industry job market dynamics.
In addi on, we rely on contractors, consultants and advisors, including scien fic and clinical advisors, to assist us in formula ng and execu ng our R&D and
commercializa on strategy. Our contractors, consultants and advisors may become employed by companies other than ours and may have commitments with
other en es that may limit their availability to us. If addi onal members of management or other personnel leave, or we are unable to con nue to a ract
and retain high quality personnel, our ability to grow and pursue our business strategy will be limited.
Our cost savings plan and the associated workforce reduc ons implemented in April, May and November 2022 may not result in an cipated savings, could
result in total costs and expenses that are greater than expected and could disrupt our business.
Following receipt of the CRL we implemented a reduc on in workforce in April and May 2022 by approximately 42% across all areas of our Company,
including several members of management. In November 2022, we also implemented a reduc on of
Akebia Therapeu cs, Inc. | Form 10-K | Page 95
Table of Contents
our workforce, by approximately 14% consis ng of individuals within our commercial organiza on as a result of our decision to shi to a strategic account
management focused model for our commercial efforts. The reduc ons in workforce reflected our determina on to refocus our strategic priori es around
our commercial product, Auryxia, and our development por olio, and were steps in a broader cost savings plan to significantly reduce our opera ng expense
profile. We may not realize, in full or in part, the an cipated benefits, savings and improvements in our cost structure from our restructuring efforts due to
unforeseen difficul es, delays or unexpected costs. We recorded a restructuring charge of approximately $0.2 million and $15.9 million in the years ended
December 31, 2023 and 2022, respec vely, primarily related to contractual termina on benefits including severance, non-cash stock-based compensa on
expense, healthcare and related benefits. If we are unable to realize the expected opera onal efficiencies and cost savings from the restructuring, our
opera ng results and financial condi on would be adversely affected. We also cannot guarantee that we will not have to undertake addi onal workforce
reduc ons or restructuring ac vi es in the future, including as a result of the FDA's decision related to our NDA resubmission for vadadustat. Furthermore,
our cost savings plan may be disrup ve to our opera ons, including our commercializa on of Auryxia, which could affect our ability to generate product
revenue. In addi on, our workforce reduc ons could yield unan cipated consequences, such as a ri on beyond planned staff reduc ons, or disrup ons in
our day-to-day opera ons. Our workforce reduc ons could also harm our ability to a ract and retain qualified management, scien fic, clinical, manufacturing
and sales and marke ng personnel who are cri cal to our business. Any failure to a ract or retain qualified personnel could prevent us from successfully
commercializing Auryxia and from successfully developing and commercializing our product candidates in the future, including vadadustat, if approved. If we
are ul mately successful in obtaining approval of vadadustat in the U.S., we will need to hire addi onal employees to support the commercializa on of
vadadustat in the U.S., and if we are unsuccessful or delayed in doing so, the poten al launch of vadadustat could be delayed.
We may encounter difficul es in managing our growth, including with respect to our employee base, and managing our partnerships and opera ons
successfully.
In our day-to-day opera ons, we may encounter difficul es in managing the size of our opera ons as well as challenges associated with managing our
business. We have strategic collabora ons for the commercializa on of Riona and the development and commercializa on of vadadustat, which is now being
or will be marketed under the trade name Vafseo by our collabora on partner, MTPC, in Japan and our collabora on partner, Medice, in the Medice Territory.
Addi onally, in the U.S., we have a strategic rela onship with CSL Vifor related to the commercializa on of vadadustat, if approved. As our opera ons
con nue, we expect that we will need to manage our current rela onships and enter into new rela onships with various strategic collaborators, consultants,
vendors, suppliers and other third par es. These rela onships are complex and create numerous risks as we deal with issues that arise.
For example, we supply or have agreed to supply, as applicable, Auryxia in Europe, Vafseo in Japan, Europe and other territories where it is approved, and
vadadustat in the U.S., if approved, for commercial and clinical use to MTPC, Medice, Averoa and CSL Vifor, which will require us to successfully manage our
limited financial and managerial resources. In addi on, we may not be able to obtain the raw materials or product that we need, or the cost of the raw
materials or product may be higher than expected. If we are unable to successfully manage our supply obliga ons, our ability to commercialize our products
or supply such products to our partners could have a material adverse effect on our rela onships with our partners and our results of opera ons.
Our future financial performance and our ability to commercialize Auryxia and vadadustat, if and where approved, and to compete effec vely will depend, in
part, on our ability to manage any future growth effec vely. This future growth will impose significant added responsibili es on the business and members of
management. To manage any future growth, we must con nue to implement and improve our managerial, opera onal and financial systems, procedures and
processes. We may not be able to implement these improvements in an efficient or mely manner and may discover deficiencies in exis ng systems,
procedures and processes. Moreover, the systems, procedures and processes currently in place or to be implemented may not be adequate for any such
growth. Any expansion of our opera ons may lead to significant costs and may divert our management and business development resources. Any inability to
manage growth could delay the execu on of our business plans or disrupt our opera ons. We may not be able to accomplish these tasks, and our failure to
accomplish any of them could prevent us from successfully managing and, as applicable, growing our Company.
In addi on, we may need to further adjust the size of our workforce as a result of changes to our expecta ons for our business, which can result in
management being required to divert a dispropor onate amount of its a en on away from our day-to-day ac vi es and devote a substan al amount of me
to managing these growth-related ac vi es and related expenses. Further, we rely on independent third par es to provide certain services to us. We
structure our rela onships with these outside service providers in a manner that we believe results in an independent contractor rela onship, not an
employee rela onship. If any of our service providers are later legally deemed to be employees, we could be subject to employment and tax withholding
liabili es and other addi onal costs as well as other mul ple damages and a orneys’ fees.
We have iden fied a material weakness in our internal control over financial repor ng as of December 31, 2023 rela ng to our accoun ng for inventory
and inventory related transac ons. If we are not able to remediate this material weakness, or
Akebia Therapeu cs, Inc. | Form 10-K | Page 96
Table of Contents
if we experience addi onal material weaknesses or other deficiencies in our internal control over financial repor ng in the future or otherwise fail to
maintain an effec ve system of internal control over financial repor ng, we may not be able to accurately or mely report our financial results or prevent
fraud, and we may conclude that our internal control over financial repor ng is not effec ve, which may adversely affect our business.
Effec ve internal control over financial repor ng is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and
procedures, is designed to prevent fraud. Any failure to maintain or implement required new or improved controls, or difficul es encountered in
implementa on could cause us to fail to meet our repor ng obliga ons. In addi on, any tes ng by us, as and when required, conducted in connec on with
Sec on 404 of the Sarbanes-Oxley Act, or Sec on 404, or any tes ng by our independent registered public accoun ng firm may reveal deficiencies in our
internal control over financial repor ng that are deemed to be material weaknesses or that may require prospec ve or retroac ve changes to our
consolidated financial statements or iden fy other areas for further a en on or improvement.
We iden fied a material weakness in our internal control over financial repor ng as of December 31, 2023. A material weakness is a deficiency, or
combina on of deficiencies, in internal control over financial repor ng, such that there is a reasonable possibility that a material misstatement of our annual
or interim consolidated financial statements will not be prevented or detected on a mely basis. Specifically, our management concluded that we did not
design and maintain effec ve controls over the completeness and accuracy of accoun ng for inventory and inventory related transac ons, including inventory
reconcilia ons, calcula on of overheads, presenta on of inventory in our balance sheet between short-term and long-term and our liabili es related to the
calcula on of firm purchase commitments. For further discussion of the material weakness, see Part II, Item 9A, “Controls and Procedures.”
We have taken certain steps and plan to take addi onal steps to remediate this material weakness, including (i) implemen ng and documen ng new
processes and controls to help ensure the completeness and accuracy of our inventory reconcilia ons, (ii) engaging addi onal third party subject ma er
experts and accoun ng personnel with U.S. GAAP experience specific to inventory accoun ng, (iii) enhancing the accuracy of key reports used to calculate the
firm purchase commitment and (iv) establishing effec ve monitoring and oversight controls to help to ensure the completeness and accuracy of inventory
included in our financial statements and related disclosures. However, we cannot provide assurance that we will be able to correct this material weakness in a
mely manner or that our remedia on efforts will be adequate to allow us to conclude that our internal control over financial repor ng will be effec ve in the
future. Even if this material weakness is remediated in the future, we could iden fy addi onal material weaknesses or deficiencies in our internal control over
financial repor ng that could require correc on or remedia on. For example, we previously iden fied a material weakness in our internal control over
financial repor ng as of December 31, 2022 rela ng to our product return reserves that resulted in a revision of our financial statements for the years ended
December 31, 2022, 2021 and 2020.
In addi on, our conclusion that we have a material weakness could give rise to increased scru ny, review, audit and inves ga on over our accoun ng controls
and procedures, which could then lead to addi onal areas of deficiency or errors in our financial statements.
We will need to con nue to dedicate internal resources, engage outside consultants and maintain a detailed work plan to assess and document the adequacy
of internal control over financial repor ng, con nue steps to remediate the material weakness rela ng to our accoun ng for inventory and inventory related
transac ons described above and any future control deficiencies or material weaknesses, and improve control processes as appropriate, validate through
tes ng that controls are func oning as documented and maintain a con nuous repor ng and improvement process for internal control over financial
repor ng. If we are not able to correct material weaknesses or deficiencies in internal controls in a mely manner or otherwise comply with the requirements
of Sec on 404 in a mely manner, our ability to record, process, summarize and report financial informa on accurately and within applicable me periods
may be adversely affected, and we could be subject to sanc ons or inves ga ons by the SEC, the Nasdaq Stock Market or other regulatory authori es as well
as stockholder li ga on which, even if resolved in our favor, would require addi onal financial and management resources and could adversely affect the
market price of our common stock. Any failure to maintain or implement required effec ve internal control over financial repor ng, or any difficul es we
encounter in their implementa on, could result in addi onal material weaknesses, cause us to fail to meet our repor ng obliga ons or result in material
misstatements in our financial statements. Furthermore, if we cannot provide reliable financial reports or prevent fraud, our business and results of
opera ons could be harmed. Inferior internal controls could also cause investors to lose confidence in our reported financial informa on, which could have a
nega ve effect on the trading price of our common stock and could also affect our ability to raise capital to fund future business ini a ves.
Security breaches and unauthorized use of our informa on technology systems and informa on, or the informa on technology systems or informa on in
the possession of our collaborators and other third par es, could damage the integrity of our clinical trials, impact our regulatory filings, compromise our
ability to protect our intellectual property, and subject us to regulatory ac ons that could result in significant fines or other penal es.
Akebia Therapeu cs, Inc. | Form 10-K | Page 97
Table of Contents
We, our collaborators, contractors and other third par es rely significantly upon informa on technology, and any failure, inadequacy, interrup on or security
lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effec vely. In addi on, we and our
collaborators, contractors and other third par es rely on informa on technology networks and systems, including the Internet and ar ficial intelligence based
so ware, to process, transmit and store clinical trial data, pa ent informa on, and other electronic informa on, and manage or support a variety of business
processes, including opera onal and financial transac ons and records, personal iden fying informa on, payroll data and workforce scheduling informa on.
We purchase most of our informa on technology from vendors, on whom our systems depend. We rely on commercially available systems, so ware, tools
and monitoring to provide security for the processing, transmission and storage of company and customer informa on.
In the ordinary course of our business, we and our third party contractors maintain personal and other sensi ve data on our and their respec ve networks,
including our intellectual property and proprietary or confiden al business informa on rela ng to our business and that of our clinical trial pa ents and
business partners. In par cular, we rely on CROs and other third par es to store and manage informa on from our clinical trials. We also rely on third par es
to manage pa ent informa on for Auryxia. Addi onally, the use of ar ficial intelligence based so ware is increasingly being used in the biopharmaceu cal
industry. Use of ar ficial intelligence based so ware may lead to the release of confiden al proprietary informa on, which may impact our ability to realize
the benefit of our intellectual property. The secure maintenance of this sensi ve informa on is cri cal to our business and reputa on.
Companies and other en es and individuals have been increasingly subject to a wide variety of security incidents, cyber-a acks and other a empts to gain
unauthorized access to systems and informa on. These threats can come from a variety of sources, ranging in sophis ca on from individual hackers to state-
sponsored a acks. A ackers have used ar ficial intelligence and machine learning to launch more automated, targeted and coordinated a acks against
targets. Cyber threats may be broadly targeted, or they may be custom-cra ed against our informa on systems or those of our vendors or third party service
providers. A security breach, cybera ack or unauthorized access of our clinical data or other data could damage the integrity of our clinical trials, impact our
regulatory filings, cause significant risk to our business, compromise our ability to protect our intellectual property, and subject us to regulatory ac ons,
including under the GDPR and CCPA discussed elsewhere in these risk factors and the privacy or security rules under federal, state, or other local laws outside
of the U.S. protec ng confiden al or personal informa on, that could be expensive to defend and could result in significant fines or other penal es.
Cybera acks can include malware, computer viruses, hacking, social engineering, zero day vulnerabili es or other unauthorized access or other significant
compromise of our computer, communica ons and related systems. Although we take steps to manage and avoid these risks and to be prepared to respond
to a acks, our preven ve and any remedial ac ons may not be successful and no such measures can eliminate the possibility of the systems’ improper
func oning or the improper access or disclosure of confiden al or personally iden fiable informa on such as in the event of cybera acks. Security breaches,
whether through physical or electronic break-ins, computer viruses, ransomware, impersona on of authorized users, a acks by hackers or other means, can
create system disrup ons or shutdowns or the unauthorized disclosure of confiden al informa on.
Although we believe our collaborators, vendors and service providers, such as our CROs, take steps to manage and avoid informa on security risks and
respond to a acks, we may be adversely affected by a acks against our collaborators, vendors or service providers, and we may not have adequate
contractual remedies against such collaborators, vendors and service providers to remedy any harm to our business caused by such event. Addi onally,
outside par es may a empt to fraudulently induce employees, collaborators, or other contractors to disclose sensi ve informa on or take other ac ons,
including making fraudulent payments or downloading malware, by using “spoofing” and “phishing” emails or other types of a acks. Our employees may be
targeted by such fraudulent ac vi es. Outside par es may also subject us to distributed denial of services a acks or introduce viruses or other malware
through “trojan horse” programs to our users’ computers in order to gain access to our systems and the data stored therein. Cyber-a acks have become more
prevalent and much harder to detect and defend against. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage
systems change frequently and con nuously become more sophis cated, including the use of ar ficial intelligence to generate sophis cated spoofed emails
and deep fake voice and video, o en are not recognized un l launched against a target and may be difficult to detect for a long me, we may be unable to
an cipate these techniques or to implement adequate preven ve or detec ve measures, and we might not immediately detect such incidents and the
damage caused by such incidents.
Such a acks, whether successful or unsuccessful, or other compromises with respect to our informa on security and the measures we implement to prevent,
detect and respond to them, could:
•
•
result in our incurring significant costs related to, for example, rebuilding internal systems, defending against li ga on, responding to regulatory
inquiries or ac ons, paying damages or fines, or taking other remedial steps with respect to third par es;
lead to public exposure of personal informa on of par cipants in our clinical trials, Auryxia pa ents and others;
Akebia Therapeu cs, Inc. | Form 10-K | Page 98
Table of Contents
•
•
•
•
damage the integrity of our studies or delay their comple on, disrupt our development programs, our business opera ons and commercializa on
efforts;
compromise our ability to protect our trade secrets and proprietary informa on;
damage our reputa on and deter business partners from working with us; or
divert the a en on of our management and key informa on technology resources.
Any failure to maintain proper func onality and security of our internal computer and informa on systems could result in a loss of, or damage to, our data or
marke ng applica ons or inappropriate disclosure of confiden al or proprietary informa on, interrupt our opera ons, damage our reputa on, subject us to
liability claims or regulatory penal es, under a variety of federal, state or other applicable privacy laws, such as HIPAA, the GDPR, or state data protec on
laws including the CCPA, harm our compe ve posi on and delay the further development and commercializa on of our products and product candidates, or
impact our rela onships with customers and pa ents.
Our employees, independent contractors, principal inves gators, CROs, CMOs, consultants and vendors may engage in misconduct or other improper
ac vi es, including non-compliance with regulatory standards and requirements and insider trading. In addi on, laws and regula ons governing any
interna onal opera ons we have or may have in the future may require us to develop and implement costly compliance programs.
We are exposed to the risk that our employees, independent contractors, principal inves gators, CROs, CMOs, consultants and vendors may engage in
fraudulent conduct or other illegal ac vity. Misconduct by these par es could include inten onal, reckless and/or negligent conduct or unauthorized ac vi es
that violate applicable laws, including the following:
•
•
•
•
•
FDA and other healthcare authori es’ regula ons, including those laws that require the repor ng of true, complete and accurate informa on to
regulatory authori es, and those prohibi ng the promo on of unapproved drugs or approved drugs for an unapproved use;
quality standards, including GxP;
federal and state healthcare fraud and abuse laws and regula ons and their non-U.S. equivalents;
an -bribery and an -corrup on laws, such as the FCPA and the UK Bribery Act or country-specific an -bribery or an -corrup on laws, as well as
various import and export laws and regula ons;
laws that require the repor ng of true and accurate financial informa on and data; and
• U.S. state and federal securi es laws and regula ons and their non-U.S. equivalents, including those related to insider trading.
We hold a marke ng authoriza on for vadadustat from the MHRA and TGA, and we conducted our global clinical trials for vadadustat, and may in the future
conduct addi onal trials, in countries where corrup on is prevalent, and viola ons of any of these laws by our personnel or by any of our vendors or agents,
such as our CROs or CMOs, could have a material adverse impact on our clinical trials and our business and could result in criminal or civil fines and sanc ons.
We are subject to complex laws that govern our interna onal business prac ces. These laws include the FCPA, which prohibits U.S. companies and their
intermediaries, such as CROs or CMOs, from making improper payments to foreign government officials for the purpose of obtaining or keeping business or
obtaining any kind of advantage for the company. The FCPA also requires companies to keep accurate books and records and maintain adequate accoun ng
controls. A number of past and recent FCPA inves ga ons by the Department of Jus ce and the SEC have focused on the life sciences sector.
Compliance with the FCPA is expensive and difficult, par cularly in countries in which corrup on is a recognized problem. Some of the countries in which we
have conducted clinical trials and in which we have CMOs have a history of corrup on, which increases our risks of FCPA viola ons. In addi on, the FCPA
presents unique challenges in the pharmaceu cal industry because in many countries’ hospitals are operated by the government, and doctors and other
hospital employees are considered foreign government officials. Certain payments made by pharmaceu cal companies, or on their behalf by CROs, to
hospitals in connec on with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA
enforcement ac ons.
Addi onally, the UK Bribery Act applies to our global ac vi es and prohibits bribery of private individuals as well as public officials. The UK Bribery Act
prohibits both the offering and accep ng of a bribe and imposes strict liability on companies for failing to prevent bribery, unless the company can show that
it had “adequate procedures” in place to prevent bribery. There are also local an -bribery and an -corrup on laws in countries where we have conducted
clinical trials, and many of these also carry the risk of significant financial or criminal penal es.
We are also subject to trade control regula ons and trade sanc on laws that restrict the movement of certain goods, currency, products, materials, services
and technology to, and certain opera ons in, various countries or with certain persons. Our ability to transfer commercial and clinical product and other
clinical trial supplies, and for our employees, independent
Akebia Therapeu cs, Inc. | Form 10-K | Page 99
Table of Contents
contractors, principal inves gators, CROs, CMOs, consultants and vendors ability to travel, between certain countries is subject to maintaining required
licenses and complying with these laws and regula ons.
Employee misconduct could also involve the improper use of informa on obtained in the course of clinical trials, which could result in regulatory sanc ons
and serious harm to our reputa on. This could include viola ons of HIPAA, other U.S. federal and state laws, and requirements of non-U.S. jurisdic ons,
including the GDPR. We are also exposed to risks in connec on with any insider trading viola ons by employees or others affiliated with us.
The internal controls, policies and procedures, and training and compliance programs we have implemented to deter prohibited prac ces may not be
effec ve in preven ng our employees, contractors, consultants, agents or other representa ves from viola ng or circumven ng such internal policies or
viola ng applicable laws and regula ons. The failure to comply with laws governing interna onal business prac ces may impact any future clinical trials,
result in substan al civil or criminal penal es for us and any such individuals, including imprisonment, suspension or debarment from government
contrac ng, withdrawal of our products, if approved, from the market, or being delisted from The Nasdaq Capital Market. In addi on, we may incur
significant costs in implemen ng sufficient systems, controls and processes to ensure compliance with the aforemen oned laws. The laws and regula ons
referenced above may restrict or prohibit a wide range of pricing, discoun ng, marke ng and promo on, sales commission, customer incen ve programs and
other business arrangements that could adversely affect our business.
Addi onally, it is not always possible to iden fy and deter misconduct by employees and third par es, and the precau ons we take to detect and prevent this
ac vity may not be effec ve in controlling known or unknown risks or preven ng losses or in protec ng us from governmental inves ga ons or other ac ons
or lawsuits stemming from a failure to be in compliance with such laws or regula ons. If any such ac ons are ins tuted against us, and we are not successful
in defending ourselves or asser ng our rights, or if any such ac on is ins tuted against our employees, consultants, independent contractors, CROs, CMOs,
vendors or principal inves gators, those ac ons could have a significant impact on our business, including the imposi on of civil, criminal and administra ve
penal es, damages, monetary fines, possible exclusion from par cipa on in Medicare, Medicaid and other federal healthcare programs, contractual
damages, reputa onal harm, diminished profits and future earnings, curtailment of our opera ons, disclosure of our confiden al informa on and
imprisonment, any of which could adversely affect our ability to operate our business and our results of opera ons.
Our financial statements include long-lived assets, including goodwill and an intangible asset as a result of the Merger. The intangible asset has become
impaired and could become further impaired in the future under certain condi ons. In addi on, other long lived assets, including property and equipment,
right-of-use assets or goodwill could become impaired in the future under certain condi ons. Any poten al future impairment of property and equipment,
our right-of-use assets, goodwill or intangible asset may significantly impact our results of opera ons and financial condi on.
As of December 31, 2023, we had approximately $95.1 million in the aggregate of goodwill and a definite lived intangible asset from the Merger, $3.6 million
of property and equipment and $12.4 million right-of-use assets. In accordance with ASC 350, Goodwill and Other, we are required annually for goodwill, or
more frequently upon certain indicators of impairment, to review our es mates and assump ons underlying the fair value of our goodwill and intangible
asset. In addi on, under ASC 360, Property, Plant and Equipment, we are required to review our property and equipment and right-of-use assets whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events giving rise to impairment of long-lived assets
are an inherent risk in the pharmaceu cal industry and o en cannot be predicted.
Condi ons that could indicate impairment and necessitate such a review include, but are not limited to, Auryxia’s commercial performance, our inability to
execute on our strategic ini a ves, the deteriora on of our market capitaliza on such that it is significantly below our net book value, a significant adverse
change in legal factors, unexpected adverse business condi ons, and an adverse ac on or assessment by a regulator. To the extent we conclude our long-lived
assets have become impaired, we may be required to incur material write-offs rela ng to such impairment and any such write-offs could have a material
impact on our future opera ng results and financial posi on. The es mates, judgments and assump ons used in our impairment analyses, and the results of
our analyses, are discussed in Note 2, Summary of Significant Accoun ng Policies, to our consolidated financial statements in Part II, Item 8. Financial
Statements and Supplementary Data of this Form 10-K. If these es mates, judgments and assump ons change in the future, including if the Auryxia asset
group does not meet its current forecasted projec ons, addi onal impairment charges related to plant and equipment, right-of-use assets, goodwill or our
intangible asset could be recorded in the future and addi onal corresponding adjustments may need to be made to the es mated useful life of the developed
product rights for Auryxia, which could materially impact our financial posi on, certain of our material agreements, and our future opera ng results.
If product liability lawsuits are brought against us, we may incur substan al liabili es and may be required to limit commercializa on of Auryxia or
vadadustat, if approved.
We face an inherent risk of product liability as a result of the clinical and commercial use of Auryxia and vadadustat. For example, we may be sued if Auryxia
or vadadustat allegedly causes injury or is found to be otherwise unsuitable during clinical
Akebia Therapeu cs, Inc. | Form 10-K | Page 100
Table of Contents
trials, manufacturing, marke ng or sale. Any such product liability claims may include allega ons of defects in manufacturing, defects in design, a failure to
warn of dangers inherent in the product or product candidate, negligence, strict liability and breach of warran es. Claims could also be asserted under state
consumer protec on acts. If we cannot successfully defend ourselves against product liability claims, we may incur substan al liabili es or be required to limit
commercializa on of Auryxia or vadadustat, if approved. Even a successful defense would require significant financial and management resources. Regardless
of the merits or eventual outcome, product liability claims may result in:
•
•
decreased demand for Auryxia or vadadustat, if approved;
injury to our reputa on and significant nega ve media a en on;
• withdrawal of clinical trial par cipants;
•
•
•
•
•
•
•
•
•
•
delay or termina on of clinical trials;
our inability to con nue to develop Auryxia or vadadustat;
significant costs to defend the related li ga on;
a diversion of management’s me and our resources;
substan al monetary awards to study subjects or pa ents;
product recalls or withdrawals, or labeling, marke ng or promo onal restric ons;
decreased demand for Auryxia or vadadustat, if approved;
loss of revenue;
the inability to commercialize Auryxia or vadadustat, if approved; and
a decline in our stock price.
Failure to obtain and retain sufficient product liability insurance at an acceptable cost to protect against poten al product liability claims could prevent or
inhibit the commercializa on of products we develop. We currently carry product liability insurance that we believe is appropriate for our Company. Although
we maintain product liability insurance, any claim that may be brought against us could result in a court judgment or se lement in an amount that is not
covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions,
and we may be subject to a product liability claim for which we have insufficient or no coverage. If we have to pay any amounts awarded by a court or
nego ated in a se lement that exceed our coverage limita ons or that are not covered by our insurance, we may not have, or be able to obtain, sufficient
capital to pay such amounts. In addi on, insurance coverage is becoming increasingly expensive, and we may not be able to maintain insurance coverage at a
reasonable cost. We also may not be able to obtain addi onal insurance coverage that will be adequate to cover addi onal product liability risks that may
arise. Consequently, a product liability claim may result in losses that could be material to our business.
We will con nue to incur increased costs as a result of opera ng as a public company, and our management will be required to devote substan al me to
compliance ini a ves and corporate governance prac ces.
As a public company, we operate in a demanding regulatory environment, and we have and will con nue to incur significant legal, accoun ng, audi ng and
other expenses. The Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protec on Act, the lis ng
requirements of The Nasdaq Capital Market and other applicable securi es rules and regula ons impose various requirements on public companies, including
establishment and maintenance of effec ve disclosure and financial controls and certain corporate governance prac ces. In par cular, our compliance with
Sec on 404 of the Sarbanes-Oxley Act has required and will con nue to require that we incur substan al accoun ng-related expenses and expend significant
management efforts. Our tes ng, or the tes ng by our independent registered public accoun ng firm, may reveal deficiencies in our internal controls that we
would be required to remediate in a mely manner. If we are not able to comply with the requirements of the Sarbanes-Oxley Act, we could be subject to
sanc ons or inves ga ons by the SEC, the Nasdaq Capital Market or other regulatory authori es, which would require addi onal financial and management
resources and could adversely affect the market price of our securi es. Furthermore, if we cannot provide reliable financial reports or prevent fraud, including
as a result of remote working by our employees, our business and results of opera ons would likely be materially and adversely affected.
We cannot predict or es mate the amount of addi onal costs we may incur to con nue to operate as a public company, nor can we predict the ming of such
costs. These rules and regula ons are o en subject to varying interpreta ons, in many cases due to their lack of specificity and, as a result, their applica on in
prac ce may evolve over me as new guidance is provided by regulatory and governing bodies, which could result in con nuing uncertainty regarding
compliance ma ers and higher costs necessitated by ongoing revisions to disclosure and governance prac ces.
Akebia Therapeu cs, Inc. | Form 10-K | Page 101
Table of Contents
Claims for indemnifica on by our directors and officers may reduce our available funds to sa sfy successful third-party claims against us and may reduce
the amount of money available to us.
Our Ninth Amended and Restated Cer ficate of Incorpora on, as amended, or Charter, and our Second Amended and Restated Bylaws, or Bylaws, as
amended to date, contain provisions that eliminate, to the maximum extent permi ed by the General Corpora on Law of the State of Delaware, or DGCL, the
personal liability of our directors and execu ve officers for monetary damages for breach of their fiduciary du es as a director or officer. Our Charter and our
Bylaws also provide that we will indemnify our directors and execu ve officers and may indemnify our employees and other agents to the fullest extent
permi ed by the DGCL.
In addi on, as permi ed by Sec on 145 of the DGCL our Bylaws and our indemnifica on agreements that we have entered into with our directors and
execu ve officers provide that:
• We will indemnify our directors and officers, as defined in our Bylaws, for serving us in those capaci es or for serving other related business
enterprises at our request, to the fullest extent permi ed by Delaware law. Delaware law provides that a corpora on may indemnify such person if
such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of Akebia and, with
respect to any criminal proceeding, had no reasonable cause to believe such person’s conduct was unlawful.
• We may, in our discre on, indemnify employees and agents in those circumstances where indemnifica on is permi ed by applicable law.
• We are required to advance expenses, as incurred, to our directors and officers in connec on with defending a proceeding, except that such
directors or officers shall undertake to repay such advances if it is ul mately determined that such person is not en tled to indemnifica on.
•
The rights conferred in our Bylaws are not exclusive, and we are authorized to enter into indemnifica on agreements with our directors, officers,
employees and agents and to obtain insurance to indemnify such persons.
Any claims for indemnifica on made by our directors or officers could impact our cash resources and our ability to fund the business.
Our ability to use net opera ng losses to offset future taxable income may be subject to certain limita ons.
Under Sec on 382 of the Internal Revenue Code, or Sec on 382, a corpora on that undergoes an “ownership change” is subject to limita ons on its ability to
u lize its pre-change net opera ng losses, or NOLs, to offset future taxable income. On December 12, 2018, we completed the Merger, which we believe has
resulted in an ownership change under Sec on 382. In addi on, the Tax Cuts and Jobs Act, including amendments made by the CARES Act, includes changes
to U.S. federal tax rates and the rules governing net opera ng loss carryforwards that may significantly impact our ability to u lize our net opera ng losses to
fully offset taxable income in the future. Future changes in our stock ownership, many of which are outside of our control, could result in an addi onal
ownership change under Sec on 382. As a result, if we generate taxable income, our ability to use our pre-change NOL carryforwards to offset federal taxable
income may be subject to limita ons, which could poten ally result in increased future tax liability to us. At the state level, state net opera ng losses
generated in one state cannot be used to offset income generated in another state and there may be periods during which the use of NOL carryforwards is
suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
Furthermore, our ability to u lize our NOLs is condi oned upon our a aining profitability and genera ng U.S. taxable income. As described above under “—
Risks Related to our Financial Posi on, Need for Addi onal Capital and Growth Strategy,” we have incurred significant net losses since our incep on and
an cipate that we will con nue to incur losses for the foreseeable future; thus, we do not know whether or when we will generate the U.S. taxable income
necessary to u lize our NOLs.
Our Charter designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of ac ons and proceedings that
may be ini ated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors,
officers or employees.
Our Charter provides that, subject to limited excep ons, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for (i) any
deriva ve ac on or proceeding brought on our behalf, (ii) any ac on asser ng a claim of breach of a fiduciary duty owed by any of our directors, officers or
other employees to us or our stockholders, (iii) any ac on asser ng a claim against us arising pursuant to any provision of the DGCL our Charter or our Bylaws,
or (iv) any other ac on asser ng a claim against us, our directors, officers or other employees that is governed by the internal affairs doctrine. Under our
Charter, this exclusive forum provision will not apply to claims that are vested in the exclusive jurisdic on of a court or forum other than the Court of
Chancery of the State of Delaware, or for which the Court of Chancery of the State of Delaware does not have subject ma er jurisdic on. For instance, the
provision would not apply to ac ons arising under federal securi es laws, including suits brought to enforce any liability or duty created by the Securi es
Exchange Act of 1934, as amended, or the Exchange Act, or the rules and regula ons thereunder. Any person or en ty purchasing or otherwise acquiring any
Akebia Therapeu cs, Inc. | Form 10-K | Page 102
Table of Contents
interest in shares of our capital stock shall be deemed to have no ce of and to have consented to the provisions of our Charter described above. This choice
of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or
other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alterna vely, if a court were to find these
provisions of our Charter inapplicable to, or unenforceable with respect to, one or more of the specified types of ac ons or proceedings, we may incur
addi onal costs associated with resolving such ma ers in other jurisdic ons, which could adversely affect our business and financial condi on.
We are currently subject to legal proceedings that could result in substan al costs and divert management's a en on, and we could be subject to
addi onal legal proceedings.
We are currently subject to legal proceedings, including those described in Part I, Item 3. Legal Proceedings in this Form 10-K, and addi onal claims may arise
in the future. In addi on, securi es class ac on and deriva ve lawsuits and other legal proceedings are o en brought against companies for any of the risks
described in this Form 10-K following a decline in the market price of their securi es. For example, we were party to a puta ve class ac on lawsuit in state
court filed by purported Keryx stockholders challenging the disclosures made in connec on with the Merger, including those that relate to vadadustat’s
safety, approvability and commercial viability. Oral argument was held on October 7, 2022, and the Court dismissed the complaint without prejudice on
October 17, 2022, giving plain ffs thirty days to amend their complaint. On November 16, 2022, plain ffs filed an amended consolidated complaint, asser ng
the same claims and seeking the same relief as the consolidated complaint. On January 18, 2023, defendants moved to dismiss the amended consolidated
complaint in its en rety. Briefing on defendants’ mo on to dismiss the amended consolidated complaint was completed on April 5, 2023 and oral argument
was held on March 13, 2024. At the conclusion of the hearing, the Court granted our mo on to dismiss. In connec on with any li ga on or other legal
proceedings, we could incur substan al costs, and such costs and any related se lements or judgments may not be covered by insurance. Monetary damages
or any other adverse judgment would have a material adverse effect on our business and financial posi on. In addi on, if other resolu on or ac ons taken as
a result of legal proceedings were to restrain our ability to operate or market our products and services, our consolidated financial posi on, results of
opera ons or cash flows could be materially adversely affected. We could also suffer an adverse impact on our reputa on, nega ve publicity and a diversion
of management’s a en on and resources, which could have a material adverse effect on our business.
Risks Related to our Common Stock
Our stock price has been and may con nue to be vola le, which could result in substan al losses for holders or future purchasers of our common stock and
lawsuits against us and our officers and directors.
Our stock price has been and will likely con nue to be vola le. The stock market in general and the market for similarly situated biopharmaceu cal companies
specifically have experienced extreme vola lity that has o en been unrelated to the opera ng performance of par cular companies, such as rising infla on
and increasing interest rates. Since our ini al public offering in March 2014, the price of our common stock as reported on The Nasdaq Stock Market has
ranged from a low of $0.24 on October 24, 2022 to a high of $31.00 on June 20, 2014. The daily closing market price for our common stock varied between a
high price of $1.84 on August 1, 2023 and a low price of $0.51 on April 5, 2023 in the twelve-month period ending on December 31, 2023. During that me,
the price of our common stock ranged from an intra-day low of $0.49 per share to an intra-day high of $1.84 per share. The market price of shares of our
common stock could be subject to wide fluctua ons in response to many risk factors listed in this sec on, including, among others, developments related to
and results of our research or clinical trials, developments related to our regulatory submissions and mee ngs with regulatory authori es, in par cular as it
relates to vadadustat, commercializa on of Auryxia, vadadustat in Europe and, if and as approved in the U.S. and other foreign markets, and any other
product candidates, announcements by us or our compe tors of significant transac ons or strategic collabora ons, nega ve publicity around Auryxia or
vadadustat, regulatory or legal developments in the U.S. and other countries, developments or disputes concerning our intellectual property, the recruitment
or departure of key personnel including as a result of our reduc ons in workforce, actual or an cipated changes in es mates as to financial results, changes in
the structure of healthcare payment systems, market condi ons in the biopharmaceu cal sector, poten al delis ng from The Nasdaq Stock Market and other
factors beyond our control. As a result of this vola lity, our stockholders may not be able to sell their common stock at or above the price at which they
purchased it.
In addi on, companies that have experienced vola lity in the market price of their stock have frequently been the subject of securi es class ac on and
shareholder deriva ve li ga on. See Part I, Item 3. Legal Proceedings of this Form 10-K for informa on concerning securi es class ac on ini ated against
Keryx and certain current and former directors and officers of ours and Keryx’s. In addi on, we could be the target of other such li ga on in the future. Class
ac on and shareholder deriva ve lawsuits, whether successful or not, could result in substan al costs, damage or se lement awards and a diversion of our
management’s resources and a en on from running our business, which could materially harm our reputa on, financial condi on and results of opera ons.
Akebia Therapeu cs, Inc. | Form 10-K | Page 103
Table of Contents
The issuance of addi onal shares of our common stock or the sale of shares of our common stock by any of our directors, officers or significant
stockholders will dilute our stockholders’ ownership interest in Akebia and may cause the market price of our common stock to decline.
Most of our outstanding common stock can be traded without restric on at any me. As such, sales of a substan al number of shares of our common stock in
the public market could occur at any me. These sales, or the percep on in the market that the holders of a large number of shares intend to sell such shares,
could reduce the market price of our common stock.
As of December 31, 2023 and based on the amounts reported in the most recent filings made under Sec on 13(d) and 13(g) of the Exchange Act, Muneer A.
Sa er, or Sa er, beneficially owned approximately 8.3% of our outstanding shares of common stock, the Vanguard Group, or Vanguard, beneficially owned
approximately 4.0% of our outstanding shares of common stock, and CSL Vifor beneficially owned approximately 4% of our outstanding shares of common
stock. By selling a large number of shares of common stock, Sa er or Vanguard could cause the price of our common stock to decline. The shares beneficially
owned by CSL Vifor have not been registered pursuant to the Securi es Act and were issued and sold in reliance upon the exemp on from registra on
contained in Sec on 4(a)(2) of the Securi es Act and Rule 506 promulgated thereunder, but if they are registered in the future, those shares would become
freely tradable and, if a large por on of such shares are sold, could cause the price of our common stock to decline.
In addi on, we entered into a warrant agreement with Kreos Capital VII Aggregator SCSp, an affiliate of Kreos, or the Warrant Holder, pursuant to which (i) we
issued a warrant to the Warrant Holder to purchase 3,076,923 shares of our common stock, at an exercise price per share of $1.30 (subject to standard
adjustments for stock splits, stock dividends, rights offerings and pro rata distribu ons), or the Exercise Price, and (ii) if we drawdown the Tranche C Loan, at
that me we will issue a warrant to the Warrant Holder to purchase 1,153,846 shares of our common stock, at an exercise price per share equal to the
Exercise Price. Each warrant is exercisable for eight years from date of issuance. If any or all of the warrants are exercised, our stockholders could realize
dilu on, and the value of their shares could decrease.
We have a significant number of shares that are subject to outstanding op ons and restricted stock units, and in the future we may issue addi onal op ons,
restricted stock units, or other deriva ve securi es conver ble into our common stock. The exercise or ves ng of any such op ons, restricted stock units, or
other deriva ve securi es, and the subsequent sale of the underlying common stock, could cause a further decline in our stock price. These sales also might
make it difficult for us to sell equity securi es in the future at a me and at a price that we deem appropriate. Such sales of our common stock could result in
higher than average trading volume and may cause the market price for our common stock to decline.
Sales of substan al amounts of shares of our common stock or other securi es by our employees or our other stockholders or by us under any shelf
registra on statement, pursuant to at-the-market offerings or otherwise, could dilute our stockholders, lower the market price of our common stock and
impair our ability to raise capital through the sale of equity securi es.
Our execu ve officers, directors and principal stockholders maintain the ability to significantly influence all ma ers submi ed to stockholders for approval.
As of December 31, 2023, our execu ve officers, directors and principal stockholders, in the aggregate, beneficially owned shares represen ng a significant
percentage of our capital stock. As a result, if these stockholders were to choose to act together, they would be able to significantly influence all ma ers
submi ed to our stockholders for approval, as well as our management and affairs. For example, these persons could significantly influence the elec on of
directors and approval of any merger, consolida on or sale of all or substan ally all of our assets. This concentra on of vo ng power could delay or prevent
an acquisi on of our Company on terms that other stockholders may desire.
Provisions in our organiza onal documents and Delaware law may have an -takeover effects that could discourage an acquisi on of us by others, even if
an acquisi on would be beneficial to our stockholders, and may prevent a empts by our stockholders to replace or remove our current management.
Provisions in our Charter and our Bylaws contain provisions that may have the effect of discouraging, delaying or preven ng a change in control of us or
changes in our management. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock,
thereby depressing the market price of our common stock. In addi on, because our Board of Directors is responsible for appoin ng certain members of our
management team, these provisions may frustrate or prevent any a empts by our stockholders to replace or remove our current management by making it
more difficult for stockholders to replace members of our Board of Directors. Among other things, these provisions:
•
•
•
authorize “blank check” preferred stock, which could be issued by our Board of Directors without stockholder approval and may contain vo ng,
liquida on, dividend and other rights superior to our common stock;
create a classified Board of Directors whose members serve staggered three-year terms;
specify that special mee ngs of our stockholders can be called only by our Board of Directors pursuant to a resolu on adopted by a majority of the
total number of directors;
Akebia Therapeu cs, Inc. | Form 10-K | Page 104
Table of Contents
•
•
•
•
•
•
prohibit stockholder ac on by wri en consent;
establish an advance no ce procedure for stockholder approvals to be brought before an annual mee ng of our stockholders, including proposed
nomina ons of persons for elec on to our Board of Directors;
provide that our directors may be removed only for cause;
provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum;
require a supermajority vote of 75% of the holders of our capital stock en tled to vote or the majority vote of our Board of Directors to amend our
Bylaws; and
require a supermajority vote of 85% of the holders of our capital stock en tled to vote to amend the classifica on of our Board of Directors and to
amend certain other provisions of our Charter.
These provisions, alone or together, could delay or prevent hos le takeovers, changes in control or changes in our management.
In addi on, Sec on 203 of the DGCL prohibits a publicly-held Delaware corpora on from engaging in a business combina on with an interested stockholder,
generally a person which together with its affiliates owns, or within the last three years has owned, 15% of our vo ng stock, for a period of three years a er
the date of the transac on in which the person became an interested stockholder, unless the business combina on is approved in a prescribed manner.
Because we do not an cipate paying any cash dividends on our capital in the foreseeable future, capital apprecia on, if any, will be our stockholders’ sole
source of gain.
We have never declared or paid cash dividends on our capital stock and we currently intend to retain all of our future earnings, if any, to finance the
development and growth of our business. Any payment of cash dividends in the future would be at the discre on of our Board of Directors and would depend
on, among other things, our earnings, financial condi on, capital requirements, level of indebtedness, statutory and contractual restric ons applying to the
payment of dividends and other considera ons that the Board of Directors deems relevant. In addi on, the terms of the BlackRock Credit Agreement
preclude us from paying cash dividends without prior wri en consent of the lender and future debt agreements may preclude us from paying cash dividends.
As a result, capital apprecia on, if any, of our common stock will be our stockholders’ sole source of gain for the foreseeable future.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity.
Cybersecurity Risk Management and Strategy
We have certain processes for assessing, iden fying, and managing material risks from cybersecurity threats, which are integrated into our enterprise risk
management processes. Specifically, we have processes for:
•
•
•
Iden fying and Managing Cybersecurity Risks — We have implemented a cross-func onal approach to assessing, iden fying and managing material
cybersecurity threats and incidents. We periodically review, assess, update and test our policies, standards, processes and prac ces in a manner
intended to address cybersecurity threats and events. The results of such reviews, assessments and tests are evaluated by management and
reported to our Audit Commi ee of the Board of Directors, or the Audit Commi ee, and our Board of Directors.
Technical Safeguards — We have integrated cybersecurity into our overall informa on technology opera ons and designed our processes and
systems to help protect our informa on assets and opera ons from internal and external cyber threats, protect employee and pa ent informa on
from unauthorized access or a ack as well as secure our networks and systems.
Incident Response and Recovery Planning — To be er facilitate our cybersecurity program, our cybersecurity team works collabora vely across our
Company to implement programs designed to protect our informa on systems from cybersecurity threats and to promptly respond to any material
cybersecurity incidents. We conduct regular tabletop exercises, including incident simula ons to test these plans and ensure personnel are familiar
with their roles and responsibili es in a response scenario.
Akebia Therapeu cs, Inc. | Form 10-K | Page 105
Table of Contents
•
•
Third-Party Risk Management — We maintain a risk-based approach to iden fying and overseeing material cybersecurity threats presented by third
par es and the systems of third par es that could adversely impact our business in the event of a material cybersecurity incident affec ng those
third-party systems.
Educa on and Awareness — We provide training regarding cybersecurity threats as a means to equip our employees and consultants with tools to
make employees and consultants aware of and to address cybersecurity threats, and to communicate our evolving informa on security policies,
standards, processes and prac ces. We also use technology-based tools to mi gate cybersecurity risks and to bolster our employee-based
cybersecurity programs.
We adjust our cybersecurity policies, standards, processes, and prac ces as necessary based on the informa on provided by our assessments, audits and
reviews. Such processes include (i) procedural and technical safeguards, (ii) response plans, (iii) annual tests on our systems, (iv) incident simula ons and (v)
rou ne review of our cybersecurity policies and procedures to iden fy risks and improve our prac ces. We engage certain external cybersecurity firms to
enhance our cybersecurity oversight. We include confiden ality provisions in all contracts with third-party service providers, and data protec on provisions in
certain contracts with third-party service providers where applicable, to help protect us and our employees and pa ents from any related vulnerabili es.
Governance
Our Board of Directors is responsible for exercising oversight of management’s iden fica on and management of, and planning for, risks from cybersecurity
threats. While the full Board of Directors has overall responsibility for risk oversight, the Board of Directors has delegated oversight responsibility related to
risks from cybersecurity threats to the Audit Commi ee. The Audit Commi ee reports to the Board of Directors at least annually, and no fies the Board of
Directors as necessary regarding significant new cybersecurity threats or incidents. The Audit Commi ee of our Board of Directors meets annually to discuss
our approach to overseeing cybersecurity threats with management, including with members of our internal cybersecurity team.
We use an internal management commi ee to run our informa on and technology team and our informa on and technology team includes our
cybersecurity team lead who has served in various roles in informa on technology and informa on security for over 25 years, including at other public
companies. Through ongoing communica ons with this management commi ee, senior management is informed about and monitors the preven on,
detec on, mi ga on and remedia on of cybersecurity threats and incidents in real- me and reports such threats and incidents to the Audit Commi ee,
when appropriate. Management updates the Audit Commi ee quarterly with an overview of our cybersecurity threat risk management and strategy
processes. Members of the Audit Commi ee are also encouraged to regularly engage in ad hoc conversa ons with management on cybersecurity-related
topics and discuss any updates to our cybersecurity risk management and strategy programs. The Audit Commi ee is no fied between such updates
regarding significant new cybersecurity threats or incidents that meet pre-established repor ng thresholds and any ongoing updates regarding any risk, as
needed.
We have not iden fied any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are
reasonably likely to materially affect our company, including our business strategy, results of opera ons or financial condi on. However, as discussed under
“Risk Factor — Risks Related to our Business and Managing Growth” in Part I, Item 1A of this Form 10-K, cybersecurity threats could pose mul ple risks to us.
As cybersecurity threats become more frequent, sophis cated, and coordinated, it is reasonably likely that we will be required to expend greater resources to
con nue to modify and enhance our protec ve measures.
Item 2. Proper es
We currently lease approximately 65,167 square feet of office, storage and laboratory space in Cambridge, Massachuse s, which is our corporate
headquarters. Excluding renewal op ons, the lease for our Cambridge, Massachuse s office and storage space expires on September 11, 2026 and the lease
for our laboratory space expires on January 31, 2025. In the third quarter of 2022, as a result of the reduc ons in our workforce and our transi on to
primarily hybrid and remote work schedules, we ceased using two-thirds of the office space, and began to market up to 59,216 square feet of furnished office
space for sublease. We believe our exis ng facili es are adequate to meet our opera onal needs.
Item 3. Legal Proceedings
Opposi on Proceedings Against Akebia
In September 2018, Dr. Reddy’s Laboratories Limited filed an opposi on to our issued Indian Patent No. 287720 in the Indian Patent Office.
Akebia Therapeu cs, Inc. | Form 10-K | Page 106
Table of Contents
On July 26, 2022, Sandoz AG filed an opposi on against our issued European Patent No. 3277270 in the European Patent Office, or the EPO. During an oral
proceeding held on February 6, 2024, the EPO's Opposi on Division rejected the opposi on and upheld the patent as granted.
Se led Opposi on Proceedings Against Akebia
On February 13, 2023, FibroGen, Inc., or FibroGen, filed an opposi on against our issued European Patent No. 3357911, or the ’911 EP Patent, in the EPO. On
November 21, 2023, we and our collabora on partner in Japan, Mitsubishi Tanabe Pharma Corpora on, or MTPC, entered into a Se lement and Cross
License Agreement, or the Se lement Agreement, with FibroGen and its collabora on partner in Europe and Japan, Astellas Pharma Inc., or Astellas. This
Se lement Agreement resolves all patent disputes between Akebia, MTPC, FibroGen and Astellas in the EU, the contrac ng states to the European Patent
Conven on, the UK, and Japan with no cash payment. On November 22, 2023, FibroGen withdrew the opposi on against the ’911 EP Patent pursuant to the
terms of the Se lement Agreement.
Se led Proceedings Filed by Akebia Against FibroGen
Europe
We filed an opposi on in the EPO against FibroGen’s European Patent No. 1463823, or the ’823 EP Patent on December 5, 2013, and an oral proceeding took
place March 8 and 9, 2016. Following the oral proceeding, the Opposi on Division of EPO ruled that the patent as granted did not meet the requirements for
patentability under the European Patent Conven on and, therefore, revoked the patent in its en rety. FibroGen appealed that decision. On February 27,
2023, FibroGen withdrew its appeal, and the patent remains revoked.
On April 3, 2019, we filed opposi ons to FibroGen’s European Patent Nos. 2289531, or the ’531 EP Patent, and 2298301, or the ’301 EP Patent in the EPO,
respec vely, reques ng the patents be revoked in their en rety. Oral proceedings for opposi ons to the two patents were held on September 7, 8 and 10,
2021. Following oral proceedings, the Opposi on Division of the EPO maintained certain claims in amended form in the two patents. On January 26, 2022, we
filed no ce to appeal the Opposi on Division’s decision for ’531 EP Patent. On July 8, 2022, FibroGen filed no ce to appeal the Opposi on Division’s decision
for the ’301 EP Patent, which it withdrew on August 17, 2022. On November 21, 2023, we withdrew our appeal to the Opposi on Division’s decision for ’531
EP Patent pursuant to the terms of the Se lement Agreement.
Japan
In 2018, we and MTPC jointly filed a Request for Trial before the Japan Patent Office, or JPO to challenge the validity of certain of FibroGen’s HIF-related
patents in Japan: JP4845728, JP5474872 and JP5474741. On September 26, 2019, the JPO conducted an invalida on trial for JP5474872 and JP4845728. On
November 11, 2019, the JPO conducted an invalida on trial for JP5474741. On April 1, 2022, the JPO issued a final decision for JP4845728, which invalidated
all claims except claims directed to the medical use to treat anemia that does not respond to erythropoiesis. On May 18, 2022, the JPO issued a final decision
for JP5474741 and JP5474872, which maintained the claims in amended form. In May 2022, MTPC filed revoca on lawsuits for the three patents in the
Intellectual Property High Court reques ng cancella on of the JPO’s decisions. In July 2022, we filed a revoca on lawsuit for JP4845728 in the Intellectual
Property High Court reques ng cancella on of the JPO’s decision. In August 2022, we filed revoca on lawsuits for JP5474741 and JP5474872 in the
Intellectual Property High Court reques ng cancella on of the JPO’s decisions. In September 2022, FibroGen filed a revoca on lawsuit for JP4845728 in the
Intellectual Property High Court reques ng cancella on of the JPO’s decision on the claims that were invalidated. In November 2023, Akebia, MTPC, and
FibroGen filed with the Japan Intellectual High Court wri en consent to withdraw the revoca on lawsuits related to JP4845728, JP5474872 and JP5474741
pursuant to the terms of the Se lement Agreement.
United Kingdom
On December 13, 2018, we filed Par culars of Claim in the Patents Court of the United Kingdom to challenge the validity of FibroGen’s six HIF-related patents
in the UK: the ’823 EP Patent (UK), European Patent (UK) No. 1633333, or the ’333 EP Patent (UK), European Patent (UK) No. 2322153, or the ’153 EP Patent
(UK), European Patent (UK) No. 2322155, or the ’155 EP Patent (UK), European Patent (UK) No. 2,289,531, or the ’531 EP Patent (UK), and European Patent
(UK) No. 2,298,301, or the ’301 EP Patent (UK). In May 2019, Astellas, the exclusive licensee of FibroGen’s HIF-related patents, sued Akebia for patent
infringement in the Patents Court of the UK. In September 2019, we filed an Amended Par culars of Claim to include FibroGen’s European Patent No.
1487472, or the ’472 EP Patent (UK). On February 28, 2020, the par es agreed to dismiss the ’472 EP Patent (UK) from the trial.
A trial was conducted in March 2020. On April 20, 2020, the Patents Court of the UK issued a judgment in favor of Akebia, which invalidated all the claims at
issue in each of the ’823 EP Patent (UK), the ’333 EP Patent (UK), the ’153 EP Patent (UK), the ’155 EP Patent (UK) and the ’301 EP Patent (UK). The ’531 EP
Patent (UK) was amended to a single claim to recite one specific compound; this claim was held to be valid but not infringed by vadadustat. On June 11, 2020,
FibroGen and Astellas appealed the Patents Court’s judgment on the invalidity of the ’823 EP Patent (UK), the ’301 EP Patent (UK), the ’333 EP
Akebia Therapeu cs, Inc. | Form 10-K | Page 107
Table of Contents
Patent (UK), the ’153 EP Patent (UK), and the ’155 EP Patent (UK) in the Court of Appeal (Civil Division). On June 8, 2021 - June 10, 2021, the United Kingdom
Court of Appeal held a three-day hearing for the appeal. On August 24, 2021, the Court of Appeal issued a judgment, which reversed the Patents Court’s
judgment on the invalidity of the ’823 EP Patent (UK) and maintained certain claims of the ’823 EP Patent (UK) and the ’301 EP Patent (UK) in amended form,
and which affirmed the Patents Court’s judgment on the invalidity of the ’333 EP Patent (UK), the ’155 EP Patent (UK), and the ’153 EP Patent (UK). Akebia
sought permission to appeal to the UK Supreme Court, which was granted on October 3, 2022. On November 28, 2023, we filed an applica on for withdrawal
of the Appeal at the UK Supreme Court pursuant to the terms of the Se lement Agreement. On December 15, 2023, the UK Supreme Court ordered that the
Appeal be withdrawn.
Legal Proceedings Rela ng to Auryxia
Stockholder Li ga on Rela ng to the Merger
On June 28, 2018, we entered into an Agreement and Plan of Merger with Keryx and Alpha Therapeu cs Merger Sub, Inc., or the Merger Sub, pursuant to
which the Merger Sub merged with and into Keryx, with Keryx becoming a wholly owned subsidiary of ours, or the Merger. On December 12, 2018, we
completed the Merger.
On July 15, 2021, a purported former Keryx stockholder filed a puta ve class ac on in the Supreme Court of the State of New York against Akebia, a current
officer of Akebia (John P. Butler), a former officer of Akebia (Jason A. Amello), former directors of Akebia (Muneer A. Sa er, Sco A. Canute, Michael D.
Clayman, Maxine Gowen, Duane Nash, Ronald C. Renaud, Jr., and Michael S. Wyzga), a current director of Akebia (Cynthia Smith), a former director and
officer of Keryx (Jodie P. Morrison), a former officer of Keryx (Sco A. Holmes) and former directors of Keryx (Michael Rogers, Kevin J. Cameron, Steven C.
Gilman, Daniel P. Regan, Mark J. Enyedy, and Michael T. Heffernan, some of whom are current members of our Board of Directors). The ac on is cap oned
Loper v. Akebia Therapeu cs, Inc., et al., or the Loper Ac on. The complaint in the Loper Ac on alleges that the registra on statement filed in connec on
with the Merger contained allegedly false and misleading statements or failed to disclose certain allegedly material informa on in viola on of Sec on 11,
12(a)(2), and 15 of the Securi es Act of 1933, as amended. It alleges, among other things, that Akebia failed to disclose heightened safety risks that allegedly
threatened the prospects of the Phase 3 PRO2TECT clinical trial and the commercial viability of vadadustat. The complaint in the Loper Ac on seeks damages
including interest thereon, an award of plain ffs’ and the class’s costs and expenses, including counsel fees and expert fees, and rescission, disgorgement, or
such other equitable or injunc ve relief that the Court deems appropriate.
On August 16, 2021, another purported former Keryx stockholder filed a puta ve class ac on making substan ally similar allega ons and asser ng the same
claims as the Loper Ac on, also in the Supreme Court of the State of New York against Akebia and many of the same individual defendants named in the
Loper Ac on. The ac on is cap oned Panicho v. Akebia Therapeu cs, Inc., et al., or the Panicho Ac on.
On September 13, 2021, the par es in the Loper Ac on and Panicho Ac on entered into a joint s pula on and proposed order, which provided for the
consolida on of the two ac ons under the cap on In re Akebia Therapeu cs, Inc. Securi es Li ga on, or the Consolidated State Ac on. On October 27, 2021,
plain ffs filed a consolidated complaint in the Consolidated State Ac on. On January 10, 2022, defendants moved to dismiss the consolidated complaint in its
en rety. Briefing on defendants’ mo on to dismiss was completed on April 22, 2022. Oral argument was held on October 7, 2022, and the Court dismissed
the complaint without prejudice on October 17, 2022, giving plain ffs thirty days to amend their complaint. On November 16, 2022, plain ffs filed an
amended consolidated complaint, asser ng the same claims and seeking the same relief as the consolidated complaint. On January 18, 2023, defendants
moved to dismiss the amended consolidated complaint in its en rety, and the plain ffs filed their opposi on on March 6, 2023. Briefing on defendants’
mo on to dismiss the amended consolidated complaint was completed on April 5, 2023. Oral argument was held on March 13, 2024. At the conclusion of the
hearing, the Court granted our mo on to dismiss.
We deny any allega ons of wrongdoing and intend to con nue vigorously defending against the one ac ve stockholder lawsuit described in this Legal
Proceedings sec on, the Consolidated State Ac on. There is no assurance, however, that we will be successful in the defense of this ac on, or any associated
appeals, or that insurance will be available or adequate to fund any se lement or judgment or the li ga on costs of this ac on. Moreover, we are unable to
predict the outcome or reasonably es mate a range of possible losses at this me. A resolu on of the Consolidated State Ac on in a manner adverse to us,
however, could have a material effect on our financial posi on and results of opera ons in the period in which the ac on is resolved.
Se led ANDA Li ga on
In February 2023, we received a Paragraph IV cer fica on no ce le er regarding an Abbreviated New Drug Applica on, or ANDA, submi ed to the U.S. Food
and Drug Administra on, or FDA, by Zydus Worldwide DMCC reques ng approval for a generic version of Auryxia tablets (210 mg ferric iron per tablet). On
March 24, 2023, we and Panion & BF Biotech, Inc., or Panion, filed a complaint for patent infringement against Zydus Worldwide DMCC, Zydus
Pharmaceu cals (USA) Inc., and Zydus Lifesciences Limited, or collec vely Zydus, in the United States District Court for the District of Delaware arising from
Akebia Therapeu cs, Inc. | Form 10-K | Page 108
Table of Contents
Zydus’ ANDA filing with the FDA. On May 30, 2023, we and Panion entered into a se lement and license agreement with Zydus, which resolved the patent
li ga on brought by we and Panion. Such se lement and license agreement, consistent with our prior ANDA se lements, granted Zydus a license to market a
generic version of Auryxia in the U.S. beginning on March 20, 2025 (subject to FDA approval), or earlier under certain circumstances customary for se lement
agreements of this nature. Addi onally, in accordance with the se lement and license agreement, the par es terminated all ongoing li ga on among us,
Panion and Zydus regarding Auryxia patents pending in the Delaware District Court. The se lement and license agreement is confiden al and subject to
review by the U.S. Federal Trade Commission and the U.S. Department of Jus ce. On June 5, 2023, the Delaware District Court entered a s pula on and order
of dismissal filed by the par es to terminate the ac on against Zydus.
Item 4. Mine Safety Disclosures
Not applicable.
Akebia Therapeu cs, Inc. | Form 10-K | Page 109
Table of Contents
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Ma ers and Issuer Purchases of Equity Securi es
Market Informa on
Our common stock is traded on The Nasdaq Capital Market under the symbol “AKBA”.
Holders
At March 12, 2024, there were approximately 30 holders of record of our common stock. The number of record holders is based upon the actual number of
holders registered on our books at such date and does not include shares held in street name by brokers or other nominees, and shares held by persons,
partnerships, associa ons, corpora ons or other en es whose shares are held by depository trust companies.
Dividends
We have never declared or paid any cash dividends on our common stock and we do not an cipate paying cash dividends in the foreseeable future. In
addi on, the terms of our BlackRock Credit Agreement preclude us from paying cash dividends without prior wri en consent and future debt agreements
may preclude us from paying cash dividends.
Issuer Purchases of Equity Securi es
None.
Recent Sales of Unregistered Securi es
None.
Purchases of Equity Securi es by the Issuer and Affiliated Purchasers
None.
Compara ve Stock Performance Graph
We are a smaller repor ng company, as defined by Rule 12b-2 of the Exchange Act, and are not required to provide a stock performance graph.
Securi es Authorized for Issuance under Equity Compensa on Plans
Informa on about our equity compensa on plans is incorporated herein by reference to Item 12, Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Ma ers, of this Form 10-K.
Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condi on and Results of Opera ons
This Annual Report on Form 10-K, or Form 10-K, including this management's discussion and analysis of financial condi on and results of opera ons, contains
forward-looking statements based upon current expecta ons that involve risks and uncertain es. Our actual results may differ materially from those described
in or implied in these forward-looking statements as a result of various factors, including those factors set forth in the “Risk Factors” sec on included in Part I,
Item 1A of this Form 10-K. All references to years, unless otherwise noted, refer to our fiscal years, which end on December 31. For purposes of this sec on, all
references to “we,” “us,” “our,” “Akebia,” or the “Company” refer to Akebia Therapeu cs, Inc. and its consolidated subsidiaries.
The following discussion and analysis should also be read in conjunc on with the accompanying audited consolidated financial statements and related notes
included in Part II, Item 8 of this Form 10-K. This sec on discusses 2023 and 2022 financial condi on, and results of opera ons and year-to-year comparisons
between 2023 and 2022. For discussion of 2022 items and year-over-year comparisons between 2022 and 2021 that are not included in this 2023 Form 10-K,
refer to “Item 7. – Management’s Discussion and Analysis of Financial Condi on and Results of Opera ons” found in our Form 10-K/A for the year ended
December 31, 2022, that was filed with the Securi es and Exchange Commission on August 28, 2023.
Business Overview
We are a fully integrated commercial-stage biopharmaceu cal company commi ed to addressing pa ents’ unmet needs. We have built a business focused on
developing and commercializing innova ve therapeu cs that we believe serves as a founda on for future growth. Our purpose is to be er the life of each
person impacted by kidney disease, and we have established ourselves as a leader in the kidney community. We believe our demonstrated ability to deliver
value broadly to the kidney community has enabled us to build a sustainable company. Upon this solid founda on and our con nued
Akebia Therapeu cs, Inc. | Form 10-K | Page 110
Table of Contents
commitment to pa ents, we believe focusing on all pa ents who can realize a meaningful benefit from our medicines, will result in delivering value for our
shareholders.
Our current por olio includes:
•
•
Auryxia® (ferric citrate) is an an orally administered medicine approved and marketed in the United States, or U.S., for two indica ons: (1) the
control of serum phosphorus levels in adult pa ents with dialysis dependent chronic kidney disease, or DD-CKD, and (2) the treatment of iron
deficiency anemia, or IDA, in adult pa ents with non-dialysis-dependent chronic kidney disease, or NDD-CKD. Today, we market Auryxia in the U.S.
with our well-established, nephrology-focused commercial organiza on. Our Japanese sublicensee, Japan Tobacco, Inc., and its subsidiary, Torii
Pharmaceu cal Co., Ltd., collec vely, JT and Torii, commercialize ferric citrate hydrate as Riona in Japan. Averoa SAS, or Averoa, has an exclusive
license to develop and commercialize ferric citrate in the European Economic Area, or EEA, Turkey, Switzerland and the United Kingdom, or UK. We
expect Averoa will apply for marke ng authoriza on for ferric citrate in Europe.
Vafseo™ (vadadustat) is an oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH, inhibitor, approved in 36 countries as a treatment for anemia
due to CKD. In the European Union, or EU, the UK, Switzerland and Australia, vadadustat is approved under the trade name Vafseo for the treatment
of symptoma c anemia associated with chronic kidney disease, or CKD, in adults on chronic maintenance dialysis. In May 2023, we entered into a
License Agreement with MEDICE Arzneimi el Pü er GmbH & Co. KG, or Medice, pursuant to which we granted Medice an exclusive license to
develop and commercialize vadadustat for the treatment of anemia in pa ents with CKD in the EEA, the UK, Switzerland and Australia, or the Medice
Territory. In Japan, vadadustat is approved as a treatment for anemia due to CKD in both dialysis dependent and non-dialysis dependent pa ents
under the trade name Vafseo, and is marketed and sold by our collaborator Mitsubishi Tanabe Pharma Corpora on, or MTPC. In Taiwan, vadadustat
is approved for the treatment of symptoma c anemia due to CKD in adult pa ents on chronic maintenance dialysis and in Korea as an anemia
treatment for pa ents with CKD on hemodialysis. MTPC plans to commercialize vadadustat in Taiwan. We con nue to pursue approval for
vadadustat in the U.S., and in September 2023, we completed our resubmission to our New Drug Applica on, or NDA, for the treatment of anemia
due to CKD for dialysis dependent pa ents to the U.S. Food and Drug Administra on, or FDA. In October 2023, the FDA acknowledged that the
resubmission was complete, classified it as a Class 2 response and set a user fee goal date, or PDUFA Date, of March 27, 2024. Beyond seeking U.S.
approval, we have several lifecycle management and indica on expansion opportuni es currently under evalua on for vadadustat, including the
poten al for alterna ve dosing and label expansion for treatment of adult pa ents not on dialysis.
• Our HIF-based pipeline assets are molecules being evaluated to target areas of unmet needs in acute care se ngs. The discovery of hypoxia-
inducible factor, or HIF, laid the founda on to explore the central role of oxygen sensing in many diseases. As we have seen through the
development of vadadustat as a treatment for anemia due to CKD, when stabilized, HIF triggers wide-ranging adap ve, protec ve responses during
hypoxic or ischemic condi ons. We have selected two addi onal HIF molecules for preclinical development: AKB-9090, for use in an acute care
se ng, poten ally for acute kidney disease, or AKI, or acute respiratory distress syndrome, or ARDS, and AKB-10108 for re nopathy of prematurity,
or ROP, in neonates.
We con nue to explore addi onal commercial and development opportuni es to expand our pipeline and por olio of novel therapeu cs through both
internal research and external innova on to leverage our fully integrated team.
Factors Affec ng Our Performance and Results of Opera on
Financial Highlights
Net product revenue in 2023 decreased by approximately 4% to $170.3 million from $176.9 million in 2022, primarily due to a decrease in Auryxia product
volume par ally offset by increases in pricing, improved payor mix and execu on of our contrac ng strategy with third-party payors.
We have incurred net losses in each year since incep on. Our net losses were $51.9 million and $94.2 million for the years ended December 31, 2023 and
2022, respec vely. Substan ally all of our net losses resulted from costs incurred in connec on with the con nued commercializa on of Auryxia and
development efforts rela ng to vadadustat, including conduc ng clinical trials of, and seeking regulatory approval for, vadadustat, providing general and
administra ve support for these opera ons and protec ng our intellectual property.
Financial Components
Product Revenue
We generate product revenue from commercial sales of Auryxia to a limited number of wholesale distributors as well as certain specialty pharmacy providers.
Our net product revenue includes many variables, including judgments and es mates of discounts, rebates and product returns, which can fluctuate from
quarter-to-quarter and year-over-year. We evaluate, at least
Akebia Therapeu cs, Inc. | Form 10-K | Page 111
Table of Contents
annually and more frequently, if needed, the price of Auryxia, which will lose exclusivity, or LoE, in March 2025. We expect our product revenue to con nue
to be generated primarily from our commercial sales of Auryxia.
Due to the buying pa erns of our customers we tend to have seasonality from quarter to quarter. In general, our first quarter usually has lower revenues than
the preceding fourth quarter, the second and third quarters have higher revenues than the first quarter, and the fourth quarter revenues are the highest in
the year. While seasonality may affect quarterly comparisons within a fiscal year, it generally is not material to our annual consolidated results. However, we
expect Auryxia to be included in the ESRD bundle star ng in January 2025, which coupled with Auryxia's LoE in March 2025 may impact the buying pa erns
of our exis ng customers during 2024, and therefore their buying pa ern in 2024 may be different than their historical prac ces.
We believe the Centers for Medicare & Medicaid Services', or CMS, decision to include phosphate binders in the dialysis bundle could poten ally lead to
higher sales of Auryxia a er the LoE date than in other LoE scenarios, and plan to work with payors and providers to seek to con nue the use of Auryxia
beyond LoE.
License, Collabora on and Other Revenue
License, collabora on and other revenue includes revenue earned under collabora on agreements, license fees, royalty payments and revenue from product
we supply under our license and supply agreements with our collabora on partners.
We expect to con nue to generate revenue from our collabora on and, if applicable, supply agreements with Medice, MTPC, JT and Torii and any other
collabora ons into which we have entered or may enter, including our collabora on with Vifor (Interna onal) Ltd. (now a part of CSL Limited), or CSL Vifor, if
vadadustat is approved in the U.S.
In 2022, we recorded a nonrefundable, non-creditable termina on fee pursuant to the terms of the Termina on and Se lement Agreement, or Termina on
Agreement, with Otsuka Pharmaceu cal Co. Ltd, or Otsuka. Furthermore, in 2023 we recorded a payment received from Otsuka, in connec on with the
Packaging Valida on Transfer Agreement, to license, collabora on and other revenue. Also in 2022, we recorded revenue from cost sharing agreements under
which we were reimbursed by our collabora on partner for expenses incurred by us for research and development, or R&D, ac vi es and, may in the future
generate revenue from poten al co-promo on ac vi es, under our collabora on agreements. We do not expect to recognize any future revenue under any
of our collabora on agreements with Otsuka, which were terminated on June 30, 2022.
Cost of Goods Sold
Cost of goods sold, or COGS, - Cost of product and other revenue - COGS - Cost of product and other revenue includes costs closely correlated or directly
related to the costs to manufacture commercial drug substance and drug product for Auryxia, including at our contract manufacturing organiza ons, or
CMOs, as well as indirect costs. Direct and indirect costs include fees for packaging, shipping, insurance and quality assurance, idle capacity charges, changes
in reserves for excess inventory, write-offs for inventory that fails to meet specifica ons or is otherwise no longer suitable for commercial sale, including
scrap, changes in our firm purchase commitment liability and royal es due to the licensor of Auryxia related to U.S. and Japan product sales recognized
during the period.
COGS also includes costs to manufacture drug product provided to MTPC and Medice for commercial sale of Vafseo in Japan and the Medice Territory,
respec vely, as well as personnel-related costs, including salaries and bonuses, employee benefits and stock-based compensa on a ributable to employees
in par cular func ons and associated directly with the manufacturing of our commercial products.
Cost of product and other revenue for a newly launched product does not include the full cost of manufacturing un l the ini al pre-launch inventory is
depleted and addi onal inventory is manufactured and sold. Unless and un l we receive regulatory approval for vadadustat, in the U.S. we record costs
incurred to manufacture the U.S. pre-launch inventory, such as raw materials, drug substance and drug product conversion costs as R&D, expense. Likewise,
the cost of product and other does not include the full cost of manufacturing un l the ini al pre-launch inventory, for the supply of vadadustat product to
Medice which was previously expensed as R&D is depleted.
Cost of goods sold - Amor za on of intangible asset - In addi on, COGS includes the amor za on of development product rights for Auryxia through the end
of 2024.
Research and Development Expenses
R&D expenses consist primarily of costs incurred for the development of vadadustat and costs associated with our pipeline which includes:
•
personnel-related expenses, including salaries, bonuses, employee benefits, stock-based compensa on and travel expenses for employees engaged
in R&D func ons;
Akebia Therapeu cs, Inc. | Form 10-K | Page 112
Table of Contents
•
•
•
•
•
•
•
costs associated with feasibility and poten al new manufacturing processes and methods for our commercial products;
regulatory registra on and related fees for non-commercial products;
expenses incurred under agreements with contract research organiza ons, or CROs, and inves ga ve sites that conduct our clinical trials;
the cost of acquiring, developing and manufacturing clinical trial materials through contract manufacturing organiza ons, or CMOs;
facili es, deprecia on and other expenses, which include direct and allocated expenses for rent and maintenance of facili es, insurance and other
supplies associated with our laboratory space as well as our R&D team;
costs associated with discovery and development for preclinical, clinical and regulatory ac vi es; and
costs associated with the pre-launch inventory build for vadadustat in the U.S., for which the FDA set a PDUFA date of March 27, 2024 for our NDA
resubmission, and in Europe prior to the European Commission, or EC, approval in April 2023.
R&D costs are expensed as incurred. Advance payments made for goods or services to be received in the future for use in R&D ac vi es are recorded as
prepaid expenses and other current assets. The prepaid amounts are expensed as the benefits are consumed. Costs for certain development ac vi es are
recognized based on an evalua on of the progress to comple on of specific tasks using informa on and data provided to us by our vendors and our clinical
sites.
We cannot determine with certainty the dura on and comple on costs of our R&D projects, the costs of related clinical development, or if, when, or to what
extent we will generate revenue from the commercializa on or sale of any of our product candidates. In addi on, we may never obtain marke ng approval
for vadadustat in the U.S.
From incep on through December 31, 2023, we have incurred $1.6 billion in R&D expenses. We expect to incur significant R&D expenditures for the
foreseeable future as we con nue the development of Auryxia, vadadustat and any other product or product candidate, including those that may be in-
licensed or acquired.
A significant por on of our R&D costs have been external costs, which we track on a program-by-program basis as well as costs related to possible new
manufacturing processes and methods associated with our commercial product. These external costs include fees paid to inves gators, consultants, central
laboratories and CROs in connec on with our clinical trials and costs related to acquiring and manufacturing clinical trial materials, including costs paid to
CMOs to manufacture clinical trial materials.
We do not track our internal personnel and facili es costs on a program-by-program basis as our personnel are deployed across mul ple R&D projects.
Each of our products and product candidates has technical, clinical, regulatory, and commercial risk, including those discussed more fully under the heading
“Risk Factors” in Part I, Item 1A of this Form 10-K. A change in the outcome of any of the variables with respect to the development of Auryxia, vadadustat or
any other product or product candidate could result in a significant change in the costs and ming associated with that development.
Selling, General and Administra ve Expenses
Selling, general and administra ve, or SG&A, expenses consist primarily of compensa on for personnel, including stock-based compensa on related to
commercial, marke ng, execu ve, finance and accoun ng, informa on technology, corporate and business development and human resource func ons.
Other SG&A expenses include costs for marke ng ini a ves for our commercial products, market research and analysis on our commercial product and
poten al product candidates, conferences and trade shows, travel expenses, professional services fees (including legal, patent, accoun ng, audit, tax, and
consul ng fees), insurance costs, general corporate expenses and allocated facili es-related expenses, including rent and maintenance of facili es.
License Expense
License expense relates to royal es due to Panion & BF Biotech, Inc., or Panion, for sales of Auryxia in the U.S. and Riona in Japan.
Other Income (Expense), Net
Other income (expense), net consists primarily of interest income on our interest-bearing accounts, interest expense related to our term loans, accre on of
the debt discount on our term loans as well as changes in the fair value of our deriva ve liabili es, amor za on of the discount on the liability related to the
termina on fees associated with the termina on agreement with BioVectra Inc., or BioVectra, entered into in December 2022, or the BioVectra Termina on
Agreement, and the amor za on of the discount and deferred gain related to our refund liability to CSL Vifor. See Note 10, Commitments and
Akebia Therapeu cs, Inc. | Form 10-K | Page 113
Table of Contents
Con ngencies, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further informa on on the
BioVectra Termina on Agreement.
Recent Events
Borrowing Under BlackRock Term Loans and Repayment of Pharmakon Term Loans
On January 29, 2024, we entered into a secured term loan facility with Kreos Capital VII (UK) Limited, or Kreos, which are funds and accounts managed by
BlackRock Inc., collec vely BlackRock, or the BlackRock Credit Agreement, that provides for an aggregate principal amount of up to $55.0 million made
available under the following three tranches:
(i) Tranche A — $37.0 million, drawn down on the closing date of the BlackRock Credit Agreement, of which we received $34.5 million, net of debt
issuance costs, fees and expenses and was used to repay our senior secured term loans, or the Pharmakon Term Loans, with Pharmakon Advisors LP, or
Pharmakon, of $35.0 million,
(ii) Tranche B — $8.0 million available in a single draw through December 31, 2024 and
(iii) Tranche C — $10.0 million available in a single draw through December 31, 2024.
Tranche B and C are only available subject to certain condi ons, including receipt of marke ng approval for vadadustat from the FDA and, in the case of
Tranche C, receipt of a certain amount of cumula ve gross cash proceeds from the sale of common stock.
On January 29, 2024, we also entered into a warrant agreement with Kreos Capital VII Aggregator SCSp, an affiliate of Kreos, pursuant to which we (i) issued a
warrant to purchase 3,076,923 shares of our common stock, at an exercise price per share of $1.30 (subject to standard adjustments for stock splits, stock
dividends, rights offerings and pro rata distribu ons), or the Exercise Price, and (ii) will issue at the me of drawdown of the Tranche C Loan, if applicable, a
warrant to purchase 1,153,846 shares of our common stock, at the Exercise Price. Each warrant shall be exercisable for eight years from date of issuance.
See Note 7, Indebtedness, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further
informa on.
At-the-Market (ATM) Offering
On April 7, 2022, we entered into an Open Market Sale Agreement
, or Sales Agreement, with Jefferies LLC as agent, to sell up to $26.0 million of our
common stock at current market prices from me to me. During the quarter and year ended December 31, 2023, we sold 6,189,974 shares of common
stock under this program with net proceeds of $6.7 million, a er deduc ng commissions and other offering expenses. Including the amount sold during the
year ended December 31, 2023, through the date of the filing of this Form 10-K, we sold 19,451,285 shares of our common stock under the Sales Agreement
with net proceeds of $25.4 million, a er deduc ng commissions and other offering expenses.
SM
PDUFA Date - March 27, 2024
On March 29, 2022, we received a complete response le er, or CRL, from the FDA, in response to our NDA for vadadustat for the treatment of anemia due to
CKD in adult pa ents in its present form. In October 2022, we submi ed a Formal Dispute Resolu on Request with the FDA and in May 2023, the Office of
New Drugs, or OND, denied our appeal but provided a path forward for us to resubmit the NDA for vadadustat for the treatment of anemia due to CKD for
dialysis dependent pa ents without the need for us to generate addi onal clinical data. In September 2023, we completed our resubmission to our NDA for
vadadustat for the treatment of anemia due to CKD in adult pa ents on dialysis. In October 2023, the FDA acknowledged our NDA resubmission was
complete, classified it as a Class 2 response and set a PDUFA date of March 27, 2024.
Impact of Infla on
We are experiencing rising costs for certain infla on-sensi ve opera ng expenses, such as labor, and certain of our service providers are heavily dependent
on labor. We do not believe these impacts were material to our net loss during the year ended December 31, 2023 or will be going forward. However,
significant sustained infla on rates driven by the macroeconomic environment or other factors could nega vely impact our margins, profitability and results
of opera ons in future periods.
Results of Opera ons
The tables and discussion below present the results for the periods indicated. The year ended December 31, 2022 has been updated to reflect the errors
revised in prior periods and as described in more detail in Note 1, Revision of Previously Issued Financial Statements, in the notes to the consolidated financial
statements found in Part II, Item 8 of our 2022 Form 10-K/A filed with the SEC on August 28, 2023:
Akebia Therapeu cs, Inc. | Form 10-K | Page 114
Table of Contents
(dollars in thousands)
Revenues
Product revenue, net
License, collabora on and other revenue
Total revenues
Cost of goods sold
Cost of product and other revenue
Amor za on of intangible asset
Total cost of goods sold
Opera ng expenses
R&D
SG&A
License
Restructuring
Total opera ng expenses
Opera ng loss
Other expense, net
Loss on ex nguishment of debt
Loss on termina on of lease
Net loss
*Percentage change not meaningful.
Years ended December 31,
2023
2022
Change 2023-2022
$
%
$
$
170,301 $
24,322
194,623
38,107
36,042
74,149
63,079
100,233
3,237
181
166,730
(46,256)
(5,145)
—
(524)
(51,925) $
176,949 $
115,535
292,484
49,526
36,042
85,568
129,986
138,601
3,175
15,933
287,695
(80,779)
(12,541)
(906)
—
(94,226) $
(6,648)
(91,213)
(97,861)
(11,419)
—
(11,419)
(66,907)
(38,368)
62
(15,752)
(120,965)
34,523
7,396
906
(524)
42,301
(4)%
(79)%
(33)%
(23)%
— %
(13)%
(51)%
(28)%
2 %
(99)%
(42)%
(43)%
(59)%
(100)%
*
(45)%
Product Revenue, Net—Net product revenue is derived from sales of our only commercial product in the U.S., Auryxia. We distribute Auryxia principally
through a limited number of wholesale distributors as well as certain specialty pharmacy providers.
Net product revenue was $170.3 million for the year ended December 31, 2023, compared to net product revenue of $176.9 million for the year ended
December 31, 2022. The decrease was primarily due to a reduc on in volume, par ally offset by price increases, favorable payor mix and execu on of our
contrac ng strategy with third party payors.
Auryxia will lose exclusivity in the U.S. in March 2025, which may have a nega ve impact on revenue. We believe CMS's decision to include phosphate binders
in the dialysis bundle could poten ally lead to higher sales of Auryxia a er the LoE date than in other LoE scenarios, and plan to work with third-party payors
and providers to con nue the use of Auryxia beyond LoE.
License, Collabora on and Other Revenue—License, collabora on and other revenue was $24.3 million for the year ended December 31, 2023, compared to
$115.5 million for the year ended December 31, 2022. The decrease was due primarily to the termina on of the Otsuka agreements in June 2022 under
which we recognized $92.3 million and a reduc on of $12.5 million in revenue recognized from the supply of drug product to MTPC, par ally offset by a one-
me $10.0 million upfront payment from Medice received in 2023 in connec on with entering into our license agreement with Medice for their development
and commercializa on of vadadustat in the EU.
We do not expect to recognize any future revenue under any of the Otsuka agreements, which were terminated on June 30, 2022. Addi onally, we expect our
revenue under our supply agreement with MTPC to con nue to decline due to the assignment of our supply agreement with Esteve Química, S.A. to MTPC in
December 2022.
See Note 12, License, Collabora on and Other Revenue, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this
Form 10-K for further informa on.
Akebia Therapeu cs, Inc. | Form 10-K | Page 115
Table of Contents
A further breakdown of the license, collabora on and other revenue is as follows:
License, Collabora on and Other Revenue (dollars in thousands)
License Fees:
Medice upfront license payment
Drug Product Supply:
MTPC vadadustat drug product supply
Medice vadadustat drug product supply
Drug Product Supply Subtotal
Royal es:
JT and Torii royal es
MTPC royal es
Royal es Subtotal
Years Ended December 31,
2023
2022
$
10,000 $
3,738
968
4,706
5,394
1,997
7,391
2,225
24,322 $
—
16,191
—
16,191
5,291
1,777
7,068
92,276
115,535
Otsuka U.S. and Interna onal Agreements (Terminated)
Total License, Collabora on and Other Revenue
$
Cost of Goods Sold: Cost of Product and Other Revenue—Cost of product and other revenue was $38.1 million for the year ended December 31, 2023,
compared to $49.5 million for the year ended December 31, 2022. The decrease was driven by lower year-over-year sales volume and a reduc on in the
write-downs of inventories to net realizable value in 2023. In addi on, for the year ended December 31, 2023, we realized a lower cost of product and other
revenue of $4.3 million due to our ability to commercially sell inventory previously wri en-down as excess inventory. Primarily during the first half of 2024,
we an cipate realizing lower costs of up to $12.3 million related to our ability to commercially sell inventory previously wri en-down as excess inventory. For
the year ended December 31, 2023, we recorded $1.5 million related to our firm purchase commitment liability.
For the year ended December 31, 2022, we recorded a net benefit of $37.2 million comprised of a one- me $28.7 million termina on fee in connec on with
the BioVectra Termina on Agreement offset by a one- me benefit of $65.9 million due to the reduc on of our firm purchase commitment liability in
connec on with the BioVectra Termina on Agreement.
We expense pre-launch inventory for the U.S. and Medice Territory, including certain manufacturing related expenses as R&D expenses un l the product
receives the required approval. Medice obtained marke ng authoriza on from the EMA for Vafseo in April 2023. During 2023, under a side-le er, we sold
certain lots of Vafseo to Medice. If the pre-launch inventory had been capitalized and the associated cost recognized when we sold the product, cost of
product and other revenue for the year ended December 31, 2023 would have increased by approximately $0.8 million. The selling of the remaining zero cost
inventories of Vafseo on hand of approximately $28.4 million as of December 31, 2023 will be dependent on the ming of sales of Vafseo related in the U.S., if
approved, and Medice Territory.
Cost of Goods Sold: Amor za on of Intangible Asset—Amor za on of intangible asset relates to the acquired developed product rights for Auryxia, which is
being amor zed using a straight-line method over its es mated useful life of approximately six years. Amor za on of the intangible asset during each of the
years ended December 31, 2023 and 2022 was $36.0 million and will con nue through the end of 2024.
R&D Expenses— R&D expenses were $63.1 million for the year ended December 31, 2023, compared to $130.0 million for the year ended December 31,
2022. The decrease of $66.9 million was a result of the comple on of certain clinical trials coupled with cost reduc on efforts that began in 2022 following
the complete response le er for vadadustat in the U.S. In 2022, we began streamlining and op mizing our opera ons to align with our business goals which
yielded savings of approximately $15.8 million in 2023, primarily due to the reduced headcount related costs as a result of the 2022 reduc on in force and the
overall lower headcount in 2023. In 2023, clinical trial costs decreased by approximately $23.7 million, which is largely a ributed to the wind-down of certain
clinical trials. We also slowed the produc on of pre-launch inventory while we resubmi ed our NDA to the FDA. We submi ed the revised NDA in September
2023 and are awai ng a response from the FDA on our PDUFA date of March 27, 2024. We believe we have sufficient levels of pre-launch inventory on hand
to support both the U.S., if approved, and the European launch that were previously expensed in the current or prior years to R&D expenses.
During 2022, we incurred higher regulatory compliance fees associated with vadadustat, higher costs associated with the explora on of a new manufacturing
method and process costs related to Auryxia and recorded a $8.8 million non-cash
Akebia Therapeu cs, Inc. | Form 10-K | Page 116
Table of Contents
expense in connec on with the R&D services the Company received from Otsuka. In addi on, in 2022, received $5.4 million from our then collabora on
partner which was used to offset the cost of the pre-launch inventory of $13.0 million ($7.6 million net).
The
following
table
summarizes our R&D expenses
for
the
years ended December 31, 2023
and 2022
Years ended December 31,
(in
thousands):
2023
2022
Vadadustat clinical trial and other external costs
Vadadustat pre-launch inventory
External costs for other programs, including feasibility and new processes and methods associated
with commercial products
Total external R&D expenses
Internal personnel, consul ng, facili es and other
Total R&D expenses
$
$
14,792 $
6,434
7,902
29,128
33,951
63,079 $
51,196
7,589
21,422
80,207
49,779
129,986
We expect to incur significant R&D expenses in future periods in support of ongoing or planned studies with respect to the development of poten al product
candidates and our product candidate por olio as well as vadadustat.
Selling, General and Administra ve Expenses—SG&A expenses were $100.2 million for the year ended December 31, 2023, compared to $138.6 million for
the year ended December 31, 2022. The decrease of $38.4 million was primarily due to decreased headcount related costs, including stock-based
compensa on, as a result of the 2022 reduc ons in force, decreased professional service, consul ng and outsourced contract expenses and lower marke ng
and promo onal expenses. In addi on, we successfully reduced our facili es footprint in May 2023 when we assigned our lease for 27,924 square feet of
office space that was located in the Boston, Massachuse s, or the Boston Lease, allowing us to reduce our costs by approximately $2.4 million annually. See
Note 9, Leases, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further informa on on the
Boston Lease.
While we expect to con nue to find ways to operate more efficiently and reduce our general and administra ve expenses, we will invest those savings in our
sales and marke ng and commercial efforts as we prepare for the launch of vadadustat, if approved in the U.S.
License Expenses—License expense related to royal es due to Panion for sales of Riona in Japan were $3.2 million for each of the years ended December 31,
2023 and 2022.
Restructuring Expenses—Restructuring expenses were $0.2 million for the year ended December 31, 2023, compared to $15.9 million for the year ended
December 31, 2022. Following the receipt of the complete response le er, or CRL, for vadadustat in the second quarter of 2022, we implemented a reduc on
of our workforce which reduced our headcount by approximately 42% and impacted all departments, including several members of senior management. On
November 7, 2022, we implemented a further reduc on in our workforce by approximately 14% consis ng solely of individuals within the commercial
organiza on as a result of our decision to shi to a strategic account management focused model for our commercial efforts. These ac ons reflected our
determina on to refocus our strategic priori es around our commercial product, Auryxia, and our development por olio, and were steps in a broader cost
savings plan to significantly reduce our opera ng expense profile. We con nue to decrease our opera ng expenses by seeking to operate more efficiently and
curtail non-headcount related expense growth. We expect to slightly increase our headcount primarily on our commercial and medical affairs teams in 2024
in connec on with a vadadustat launch, if approved.
Other Expense, Net—Other expense, net, was $5.1 million for the year ended December 31, 2023, compared to $12.5 million for the year ended
December 31, 2022. The decrease was primarily due to a decrease in interest expense as a result of reducing our outstanding principal balance on the
Pharmakon Term Loans by $32.0 million offset by a nearly 228 basis point increase in the interest rate since the year ended December 31, 2022. In addi on,
we no longer record interest on our liability for the sale of future royal es.
Loss on Ex nguishment of Debt—During the year ended December 31, 2022, we recorded a debt ex nguishment loss of $0.9 million related to the principal
prepayments made on the Pharmakon Term Loans pursuant to the Second Amendment and Waiver.
Loss on Lease Termina on—On May 26, 2023 we incurred a loss on lease termina on of $0.5 million in connec on with the assignment of our Boston Lease.
In accordance with ASC 842, Leases, we wrote off the right-of-use asset and lease liability associated with the Boston Lease, and recognized the difference
between the right-of-use asset and the lease liability offset by the payment we made to LG Chem Life Sciences Innova on Center, Inc. in connec on with the
assignment of $1.3 million. See Note 9, Leases, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-
K for further informa on.
Akebia Therapeu cs, Inc. | Form 10-K | Page 117
Table of Contents
Liquidity and Capital Resources
As of December 31, 2023, we had cash and cash equivalents of approximately $42.9 million and restricted cash of $1.7 million.
To date, we have funded our opera ons principally through sales of our common stock, including through our employee stock purchase plan, product sales,
payments received from our collabora on and licensing partners, borrowings under term loans, a working capital payment from CSL Vifor also referred to as a
refund liability and a royalty transac on. From incep on through December 31, 2023, we raised approximately $820.2 million of net proceeds from the sale
of equity, including $519.8 million from various underwri en public offerings, $230.4 million from at-the-market offerings, or ATM Offerings, pursuant to our
sales agreement with Jefferies LLC and prior sales agreements with Cantor Fitzgerald & Co., and $70.0 million from the sale of 7,571,429 shares of common
stock to CSL Vifor. From January 1, 2024 through February 23, 2024, we sold 13,261,311 shares of our common stock under our Sales Agreement, resul ng in
proceeds to us of $18.7 million, net of offering expenses, which are not included in the above amounts reported under the ATM sales agreement.
We have incurred recurring losses and nega ve cash flow from opera ons in each year since incep on and an cipate net losses and nega ve cash flows for
the near future. For the years ended December 31, 2023 and 2022, we incurred net opera ng losses of $51.9 million and $94.2 million, respec vely. As of
December 31, 2023 and 2022, we had an accumulated deficit of $1.6 billion.
We currently have exclusive rights under a series of patents and patent applica ons to commercialize Auryxia in the U.S. that protect us from generic drug
compe on un l March 2025. Following LoE, in the U.S., we may not be able to realize enough product revenue from sales of Auryxia to realize net profits
from product sales. While we believe CMS's decision to include phosphate binders in the dialysis bundle could poten ally lead to higher sales of Auryxia a er
the LoE date than in other LoE scenarios, and plan to work with payors and providers to con nue the use of Auryxia beyond LoE, Auryxia product sales have
not generated, and may not generate, now or following LoE in the U.S., sufficient product revenue to realize net profits from product sales to cover our
current or long-term opera ng costs.
We believe our exis ng cash resources and the cash we expect to generate from product, royalty, supply and license revenues as well as the borrowings and
poten al future borrowing that are available under the BlackRock Credit Agreement and the working capital liability are sufficient to fund our current
opera ng plan for at least twenty-four months if vadadustat is approved in the U.S. and for at least twelve months from filing the Form 10-K, if vadadustat is
not approved in the U.S. However, if our opera ng performance deteriorates significantly from the levels expected in our opera ng plan, or if vadadustat is
not approved in the U.S., it would have an adverse effect on our liquidity and capital resources and could affect our ability to con nue as a going concern in
the future. In addi on, we may also seek to sell addi onal private or public equity, enter into new debt transac ons, explore poten al strategic transac ons
or a combina on of these approaches or other strategic alterna ves. If we raise addi onal funds by issuing equity securi es, our shareholders would
experience dilu on. Debt financing, if available, may involve covenants restric ng our opera ons or our ability to incur addi onal debt. Any debt financing or
addi onal equity that we raise may contain terms that are not favorable to us or our stockholders. Addi onal financing may not be available to us in amounts
or on terms acceptable to us, if at all. If we are unable to raise addi onal capital in sufficient amounts when needed or on a rac ve terms, we may not be
able to pursue development and commercial ac vi es related to Auryxia and vadadustat, if approved, or any addi onal products and product candidates,
including those that may be in-licensed or acquired. Any of these events could significantly harm our business, financial condi on and prospects.
There can be no assurance that the current opera ng plan will be achieved in the me frame an cipated by us, or that our cash resources will fund our
opera ng plan for the period of me an cipated by us, or that addi onal funding will be available on terms acceptable to us, or at all. Our forecast of the
period of me through which our financial resources will be adequate to support our opera ons is a forward-looking statement and involves numerous risks
and uncertain es, and actual results could vary as a result of a number of factors, many of which are outside our control. We have based this es mate on
assump ons that may be substan ally different than actual results, and we could u lize our available capital resources sooner than we currently expect. Our
future funding requirements, both near- and long-term, will depend on many factors including, but not limited to, those described under Part I, Item 1A. Risk
Factors under the heading "Risks Related to our Financial Posi on, Need for Addi onal Capital and Growth Strategy."
Contractual Obliga ons and Commitments
Debt Agreements and Other Funding Arrangements
BlackRock Term Loans
On January 29, 2024, or the Closing Date, we entered into the BlackRock Credit Agreement, which provides for a senior secured term loan facility, in the
aggregate principal amount of up to $55.0 million, or the Term Loan Facility. The ini al tranche of $37.0 million, or the Tranche A Loan, was funded on the
Closing Date and used to pay off the Pharmakon Term Loans. The Term Loan Facility provides for addi onal tranches available as follows: (i) $8.0 million
available in a single draw
Akebia Therapeu cs, Inc. | Form 10-K | Page 118
Table of Contents
through December 31, 2024, or the Tranche B Loan, and (ii) $10.0 million available in a single draw through December 31, 2024, or the Tranche C Loan and,
together with the Tranche A Loan and the Tranche B Loan, the Term Loans. The Term Loan Facility matures on March 31, 2025, which will be automa cally
extended to January 29, 2028 if we receive FDA approval for vadadustat on or prior to June 30, 2024, or the BlackRock Maturity Date.
We are required to make interest-only payments un l December 31, 2026 a er which, we will begin making equal monthly principal payments.
The Term Loan Facility will accrue interest at a floa ng annual rate equal to the sum of (i) term Secured Overnight Financing Rate, or SOFR, for a tenor of one
month (subject to a floor of 4.25% per annum) plus (ii) a margin of 6.75% per annum (subject to an overall cap of 15.00% per annum on the all-in interest
rate). During the con nuance of any payment event of default the interest rate on such overdue sum will automa cally increase by an addi onal 3.0% per
annum, and may be subject to an addi onal late fee of 2.0% of such overdue sum.
In the event of certain prespecified events, the repayment schedule will be accelerated. For example, if FDA approval of vadadustat is not obtained on or prior
to June 30, 2024, the interest only period will automa cally terminate on October 1, 2024, and we will be required to repay the Term Loans in seven equal
monthly payments (comprised of principal and interest), commencing on October 1, 2024 and ending on the BlackRock Maturity Date.
All obliga ons under the Term Loan Facility are secured by substan ally all of our exis ng and a er-acquired assets. The BlackRock Credit Agreement requires
us to either (i) maintain cash and cash equivalents, measured as of the last day of each fiscal month, greater than or equal to $15.0 million or (ii) earn
consolidated revenue, measured as of the last day of each fiscal month for the trailing twelve-month period, of $150.0 million. The BlackRock Credit
Agreement contains certain representa ons and warran es, affirma ve and nega ve covenants that limit our ability to engage in specified types of
transac ons and other provisions typical within a credit agreement. If an event of default occurs and is con nuing under the BlackRock Credit Agreement,
BlackRock is en tled to take enforcement ac on, including accelera on of amounts due. If we prepay the Term Loans prior to the BlackRock Maturity Date,
we will be required to pay a prepayment fee ranging from 1.0% to 4.0% of the amount prepaid.
On the Closing Date, Kreos Capital VII Aggregator SCSp, an affiliate of Kreos, or the Warrant Holder, received a warrant to purchase 3,076,923 shares of our
common stock, at an exercise price per share of $1.30, and upon borrowing of Tranche C, we will become obligated to issue addi onal warrants to purchase
1,153,846 shares of our common stock at an exercise price per share of $1.30. Each warrant shall be exercisable for eight years from date of issuance.
As of December 31, 2023, we had outstanding debt of $35.0 million, net of debt issuance costs of $0.3 million with Pharmakon.
In connec on with the entry into the BlackRock Credit Agreement, on the Closing Date, we terminated the Pharmakon Loan Agreement, all obliga ons
thereunder were paid in full and discharged and Pharmakon's security interests in our assets and property were released. See Note 7, Indebtedness, in the
accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further informa on.
Working Capital Fund/Refund Liability
In February 2022, we amended our agreement with CSL Vifor and they contributed $40.0 million to a working capital fund, or the Working Capital Fund,
established to par ally fund our costs of purchasing vadadustat from our contract manufacturers. The Working Capital Fund amount may fluctuate, and will
be repaid to CSL Vifor over me.
We have recorded the Working Capital Fund as a refund liability under ASC 606, Revenue from Contracts with Customers. The refund liability is considered a
debt arrangement with zero coupon interest and we impute interest on the refund liability at a rate of 15.0% per annum. As of December 31, 2023, the $40.1
million refund liability is classified as a long-term liability based on management's es mated ming of the repayment of the refund liability to CSL Vifor
exceeding one-year. See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royal es, in the accompanying notes to the
consolidated financial statements in Part II, Item 8 of this Form 10-K for further informa on.
Liability Related to Sale of Future Royal es
In February 2021, we sold to HealthCare Royalty Partners IV L.P., or HCR, our right to receive royal es and sales milestones for vadadustat in Japan and certain
other Asian countries, such countries collec vely, the MTPC Territory, such payments collec vely the Royalty Interest Payments, in each case, payable to us
under the MTPC Agreement. The Royalty Interest Payments are subject to an annual maximum “cap” of $13.0 million, a er which we will receive 85% of the
Royalty Interest Payments for the remainder of that year. The Royalty Interest Payments are also subject to an aggregate maximum “cap” of $150.0 million,
a er which the Royalty Interest Payments will revert back to us.
Akebia Therapeu cs, Inc. | Form 10-K | Page 119
Table of Contents
We received $44.8 million from HCR, net of certain transac on expenses, which we recorded as a liability at the transac on date. We amor ze the liability
related to the sale of future royal es using the effec ve interest method over the life of the arrangement. The annual effec ve interest rate as of
December 31, 2023 was 0%. We retain the right to receive all poten al future regulatory milestones for vadadustat under the MTPC Agreement. During the
year ended December 31, 2023 and 2022, we recorded $2.0 million and $1.8 million of non-cash royalty revenue, respec vely. See Note 8, Deferred Revenue,
Refund Liability and Liability Related to Sale of Future Royal es, in the accompanying notes to the consolidated financial statements in Part II, Item 8 of this
Form 10-K for further informa on.
Off-Balance Sheet Arrangements
Le er of Credit
As of December 31, 2023, in connec on with the Cambridge Lease (as defined below), we had $1.7 million in a le er of credit outstanding.
Director and Officer Indemnifica on
We have entered into indemnifica on agreements with our directors and certain officers that will require us, among other things, to indemnify them against
certain liabili es that may arise by reason of their status or service as directors or officers. No demands have been made upon us to provide indemnifica on
under such agreements and there are no claims that we are aware of that could have a material effect on our consolidated financial statements.
Contractual Obliga ons and Commitments Other Than Debt Agreements
We are party to contractual obliga ons involving commitments to make payments to third par es in the future. Certain contractual obliga ons are reflected
on our consolidated balance sheet as of December 31, 2023, while others are considered future obliga ons. Our material cash requirements as of December
31, 2023, include contractual obliga ons and commitments arising in the normal course of business, including leases, license agreements, manufacturing
agreements and uncondi onal purchases commitments which are described in more detail below.
Cambridge Leases
We lease approximately 65,167 square feet of office, storage and laboratory space in Cambridge, Massachuse s under non-cancelable opera ng leases,
collec vely the Cambridge Lease. The office and storage lease expires on September 11, 2026 and the lease for the laboratory space expires on January 31,
2025. We ceased using approximately two-thirds of our office space in 2022 and we are currently marke ng the furnished office space for sublease.
See Note 9, Leases, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further informa on.
License Agreements
We have a license agreement with Panion, under which we are required to pay royal es related to the sale of Auryxia. The royalty payment obliga ons are
con ngent upon genera ng product revenue, and the amount and ming of such payments are not known. See Note 10, Commitments and Con ngencies, in
the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-K for further informa on.
In June 2021, we entered into a license agreement, or Cyclerion Agreement, with Cyclerion Therapeu cs Inc. under which we obtained an exclusive global
license under certain intellectual property rights to research, develop and commercialize praliciguat, an inves ga onal oral soluble guanylate cyclase
s mulator. We may be obligated to pay up to an aggregate of $222.0 million in specified development and regulatory milestone payments, certain specified
commercial milestones and ered royal es ranging from a low-single-digit to mid-double-digit percentage of net sales, on a product-by-product basis, and
subject to reduc on upon expira on of patent rights or the launch of a generic product in the territory.
Unless earlier terminated, the Cyclerion Agreement will expire on a product-by-product and country-by-country basis upon the expira on of the last royalty
term, which ends upon the longest of (i) the expira on of the patents licensed under the Cyclerion Agreement, (ii) the expira on of regulatory exclusivity for
such product and (iii) ten years from first commercial sale of such product. We may terminate the Cyclerion Agreement in its en rety or only with respect to a
par cular licensed compound or product upon 180 days' prior wri en no ce to Cyclerion. The par es also have customary termina on rights, subject to a
cure period, in the event of the other party’s material breach of the Cyclerion Agreement or in the event of certain addi onal circumstances.
Manufacturing Agreements
We have various supply arrangements to which we are a party, and we are obligated to pay for drug substance and drug product for commercial use. Under
one of our agreements, we are required to purchase a minimum quan ty of Auryxia drug substance at a predetermined price. We are also obligated to
purchase a certain percentage of the global demand for
Akebia Therapeu cs, Inc. | Form 10-K | Page 120
Table of Contents
vadadustat drug substance and drug product based on certain quarterly and annual forecasts we provide to certain suppliers. Our supply agreements for
vadadustat drug substance and drug product provide for a volume-based pricing structure. We may also be required to reimburse certain suppliers for
reasonable expenses.
See Note 10, Commitments and Con ngencies, in the accompanying notes to the consolidated financial statements included in Part II, Item 8 of this Form 10-
K for further informa on.
Amounts Due Under Former Manufacturing and Uncondi onal Purchase Commitments
On December 22, 2022, we and BioVectra terminated any and all exis ng agreements for BioVectra to supply us Auryxia drug substance. Under the BioVectra
Termina on Agreement, we agreed to pay BioVectra a total of $32.5 million consis ng of (i) an upfront payment of $17.5 million that was paid in December
2022 and (ii) six quarterly payments of $2.5 million commencing in April 2024. In addi on, we and BioVectra have released one another from all exis ng and
future claims and liabili es and agreed to return certain materials and documents.
Other Third Party Contracts
Uncondi onal Purchase Commitments
We enter into agreements in the normal course of business with various vendors, which are generally cancellable upon no ce. Payments due upon
cancella on consist only of payments for services provided or expenses incurred, including non-cancellable obliga ons of service providers, up to the date of
cancella on. In addi on, we contract with various organiza ons to conduct R&D ac vi es with remaining contract costs to us of approximately $44.7 million
as of December 31, 2023. The scope of the services under these R&D contracts can be modified and the contracts cancelled by us upon wri en no ce. In
some instances, the contracts may be cancelled by the third party upon wri en no ce.
Cash Flows
The
following
table provides a summary of cash flow data
for each applicable period:
NET CASH PROVIDED BY/(USED IN) (in thousands):
Opera ng ac vi es
Inves ng ac vi es
Financing ac vi es
Net decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash — beginning of period
Cash, cash equivalents and restricted cash — end of period
Opera ng Ac vi es
Years ended December 31,
2022
2023
(23,384) $
—
(25,206)
(48,590) $
93,169
44,579 $
(73,154)
(114)
14,598
(58,670)
151,839
93,169
$
$
$
Net cash used in opera ng ac vi es during the year ended December 31, 2023 was $23.4 million. Net cash used in opera ng ac vi es during the year ended
December 31, 2023 consisted of a net loss of $51.9 million and net non-cash adjustments of $49.3 million, including amor za on of our intangible asset of
$36.0 million, and a reduc on of $20.7 million in working capital.
Net cash used in opera ng ac vi es during the year ended December 31, 2022 was $73.2 million. Net cash used in opera ng ac vi es consisted of a net loss
of $94.2 million and non-cash adjustments of $22.5 million, including amor za on of our intangible asset of $36.0 million and decrease in our inventory firm
purchase commitments that reduced our net loss by $65.9 million, primarily due to the termina on of our supply agreement with BioVectra, and a reduc on
of $1.4 million in working capital.
Inves ng Ac vi es
No net cash was used in inves ng ac vi es during the year ended December 31, 2023.
Net cash used in inves ng ac vi es during the year ended December 31, 2022 of $0.1 million was used to purchase equipment.
Financing Ac vi es
Net cash used in financing ac vi es for the year ended December 31, 2023 was $25.2 million and consisted of principal payments of $32.0 million par ally
offset by $6.7 million of net proceeds from the sale of common stock under our ATM Facility and from the sale of stock under our employee stock purchase
plan.
Akebia Therapeu cs, Inc. | Form 10-K | Page 121
Table of Contents
Net cash provided by financing ac vi es for the year ended December 31, 2022 was $14.6 million and consisted of net proceeds from a refund liability to a
customer of $40.0 million, net proceeds from the issuance of common stock of $7.1 million under our then current at-the-market offering facility and
proceeds from the exercise of common stock op ons and from the sale of stock under our employee stock purchase plan, par ally offset by principal
payments of debt of $33.0 million.
Recent Accoun ng Pronouncements
For a discussion of recent accoun ng pronouncements not yet adopted, see Note 2, Summary of Significant Accoun ng Policies, to our consolidated financial
statements included in Part II, Item 8 of this Form 10-K.
Cri cal Accoun ng Policies and Significant Judgments and Es mates
Our management's discussion and analysis of our financial condi on and results of opera ons are based upon our consolidated financial statements included
elsewhere in this Form 10-K, which consolidated financial statements have been prepared in accordance with U.S. generally accepted accoun ng principles,
or U.S. GAAP. The prepara on of these consolidated financial statements requires us to make es mates and judgments that affect the reported amounts of
assets, liabili es, revenues and expenses, including the current or long-term classifica on of such assets, liabili es and expenses, classifica on of the
expenses and the related disclosure of con ngent assets and liabili es. We monitor our es mates on an ongoing basis for changes in facts and circumstances,
and material changes in these es mates could occur in the future. Changes in es mates are recorded in the period in which they become known. We base
our es mates on historical experience and other assump ons that we believe to be reasonable under the circumstances. Actual results may differ from our
es mates if past experience or other assump ons do not turn out to be substan ally accurate.
While our significant accoun ng policies are described in more detail in Note 2, Summary of Significant Accoun ng Policies, to our consolidated financial
statements in Part II, Item 8 of this Form 10-K, we believe the following accoun ng policies are those most cri cal to the judgments and es mates used in the
prepara on of our consolidated financial statements and to understanding of our results of opera ons.
Inventories, including Pre-Launch Inventory
We assess the value of our inventories quarterly at the lower-of-cost or net realizable value, with approximate cost determined using the first-in, first-out
method. Work-in-process and finished goods inventories include materials, labor, and overhead. Other long-term assets include inventory expected to remain
on hand beyond one year.
We write down inventories based on quality control tes ng data, or when product is obsolete or condi ons exist that suggest that inventory may be in excess
of the an cipated demand based on assump ons about future demand for our products and market condi ons. Our es mates of forecasted demand are
based upon our analysis and assump ons including, but not limited to, expected product lifecycles, market condi ons, product development plans and
historical usage by product. If actual market condi ons are less favorable than our forecasts, or actual demand from our customers is lower than our
es mates, we may be required to record addi onal inventory write-downs. If actual market condi ons are more favorable than an cipated, inventory
previously wri en down may be sold, resul ng in lower cost of sales and higher income from opera ons than expected in that period.
Impairment charges are recorded as a component of cost of product sales in the consolidated statements of opera ons and comprehensive loss in the period
in which the impairment or excess quan ty is iden fied.
The costs incurred to manufacture pre-launch inventory in advance of marke ng authoriza on in the EU and FDA approval in the U.S. is expensed to R&D.
Impairment of Long-Lived Assets and Intangible Assets Subject to Amor za on
Long-lived assets primarily include property and equipment, right-of-use assets, intangible assets and goodwill. Right-of-use assets pertain to leases of our
office and laboratory spaces and the property and equipment primarily related to the leasehold improvements made to the right-of-use assets as well as
furniture and laboratory equipment. In 2018, we recorded a definite-lived intangible asset related to developed product rights for Auryxia in connec on with
our merger with Keryx Biopharmaceu cals, Inc., or Keryx. We amor ze our intangible asset that has a finite life using the straight-line method, which we
es mated to be six years. As of December 31, 2023, we had $36.0 million on our consolidated balance sheet that is being amor zed through December 2024.
Goodwill is the amount by which the purchase price of acquired net assets in a business combina on exceeded the fair values of net iden fiable assets on the
date of acquisi on. Goodwill is not amor zed but is subject to impairment test annually or more frequently if events or changes in circumstances suggest that
the carrying value of goodwill may not be recoverable,
Akebia Therapeu cs, Inc. | Form 10-K | Page 122
Table of Contents
u lizing either the qualita ve or quan ta ve method. The goodwill recorded in our financial statements pertains to the merger with Keryx in 2018.
Annually, or more frequently upon certain indicators of impairment, we review our es mates and assump ons underlying the fair value of our long-lived
assets when indicators of impairment are present. If an impairment indicator exists, we perform a recoverability test by a comparison of the carrying amount
of an asset or repor ng unit to the future undiscounted net cash flows expected to be generated by the asset or repor ng unit. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset or
repor ng unit.
We calculate the fair value of the long-lived asset group as the present value of es mated future cash flows expected to be generated from the long-lived
asset group using a risk-adjusted discount rate. In determining es mated future cash flows associated with the long-lived asset group, we use market
par cipant assump ons pursuant to ASC Topic 820, Fair Value Measurements and Disclosures.
Working Capital Fund/Refund Liability to Customer
We treat the refund liability related to the Vifor Working Capital Fund as a debt arrangement with zero coupon interest, which is recorded at net present
value. On March 18, 2022, when the funds were received from CSL Vifor, we recorded an ini al discount on the refund liability and a corresponding deferred
gain to the refund liability on the consolidated balance sheets. The discount on the refund liability is being amor zed to interest expense using the effec ve
interest method over the expected term of the Vifor Agreement. The deferred gain is being amor zed to interest income on a straight-line basis over the
expected term of the Vifor Agreement.
Product Revenue, Net
We recognize revenue on product sales when the customer obtains control of our product, which occurs at a point in me, typically upon delivery to the
customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amor za on period of the asset that we would have
recognized is one year or less.
The most significant es mate we are required to make is related to government and private payor rebates, chargebacks, discounts and fees, collec vely
rebates (collec vely considered variable considera on). The values of the rebates provided to third-party payors vary significantly and are based on
government-mandated discounts and our arrangements with other third-party payors. To es mate our total rebates, we es mate the percentage of
prescrip ons that will be covered by each third-party payor, which is referred to as the payor mix. Thus, revenue from product sales is recorded at the net
sales price (transac on price), which includes es mates of variable considera on, which are described below. We track available informa on regarding
changes, if any, to the payor mix for our products, to our contractual terms with third-party payors and to applicable governmental programs and regula ons
and levels of our products in the distribu on channel. We adjust our es mated rebates based upon new informa on as it becomes available, including
informa on regarding actual rebates for our products and forecasted customer buying and payment demands. Claims by third-party payors for rebates are
submi ed to us significantly a er the related sales, poten ally resul ng in adjustments in the period in which the new informa on becomes known. Our
adjustments to revenue related to prior period sales have not been significant.
Further details on the variable considera on components or reserves include:
•
•
•
Trade Discounts and Allowances—Discounts that include incen ve fees that are explicitly stated in our contracts. In addi on, we compensate
(through trade discounts and allowances) our customers for sales order management, data and distribu on services.
Product Returns—Consistent with industry prac ce, subject to certain caps for certain customers, we generally offer customers a limited right of
return which allows for the product to be returned when the product expiry is within an allowable window, when the quan ty delivered is different
than quan ty ordered, the product is damaged in transit prior to receipt by the customer, or is subject to a recall. This right of return generally lapses
once the product is provided to a pa ent. We es mate the amount of our product sales that may be returned for credit by our customers. Product
return reserves are es mated primarily based on our gross sales mul plied by an es mated return rate calculated using our historical actual rate of
return for product sales as well as recent trends on lots s ll subject to the return window. In addi on, certain customers are subject to an annual cap
on returns of 2% of gross sales in any given year.
Provider Chargebacks and Discounts—Chargebacks for fees and discounts to providers represent the es mated obliga ons resul ng 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 us. Customers charge us for the difference between what they pay for the product and the ul mate selling price to the
qualified healthcare providers. Reserves for chargebacks consist of credits that we expect to issue for units that remain in the distribu on
Akebia Therapeu cs, Inc. | Form 10-K | Page 123
Table of Contents
channel at each repor ng period end that we expect will be sold to qualified healthcare providers and chargebacks that customers have claimed but
for which we have not yet issued a credit.
•
Commercial and Medicare Part D Rebates—We contract with various commercial payor organiza ons, primarily health insurance companies and
pharmacy benefit managers, for the payment of rebates with respect to u liza on of our products. We es mate the rebates for commercial and
Medicare Part D payors based upon (i) our contracts with the payors and (ii) informa on obtained from our customers and other third par es
regarding the payor mix for Auryxia.
• Other Government Rebates—We are subject to discount obliga ons under state Medicaid programs and other government programs. We es mate
Medicaid and other government programs rebates based upon a range of possible outcomes that are probability-weighted for the es mated payor
mix. For Medicare, we also es mate the number of pa ents in the prescrip on drug coverage gap for whom we will owe an addi onal liability under
the Medicare Part D program. Our 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, es mates of claims for the current quarter, and es mated future claims that will be made for product
that has been recognized as revenue, but which remains in the distribu on channel at the end of each repor ng period.
• Other Incen ves—Other incen ves that we offer include voluntary pa ent assistance programs such as our co-pay assistance program, which are
intended to provide financial assistance to qualified commercially insured pa ents with prescrip on drug co-payments required by payors. The
calcula on of the accrual for co-pay assistance is based on actual claims processed during a given period, as well as historical u liza on data to
es mate the amount we expect to receive associated with product that has been recognized as revenue, but remains in in the distribu on channel
at the end of each repor ng period.
Overall, these reserves reflect our best es mates of the amount of considera on to which we are en tled based on the terms of the respec ve underlying
contracts. Our calcula on of the reserves, include es mates and judgments that materially affect our recogni on of net product revenues. Changes in our
es mates of net product revenues could have a material effect on net product revenues recorded in the period in which we determine that change occurs.
Research and Development Expense
R&D costs are expensed as incurred. Internal R&D expenses are comprised of costs incurred in providing R&D ac vi es, including salaries and bonuses,
employee benefits and stock-based compensa on for personnel engaged in R&D ac vi es. In addi on, they include facility costs, including the laboratory and
an alloca on of office space for u liza on by R&D staff, deprecia on expense on the laboratory equipment as well as other direct costs such as lab supplies.
External R&D costs include development of poten al new manufacturing processes and methods for both commercial and non-commercial products,
conceptual formula on and design of possible product and process alterna ves for commercial and non-commercial products, research compounds and
clinical manufacturing costs, costs incurred for consultants and other outside services, such as data management and sta s cal analysis support and materials
and supplies used in support of the clinical and preclinical programs and costs paid to CROs including inves ga ve sites that conduct our clinical trials.
We also expense pre-launch inventory to R&D un l approval from the respec ve regulatory body is obtained.
We es mate certain costs and expenses and accrue for these liabili es as part of our process of preparing financial statements. Examples of areas in which
subjec ve judgments may be required include, among other things, costs associated with services provided by contract organiza ons for preclinical
development and manufacturing of our product candidates and clinical trials. We accrue for costs incurred as the services are being provided by monitoring
the status of the trial or services provided, and the invoices received from our external service providers which can at mes be significantly delayed. As actual
costs become known to us, we adjust our accruals. To date, our es mates have not differed materially from the actual costs incurred. However, subsequent
changes in es mates may result in a material change in our accruals, which could also materially affect our balance sheet and results of opera ons.
Item 7A. Quan ta ve and Qualita ve Disclosures about Market Risk
We are a smaller repor ng company as defined by Rule 12b-2 of the Exchange Act, and are not required to provide informa on under this item.
Akebia Therapeu cs, Inc. | Form 10-K | Page 124
Table of Contents
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Report of Independent Registered Public Accoun ng Firm (PCAOB ID: 42)
Consolidated Balance Sheets
Consolidated Statements of Opera ons and Comprehensive Loss
Consolidated Statements of Stockholders’ (Deficit) Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Page
126
128
129
130
131
132
All financial statement schedules have been omi ed, since the required informa on is not applicable or is not present in amounts sufficient to require
submission of the schedule, or because the informa on required is included in the consolidated financial statements and accompanying notes.
Akebia Therapeu cs, Inc. | Form 10-K | Page 125
Table of Contents
To the Stockholders and the Board of Directors of Akebia Therapeu cs, Inc.
Opinion on the Financial Statements
Report of Independent Registered Public Accoun ng Firm
We have audited the accompanying consolidated balance sheets of Akebia Therapeu cs, Inc. (the Company) as of December 31, 2023 and 2022, the related
consolidated statements of opera ons and comprehensive loss, stockholders' (deficit) equity and cash flows for each of the two years in the period ended
December 31, 2023, and the related notes (collec vely referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial posi on of the Company at December 31, 2023 and 2022, and the results of its opera ons and
its cash flows for each of the two years in the period ended December 31, 2023, in conformity with U.S. generally accepted accoun ng principles.
We also have audited, in accordance with the standards of the Public Company Accoun ng Oversight Board (United States) (PCAOB), the Company's internal
control over financial repor ng as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Commi ee of
Sponsoring Organiza ons of the Treadway Commission (2013 framework) and our report dated March 14, 2024 expressed a qualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial
statements based on our audits. We are a public accoun ng firm registered with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securi es laws and the applicable rules and regula ons of the Securi es and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits
also included evalua ng the accoun ng principles used and significant es mates made by management, as well as evalua ng the overall presenta on of the
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Cri cal Audit Ma er
The cri cal audit ma er communicated below is a ma er arising from the current period audit of the financial statements that was communicated or
required to be communicated to the audit commi ee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjec ve or complex judgments. The communica on of the cri cal audit ma er does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communica ng the cri cal audit ma er below, providing a separate opinion on
the cri cal audit ma er or on the accounts or disclosures to which it relates.
Akebia Therapeu cs, Inc. | Form 10-K | Page 126
Table of Contents
Descrip on of the
Ma er
Revenue Recogni on - Payor Mix Impact on Measuring Variable Considera on, Specifically Payor Rebates
As of December 31, 2023, the Company recorded accrued product revenue allowances of $29.9 million, which
includes payor rebates. As discussed in Note 2 to the Company’s consolidated financial statements, the
Company recognizes revenue from product sales at the net sales price (transac on price), which includes
es mates of variable considera on for which reserves are established. The Company contracts with various
commercial payor organiza ons, primarily health insurance companies and pharmacy benefit managers, for the
payment of rebates with respect to u liza on of its products. The Company es mates the rebates for payors
based upon (i) its contracts with the payors and (ii) informa on obtained from its customers and other third
par es regarding the payor mix. The Company es mates these payor rebates and records such es mates in the
same period the related revenue is recognized, resul ng in a reduc on of product revenue and the
establishment of an accrued liability.
Audi ng the measurement of the Company’s net product revenues was complex and judgmental due to the
significant es ma on required in determining the amount of considera on that will be collected net of
es mates for payor rebates. In par cular, the payor rebate is affected by assump ons in payor behavior such as
changes in payor mix, payor collec ons and current customer contractual requirements.
How We Addressed
the Ma er in Our
Audit
We obtained an understanding, evaluated the design and tested the opera ng effec veness of controls over the
Company’s revenue recogni on process, including controls over the underlying assump ons and inputs used by
management to es mate the payor rebates. Specifically, this included controls to assess the completeness and
accuracy of the current and historical data used in calcula ng the es mate.
Our audit procedures to test the Company’s recogni on of net product revenues and specifically the variable
considera on component of payor rebates included, among others, assessing the methodology used to
determine the es mate and tes ng the significant assump ons and the underlying data used by the Company
in its analysis. This included tes ng the reasonableness of management’s es mates to other inputs into their
calcula ons such as contract terms, product in the distribu on channel, and actual invoices received. We
assessed the historical accuracy of management’s es mates by comparing actual ac vity to previous es mates
and performed analy cal procedures to evaluate the completeness of the payor rebate reserves.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2013.
Boston, Massachuse s
March 14, 2024
Akebia Therapeu cs, Inc. | Form 10-K | Page 127
AKEBIA THERAPEUTICS, INC.
CONSOLIDATED BALANCE SHEETS
Table of Contents
(dollars in thousands, except per share amounts)
Assets
Current assets:
Cash and cash equivalents
Inventories
Accounts receivable, net
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Opera ng right-of-use assets
Intangible asset, net
Goodwill
Other long-term assets
Total assets
Liabili es and stockholders' (deficit) equity
Current liabili es:
Accounts payable
Accrued expenses and other current liabili es
Short-term deferred revenue
Current por on of long-term debt
Total current liabili es
Deferred revenue, net of current por on
Long-term opera ng lease liabili es
Embedded debt deriva ve
Long-term debt, net
Liability related to sale of future royal es
Refund liability to customer
Other long-term liabili es
Total liabili es
Commitments and con ngencies (Note 10)
Stockholders' (deficit) equity:
Preferred stock $0.00001 par value, 25,000,000 shares authorized; no shares issued and outstanding at
December 31, 2023 and 2022
Common stock: $0.00001 par value; 350,000,000 shares authorized at December 31, 2023 and 2022; 194,582,539
and 184,135,714 shares issued and outstanding at December 31, 2023 and 2022, respec vely
Addi onal paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total stockholders' (deficit) equity
Total liabili es and stockholders' (deficit) equity
December 31,
2023
2022
42,925 $
15,691
39,290
20,243
118,149
3,629
12,416
36,042
59,044
12,423
241,703 $
14,635 $
67,735
—
17,500
99,870
43,296
8,947
—
17,183
54,013
40,093
8,885
272,287
90,466
21,568
40,284
32,864
185,182
5,214
29,158
72,084
59,044
5,372
356,054
18,021
75,777
3,738
32,000
129,536
43,296
28,961
760
34,078
57,484
40,992
15,717
350,824
—
2
1,578,358
6
(1,608,950)
(30,584)
241,703 $
—
2
1,562,247
6
(1,557,025)
5,230
356,054
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
Akebia Therapeu cs, Inc. | Form 10-K | Page 128
Table of Contents
AKEBIA THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(dollars in thousands, except per share amounts)
Revenues:
Product revenue, net
License, collabora on and other revenue
Total revenues
Cost of goods sold:
Cost of product and other revenue
Amor za on of intangible asset
Total cost of goods sold
Opera ng expenses:
Research and development
Selling, general and administra ve
License
Restructuring
Total opera ng expenses
Loss from opera ons
Other income (expense):
Interest expense
Other income
Loss on ex nguishment of debt
Loss on termina on of lease
Net loss before income taxes
Net loss
Comprehensive loss
Net loss per share:
Basic and diluted
Weighted average number of common shares outstanding:
Basic and diluted
Years Ended December 31,
2022
2023
$
$
$
170,301 $
24,322
194,623
38,107
36,042
74,149
63,079
100,233
3,237
181
166,730
(46,256)
(6,032)
887
—
(524)
(51,925)
(51,925) $
(51,925) $
176,949
115,535
292,484
49,526
36,042
85,568
129,986
138,601
3,175
15,933
287,695
(80,779)
(15,687)
3,146
(906)
—
(94,226)
(94,226)
(94,226)
$(0.28)
$(0.52)
187,465,448
182,782,680
The accompanying notes are an integral part of these consolidated financial statements.
Akebia Therapeu cs, Inc. | Form 10-K | Page 129
Table of Contents
(dollars in thousands)
Balance at December 31, 2021
Akebia Therapeu cs, Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
Common Stock
Shares
Amount
Addi onal
Paid-In Capital
Accumulated
Other
Comprehensive
Income (Loss)
177,000,963 $
1 $
1,536,800 $
Accumulated
Deficit
(1,462,799) $
6 $
Total
Stockholders'
(Deficit) Equity
74,008
Issuance of common stock, net of issuance costs
Proceeds from sale of stock under employee stock purchase plan
Stock-based compensa on expense
Restricted stock unit ves ng
Exercise of op ons
Net loss
Balance at December 31, 2022
Issuance of common stock, net of issuance costs
Proceeds from sale of stock under employee stock purchase plan
Stock-based compensa on expense
Restricted stock unit ves ng
Exercise of op ons
Net loss
Balance at December 31, 2023
4,404,600
335,146
—
2,252,565
142,440
—
184,135,714 $
6,189,974
200,194
—
4,054,407
2,250
—
194,582,539 $
1
—
—
—
—
—
2 $
—
—
—
—
—
—
2 $
7,121
410
17,849
—
67
—
1,562,247 $
6,708
85
9,317
—
1
—
1,578,358 $
—
—
—
—
—
—
6 $
—
—
—
—
—
—
6 $
—
—
—
—
—
(94,226)
(1,557,025) $
—
—
—
—
—
(51,925)
(1,608,950) $
7,122
410
17,849
—
67
(94,226)
5,230
6,708
85
9,317
—
1
(51,925)
(30,584)
The accompanying notes are an integral part of these consolidated financial statements.
Akebia Therapeu cs, Inc. | Form 10-K | Page 130
Table of Contents
Akebia Therapeu cs, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
Opera ng Ac vi es:
Net loss
Adjustments to reconcile net loss to net cash used in opera ng ac vi es:
Deprecia on expense
Amor za on of intangible asset
Interest expense related to sale of future royal es (non-cash)
Accre on of interest expense and amor za on of refund liability
Royalty revenue from MTPC (non-cash)
Collabora on revenue in connec on with the termina on of the Otsuka Agreement (non-cash)
R&D expense in connec on with the termina on of the Otsuka Agreement (non-cash)
Amor za on of right-of-use assets
Write-off on termina on of Boston Lease (non-cash)
Loss on ex nguishment of debt
Provision of inventories
Change in firm purchase commitments
Stock-based compensa on expense
Change in fair value of embedded debt deriva ve
Changes in opera ng assets and liabili es:
Accounts receivable
Inventories
Prepaid expenses and other current assets
Other long-term assets
Accounts payable
Accrued expense and other current liabili es
Lease liabili es
Deferred revenue
Other long-term liabili es
Net cash used in opera ng ac vi es
Inves ng Ac vi es:
Purchase of property and equipment
Net cash provided by (used in) inves ng ac vi es
Financing Ac vi es:
Proceeds from refund liability to customer
Proceeds from the issuance of common stock, net of issuance costs
Proceeds from the sale of stock under employee stock purchase plan
Proceeds from the exercise of common stock op ons
Principal payments on debt
Net cash (used in) provided by financing ac vi es
Decrease in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of the period
Cash, cash equivalents and restricted cash at end of the period
Supplemental disclosure of cash flow informa on:
Cash paid for interest
Years Ended December 31,
2022
2023
$
(51,925) $
(94,226)
1,585
36,042
—
(2,228)
(1,977)
—
782
4,219
(825)
—
1,580
1,533
9,317
(760)
994
(2,542)
11,839
(1,361)
(5,244)
(10,021)
(4,963)
(3,738)
(5,691)
(23,384)
—
—
—
6,708
85
1
(32,000)
(25,206)
(48,590)
93,169
44,579 $
1,654
36,043
6,182
2,121
(1,777)
(9,550)
8,768
(2,417)
—
406
30,242
(65,946)
17,849
(1,060)
11,297
19,087
1,058
(5,623)
1,501
(38,005)
2,311
4,654
2,277
(73,154)
(114)
(114)
40,000
7,121
410
67
(33,000)
14,598
(58,670)
151,839
93,169
6,059 $
6,755
$
$
The accompanying notes are an integral part of these consolidated financial statements.
Akebia Therapeu cs, Inc. | Form 10-K | Page 131
Table of Contents
1. NATURE OF BUSINESS
Organiza on
Akebia Therapeu cs, Inc.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Akebia Therapeu cs, Inc., referred to as Akebia or the Company, was incorporated in the State of Delaware in 2007 and became a public company in 2014.
Akebia is a fully integrated commercial-stage biopharmaceu cal company commi ed to addressing pa ents’ unmet needs. Our purpose is to be er the life of
each person impacted by kidney disease.
®
The Company has one commercial product in the United States, or U.S, Auryxia (ferric citrate), which is approved by the U.S. Food and Drug Administra on,
or FDA, and marketed for two indica ons: (i) the control of serum phosphorus levels in adult pa ents with dialysis dependent chronic kidney disease, or DD-
CKD, and (ii) the treatment of iron deficiency anemia, or IDA, in adult pa ents with non-dialysis chronic kidney disease, or NDD-CKD. Auryxia will lose
exclusivity in the U.S. in March 2025.
Ferric citrate is also approved in Japan, and is marketed and sold by the Company's collabora on partner, as an oral treatment for the improvement of
hyperphosphatemia in pa ents with chronic kidney disease, or CKD, including DD-CKD and NDD-CKD and for the treatment of adult pa ents with IDA under
the trade name Riona (ferric citrate hydrate).
The Company has early to late-stage clinical programs, including vadadustat, the Company’s lead inves ga onal product candidate. Vadadustat is an
inves ga onal oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH, inhibitor. In October 2023, the FDA acknowledged the Company's New Drug
Applica on, or NDA, resubmission for vadadustat was complete, classified it as a Class 2 response and set a user fee goal date, or PDUFA date, of March 27,
2024.
Vadadustat is approved for the treatment of symptoma c anemia associated with CKD under the trade name Vafseo in the European Economic Area, or EEA,
the United Kingdom, or UK, Switzerland, Australia and Taiwan in adult pa ents on chronic maintenance dialysis, in Korea for adult pa ents with CKD on
hemodialysis and in Japan for adult dialysis-dependent and non-dialysis pa ents. The Company will con nue to support its partners in prepara on to launch
vadadustat in Europe, Taiwan and poten ally other countries to pursue our goal of enabling broad access to vadadustat for pa ents globally.
Since its incep on, the Company has devoted most of its resources to research and development, or R&D, including its preclinical and clinical development
ac vi es, commercializing Auryxia and providing general and administra ve support for these opera ons. The Company began recording revenue from the
U.S. sales of Auryxia and revenue from sublicensing rights to Auryxia in Japan from the Company’s Japanese partners, Japan Tobacco, Inc. and its subsidiary
Torii Pharmaceu cal Co., Ltd., collec vely, JT and Torii, in 2018. In addi on, the Company con nues to explore addi onal development opportuni es to
expand its pipeline and por olio of novel therapeu cs. If the Company does not successfully commercialize vadadustat in the U.S., if approved, or any other
poten al product candidate, it may be unable to achieve profitability.
As of December 31, 2023, the Company had cash and cash equivalents of approximately $42.9 million. Based on its current opera ng plan, the Company
believes that its cash resources and the cash the Company expects to generate from product, royalty, supply and license revenues will be sufficient to allow
the Company to fund its current opera ng plan through at least twelve months from the filing of this Annual Report on Form 10-K, or Form 10-K. However, if
the Company’s opera ng performance deteriorates significantly from the levels expected in the Company’s opera ng plan, or if vadadustat is not approved in
the U.S., it would affect the Company’s liquidity and its ability to con nue as a going concern in the future. The Company expects to finance future cash needs
through product and collabora on, license and other revenue, including royal es and revenue from supply agreements. If the Company believes its resources
are insufficient to sa sfy its liquidity requirements, we may seek to sell public or private equity, enter into new debt transac ons, explore poten al strategic
transac ons, consider other cash-genera ng or saving measures or a combina on of these approaches or other strategic alterna ves. There can be no
assurance that the current opera ng plan will be achieved in the me frame an cipated by the Company or that its cash resources will fund its opera ng plan
for the period of me an cipated by the Company, or that addi onal funding will be available on terms acceptable to the Company, or at all.
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presenta on and Principles of Consolida on
The accompanying consolidated financial statements have been prepared in conformity with accoun ng principles generally accepted in the U.S., or GAAP.
Any reference in these notes to applicable guidance is meant to refer to the authorita ve GAAP as found in the Accoun ng Standards Codifica on, or ASC,
and Accoun ng Standards Update, or ASU, of the Financial Accoun ng Standards Board, or FASB.
Akebia Therapeu cs, Inc. | Form 10-K | Page 132
Table of Contents
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany
balances and transac ons have been eliminated in the consolidated financial statements herein.
Certain monetary amounts, percentages and other figures included elsewhere in these consolidated financial statements have been subject to rounding
adjustments. Accordingly, figures shown as totals in certain tables may not be the arithme c aggrega on of the figures that precede them, and figures
expressed as percentages in the text may not total 100% or, as applicable, when aggregated, may not be the arithme c aggrega on of the percentages that
precede them.
Use of Es mates
The prepara on of financial statements in conformity with GAAP, requires management to make es mates and assump ons that affect the reported amounts
of assets and liabili es, revenue and expenses, classifica on of the expenses, assets and liabili es and the disclosure of con ngent assets and liabili es as of
and during the reported period. On an ongoing basis, management evaluates its es mates. Management bases its es mates and assump ons on historical
experience when available and on various factors, including expected business and opera onal changes, sensi vity and vola lity associated with the
assump on that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
the assets and liabili es that are not readily apparent from other sources. In certain circumstances, management must apply significant judgment in these
processes. The es ma on process o en may yield a range of poten ally reasonable es mates of the ul mate future outcomes, and management selects an
amount that falls within that range of reasonable es mates. Although, we regularly assesses these es mates, actual results may differ materially from those
es mates and changes in es mates are recorded in the period they become known.
Significant es mates and judgments reflected in these consolidated financial statements include, but are not limited to: accrued expenses, other long-term
liabili es, product revenues, including various rebates, returns and reserves related to product sales, inventories, classifica on of expenses between cost of
goods sold, R&D and selling, general and administra ve, long-term assets, including the Company's right-of-use assets, intangible asset and goodwill.
Cash, Cash Equivalents and Restricted Cash
In determining cash, cash equivalents and restricted cash, the Company considers only those highly liquid investments, readily conver ble to cash within 90
days from the date of purchase to be cash equivalents. As of December 31, 2023, cash and cash equivalents primarily included cash on hand and funds
invested in money market funds.
Restricted cash represents amounts required to secure the outstanding le er of credit in connec on with the Company’s office and laboratory space in
Cambridge, Massachuse s, or the Cambridge Lease. Restricted cash is included in “other long-term assets” in the consolidated balance sheets.
The following table reconciles cash, cash equivalents and restricted cash reported within the Company's consolidated balance sheets to the total amounts
reported
consolidated
statements
flows:
cash
the
of
in
Reconcilia on of cash, cash equivalents and restricted cash (in thousands)
Cash and cash equivalents
Restricted cash included in other long-term assets
Total cash, cash equivalents and restricted cash
Fair Value of Financial Instruments
December 31,
2023
2022
$
$
42,925 $
1,654
44,579 $
90,466
2,703
93,169
Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transac on between market
par cipants at the measurement date. When determining the fair value measurements for assets and liabili es required to be recorded at fair value,
management considers the principal or most advantageous market in which it would transact and considers assump ons that market par cipants would use
when pricing the asset or liability. ASC Topic 820, Fair Value Measurement, establishes a fair value hierarchy that requires an en ty to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring fair value. To the extent the valua on is based on models or inputs that are
less observable in the market, the determina on of fair values requires more judgment. A financial instrument categoriza on within the fair value hierarchy is
based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs that may be used to measure fair value are:
•
•
Level 1 – unadjusted quoted prices in ac ve markets for iden cal assets or liabili es to the repor ng en ty at the measurement date.
Level 2 – quoted prices for similar assets or liabili es in markets that are not ac ve, or for which all significant inputs are observable, either
directly or indirectly, for substan ally the full term of the asset or liability.
Akebia Therapeu cs, Inc. | Form 10-K | Page 133
Table of Contents
•
Level 3 – unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby
allowing for situa ons in which there is li le, if any, market ac vity for the asset or liability at the measurement date.
Accounts Receivable
The Company’s accounts receivable represent amounts due to the Company from product sales (see Note 11) and from its collabora on, license and other
agreements (see Note 12). Reimbursable costs that have not been invoiced as of the balance sheet date are recorded as unbilled accounts receivable.
Accounts receivable arising from product sales primarily represent amounts due from the Company's customers, net of allowances for customer discounts
and chargebacks. The Company deducts trade allowances for prompt payment, among other certain discounts or chargebacks, from its accounts receivable
based on its experience that the Company’s customers will earn these discounts and fees.
The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for receivables when collec on becomes
doub ul. Provisions are made based upon a specific review of all significant outstanding receivables and the overall quality and age of those invoices not
specifically reviewed as well as historical payment pa erns and exis ng economic factors. The Company believes that credit risks associated with its
customers and collabora on partners are not significant. The Company's allowance for credit losses was $1.0 million and $1.1 million as of December 31,
2023 and 2022, respec vely. The write-offs for the year ended December 31, 2023 and 2022 were $0.1 million and $0.4 million, respec vely.
Concentra ons of Risk and Off-Balance Sheet Risk
Credit Risk
Cash, cash equivalents and accounts receivable are the only financial instruments that poten ally subject the Company to concentra ons of credit risk. The
Company maintains cash accounts principally at three financial ins tu ons in the U.S., which at mes, may exceed the Federal Deposit Insurance
Corpora on's limits. The Company has not experienced any losses from cash balances in excess of the insurance limit. The Company's management does not
believe the Company is exposed to significant credit risk at this me due to the financial condi on of the financial ins tu ons where its cash is held.
Gross revenues and accounts receivable from each of the Company’s customers or collabora on partners who individually accounted for 10% or more of total
gross revenues and/or 10% or more of total gross accounts receivable consisted of the following:
Customer
Fresenius Medical Care Rx
Cencora, Inc., formerly known as AmerisourceBergen Drug Corpora on
McKesson Corpora on
Cardinal Health, Inc.
Otsuka Pharmaceu cal Co. Ltd.
Customer
Fresenius Medical Care Rx
Cencora, Inc., formerly known as AmerisourceBergen Drug Corpora on
Cardinal Health, Inc.
McKesson Corpora on
Off-Balance Sheet Accounts
% of Total Gross Revenues
Years Ended December 31,
2022
2023
34%
40%
15%
21%
—%
11%
—%
10%
20%
—%
% of Gross Accounts Receivable
December 31,
2023
31%
25%
16%
12%
2022
44%
16%
13%
10%
The Company has no significant off-balance sheet concentra ons of credit risk, such as foreign currency exchange contracts, op on contracts or other
hedging arrangement. See Note 9, Leases, for further details.
Manufacturing and Distribu on Risk.
The Company is dependent on third-party manufacturers, logis cs company and distributors to supply products for commercial ac vi es associated with its
product and product candidates, as applicable. In par cular, the Company relies and
Akebia Therapeu cs, Inc. | Form 10-K | Page 134
Table of Contents
expects to con nue to rely on a small number of manufacturers to supply it with its requirements for the ac ve pharmaceu cal ingredients and formulated
drugs related to the Company's product and product candidate ac vi es. These ac vi es, including the commercializa on of Auryxia, could be adversely
affected by a significant interrup on in the supply of ac ve pharmaceu cal ingredients and formulated drugs or distribu on of finished product to the
market.
Inventories, including Pre-Launch Inventories
The Company values its inventories at the lower-of-actual 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. When the Company expects to u lize the inventory beyond one year
we record it in inventories, long-term on its consolidated balance sheets.
Prior to obtaining ini al regulatory approval for an inves ga onal product candidate the Company expenses costs rela ng to produc on of pre-launch
inventory as R&D expense in its consolidated statements of opera ons and comprehensive loss in the period incurred. A er regulatory approval has been
received, the Company capitalizes such inventory costs. Products used in clinical trials are expensed as R&D expense in the statement of opera ons and
comprehensive loss.
The Company performs an assessment of the recoverability of capitalized inventory during each repor ng period, and writes down any excess or obsolete
inventory to its net realizable value in the period in which the impairment is iden fied through cost of product and other revenue in the consolidated
statements of opera ons and comprehensive loss.
Addi onally, the Company’s product is subject to strict quality control and monitoring that is performed throughout the manufacturing process, including
release of work-in-process to finished goods. In the event that certain batches or units of product do not meet quality specifica ons, the Company will record
a write-down of any poten al unmarketable inventory to its es mated net realizable value and record the expense as cost of product and other revenue in
the consolidated statements of opera ons and comprehensive loss.
The Company prepays for certain manufacturing costs, including the raw materials to its CMOs which are included in prepaid manufacturing on the
consolidated balance sheet.
Property and Equipment
Property and equipment are recorded at cost, less accumulated deprecia on. Expenditures for repairs and maintenance are expensed as incurred.
Deprecia on expense is recognized using the straight-line method over the es mated useful lives, which are typically:
Computer equipment and so ware
Furniture and fixtures
Laboratory and other equipment
Leasehold improvements
Asset Category
Es mated Useful Life
3 years
-
7 years
Shorter of the useful life or remaining lease
term
7 years
5 years
Maintenance and repairs to an asset that do not improve or extend its life are charged to opera ons. When assets are re red or otherwise disposed of, the
assets and related accumulated deprecia on are eliminated from the accounts and any resul ng gain or loss is reflected in the Company's consolidated
statements of opera ons and comprehensive loss.
Intangible Asset
The Company maintains a definite-lived intangible asset related to developed product rights for Auryxia. The intangible asset was ini ally recorded at fair
value and is stated net of accumulated amor za on. The Company amor zes its intangible asset that has a finite life using the straight-line method.
Amor za on for the Company’s intangible asset is recorded over its remaining es mated useful life, which as of December 31, 2023 is es mated to be six
years.
Goodwill
Goodwill reflects the excess purchase price over the fair value of the net tangible and intangible assets acquired in a business combina on.
Goodwill is evaluated for impairment on an annual basis, and more frequently if indicators are present or changes in circumstances suggest that impairment
may exist. The Company compares the fair value of its repor ng unit to its carrying value. If the carrying value of the net assets assigned to the repor ng unit
exceeds the fair value of its repor ng unit, the Company would record an impairment loss equal to the difference. As described above, the Company operates
in one opera ng segment which the Company considers to be the only repor ng unit.
Akebia Therapeu cs, Inc. | Form 10-K | Page 135
Table of Contents
Impairment of Long-Lived Assets and Intangible Assets Subject to Amor za on
Long-lived assets primarily include property and equipment, intangible assets. The Company evaluates its long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value
of the asset.
The Company did not recognize any impairment losses on long-lived assets for the years ended December 31, 2023 and 2022, respec vely.
Leases
The Company made an accoun ng policy elec on not to recognize leases with an ini al term of twelve months or less within its consolidated balance sheets
and to recognize those lease payments as an expense on a straight-line basis in its consolidated statements of opera ons and comprehensive loss. The
Company also made the accoun ng policy elec on not to separate the non-lease components from the lease components for its building leases and, rather,
account for each non-lease component and lease component as a single component.
The Company determines if an arrangement is a lease at incep on. An arrangement is determined to contain a lease if the contract conveys the right to
control the use of an iden fied property, plant or equipment for a period of me in exchange for considera on. If the Company can benefit from the various
underlying assets of a lease on their own or together with other resources that are readily available, or if the various underlying assets are neither highly
dependent on nor highly interrelated with other underlying assets in the arrangement, they are considered to be a separate lease component. In the event
mul ple underlying assets are iden fied, the lease considera on is allocated to the various components based on each of the component’s rela ve fair value.
Opera ng lease assets represent the Company’s right to use an underlying asset for the lease term and opera ng lease liabili es represent its obliga on to
make lease payments arising from the leasing arrangement. The right-of-use asset and opera ng lease liabili es are recognized at the commencement date
based on the present value of lease payments over the lease term. The Company uses the implicit rate when readily determinable and uses an es mate of its
incremental borrowing rate when the implicit rate is not readily determinable based upon the available informa on at the commencement date of lease
incep on. The incremental borrowing rate is determined using a credit ra ng scoring model to es mate the Company’s credit ra ng, adjusted for
collateraliza on. The calcula on of the right-of-use asset includes any lease payments made and excludes any lease incen ves. If a lease includes an op on to
extend or terminate the lease, the Company reflects the op on in the lease term if it is reasonably certain the Company will exercise the op on.
The Company’s opera ng leases are reflected in opera ng right-of-use assets, accrued expenses and other current liabili es and long-term opera ng lease
liabili es in its consolidated balance sheets.
Deriva ve Financial Instruments
The Company accounts for deriva ve financial instruments as either equity or liabili es in accordance with ASC Topic 815, Deriva ves and Hedging, or ASC
815, based on the characteris cs and provisions of each instrument. Embedded deriva ves are required to be bifurcated from the host instruments and
recorded at fair value if the deriva ves are not clearly and closely related to the host instruments on the date of issuance. Deriva ve instrument liabili es are
classified in the consolidated balance sheets as current or non-current based on whether or not net-cash se lement of the deriva ve instrument could be
required within 12 months of the balance sheet date. The embedded deriva ves are revalued on each subsequent balance sheet date un l such instruments
are exercised or expire, with any changes in the fair value between repor ng periods recorded as other income or expense in the consolidated statements of
opera ons and comprehensive loss. The deriva ve liability recorded in connec on with the Company’s prior Loan Agreement with Pharmakon was classified
as a liability in the Company’s consolidated balance sheets. See Note 3, Fair Value Measurements, and Note 7, Indebtedness, for more informa on.
Liability Related to Sale of Future Royal es
The Company accounts for the liability related to sale of future royal es as a debt financing, amor zed under the effec ve interest rate method over the
es mated life of the related expected royalty stream. The liability related to sale of future royal es and the debt amor za on are based on the Company’s
current es mates of future royal es expected to be paid over the life of the arrangement. The Company will periodically assess the expected royalty
payments. To the extent the Company’s es mates of future royalty payments are greater or less than previous es mates or the es mated ming of such
payments is materially different than previous es mates, the Company will adjust the effec ve interest rate and recognize related non-cash interest expense
on a prospec ve basis. In the event the Company's es mates of future royal es are less
Akebia Therapeu cs, Inc. | Form 10-K | Page 136
Table of Contents
than the proceeds from the sale of future royal es, the Company will not recognize related non-cash interest expense. Non-cash royalty revenue is reflected
as royalty revenue within License, collabora on and other revenue, and non-cash amor za on of debt is reflected as interest expense in the consolidated
statements of opera ons and comprehensive loss. See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royal es, for more
informa on.
Refund Liability to Customer
The Company accounts for the refund liability as a debt arrangement, which is recorded at net present value. When the funds were received from the
customer, the Company recorded an ini al discount on the refund liability and a corresponding deferred gain to the refund liability. The discount on the
refund liability is being amor zed to interest expense on the consolidated statement of opera ons and comprehensive loss and the deferred gain is being
amor zed to other income on the consolidated statement of opera ons and comprehensive loss over the expected term of the arrangement. See Note 8,
Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royal es, for more informa on.
Excess Firm Purchase Commitment Liabili es
At each repor ng period, the Company assesses whether there are excess firm non-cancelable purchase commitment liabili es, resul ng from supply
agreements with third-party CMOs. The determina on of excess firm purchase commitment liabili es requires judgment, including considera on of many
factors, such as es mates of future product demand, current and future market condi ons, impact of our loss of exclusivity, expira on and u liza on of drug
substance under firm purchase commitments, and contractual minimums. Inventory receipts, if any, that have been previously iden fied as excess are
recorded as a reduc on to the firm purchase commitment liability. Any changes in the firm purchase commitment liability are recorded in cost of product and
other revenue in the consolidated statements of opera ons and comprehensive loss.
Revenue Recogni on
The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, or 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 considera on which the en ty expects to receive in exchange for those goods or
services. To determine revenue recogni on for arrangements that the Company determines are within the scope of ASC 606, it performs the following five
steps:
(i)
iden fy the contract(s) with a customer;
(ii)
iden fy the performance obliga ons in the contract;
(iii) determine the transac on price;
(iv) allocate the transac on price to the performance obliga ons in the contract; and
(v) recognize revenue when (or as) the en ty sa sfies a performance obliga on.
The Company only applies the five-step model to contracts when it is probable that the en ty will collect the considera on it is en tled to in exchange for the
goods or services it transfers to the customer. At contract incep on, 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 obliga ons, and assesses whether each promised
good or service is dis nct. The Company then recognizes as revenue the amount of the transac on price that is allocated to the respec ve performance
obliga on when, or as, the performance obliga on is sa sfied.
The Company does not include a financing component to its es mated transac on price at contract incep on unless it es mates that certain performance
obliga ons will not be sa sfied within one year. Addi onally, the Company recognizes the incremental costs of obtaining a contract as an expense when
incurred if the amor za on period of the asset that the Company otherwise would have recognized is one year or less.
Product Revenue, Net
The Company recognizes product revenues on sales of Auryxia primarily a ributable to a limited number of customers, including wholesale distributors as
well as certain specialty pharmacy providers, in the U.S., which accounts for the largest por on of the Company's total revenue. These customers resell the
Company’s product to health care providers and pa ents. In addi on to distribu on agreements with customers, the Company enters into arrangements with
health care providers and payors that provide for government-mandated and/or privately-nego ated rebates, chargebacks and discounts with respect to the
purchase of the Company’s product. The Company’s payment terms are consistent with prevailing prac ce in the respec ve markets in which the Company
does business. Most of the Company’s customers make payments based on contract terms, which are not affected by con ngent events that could impact the
transac on price. Payment terms fall within the one-year guidance for the prac cal expedient, which allows the Company to forgo adjustment of the
contractual payment amount of considera on for the effects of a significant financing component.
Akebia Therapeu cs, Inc. | Form 10-K | Page 137
Table of Contents
The Company recognizes revenue on product sales when the customer obtains control of the Company’s product, which occurs at a point in me, typically
upon receipt of the product by the Company's customer. The Company expenses incremental costs of obtaining a contract, such as sales commissions, as and
when incurred, if the expected amor za on period of the asset that it would have recognized is one year or less. Sales commissions are recorded in selling,
general and administra ve expense in the statements of opera ons and comprehensive loss.
Revenue from product sales is recorded at the net sales price, or Transac on Price, which includes es mates of variable considera on for which reserves are
established and which result from discounts, returns, chargebacks, rebates, co-pay assistance and other allowances offered within contracts between the
Company and its customers, health care providers, payors and other indirect customers rela ng to the Company’s sales of its products. When appropriate,
these es mates take into considera on 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 pa erns.
The amount of variable considera on that is included in the Transac on 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 cumula ve revenue recognized will not occur in a future period. Actual amounts of considera on
ul mately received may differ from the Company’s es mates. The reserves are classified as reduc ons to accounts receivable, net of payable, if the trade
discount and/or allowance will be credited to the customer or accrued expenses and other current liabili es or other long-term liabili es, if payable to a
third-party in the consolidated balance sheets.
Trade Discounts and Allowances—The Company generally provides customers with prompt pay discounts and pay fees for distribu on services, such as
fees for certain data that customer's provide to the Company. Trade discounts and allowances are recorded as a reduc on of revenue within the
consolidated statements of opera ons and comprehensive loss in the period the related product revenue is recognized. The Company es mates that,
based on its experience, its customers will earn these discounts and fees, and the Company will deduct the full amount of these discounts and fees
from its gross product revenues and accounts receivable at the me such revenues are recognized.
Product Returns—Consistent with industry prac ce, subject to certain caps for certain customers, 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, when the quan ty delivered is
different than quan ty ordered, the product is damaged in transit prior to receipt by the customer or is subject to a recall. This right of return generally
lapses once the product is provided to a pa ent or generally, if the bo le has been opened. The Company es mates the amount of its product sales
that may be returned and records this es mate as a reduc on of revenue in the period the related product revenue is recognized. The Company
currently es mates product return reserve using available industry data and its own historical return informa on, including its visibility into the
es mated inventory remaining in the distribu on channel.
Provider Chargebacks and Discounts—Chargebacks for fees and discounts to providers represent the es mated obliga ons resul ng 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 ul mate selling price to
the qualified healthcare providers. These reserves are established in the same period that the related revenue is recognized, resul ng in a reduc on of
product revenue and accounts receivable. Chargeback amounts are generally determined at the me 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 distribu on channel at each repor ng 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 organiza ons, primarily health insurance
companies and pharmacy benefit managers, for the payment of rebates with respect to u liza on of its products. The Company es mates the rebates
for commercial and Medicare Part D payors based upon (i) its contracts with the payors and (ii) informa on obtained from its customers and other
third par es regarding the payor mix for Auryxia. The Company es mates these rebates and records such es mates in the same period the related
revenue is recognized, resul ng in a reduc on of product revenue and the establishment of an accrued liability.
Other Government Rebates—The Company is subject to discount obliga ons under state Medicaid programs and other government programs. The
Company es mates its Medicaid and other government programs rebates based upon a range of possible outcomes that are probability-weighted for
the es mated payor mix. These reserves are recorded in the same period the related revenue is recognized, resul ng in a reduc on of product revenue
and the establishment
Akebia Therapeu cs, Inc. | Form 10-K | Page 138
Table of Contents
of a current liability which is included in accrued expenses and other current liabili es in the consolidated balance sheets. For Medicare, the Company
also es mates the number of pa ents in the prescrip on drug coverage gap for whom the Company will owe an addi onal 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, es mates of claims for the current quarter, and es mated future claims that will be made for product that
has been recognized as revenue, but which remains in the distribu on channel at the end of each repor ng period.
Other Incen ves—The Company offers a voluntary pa ent co-pay assistance program, which provides financial assistance to qualified commercially
insured pa ents with prescrip on drug co-payments required by payors. The calcula on of the accrual for co-pay assistance is based on actual claims
processed during a given period plus an es mate of the amount the Company expects to pay based on historical u liza on rates for the product that
has been recognized as revenue but is es mated to be remaining in in the distribu on channel at the end of each repor ng period.
License, Collabora on and Other Revenues
The Company enters into license and collabora on agreements within the scope of ASC 606, under which it licenses certain rights to its product candidates to
third par es. The terms of these arrangements typically include the following: (i) non-refundable, up front licenses fees associated with the licensing of
intellectual property; (ii) development, regulatory and commercial milestone payments; (iii) drug product the Company supplies in connec on with certain
license and collabora on agreements and (iv) royal es earned on net sales of licensed products.
In determining the appropriate amount of revenue to be recognized as the Company fulfills its obliga ons under each of its agreements, the Company
implements the five-step model noted above. As part of the accoun ng for these arrangements, the Company develops assump ons that require judgment
to determine whether the individual promises should be accounted for as separate performance obliga ons or as a combined performance obliga on, and to
determine the stand-alone selling price for each performance obliga on iden fied in the contract. A deliverable represents a separate performance obliga on
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 en ty’s promise to transfer the good or service to the customer is separately iden fiable from other promises in
the contract. The Company uses key assump ons to determine the stand-alone selling price, which may include forecasted revenues, development melines,
reimbursement rates for personnel costs, discount rates and probabili es of technical and regulatory success.
Licenses of Intellectual Property
If the license to the Company’s intellectual property is determined to be dis nct from the other performance obliga ons iden fied in the 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 u lizes judgment to assess the nature of the
combined performance obliga on to determine whether the combined performance obliga on is sa sfied over me or at a point in me and, if over me,
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 repor ng period and, if necessary, adjust the measure of performance and related revenue recogni on.
Milestone Payments
At the incep on of each arrangement that includes development milestone payments, the Company evaluates whether the milestones are considered
probable of being reached and es mates the amount to be included in the transac on price using the most likely amount method. The Company evaluates
factors such as the scien fic, clinical, regulatory, commercial and other risks that must be overcome to assess the milestone as probable of being achieved.
There is considerable judgement involved in determining whether a milestone is probable of being reached at each specific repor ng 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 un l
those approvals are received. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transac on
price. The transac on price is then allocated to each performance obliga on on a rela ve stand-alone selling price basis, for which the Company recognizes
revenues as, or when, the performance obliga ons under the contract are sa sfied. At the end of each subsequent repor ng period, the Company re-
evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its es mate of the overall
transac on price. Any such adjustments are recorded on a cumula ve catch-up basis, which would affect collabora on revenue in the period of adjustment.
Akebia Therapeu cs, Inc. | Form 10-K | Page 139
Table of Contents
Drug Product Supply
Collabora on and license 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 discre on are generally considered as op ons. The Company assesses if these op ons provide a material right to the
licensee and if so, they are accounted for as a separate performance obliga on. If the Company is en tled to addi onal payments when the licensee exercises
these op ons, any payments are recorded in license, collabora on and other revenues when the licensee obtains control of the goods, which is generally
upon delivery.
Royal es
The Company will recognize sales-based royal es, including milestone payments based on the level of net sales, at the later of (i) when the related sales
occur, or (ii) when the performance obliga on to which some or all of the royalty has been allocated has been sa sfied (or par ally sa sfied).
Collabora ve Arrangements
The Company records the elements of its collabora on agreements that represent joint opera ng ac vi es in accordance with ASC Topic 808, Collabora ve
Arrangements, or ASC 808. Accordingly, the elements of the collabora on agreements that represent ac vi es in which both par es are ac ve par cipants
and to which both par es are exposed to the significant risks and rewards that are dependent on the commercial success of the ac vi es are recorded as
collabora ve arrangements. The Company considers the guidance in ASC 606-10-15, Revenue from Contracts with Customers – Scope and Scope Excep ons, in
determining the appropriate treatment for the transac ons between the Company and its collabora ve partners and the transac ons between the Company
and third par es. Generally, the classifica on of transac ons under the collabora ve arrangements is determined based on the nature and contractual terms
of the arrangement along with the nature of the opera ons of the par cipants. To the extent product revenue is generated from the collabora on, the
Company recognizes its share of the net sales on a gross basis if the Company is deemed to be the principal in the transac ons with customers, or on a net
basis if the Company is instead deemed to be the agent in the transac ons with customers, consistent with the guidance in ASC 606.
Cost of Goods Sold
Cost of goods sold, or COGS, includes costs closely correlated or directly related to the costs to manufacture commercial drug product for Auryxia, including
costs paid to the Company's contract manufacturing organiza ons, or CMOs, as well as indirect costs. Direct and indirect costs include fees for packaging,
shipping, insurance and quality assurance, idle capacity charges, rou ne tes ng costs, rou ne ongoing efforts to improve exis ng commercial products,
reserves for excess inventory, write-offs for inventory that fails to meet specifica ons or is otherwise no longer suitable for commercial sale, including scrap,
changes in firm purchase commitment liability and royal es due to the licensor of Auryxia related to U.S. and Japan product sales recognized during the
period. In addi on, COGS includes the amor za on of development product rights for the Auryxia intangible asset. The Company also includes personnel-
related costs, including salaries and bonuses, employee benefits and stock-based compensa on a ributable to employees in par cular func ons and
associated directly with the manufacturing of our commercial products.
Further, the Company includes in COGS costs to manufacture drug product provided to customers for which we have a license agreement. Cost of goods sold
for a newly launched product may not include the full cost of manufacturing un l the ini al pre-launch inventory is depleted, and addi onal inventory is
manufactured and sold.
Un l the Company receives regulatory approval for vadadustat, the Company records expenses incurred for the manufacture of pre-launch inventory that
could poten ally support a U.S. launch as R&D expense. The costs associated with the pre-launch inventory for the Medice Territory was expensed to R&D
through April 2023 when marke ng authoriza on was received. The costs incurred to manufacturer vadadustat for the Medice Territory a er the marke ng
approval in the Medice Territory is capitalized in inventory.
Therefore, the pre-launch inventory costs are not included in COGS.
Research and Development Expenses
R&D costs are expensed as incurred. Internal R&D expenses are comprised of costs incurred in providing R&D ac vi es, including salaries and bonuses,
employee benefits, stock-based compensa on for personnel engaged in R&D ac vi es. In addi on, they include facility costs, including the laboratory and an
alloca on of office space for u liza on by R&D staff, deprecia on expense on the laboratory equipment as well as other direct costs such as lab supplies and
equipment.
External R&D costs include development of poten al new manufacturing processes and methods for both commercial and non-commercial products,
conceptual formula on and design of possible product and process alterna ves, research compounds and clinical manufacturing costs, costs incurred for
consultants and other outside services, such as data
Akebia Therapeu cs, Inc. | Form 10-K | Page 140
Table of Contents
management and sta s cal analysis support and materials and supplies used in support of the clinical and preclinical programs and costs paid to clinical
resource organiza ons, or CRO, including inves ga ve sites that conduct the Company's clinical trials.
Non-refundable advance payments for goods and services for both Auryxia and vadadustat are recorded in prepaid and other current assets in the
consolidated balance sheets and expensed when the ac vity is performed or when the goods are received. In addi on, the costs associated with pre-launch
inventory, including the cost of raw materials, costs paid to contract manufacturers for inventory manufacturing, freight and custom charges for vadadustat
are expensed as R&D prior to regulatory approval. For the years ended December 31, 2023 and 2022, material and produc on related costs of pre-approval
inventory recorded to R&D was $6.4 million and $7.6 million, respec vely.
Selling, General and Administra ve Expenses
Selling, general and administra ve, or SG&A, expenses consist primarily of compensa on for personnel, including stock-based compensa on related to
commercial, marke ng, execu ve, finance and accoun ng, informa on technology, corporate and business development and human resource func ons.
Other SG&A expenses include costs for marke ng ini a ves for the Company's commercial products, market research and analysis on the Company's
commercial and product and poten al product candidates, conferences and trade shows, travel expenses, professional services fees (including legal, patent,
accoun ng, audit, tax, and consul ng fees), insurance costs, general corporate expenses and allocated facili es-related expenses, including rent and
maintenance of facili es. Costs associated with adver sing are expensed in the period incurred and are included in selling, general and administra ve
expenses. For the years ended December 31, 2023 and 2022, adver sing expenses totaled $1.0 million and $6.7 million, respec vely, all related to the
Company's U.S. sales of its commercial product Auryxia.
Patent Costs
All patent-related costs incurred in connec on with the filing and prosecu ng patent applica ons are expensed as incurred due to the uncertainty about the
recovery of the expenditure. Such amounts incurred are classified as SG&A expenses in the accompanying consolidated statements of opera ons and
comprehensive loss.
Stock-Based Compensa on
The Company’s stock-based compensa on program allows for grants of common stock op ons, restricted stock awards, performance-based restricted stock
units, or PSUs, stock apprecia on rights, or SARs and restricted stock units. Grants are awarded to employees and non-employees, including directors.
The Company accounts for its stock-based compensa on awards in accordance with ASC Topic 718, Compensa on—Stock Compensa on, or ASC 718. ASC 718
requires all stock-based payments to employees and non-employees, including modifica ons to exis ng stock awards, to be recognized in the statements of
opera ons and comprehensive loss based on their fair values. The Company es mates the fair value of op ons granted using the Black-Scholes op on pricing
model, or Black-Scholes. The Company uses the market price at the me of grant to determine the fair value of restricted stock awards and performance-
based restricted stock awards.
The Black-Scholes op on pricing model requires the input of certain subjec ve assump ons, including (a) the expected stock price vola lity, (b) the
calcula on of expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Prior to 2017, due to the lack of company-specific
historical and implied vola lity data for trading the Company’s stock in the public market, the Company had based its es mate of expected vola lity on the
historical vola lity of a group of similar companies that are publicly traded. The historical vola lity was calculated based on a period of me commensurate
with the expected term assump on. The Company uses the simplified method as prescribed by the Securi es and Exchange Commission, or SEC, Staff
Accoun ng Bulle n No. 107, Share-Based Payment, to calculate the expected term for op ons granted to employees as it does not have sufficient historical
exercise data to provide a reasonable basis upon which to es mate the expected term. The expected term is applied to the stock op on grant group as a
whole, as the Company does not expect substan ally different exercise or post-ves ng termina on behavior among its employee popula on. For op ons
granted to non-employees, the Company u lizes the contractual term of the arrangement as the basis for the expected term assump on. The risk-free
interest rate is based on U.S. Treasury securi es with a maturity date commensurate with the expected term of the associated award. The expected dividend
yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The Company
recognizes forfeitures as they occur.
The Company’s stock-based awards are subject to either service or performance-based ves ng condi ons. Compensa on expense related to awards to
employees and non-employees with service-based ves ng condi ons is recognized on a straight-line basis based on the grant date fair value over the
associated service period of the award, which is generally the ves ng term, and is adjusted for pre-ves ng forfeitures in the period in which the forfeitures
occur. Compensa on expense related to awards to employees and non-employees with performance-based ves ng condi ons is recognized based on the
grant date
Akebia Therapeu cs, Inc. | Form 10-K | Page 141
Table of Contents
fair value over the requisite service period using the accelerated a ribu on method to the extent achievement of the performance condi on is probable.
For awards with performance condi ons in which the award does not vest unless the performance condi on is met, the Company recognizes expense if, and
to the extent that, the Company es mates that achievement of the performance condi on is probable. If the Company concludes that ves ng is probable, it
recognizes expense from the date it reaches this conclusion through the es mated ves ng date.
Income Taxes
Income taxes are recorded in accordance with FASB Topic 740, Income Taxes, or ASC 740, which provides for deferred taxes using an asset and liability
approach. The Company recognizes deferred tax assets and liabili es for the expected future tax consequences of events that have been included in the
financial statements or tax returns. Deferred tax assets and liabili es are determined based on the difference between the financial statement and tax bases
of assets and liabili es using enacted tax rates in effect for the year in which the differences are expected to reverse. Valua on allowances are provided, if,
based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. All deferred taxes as of
December 31, 2023 and 2022 are classified as non-current within the income tax provision. See Note 15, Income Taxes, for further informa on.
The Company accounts for uncertain tax posi ons in accordance with the provisions of ASC 740. When uncertain tax posi ons exist, the Company recognizes
the tax benefit of tax posi ons to the extent that the benefit will more likely than not be realized. The determina on as to whether the tax benefit will more
likely than not be realized is based upon the technical merits of the tax posi on, as well as considera on of the available facts and circumstances. As of
December 31, 2023 and 2022, the Company does not have any significant uncertain tax posi ons. The Company recognizes interest and penal es related to
uncertain tax posi ons in income tax expense.
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 considera on for common
stock equivalents. Diluted net loss per share is calculated by adjus ng weighted-average shares outstanding for the dilu ve effect of common stock
equivalents outstanding for the period, determined using the treasury-stock method. For purposes of the diluted net loss per share calcula on common stock
op ons, stock apprecia on rights, warrants and RSUs as well as restricted stock, if the Company was to issue any, are considered to be common stock
equivalents, but have been excluded from the calcula on of diluted net loss per share, as their effect would be an -dilu ve 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 dilu ve effect from outstanding op ons, warrants, restricted stock and
RSUs using the treasury stock method.
Segment Informa on
Opera ng segments are defined as components of an enterprise about which separate discrete informa on is available for evalua on by the chief opera ng
decision maker, or CODM, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company operates its business
in a single segment and as one repor ng unit, which is how its chief opera ng decision maker (who is the Company's president and chief execu ve officer)
reviews financial performance and allocates resources. The Company views its opera ons as and manages its business in one opera ng segment.
Recent Accoun ng Pronouncements Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 requires public companies
to annually (i) disclose specific categories in the rate reconcilia on and (ii) provide addi onal informa on for reconciling items that meet a quan ta ve
threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by mul plying pretax income or loss by the
applicable statutory income tax rate). ASU 2023-09 will be effec ve for the annual repor ng periods in fiscal years beginning a er December 15, 2024. The
Company is currently evalua ng ASU 2023-09 and does not expect it to have a material effect on the Company’s consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of significant segment
expenses that are regularly provided to the CODM and included within the segment measure of profit or loss, an amount and descrip on of its composi on
for other segment items to reconcile to segment profit or loss, and the tle and posi on of the en ty’s CODM. ASU 2023-07 will be applied retrospec vely
and is effec ve for annual repor ng periods in fiscal years beginning a er December 15, 2023, and interim repor ng periods in fiscal years beginning a er
December 31, 2024. The Company is currently reviewing the impact that the adop on of ASU 2023-07 may have on its consolidated financial statements and
disclosure.
Akebia Therapeu cs, Inc. | Form 10-K | Page 142
Table of Contents
3.
FAIR VALUE MEASUREMENTS
The tables below present certain assets and liabili es measured at fair value categorized by the level of input used in the valua on of each asset and liability
(in thousands):
Cash equivalents:
Money market funds
Cash equivalents:
Money market funds
Long-term liability:
Embedded debt deriva ve
Level 1
Level 2
Level 3
Total
December 31, 2023
1,504
—
— $
1,504
Level 1
Level 2
Level 3
Total
December 31, 2022
52,442
—
—
— $
— $
52,442
760 $
760
$
$
Cash and cash equivalents —Money market funds included within cash and cash equivalents are classified within Level 1 of the fair value hierarchy because
they are valued using quoted market prices in ac ve markets.
Embedded debt deriva ve —As described in Note 7, Indebtedness, the Company’s prior Loan Agreement with Pharmakon contained certain provisions that
change the underlying cash flows of the debt instrument, including the accelera on of the obliga ons under the Pharmakon Loan Agreement under certain
events of default, and under certain circumstances, the applica on of a default interest rate on all outstanding obliga ons during the occurrence and
con nuance of an event of default. The Company concluded that these features of the Pharmakon Loan Agreement represent a single compound embedded
debt deriva ve required to be bifurcated from the debt host instrument and re-measured at fair value on a quarterly basis. The Company classified the
embedded debt deriva ve as a non-current liability in its consolidated balance sheets.
The es mated fair value of the deriva ve liability on both December 31, 2023 and 2022 was determined using a scenario-based approach and discounted
cash flow model that includes principal and interest payments under various cash flow assump ons. Should the Company’s assessment of the probabili es
around these scenarios change, including for changes in market condi ons, there could be a change to the fair value of the embedded debt deriva ve. The
determina on of the fair value of the embedded debt deriva ve includes inputs not observable in the market and as such, represents Level 3 measurement.
The methodology u lized requires inputs based on certain subjec ve assump ons, specifically, probabili es of accelera on of the obliga ons under the
Pharmakon Loan Agreement by Pharmakon under certain events of default.
The following table reconciles the fair value of the embedded debt deriva ve (in thousands):
Balance at December 31, 2022
Change in fair value, recorded as other income
Balance at December 31, 2023
4.
INVENTORIES AND PREPAID MANUFACTURING
$
$
760
(760)
—
Akebia Therapeu cs, Inc. | Form 10-K | Page 143
Table of Contents
Inventories consists of
the
following
(in
thousands):
Inventories, current:
Work-in-process
Finished goods
Inventories, current
Long-term inventories included in other long-term assets:
Raw materials
Work-in-process
Inventories, long-term
Total inventories
December 31,
2023
2022
$
$
$
$
4,297 $
11,394
15,691 $
1,143
8,260
9,403 $
25,094 $
7,892
13,676
21,568
610
—
610
22,178
For the period ended December 31, 2023 and 2022, inventories consisted primarily of inventories related to the Company's commercial product, Auryxia. As
of December 31, 2023, the Company had $0.5 million of prepaid manufacturing costs for Auryxia drug substance and manufacturing costs. The Company did
not have any prepaid manufacturing related to Auryxia as of December 31, 2022.
Inventory wri en down for Auryxia as a result of excess, obsolescence, scrap or other reasons charged to cost of product and other revenue in the
consolidated statements of opera ons and comprehensive loss totaled approximately $1.6 million and $30.2 million during the years ended December 31,
2023 and 2022, respec vely. For the year ended December 31, 2023, the Company recorded $4.3 million of lowered cost of product and other revenue due to
the Company's ability to commercially sell inventory previously wri en down to zero, its then net realizable value. As of December 31, 2023, the Company has
an addi onal $12.3 million of inventory previously wri en down inventory to its then net realizable value of zero for drug product that may be salable in
future periods.
Pre-Launch Inventory
The Company records advance payments for vadadustat ac ve pharmaceu cal ingredient, or API, or drug substance (raw materials) it expects to use for the
poten al U.S. launch and Medice Territory as prepaid manufacturing costs. Upon the quality release of the vadadustat batches and transfer of tle to the
Company from the CMO, the cost of the pre-launch inventory, including the manufacturing costs is expensed to R&D. As of December 31, 2023, the Company
had $14.0 million of prepaid manufacturing costs for vadadustat drug substance expected to be used in the poten al U.S. launch of vadadustat included in
prepaid expenses and other current assets on the consolidated balance sheet. See Note 6, Addi onal Balance Sheet Detail, for further informa on.
5.
INTANGIBLE ASSET AND GOODWILL
Intangible Asset
Intangible asset, net of accumulated amor za on, prior impairments and adjustments as of December 31, 2023 and 2022 consisted of the following (in
thousands):
Intangible asset:
December 31, 2023
December 31, 2022
Gross
Carrying
Value
Accumulated
Amor za on
Net Book Value
Net Book Value
Developed product rights for Auryxia
$
214,705 $
(178,663) $
36,042 $
72,084
Es mated Useful
Life
6 years
The Company recorded $36.0 million in amor za on expense during each of the years ended December 31, 2023 and 2022 related to the developed product
rights for Auryxia.
Goodwill
As of December 31, 2023 and 2022, the Company had goodwill of $59.0 million recorded in connec on with the December 2018 merger with Keryx. The
Company has not iden fied any goodwill impairment to date.
6. ADDITIONAL BALANCE SHEET DETAIL
Prepaid expenses and other current assets are as follows (in thousands):
Akebia Therapeu cs, Inc. | Form 10-K | Page 144
Table of Contents
Descrip on
Prepaid manufacturing
Other
Total prepaid expenses and other current assets
See Note 4, Inventories, for further informa on on prepaid manufacturing expenses.
Accrued expenses and other current liabili es are as follows (in thousands):
Descrip on
Product revenue allowances
Product return reserves, current por on
Compensa on and related benefits
Accrued manufacturing costs
BioVectra termina on fees, current por on
Opera ng lease liabili es, current por on
Royal es due to Panion
Liability related to sale of future royal es, current por on
Professional fees
Clinical trial costs
Restructuring costs, current por on
Other
Total accrued expenses and other current liabili es
Other long-term assets are as follows (in thousands):
Descrip on
Long-term inventories
Restricted cash
Other
Total other long-term assets
December 31,
2023
2022
14,489 $
5,754
20,243 $
15,615
17,249
32,864
December 31,
2023
2022
22,940 $
5,420
8,216
5,555
7,500
4,491
3,989
2,048
1,909
328
737
4,602
67,735 $
December 31,
2023
2022
9,403 $
1,654
1,366
12,423 $
26,268
7,789
11,894
4,310
—
4,744
3,804
—
1,886
5,755
2,751
6,576
75,777
610
2,703
2,059
5,372
$
$
$
$
$
$
See Note 4, Inventories, for further informa on on long-term inventories.
7.
INDEBTEDNESS
Entry into BlackRock Loan Facility
On January 29, 2024, the Closing Date, the Company entered into the Agreement for the Provision of a Loan Facility, or the BlackRock Credit Agreement, with
Kreos Capital VII (UK) Limited, or Kreos, which are funds and accounts managed by BlackRock Inc., collec vely, BlackRock, and provides for a senior secured
term loan facility in the aggregate principal amount of up to $55.0 million, or the Term Loan Facility. The Term Loan Facility is available in three tranches (i)
Tranche A — $37.0 million was funded on the Closing Date and used to repay the Pharmakon Term Loans; (ii) Tranche B — $8.0 million is available in a single
draw through December 31, 2024, and (ii) Tranche C — $10.0 million is available in a single draw through December 31, 2024, collec ve the Term Loans.
Tranche B and C are available subject to certain condi ons, including the Company's receipt of marke ng approval for vadadustat from the FDA and in the
case of Tranche C, receipt of a certain amount of cumula ve gross cash proceeds a er the Closing Date in the form of equity or equity linked securi es in one
or more series of transac ons.
The BlackRock Term Loan Facility has an ini al maturity date of March 31, 2025, which will be automa cally extended to January 29, 2028, if Company
receives FDA approval for vadadustat on or prior to June 30, 2024, or the BlackRock Maturity Date. The Company is required to make interest-only payments
un l December 31, 2026, a er which the Company will begin paying equal monthly principal on the first calendar day of each month, or the BlackRock
Interest Only Period. In the event of certain prespecified events, the repayment schedule will be accelerated. For example, if FDA approval of vadadustat is
not
Akebia Therapeu cs, Inc. | Form 10-K | Page 145
Table of Contents
obtained on or prior to June 30, 2024, the BlackRock Interest Only Period will automa cally terminate on October 1, 2024, and the Company will be required
to repay the Term Loans in seven equal monthly payments (comprised of principal and interest), commencing on October 1, 2024 and ending on the
BlackRock Maturity Date.
The Term Loan Facility will accrue interest at a floa ng annual rate equal to the sum of (i) term Secured Overnight Financing Rate, or SOFR, for a tenor of one
month (subject to a floor of 4.25% per annum) plus (ii) a margin of 6.75% per annum (subject to an overall cap of 15.00% per annum on the all-in interest
rate). During the con nuance of any payment event of default under the BlackRock Credit Agreement, the interest rate on such overdue sum will
automa cally increase by an addi onal 3.0% per annum, and may be subject to an addi onal late fee of 2.0% of such overdue sum. The Term Loan Facility
also includes transac on fees ranging from 1.00% to 1.25% of the draw down amount as well exit fees of 0.75% of the amount funded to the relevant
tranche.
If the Company prepays the outstanding loan prior to maturity, it will be required to pay a prepayment fee ranging from 1.0% to 4.0% of the amount prepaid.
If prepayment is made during the first year, the Company also is required to pay the amount of otherwise due interest payments for the twelve-month period
following prepayment.
The BlackRock Term Loan Facility is secured by substan ally all of the exis ng and a er-acquired assets of the Company, including intellectual property. The
BlackRock Credit Agreement requires the Company to (i) maintain a minimum aggregate cash balance of $15.0 million in one or more controlled accounts or
(ii) trailing twelve-month revenue of $150.0 million, both of which are measured monthly. The BlackRock Credit Agreement contains various affirma ve and
nega ve covenants that limit the Company's ability to enter into certain transac ons.
On the Closing Date, Kreos Capital VII Aggregator SCSp, an affiliate of Kreos, or the Warrant Holder, received a warrant to purchase 3,076,923 shares of the
Company’s common stock, at an exercise price per share of $1.30, and upon borrowing of Tranche C, the Company will become obligated to issue addi onal
warrants to purchase 1,153,846 shares of the Company’s common stock at an exercise price per share of $1.30 . Each warrant shall be exercisable for eight
years from the date of issuance.
The Company's net proceeds from the Tranche A Loan were approximately $34.5 million, a er deduc ng debt issuance costs, fees and expenses. The
amounts classified on the consolidated balance sheet as of December 31, 2023, are reflec ve of the current and long-term por ons due under the repayment
schedule due to Blackrock.
Other Agreements Accounted for as Debt
The Company has a liability related to the sale of future liabili es which is accounted for as a debt arrangement. See Note 8, Deferred Revenue, Refund
Liability and Liability Related to Sale of Future Royal es, for further informa on.
The Company has a refund liability with Vifor (Interna onal) Ltd. (now a part of CSL Limited), or CSL Vifor, which is also accounted for as a debt arrangement.
See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royal es, for further informa on.
Pharmakon Term Loan (Ex nguished January 29, 2024)
On November 11, 2019, the Company, with Keryx as guarantor, entered into a loan agreement, or the Pharmakon 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, and a Guaranty and Security
Agreement with the Collateral Agent. BioPharma Credit PLC subsequently transferred its interest in the loans, solely in its capacity as a lender, to its affiliate,
BPCR Limited Partnership. The Collateral Agent and the lenders are collec vely referred to as Pharmakon. The Pharmakon Loan Agreement, as amended,
consisted of a secured term loan facility in an aggregate amount of up to $100.0 million, or Pharmakon Term Loans, which was made available under two
tranches: (i) Tranche A — $80.0 million and (ii) Tranche B —the second tranche of $20.0 million. On November 25, 2019, the Company drew $77.3 million on
Tranche A, net of fees and expenses of $2.7 million. On December 10, 2020, the Company drew $20.0 million on Tranche B, net of immaterial lender expenses
and issuance costs.
On July 15, 2022, or Second Amendment Effec ve Date, the Company prepaid $25.0 million of the then outstanding principal, $5.0 million on Tranche A and
$20.0 million on Tranche B as well as a $0.5 million prepayment fee under the terms of the Pharmakon Loan Agreement. During the year ended December 31,
2022, the Company recorded a debt ex nguishment loss of $0.9 million. As of December 31, 2023, the Company had $35.0 million of principal outstanding.
The Pharmakon Term Loans, as amended, bore interest through maturity at a variable rate based on the three month SOFR plus a SOFR adjustment of 0.30%
plus 7.50%. The SOFR interest rate was capped at 3.35% through October 31, 2023, the date of the Fourth Amendment to the Pharmakon Loan Agreement, or
Fourth Amendment. As of December 31, 2023, the three-month SOFR rate was no longer subject to the SOFR cap, therefore, the Company's interest rate was
13.13%. The Company recognized approximately $6.0 million and $9.5 million of interest expense related to the Pharmakon Loan Agreement during
Akebia Therapeu cs, Inc. | Form 10-K | Page 146
Table of Contents
the years ended December 31, 2023 and 2022, respec vely. Unamor zed discount and issuance costs were $0.3 million as of December 31, 2023.
The Company was required to make equal quarterly principal payments that started on the 33rd-month anniversary of the applicable Funding Date un l
November 25, 2024, or Original Maturity Date. The Fourth Amendment, which the Company entered into on October 31, 2023, extended the maturity date to
March 31, 2025, or New Maturity Date, and revised the principal payments to monthly principal payments star ng in October 2024 on the remaining
principal balance of $35.0 million. During the year ended December 31, 2023, the Company made quarterly principal payments totaling $32.0 million under
the Pharmakon Term Loans.
The Pharmakon Loan Agreement was secured by a first priority lien on certain assets of the Company, including Auryxia and certain related assets, cash and
certain equity interests held by the Company. The Pharmakon Loan Agreement contained various affirma ve and nega ve covenants, including that limit the
Company's ability to engage in specified types of transac ons and require the Company to maintain one or more controlled cash accounts. In addi on, the
Pharmakon Loan Agreement, as amended, required the Company to (i) report quarterly minimum net Auryxia sales for the trailing twelve-month period of
$85.0 million, (ii) in certain instances maintain an annual minimum liquidity threshold and (iii) not be subject to any qualifica on as to going concern in its
Annual Reports on Form 10-K. If an event of default occurred, including a qualifica on as a going concern, and was con nuing under the Pharmakon Loan
Agreement, the Collateral Agent would have been en tled to take enforcement ac on, including accelera on of amounts due under the Pharmakon Loan
Agreement. Under certain circumstances, a default interest rate would have applied on all outstanding obliga ons during the occurrence and con nuance of
an event of default. As of December 31, 2023 and 2022, the Company was in compliance with the covenants under the Pharmakon Loan Agreement.
Future principal payments pursuant to the contractual terms of the Pharmakon Loan Agreement, as amended, as of December 31, 2023 were as follows (in
thousands):
Years ended December 31,
2024
2025
Total before unamor zed discount and issuance costs
Less: unamor zed discount and issuance costs
Total term loans
$
$
Amounts
17,500
17,500
35,000
(317)
34,683
As it relates to the Pharmakon Loan Agreement, the Company concluded the con ngent put and call features that could require mandatory repayment upon
the occurrence of an event of default, default interest rates to be payable and certain other events represent an embedded deriva ve required to be
bifurcated from the debt host instrument and accounted for separately and re-measured at fair value on a quarterly basis. The fair value of the deriva ve
liability related to the Company’s Pharmakon Loan Agreement was $0 and $0.8 million as of December 31, 2023 and 2022, respec vely. During the years
ended December 31, 2023 and 2022, the Company recognized a $0.8 million and $1.1 million gain, respec vely, in other income in the consolidated
statements of opera ons and comprehensive loss related to the decrease in the fair value of the embedded debt deriva ve.
On January 29, 2024, using the proceeds from the BlackRock Credit Agreement, the Company paid the then current outstanding principal balance under the
Pharmakon Term Loan of $35.0 million, plus the outstanding interest and a prepayment fee of $0.2 million.
8. DEFERRED REVENUE, REFUND LIABILITY AND LIABILITY RELATED TO SALE OF FUTURE ROYALTIES
CSL Vifor License Agreement
Summary of Agreement
On February 18, 2022, the Company entered into a Second Amended and Restated License Agreement, or the Vifor Agreement, with CSL Vifor which
amended and restated the License Agreement dated as of May 12, 2017, or the Original License Agreement. The Vifor Agreement grants CSL Vifor an
exclusive license to sell vadadustat to Fresenius Kidney Care Group LLC, an affiliate of Fresenius Medical Care North America, or FMCNA, and its affiliates,
including Fresenius Kidney Care Group LLC, to certain third-party dialysis organiza ons approved by the Company, to independent dialysis organiza ons that
are members of certain group purchasing organiza ons and certain non-retail specialty pharmacies, collec vely, the Supply Group, in the U.S., or Vifor
Territory. The Company plans to market vadadustat in the U.S., if approved, including to the Supply Group, and sell vadadustat directly to organiza ons
outside the Supply Group. CSL Vifor has agreed that it would not sell or otherwise supply vadadustat un l the FDA has granted regulatory approval for
vadadustat for the treatment of anemia due to
Akebia Therapeu cs, Inc. | Form 10-K | Page 147
Table of Contents
CKD in adult pa ents with DD-CKD in the Vifor Territory and un l CSL Vifor has entered a supply agreement with the applicable member of the Supply Group.
The Vifor Agreement is structured as a profit share arrangement between the Company and CSL Vifor in which the Company will receive approximately 66%
of the profit, net of certain pre-specified costs. In addi on, CSL Vifor made an upfront payment to the Company of $25.0 million in February 2022 in
connec on with the amendment and restatement of the Vifor Agreement, which was recorded as long-term deferred revenue in the accompanying
consolidated balance sheet.
Unless earlier terminated, the Vifor Agreement will expire upon the later of the expira on of all patents that claim or cover vadadustat or expira on of
marke ng or regulatory exclusivity for vadadustat in the Vifor Territory. CSL Vifor may terminate the Vifor Agreement in its en rety upon thirty months' prior
wri en no ce a er the first anniversary of the receipt of regulatory approval, if approved from the FDA for vadadustat for dialysis-dependent CKD pa ents.
The Company may terminate the Vifor Agreement in its en rety for convenience, following the earlier of a certain period of me elapsing or following certain
specified regulatory events, and upon six months’ prior wri en no ce. If the Company so terminates for convenience, subject to specified excep ons, the
Company will pay a termina on fee to CSL Vifor. In addi on, either party may, subject to a cure period, terminate the Vifor Agreement in the event of the
other party’s uncured material breach or bankruptcy.
Investment Agreements
In connec on with the Original License Agreement, in May 2017, the Company sold an aggregate of 3,571,429 shares of the Company’s common stock, or
2017 Shares, to CSL Vifor at a price per share of $14.00 for a total of $50.0 million.
In February 2022, in connec on with the Vifor Agreement, the Company sold an aggregate of 4,000,000 shares of its common stock, or 2022 Shares, to CSL
Vifor for a price per share of $5.00 for a total of $20.0 million.
The $18.3 million represen ng the premium over the closing stock price, or $4.7 million for the 2017 Shares and $13.6 million for the 2022 Shares, represent
considera on related to the Vifor Agreement.
CSL Vifor agreed to a lock-up restric on to not sell or otherwise dispose of the 2017 Shares or the 2022 Shares for a period of me, which restric ons have
expired with respect to both the 2017 Shares and the 2022 Shares. The 2017 Shares and 2022 Shares are subject to stands ll agreement and are subject to
vo ng agreements. The 2017 Shares and 2022 Shares have not been registered pursuant to the Securi es Act of 1933, as amended, or the Securi es Act, and
were issued and sold in reliance upon the exemp on from registra on contained in Sec on 4(a)(2) of the Securi es Act and Rule 506 promulgated thereunder
as the transac on did not involve any public offering within the meaning of Sec on 4(a)(2) of the Securi es Act.
Deferred Revenue Recogni on
The Company evaluated the elements of the Vifor Agreement in accordance with the provisions of ASC 606 and concluded that the contract counterparty, CSL
Vifor, is a customer. The Company iden fied one performance obliga on under the Vifor Agreement at incep on, which is the non-sublicensable, non-
transferrable license under certain of the Company’s intellectual property to (i) sell vadadustat solely to the Supply Group, (ii) sell vadadustat to Designated
Wholesalers solely for resale to members of the Supply Group, (iii) conduct medical affairs with respect to vadadustat in the Vifor Territory in the field during
the term of the Vifor Agreement and (iv) use the Akebia Trademark solely in connec on with the sale of vadadustat.
The transac on price of $43.3 million was comprised of the up-front payment of $25.0 million and the premiums paid by CSL Vifor on the First Investment
Agreement and Second Investment Agreement of $4.7 million and $13.6 million, respec vely. Pursuant to the Vifor Agreement, these payments are non-
refundable and non-creditable against any other amount due to the Company. However, if the Centers for Medicare & Medicaid Services, or CMS, determines
that vadadustat is excluded from the Transi onal Drug Add-on Payment Adjustment, or TDAPA, the Company can terminate the Vifor Agreement and will be
required to repay the up-front payment and the premiums paid by CSL Vifor on the First Investment Agreement and the Second Investment Agreement. Given
the uncertainty associated with a poten al future approval of vadadustat by the FDA, and whether, if approved, vadadustat would be included in certain
reimbursement bundles by CMS, the Company constrained the en re transac on price at incep on. Un l the license is delivered, the transac on price of
$43.3 million will remain in long-term deferred revenue in the accompanying consolidated balance sheets. (see Note 12, License, collabora on and other
revenue for further informa on)
Refund Liability to Customer/Working Capital Fund
Pursuant to the Vifor Agreement, CSL Vifor contributed $40.0 million to a working capital fund, or Working Capital Fund, established to fund approximately
50% of the Company’s costs of purchasing vadadustat from its contract manufacturers for the supply of vadadustat for the Vifor Territory already delivered or
to be delivered to the Company through the end of 2023. The amount of the Working Capital Fund will be reviewed at specified intervals and is adjusted
based on a number of factors including outstanding supply commitments for vadadustat for the Vifor Territory and agreed upon vadadustat inventory levels
held by the Company for the Vifor Territory. Upon termina on or expira on of the Vifor Agreement for any reason other than
Akebia Therapeu cs, Inc. | Form 10-K | Page 148
Table of Contents
convenience by CSL Vifor (including following receipt of the CRL for vadadustat), the Company will be required to refund the outstanding balance of the
Working Capital Fund on the date of termina on or expira on.
The Company has determined that the working capital fund does not represent an obliga on to transfer goods or services to CSL Vifor in the future and thus
under ASC 606 was recorded as a refund liability. The refund liability is considered a debt arrangement with zero coupon interest and the Company imputes
interest on the refund liability at a rate of 15.0% per annum, which was determined based on certain factors, including the Company's credit ra ng,
comparable securi es yield and the expected repayment period. On March 18, 2022, when the $40.0 million was received from CSL Vifor, the Company
recorded an ini al discount on the refund liability to the customer and a corresponding deferred gain to the refund liability to customer in the consolidated
balance sheet. The discount on the note payable is being amor zed to interest expense using the effec ve interest method over the expected term of the
Vifor Agreement. The deferred gain is being amor zed to interest income on a straight-line basis over the expected term of the Vifor Agreement. The
amor za on of the discount was $3.1 million and $3.4 million for the years ended December 31, 2023 and 2022, respec vely. The amor za on of the
deferred gain was $4.0 million and $2.4 million for the years ended December 31, 2023 and 2022, respec vely. As of December 31, 2023, the $40.1 million
total refund liability is classified as a long-term liability based on management's es mated ming of the repayment of the refund liability to Vifor exceeding
one year.
Liability Related to Sale of Future Royal es
In February 2021, the Company entered into a royalty interest acquisi on agreement with HealthCare Royalty Partners IV, L.P., or HCR, or Royalty Agreement,
pursuant to which the Company sold to HCR its right to receive royal es and sales milestones for vadadustat in Japan and certain other Asian countries, such
countries collec vely, the MTPC Territory, and such payments collec vely the Royalty Interest Payments, in each case, payable to the Company under the
MTPC Agreement. The Royalty Interest Payments are subject to an annual maximum “cap” of $13.0 million, a er which the Company will receive 85% of the
Royalty Interest Payments for the remainder of that year. The Royalty Interest Payments are also subject to an aggregate maximum “cap” of $150.0 million,
a er which the Royalty Interest Payments will revert back to the Company.
The Company was eligible to receive an addi onal $5.0 million in each year from 2021 through 2023 under the Royalty Agreement if specified annual sales
milestones were achieved for vadadustat in the MTPC Territory, subject to the sa sfac on of certain customary condi ons. The sales milestones for
vadadustat in the MTPC Territory were not achieved for 2023, 2022 or 2021. The Company retains the right to receive all poten al future regulatory
milestones for vadadustat under the MTPC Agreement. The Royalty Agreement will terminate on the earlier of the date on which HCR has received (i) the last
Royalty Interest Payment or (ii) payment by the Company of an amount equal to the Aggregate Cap minus the aggregate amount of all Royalty Interest
Payments actually received by HCR.
At the transac on date, the Company recognized the proceeds received from HCR of $44.8 million (net of certain transac on expenses) as a liability and is
amor zing it using the effec ve interest method over the life of the arrangement. The liability related to sale of future royal es and the debt amor za on are
based on the Company’s current es mates of future royal es expected to be paid over the life of the arrangement. To the extent the Company’s es mates of
future royalty payments are greater or less than previous es mates or the es mated ming of such payments is materially different than previous es mates,
the Company will adjust the effec ve interest rate and recognize related non-cash interest expense on a prospec ve basis. In the event the Company's
es mates of future royal es are less than the proceeds from the sale of future royal es, the Company will not recognize related non-cash interest expense.
On a quarterly basis, the Company assesses the expected royalty payments. The annual effec ve interest rate as of December 31, 2023 was 0% and, therefore
the Company did not recognize any non-cash interest expense in the consolidated statements of opera ons and comprehensive loss. As a result of the
Company's ongoing involvement in the cash flows related to the royal es and sales milestones in the MTPC Territory, the Company will con nue to account
for the royal es received as non-cash royalty revenue which is reflected within license, collabora on and other revenue in the consolidated statements of
opera ons and comprehensive loss.
During the year ended December 31, 2023 and 2022, the Company paid $2.0 million and $1.8 million of royal es to HCR and as of year end the balances were
is
thousands):
follows
(in
as
Liability related to the sale of future royal es:
Current por on (included in accrued expenses and other current liabili es)
Long-term por on
Total liability related to sale of future royal es
December 31,
2023
2022
$
$
2,048
54,013
56,061
$
$
—
57,484
57,484
The Royalty Agreement requires the Company to take certain ac ons, including ac ons with respect to the Royalty Interest Payments, the MTPC Agreement,
and the Company's intellectual property. The Royalty Agreement also contains certain representa ons and warran es, covenants, indemnifica on obliga ons,
events of default and other provisions that are
Akebia Therapeu cs, Inc. | Form 10-K | Page 149
Table of Contents
customary for a royalty mone za on transac on of this nature. In addi on, the Company granted HCR a precau onary security interest in connec on with
the Royalty Interest Payments.
MTPC Supply Agreement
See Note 12, License, Collabora on and Other Revenues, for further informa on on short-term deferred revenue as of December 31, 2022 that was
recognized during the year ended December 31, 2023.
9. LEASES
Cambridge Leases
Under the Cambridge Lease, the Company leases approximately 65,167 square feet of office, storage and laboratory space in Cambridge, Massachuse s,
which are non-cancelable opera ng leases. 5,951 square feet of the laboratory space is set to expire on January 31, 2025, with an extension op on for one
addi onal period through September 11, 2026 and 59,216 office and storage space are set to expire on September 11, 2026, with one five-year extension
op on available. In addi on to rent, certain leases require the Company to pay addi onal amounts for taxes, insurance, maintenance, and other opera ng
expenses.
All of the Company's leases are classified as opera ng leases. The renewal op on in this real estate lease was not included in the calcula on of the opera ng
lease asset and opera ng lease liability as the renewal is not reasonably certain. The lease agreements do not contain residual value guarantees. The
components of lease right-of-use assets and lease liabili es are included in the consolidated balance sheets. Opera ng lease liabili es are based on the net
present value of the remaining lease payments over the remaining lease term. In determining the present value of lease payments, the Company used its
incremental borrowing rate when measuring opera ng lease liabili es. In arriving at the opera ng lease liabili es, the Company applied incremental
borrowing rates ranging from 6.65% to 6.94%, which were based on the remaining lease term at either the date of adop on of ASC 842, Leases, or the
effec ve date of any subsequent lease term extensions. As of December 31, 2023, the remaining lease term for the Cambridge Leases was 2.70 years.
Opera ng lease costs were $5.7 million and $7.1 million for the years ended December 31, 2023 and 2022, respec vely. Cash paid for amounts included in
the measurement of opera ng lease liabili es were $5.9 million and $7.2 million for the years ended December 31, 2023 and 2022, respec vely. The security
deposit in connec on with the Cambridge Lease is $1.7 million in the form of a le er of credit, which is included as restricted cash in other long-term assets in
the Company's consolidated balance sheet as of December 31, 2023.
Sublease and Former Boston Lease
Previously, the Company leased 27,924 square feet of office space in Boston, Massachuse s, or the Boston Lease, under a non-cancelable opera ng lease
that was set to expire in July 2031. The Company subleased the en re Boston Lease, effec ve October 2019 through February 2023. The Company recorded
$0.3 million and $1.8 million in rental income as other income in the consolidated statements of opera ons and comprehensive loss during the years ended
December 31, 2023 and 2022, respec vely.
In May 2023, pursuant to a Lease Assignment Agreement, or the Lease Assignment Agreement, the Company assigned all of its rights, tle, and interest in, to,
and under the Boston Lease to LG Chem Life Sciences Innova on Center, Inc., or LG Chem, and made a payment to LG Chem of $1.3 million. As of May 2023,
LG Chem assumed all of the rights and obliga ons of the Company under the Boston Lease and the Company has no further obliga ons for rent or other
payments under the Boston Lease. In accordance with ASC 842, Leases, the Company wrote off the right-of-use asset and lease liability associated with the
Boston Lease, and recognized the difference between the right-of-use asset and the lease liability offset by the $1.3 million payment as a loss on lease
termina on in the consolidated statements of opera ons and comprehensive loss of $0.5 million. Under the terms of the Lease Assignment Agreement the
Company was en tled to, and received back, its security deposit of $1.0 million which had been recorded as restricted cash in other long-term assets in the
Company's consolidated balance sheet as of December 31, 2022.
Akebia Therapeu cs, Inc. | Form 10-K | Page 150
Table of Contents
Future Lease Commitments
Future commitments under non-cancelable Cambridge Leases are as follows (in thousands):
2024
2025
2026
Total lease commitments
Less: present value adjustment
Current and long-term opera ng lease liabili es
10. COMMITMENTS AND CONTINGENCIES
Manufacturing and Uncondi onal Purchase Commitment Agreements
Siegfried Manufacturing
Opera ng
Leases
5,261
5,819
3,613
14,693
(1,255)
13,438
$
$
$
The Company's contractual obliga ons include a commercial supply agreement with Siegfried Evionnaz, or Siegfried, to supply commercial drug substance for
Auryxia. The Company and Siegfried entered into a Master Manufacturing Services and Supply Agreement, most recently amended in February 2023, or the
Siegfried Agreement, under which the Company has agreed to purchase a minimum quan ty of drug substance of Auryxia, annually at a predetermined price.
As of December 31, 2023, the Company had a minimum total commitment of approximately $29.6 million through the end of 2026.
The term of the Siegfried Agreement was set to expire on December 31, 2024, subject to the Company’s op on to extend the term through December 31,
2026. The Company provided Siegfried with wri en no ce of its elec on to extend the term of the Siegfried Agreement through December 31, 2026. The
Siegfried Agreement provides the Company and Siegfried with certain early termina on rights.
In connec on with the extension of the Siegfried Agreement and the related increase in contractual purchase commitments, the Company recorded an excess
firm purchase commitment liability in other long-term liabili es of $1.5 million and corresponding expense to cost of product and other revenue during the
year ended December 31, 2023.
Patheon Manufacturing
In March 2020, the Company entered into a Supply Agreement with Patheon Inc., or Patheon, or the Patheon Agreement, under which Patheon will
manufacture vadadustat drug product for commercial use under a volume-based pricing structure through June 30, 2025, renewing annually unless either
party gives the other party eighteen months' prior wri en no ce. Under the Patheon Agreement, the Company agreed to purchase from Patheon a certain
percentage of the es mated global demand for vadadustat drug product based on certain quarterly and annual forecasts provided by the Company. As of
December 31, 2023, the Company had no minimum commitment with Patheon, however, as es mated global demand fluctuates, the Company may have
future obliga ons under the Patheon Agreement.
WuXi STA Manufacturing
In April 2020, the Company entered into a Supply Agreement with STA Pharmaceu cal Hong Kong Limited, a subsidiary of WuXi AppTec, or WuXi STA, or, as
amended, the WuXi STA DS Agreement. Under the WuXi STA DS Agreement, WuXi STA will manufacture vadadustat drug substance for commercial use under
a volume-based pricing structure through April 2, 2024. Pursuant to the WuXi STA DS Agreement, the Company has agreed to purchase a certain percentage
of the global demand for vadadustat drug substance from WuXi STA. As of December 31, 2023, the Company has commi ed to purchase $13.4 million of
vadadustat drug substance from WuXi STA through the end of 2024.
On February 10, 2021, the Company entered into a Supply Agreement with WuXi STA, or the WuXi STA DP Agreement, under which WuXi STA will
manufacture and supply vadadustat drug product for commercial purposes under a volume-based pricing structure through February 10, 2025. The
vadadustat drug product price is reviewed annually by the Company and WuXi STA. The Company also reimburses WuXi STA for certain reasonable expenses.
Pursuant to the WuXi STA DP Agreement, the Company has agreed to purchase a certain percentage of global demand for vadadustat drug product from WuXi
STA. The WuXi STA DP Agreement may be renewed or extended by mutual agreement of the Company and WuXi STA with at least eighteen months’ prior
wri en no ce. The WuXi STA DP Agreement allows the Company to terminate the rela onship on 180 calendar days’ prior wri en no ce to WuXi STA for any
reason. In addi on, each party has the ability to terminate the WuXi STA DP Agreement upon the occurrence of certain condi ons.
Akebia Therapeu cs, Inc. | Form 10-K | Page 151
Table of Contents
Esteve - Assigned Supply Agreement
On April 9, 2019, the Company and Esteve Química, S.A., or Esteve, entered into a Supply Agreement, or the Esteve Agreement, which included the terms and
condi ons under which Esteve would manufacture vadadustat drug substance for commercial use under a volume-based pricing structure. On December 16,
2022, the Company, MTPC, and Esteve executed the Esteve Assignment Agreement, pursuant to which the Esteve Agreement was assigned to MTPC. The
Esteve Assignment Agreement transferred the rights and obliga ons of the Esteve Agreement to MTPC, specifically including the obliga ons under certain
purchase orders issued by the Company and accepted by Esteve. As such, the Company will have no further obliga on to take delivery of or pay for product
delivered by Esteve under the transferred Esteve Agreement.
BioVectra - Former Manufacturing and Uncondi onal Purchase Commitments
Under the Manufacture and Supply Agreement with BioVectra and the Amended and Restated Product Manufacture and Supply and Facility Construc on
Agreement with BioVectra, the Company agreed to purchase minimum quan es of Auryxia drug substance annually at predetermined prices as well as
reimburse BioVectra for certain costs in connec on with construc on of a new facility for the manufacture and supply of Auryxia drug substance.
On December 22, 2022, the Company and BioVectra entered into a termina on agreement, under which the par es agreed, among other things, to
terminate, effec ve immediately, any and all exis ng agreements entered into between the par es in connec on with the manufacture and supply, by
BioVectra to the Company, of Auryxia drug substance. In the termina on agreement, the Company and BioVectra released one another from all exis ng and
future claims and liabili es and the return of certain materials and documents. In addi on, the Company agreed to pay BioVectra a total of $32.5 million
consis ng of (i) an upfront payment of $17.5 million and (ii) six quarterly payments of $2.5 million commencing in April 2024, totaling $15.0 million. The
upfront payment of $17.5 million was made during the quarter ended December 31, 2022 and was recorded in cost of product and other revenue. In
accordance with ASC 420, Exit or Disposal Cost Obliga ons, the Company recognized a liability and corresponding expense for the remaining termina on fees
based on es mated fair value as of December 22, 2022. The Company imputed interest on the liability for the remaining termina on fees at a rate of 17.0%
per annum, which was determined based on certain factors, including the Company's credit ra ng, comparable securi es yield and expected repayment
period of the remaining termina on fees. The Company recorded an ini al discount on the remaining termina on fees in the consolidated balance sheet on
the date of the termina on. This resulted in the recording of a liability and corresponding charge to cost of goods sold of $11.2 million during the quarter
ended December 31, 2022. The discount on the liability balance is being amor zed to interest expense using the effec ve interest rate method over the term
of the liability. The amor za on of the discount was $1.9 million for the year ended December 31, 2023.
In-Licensing - Panion License Agreement
On April 17, 2019, the Company and Panion & BF Biotech, Inc., or Panion, entered into a second amended and restated license agreement, or Panion
Amended License Agreement, which amended and restated in full the license agreement between the Company and Panion. The Panion Amended License
Agreement provides the Company with an exclusive license under Panion-owned know-how and patents covering the rights to sublicense, develop, make,
use, sell, offer for sale, import and export ferric citrate worldwide, excluding certain Asian-Pacific countries, or the Licensor Territory. The Panion Amended
License Agreement also provides Panion with an exclusive license under Company-owned patents covering the rights to sublicense (with the Company’s
wri en consent), develop, make, use, sell, offer for sale, import and export ferric citrate in certain countries in the Licensor Territory. Under the Panion
Amended License Agreement, Panion is eligible to receive from the Company or any sublicensee royalty payments based on a mid-single digit percentage of
sales of ferric citrate in the Company’s licensed territories. The Company is eligible to receive from Panion or any sublicensee royalty payments based on
a mid-single digit percentage of net sales of ferric citrate in Panion’s licensed territories.
The Panion Amended License Agreement terminates upon the expira on of each of the Company’s and Panion’s obliga ons to pay royal es thereunder. In
addi on, the Company may terminate the Panion Amended License Agreement (i) in its en rety or (ii) with respect to one or more countries in the
Company’s licensed territory, in either case upon ninety days’ no ce. 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, un l the second
anniversary of the expira on of the obliga on of the Company or Panion, as applicable, to pay royal es in a country in which such party has ferric citrate for
sale on the date of such expira on, 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 distribu on in such country.
The Panion Amended License Agreement includes customary terms rela ng to, among others, indemnifica on, confiden ality, remedies, and representa ons
and warran es. In addi on, the Panion Amended License Agreement provides that each of the Company and Panion has the right, but not the obliga on, to
conduct li ga on against any infringer of certain patent rights under the Panion Amended License Agreement in certain territories.
Akebia Therapeu cs, Inc. | Form 10-K | Page 152
Table of Contents
During the years ended December 31, 2023 and 2022, the Company incurred approximately $10.0 million and $13.8 million, respec vely, in royalty payments
due to Panion rela ng to the Company’s sales of Auryxia in the U.S. and JT and Torii’s net sales of Riona in Japan.
Other Third Party Contracts
The Company contracts with various organiza ons to conduct R&D ac vi es with remaining contract costs to the Company of approximately $44.7 million at
December 31, 2023. The scope of the services under these R&D contracts can be modified and the contracts cancelled by the Company upon wri en no ce.
In some instances, the contracts may be cancelled by the third party upon wri en no ce.
Li ga on and Related Ma ers
The Company is involved from me to me in various legal proceedings arising in the normal course of business. Loss con ngency provisions are recorded for
probable and es mable losses at our best es mate of a loss or, when a best es mate cannot be made, at our es mate of the minimum loss. These es mates
are o en developed prior to knowing the amount of the ul mate loss, require the applica on of significant judgment and are refined as addi onal
informa on becomes known. Accordingly, we are o en ini ally unable to develop a best es mate of loss and therefore the es mated minimum loss amount,
which could be zero, is recorded. Changes in the Company’s es mates could have a material impact. Although the outcomes of poten al legal proceedings are
inherently difficult to predict, the Company does not expect the resolu on of current legal proceedings to have a material adverse effect on its financial
posi on, results of opera ons or cash flows of the Company.
Guarantees and Indemnifica ons
As permi ed under Delaware law, the Company may indemnify its officers, directors and employees for certain events or occurrences that happen by reason
of their rela onship with, or posi on held at, the Company. The Company may also be subject to indemnifica on obliga ons by law with respect to the
ac ons of its employees under certain circumstances and in certain jurisdic ons. The Company maintains director and officer liability insurance coverage that
is intended to cover a por on of amounts that may be due with respect to indemnifica on a er a deduc ble is met. Further, the Company is a party to a
variety of agreements in the ordinary course of business under which it may be obligated to indemnify third par es with respect to certain ma ers. For the
years ended December 31, 2023 and 2022, the Company did not experience any losses related to these indemnifica on obliga ons, and no claims were
outstanding as of December 31, 2023. The Company does not have any claims related to these indemnifica on obliga ons and consequently concluded that
the fair value of these obliga ons is negligible and no related accruals were recorded.
11. PRODUCT REVENUE AND RESERVES FOR VARIABLE CONSIDERATION
To date, the Company’s only source of product revenue has been from the U.S. sales of Auryxia. Total net product revenue was $170.3 million and
$176.9 million for the years ended December 31, 2023 and 2022, respec vely. Product revenue allowance and reserve categories were as follows:
(in thousands)
Balance at December 31, 2021
Current provisions related to sales in current year
Adjustments related to prior year sales
Credits/payments made
Balance at December 31, 2022
Current provisions related to sales in current year
Adjustments related to prior year sales
Credits/payments made
Balance at December 31, 2023
Chargebacks
and
Discounts
Rebates, Fees
and other
Deduc ons
Returns
Total
$
$
$
1,047 $
11,412
(9)
(11,191)
1,259 $
11,138
(304)
(10,486)
1,607 $
24,478 $
89,095
401
(87,722)
26,252 $
79,648
(1,506)
(81,403)
22,991 $
10,065 $
5,603
(26)
(4,719)
10,923 $
6,181
1,648
(11,836)
6,916 $
35,590
106,110
366
(103,632)
38,434
96,967
(162)
(103,725)
31,514
Chargebacks, discounts and es mated product returns are recorded as a reduc on of revenue in the period the related product revenue is recognized in the
consolidated statements of opera ons and comprehensive loss. Chargebacks are recorded as a reduc on to accounts receivable while discounts, rebates, fees
and other deduc ons are recorded with a corresponding increase to accrued expenses and other current liabili es or accounts payable in the consolidated
balance sheets. Es mated product returns on product sales that are not expected to be returned within one year are recorded as other long-term liabili es in
the consolidated balance sheets.
Akebia Therapeu cs, Inc. | Form 10-K | Page 153
Table of Contents
Accounts receivable, net related to product sales was approximately $35.9 million and $37.3 million as of December 31, 2023 and 2022, respec vely.
12. LICENSE, COLLABORATION AND OTHER REVENUE
The Company recognized the following revenues from its license, collabora on and other revenue agreements (in thousands):
En ty
Medice
MTPC
JT and Torii
Otsuka
Descrip on
License and Product Supply of Vadadustat in EU
License and Product Supply of Vadadustat in Japan
License and royal es related to the sale of Riona in Japan
Terminated U.S. and Interna onal Agreements
Total License, Collabora on and Other Revenue
Years Ended December 31,
2022
2023
10,968 $
5,735
5,394
2,225
24,322 $
—
17,968
5,291
92,276
115,535
$
$
The following table presents changes in the Company’s contract assets and liabili es related to license, collabora on and other revenue agreements (in
thousands):
Contract assets:
Accounts receivable
Prepaid expenses and other current assets
(1)
Contract liability:
Deferred revenue (current and long-term)
Contract assets:
Accounts receivable
Prepaid expenses and other current assets
(1)
Contract liabili es:
Deferred revenue (current and long-term)
Accounts payable
Twelve Months Ended December 31, 2023
Balance at
Beginning of
Period
Addi ons
Deduc ons
Balance at End
of Period
1,901 $
781 $
10,088 $
— $
(8,656) $
(781) $
3,333
—
47,034 $
— $
(3,738) $
43,296
Twelve Months Ended December 31, 2022
Balance at
Beginning of
Period
Addi ons
Deduc ons
Balance at End
of Period
19,094 $
4,309 $
42,380 $
3,171 $
94,515 $
9,550 $
70,044 $
— $
(111,708) $
(13,078) $
(65,390) $
(3,171) $
1,901
781
47,034
—
$
$
$
$
$
$
$
(1) Excludes accounts receivable from product sales of Auryxia which are included in the accompanying consolidated balance sheets as of December 31,
2023 and 2022.
During the years ended December 31, 2023 and 2022, the Company recognized the following revenues as a result of changes in the contract asset and
contract liability balances in the respec ve periods (in thousands):
Revenue Recognized in the Period from:
Deferred revenue - beginning of the period
Performance obliga ons sa sfied in previous periods
Medice License Agreement
Years Ended December 31,
2022
2023
$
$
3,738 $
— $
29,574
—
On May 24, 2023, or Medice Effec ve Date, the Company and MEDICE Arzneimi el Pü er GmbH & Co. KG, or Medice, entered into a License Agreement, or
the Medice License Agreement, pursuant to which the Company granted to Medice an exclusive license to develop and commercialize vadadustat for the
treatment of anemia in adult pa ents with chronic kidney disease in European Economic Area, the UK, Switzerland and Australia, or the Medice Territory.
Akebia Therapeu cs, Inc. | Form 10-K | Page 154
Table of Contents
Under the Medice License Agreement, the Company received an up-front payment of $10.0 million and is eligible to receive the following payments:
(i) commercial milestone payments up to an aggregate of $100.0 million, and
(ii) ered royal es ranging from 10% to 30% of Medice's annual net sales of vadadustat in the Medice Territory, subject to reduc on in certain
circumstances.
The royal es will expire on a country-by-country basis upon the latest to occur of (a) the date of expira on of the last-to-expire valid claim of any Company,
Medice or joint patent that covers vadadustat in such country in the Medice Territory, (b) the date of expira on of data or regulatory exclusivity for
vadadustat in such country in the Medice Territory and (c) the date that is twelve years from first commercial sale of vadadustat in such country in the Medice
Territory.
Under the Medice License Agreement, the Company retains the right to develop vadadustat for non-dialysis pa ents with anemia due to chronic kidney
disease in the Medice Territory. If the Company develops vadadustat for non-dialysis pa ents and vadadustat receives marke ng approval in the Medice
Territory, Medice will commercialize vadadustat for both indica ons in the Medice Territory. In this instance, the Company would receive 70% of the net
product margin of any sales of vadadustat in the non-dialysis pa ent popula on, unless Medice requests to share the cost of the development necessary to
gain approval to market vadadustat for non-dialysis pa ents in the Medice Territory and the par es agree on alterna ve financial terms. If the Company
develops vadadustat for non-dialysis pa ents, the Company has determined that the ac vi es under the Medice License Agreement represent joint opera ng
ac vi es in which both par es are ac ve par cipants and of which both par es are exposed to significant risks and rewards that are dependent on the
success of the ac vi es. Accordingly, if the Company develops vadadustat for non-dialysis pa ents the Company will account for the joint ac vi es in
accordance with ASC No. 808, Collabora ve Arrangements, or ASC 808. Addi onally, the Company has determined that in the context of the development of
vadadustat for non-dialysis pa ents, Medice does not represent a customer as contemplated by ASC 606-10-15, Revenue from Contracts with Customers –
Scope and Scope Excep ons. As a result, the ac vi es conducted pursuant to development ac vi es for vadadustat for non-dialysis pa ents will be accounted
for as a component of the related expense in the period incurred.
The Medice License Agreement expires on the date of expira on of all payment obliga ons due thereunder with respect to vadadustat in the last country in
the Medice Territory, unless earlier terminated in accordance with the terms of the Medice License Agreement. Either party may, subject to a cure period,
terminate the Medice License Agreement in the event of the other party's uncured material breach. Medice has the right to terminate the Medice License
Agreement in its en rety for convenience upon twelve months' prior wri en no ce delivered on or a er the date that is twelve months a er the Medice
Effec ve Date.
The Medice License Agreement provides that the Company and Medice will enter into a supply agreement pursuant to which the Company will supply
vadadustat to Medice for commercial use in the Medice Territory. As of December 31, 2023, the Company and Medice have not yet entered into a supply
agreement.
The Company evaluated the elements of the Medice License Agreement in accordance with the provisions of ASC 606 and concluded Medice is a customer.
The Company iden fied one performance obliga on in connec on with its obliga ons under the Medice License Agreement, which is the license, or License
Performance Obliga on. The transac on price at incep on was comprised of the up-front payment of $10.0 million, of which the Company received $8.6
million during the quarter ended June 30, 2023. The remaining $1.4 million was withheld by the German Federal Tax Office and is included in other long-term
assets in the consolidated balance sheet as of December 31, 2023.
Pursuant to the terms of the Medice License Agreement, the up-front payment of $10.0 million is non-refundable and non-creditable against any other
amount due to the Company and was allocated to the License Performance Obliga on, which was sa sfied as of the Medice Effec ve Date. As such, the
Company recognized the $10.0 million up-front payment as License, collabora on and other revenue in the consolidated statement of opera ons and
comprehensive loss during the year ended December 31, 2023.
In accordance with ASC 606, the Company will recognize sales-based royal es and milestone payments at the later of when the performance obliga on is
sa sfied or the related sales occur.
Medice Le er Agreement
On December 6, 2023, the Company and Medice entered into a le er agreement, or the Medice Le er Agreement, pursuant to which the Company agreed to
sell to Medice a par al batch of vadadustat in order to achieve packaging valida on for the Medice Territory. The Company recognizes revenue under this
arrangement when risk of loss passes to Medice and delivery has occurred. During the year ended December 31, 2023, the Company recognized $1.0 million
in collabora on revenue under the Medice Side Le er. As of December 31, 2023, there was $0.9 million in accounts receivable and no contract assets,
payables or deferred revenue recorded in connec on with the Medice Le er Agreement.
Akebia Therapeu cs, Inc. | Form 10-K | Page 155
Table of Contents
MTPC Collabora on Agreement
On December 11, 2015, the Company and Mitsubishi Tanabe Pharma Corpora on, or MTPC, entered into the MTPC Agreement, providing MTPC with
exclusive development and commercializa on rights to vadadustat in Japan and certain other Asian countries, collec vely, the MTPC Territory, which was
amended effec ve as of December 2, 2022. In addi on, the Company supplies vadadustat to MTPC for both clinical and commercial use in the MTPC Territory.
In February 2021, the Company entered into the Royalty Agreement with HCR, whereby the Company sold its right to receive royal es and sales milestones
under the MTPC Agreement, subject to certain caps and other terms and condi ons. See Note 8, Deferred Revenue, Refund Liability and Liability Related to
Sale of Future Royal es, for more informa on.
Unless earlier terminated, the MTPC Agreement will con nue in effect on a country-by-country basis un l the later of the following: expira on of the last-to-
expire patent covering vadadustat in such country in the MTPC Territory; expira on of marke ng or regulatory exclusivity in such country in the MTPC
Territory; or ten years a er the first commercial sale of vadadustat in such country in the MTPC Territory. MTPC may terminate the MTPC Agreement upon
twelve months’ no ce at any me a er the second anniversary of the effec ve 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 me period or upon the insolvency of the other party.
Under the MTPC Agreement, MTPC is required to make certain milestone payments to the Company aggrega ng up to approximately $225.0 million upon the
achievement of specified development, regulatory and commercial events. The Company has received $10.0 million in development milestone payments. Of
the $40.0 million in regulatory milestone payments the Company is eligible for, the Company received $10.0 million in rela on to the Japanese NDA filing in
the third quarter of 2019 and $15.0 million following regulatory approval of vadadustat in Japan in the third quarter of 2020. The Company is also en tled to
receive up to $175.0 million in commercial milestone payments associated with aggregate sales of all products. In considera on for the exclusive license and
other rights contained in the MTPC Agreement, MTPC made a $20.0 million upfront payment as well as a $20.5 million payment for Phase 2 studies in
Japanese pa ents completed by the Company and reimbursed by MTPC. Addi onally, the Company is en tled to receive ered royalty payments ranging from
13% to 20% on annual net sales of vadadustat in the MTPC Territory, subject to reduc on in certain circumstances.
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 iden fied two performance obliga ons in connec on with its material promises under the MTPC Agreement as follows: (i)
License, Research and Clinical Supply Performance Obliga on and (ii) Rights to Future Know-How Performance Obliga on.
The transac on price was comprised of: (i) the up-front payment of $20.0 million, (ii) the cost for the Phase 2 studies of $20.5 million, (iii) the cost of all
clinical supply provided to MTPC for the Phase 3 studies, (iv) $10.0 million in development milestones received, (v) $25.0 million in regulatory milestones
received and (vi) $5.0 million in royal es from net sales of Vafseo. The Company re-evaluates the transac on price in each repor ng period and as uncertain
events are resolved or other changes in circumstances occur. As of December 31, 2023, all development milestones and $25.0 million in regulatory milestones
have been achieved. No other regulatory milestones or commercial milestones have been assessed as probable and have been fully constrained un l the
period in which they are achieved.
The Company allocates the transac on price to each performance obliga on based on the Company’s best es mate of the rela ve standalone selling price.
The Company developed a best es mate of the standalone selling price for the Rights to Future Know-How Performance Obliga on primarily based on the
likelihood that addi onal intellectual property covered by the license conveyed will be developed during the term of the arrangement and determined it is
immaterial. As such, the Company did not develop a best es mate of standalone selling price for the License, Research and Clinical Supply Performance
Obliga on and allocated the en re transac on price to this performance obliga on.
Revenue for the License, Research and Clinical Supply Performance Obliga on for the MTPC Agreement is being recognized using a propor onal performance
method, for which all deliverables have been completed. The Company recognizes any revenue from MTPC royal es in the period in which the sales occur.
The Company recognized $2.0 million and $1.8 million of revenue for royal es from the net sales of Vafseo during the years ended December 31, 2023 and
2022, respec vely. As noted above, in February 2021, the Company entered into the Royalty Agreement, whereby the Company sold its right to receive these
royal es and sales milestones under the MTPC Agreement, subject to certain caps and other condi ons. See Note 8, Deferred Revenue, Refund Liability and
Liability Related to Sale of Future Royal es, for more informa on. The revenue is classified as collabora on revenue in the accompanying consolidated
statements of opera ons and comprehensive loss. As of December 31, 2023, there were no accounts receivable, contract assets, payables or deferred
revenue recorded in connec on with the MTPC Agreement.
Akebia Therapeu cs, Inc. | Form 10-K | Page 156
Table of Contents
Supply of Drug Product to MTPC
On July 15, 2020, the Company and MTPC entered into a supply agreement, or the MTPC Supply Agreement, under which the Company supplies vadadustat
drug product to MTPC for commercial use in Japan and certain other Asian countries, as contemplated by the MTPC Agreement. The term of the MTPC Supply
Agreement extends throughout the term of the MTPC Agreement, and the termina on provisions of the MTPC Agreement govern termina on of the MTPC
Supply Agreement. The Company does not recognize revenue under this arrangement un l risk of loss on the drug product passes to MTPC and delivery has
occurred and MTPC has accepted the product.
On December 16, 2022, the Company, MTPC and Esteve Química, S.A., or Esteve, executed an Assignment of Supply Agreement, or Esteve Assignment
Agreement, pursuant to which the Supply Agreement between the Company and Esteve, or Esteve Agreement was assigned to MTPC. The Esteve Assignment
Agreement transferred the rights and obliga ons of the Company under the Esteve Agreement to MTPC. The Company has no further obliga on to take
delivery of, or pay for, product delivered by Esteve. See Note 10, Commitments and Con ngencies, for more informa on.
During the years ended December 31, 2023 and 2022, the Company recognized $3.7 million and $16.2 million, respec vely, of revenue under the MTPC
Supply Agreement. Due to the Esteve Agreement, the Company no longer records accounts receivable, deferred revenue or other current liabili es rela ng to
the MTPC Supply Agreement.
JT and Torii Sublicense Agreement
The Company has an Amended and Restated Sublicense Agreement, which was amended in June 2013, with JT and Torii, or JT and Torii Sublicense
Agreement, under which JT and Torii obtained the exclusive sublicense rights for the development and commercializa on of ferric citrate hydrate in Japan. JT
and Torii are responsible for the future development and commercializa on costs in Japan.
The Company is eligible to receive royalty payments based on a ered low double-digit percentage of net sales of Riona in Japan inclusive of amounts that the
Company must pay to Panion on JT and Torii's net sales of Riona under the Panion License Agreement subject to certain reduc ons upon expira on or
termina on of the Amended and Restated License Agreement between the Company and Panion, pursuant to which Company in-licensed the exclusive
worldwide rights, excluding certain Asian-Pacific countries, for the development and commercializa on of ferric citrate. The Company is en tled to receive up
to an addi onal $55.0 million upon the achievement of certain annual net sales milestones.
The sublicense under the JT and Torii Sublicense Agreement terminates upon the expira on 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 wri en no ce to the Company. Addi onally, either party may
terminate the JT and Torii Sublicense Agreement for cause upon 60 days’ prior wri en no ce a er the breach of any uncured material provision of the JT and
Torii Sublicense Agreement, or a er certain insolvency events.
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 iden fied two performance obliga ons in connec on with its obliga ons under the JT and Torii
Sublicense Agreement: (i) License and Supply Performance Obliga on and (ii) Rights to Future Know-How Performance Obliga on. The Company developed a
best es mate of the standalone selling price for the Rights to Future Know-How Performance Obliga on primarily based on the likelihood that addi onal
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 es mate of standalone selling price for the License and Supply Performance Obliga on and allocated the en re transac on
price to this performance obliga on. Addi onally, as of the consumma on of the Merger, the services associated with the License and Supply Performance
Obliga on were completed and JT and Torii had secured their own source to manufacture ferric citrate hydrate. As such, any ini al 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 considera on that may be payable to the Company under the terms of the sublicense agreement are either quarterly royal es on net sales or
payments due upon the achievement of sales-based milestones. In accordance with ASC 606, the Company recognizes sales-based royal es and 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 obliga on is sa sfied, or the related sales occur.
During the years ended December 31, 2023 and 2022, the Company recognized $5.4 million and $5.3 million, respec vely, in license revenue related to
royal es 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.
Akebia Therapeu cs, Inc. | Form 10-K | Page 157
Table of Contents
Prior Collabora on and License Agreements
U.S. Collabora on and License Agreement with Otsuka Pharmaceu cal Co. Ltd.
On December 18, 2016, the Company entered into a collabora on and license agreement, or Otsuka U.S. Agreement, with Otsuka Pharmaceu cal Co. Ltd, or
Otsuka. The collabora on was focused on the development and commercializa on of vadadustat in the U.S. The Company was responsible for leading the
development of vadadustat, for which it submi ed an NDA to the FDA in March 2021, and for which it received the CRL in March 2022.
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 ac vi es and to conduct non-promo onal and commercializa on ac vi es related to vadadustat
in accordance with the associated plans. The co-exclusive license related to ac vi es that would be jointly conducted by the Company and Otsuka under the
Otsuka U.S. Agreement.
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, was a customer. The Company iden fied three performance obliga ons in connec on with its obliga ons under the Otsuka U.S.
Agreement as follows: (i) License and Development Services Combined (License Performance Obliga on); (ii) Rights to Future Intellectual Property (Future IP
Performance Obliga on) and (iii) Joint Commi ee Services (Commi ee Performance Obliga on). The Company allocated the transac on price to each
performance obliga on based on the Company’s best es mate of the rela ve standalone selling price. No amounts were allocated to the Future IP
Performance Obliga on because the associated best es mate of standalone selling price was determined to be immaterial. Due to the similar performance
period and recogni on pa ern between the License Performance Obliga on and the Commi ee Performance Obliga on, the transac on price was allocated
to the License Performance Obliga on and the Commi ee Performance Obliga on on a combined basis. The Company recognized revenue on a propor onal
performance basis as the underlying services were performed.
Pursuant to the Otsuka U.S. Agreement, the Company received: (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 net cost share considera on received with respect to amounts
incurred by the Company under the global development plan of approximately $319.2 million with respect to amounts incurred by the Company subsequent
to December 31, 2016.
On May 12, 2022, the Company received no ce from Otsuka that Otsuka had elected to terminate the Otsuka U.S. Agreement and the April 25, 2017
collabora on and license agreement with Otsuka, or Otsuka Interna onal Agreement. On June 30, 2022, the Company and Otsuka entered into the
Termina on and Se lement Agreement, or Otsuka Termina on Agreement, pursuant to which, among other things, the Company and Otsuka agreed to
terminate the Otsuka U.S. Agreement and the Otsuka Interna onal Agreement as of June 30, 2022.
During the year ended December 31, 2023, the Company recognized $2.2 million in collabora on revenue in connec on with the Packaging Valida on
Transfer Agreement entered into with Otsuka on April 20, 2023. Under the Packaging Valida on Transfer Agreement, the par es agreed that responsibility for
all remaining packaging valida on ac vi es would be transferred from Otsuka to the Company in considera on of payments made by Otsuka to the Company.
The Company evaluated the agreement under ASC 606 and concluded it was closely ed to the prior collabora on revenue agreements and under ASC 606
recognized collabora on revenue in the current year. During the year ended December 31, 2022, the Company recognized collabora on revenue totaling
approximately $86.8 million with respect to the Otsuka U.S. Agreement.
The Company accounted for the joint medical affairs, commercializa on and non-promo onal ac vi es elements of the Otsuka U.S. Agreement in accordance
with ASC No. 808, Collabora ve Arrangements (ASC 808). Furthermore, these ac vi es were recognized for as a component of the related expense in the
period incurred. During the year ended December 31, 2023, the Company incurred no costs related to the cost-sharing provisions of the Otsuka U.S.
Agreement. During the year ended December 31, 2022, the Company incurred approximately $7.6 million of costs related to the cost-sharing provisions of
the Otsuka U.S. Agreement of which approximately $3.8 million were reimbursable by Otsuka and recorded as a reduc on to R&D expense during the year
ended December 31, 2022.
Interna onal Collabora on and License Agreement with Otsuka Pharmaceu cal Co. Ltd.
On April 25, 2017, the Company entered into a collabora on and license agreement with Otsuka, or the Otsuka Interna onal Agreement. The collabora on
was focused on the development and commercializa on of vadadustat in Europe, Russia, China, Canada, Australia, the Middle East and certain other
territories, collec vely, the Otsuka Interna onal Territory. As discussed above, the Otsuka Interna onal Agreement was terminated on June 30, 2022 pursuant
to the Otsuka Termina on Agreement.
The Company has accounted for the Otsuka Interna onal Agreement separately from the collabora on arrangement with Otsuka with respect to the U.S. due
to the lack of interrela onship and interdependence of the elements and payment terms within each of the contracts as they related to the respec ve
territories. Accordingly, the Company applied the guidance in ASC 606 solely in reference to the terms and condi ons of the Otsuka Interna onal Agreement,
while the Otsuka U.S.
Akebia Therapeu cs, Inc. | Form 10-K | Page 158
Table of Contents
Agreement con nued to be accounted for as a discrete agreement in its own right. The Company evaluated the Otsuka Interna onal Agreement in
accordance with the provisions of ASC 606 and concluded that the contract counterparty, Otsuka, was a customer. The Company iden fied three performance
obliga ons in connec on with its obliga ons under the Otsuka Interna onal Agreement as follows: (i) License and Development Services Combined (License
Performance Obliga on); (ii) Rights to Future Intellectual Property (Future IP Performance Obliga on) and (iii) Joint Commi ee Services (Commi ee
Performance Obliga on). The Company allocated the transac on price to each performance obliga on based on the Company’s best es mate of the rela ve
standalone selling price. No amounts were allocated to the Future IP Performance Obliga on because the associated best es mate of standalone selling price
was determined to be immaterial. Due to the similar performance period and recogni on pa ern between the License Performance Obliga on and the
Commi ee Performance Obliga on, the transac on price was allocated to the License Performance Obliga on and the Commi ee Performance Obliga on on
a combined basis. The Company recognized revenue on a propor onal performance basis as the underlying services were performed.
Pursuant to the Otsuka Interna onal Agreement, the Company received: (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) the net cost share considera on received with respect to
amounts incurred by the Company subsequent to March 31, 2017 of $216.7 million.
During the year ended December 31, 2023, the Company recognized no revenue with respect to the Otsuka Interna onal Agreement. During the year ended
December 31, 2022, the Company recognized revenue totaling approximately $5.5 million with respect to the Otsuka Interna onal Agreement. The revenue is
classified as collabora on revenue in the accompanying consolidated statements of opera ons and comprehensive loss.
13. CAPITAL STOCK
Authorized and Outstanding Capital Stock
On June 5, 2020, the Company filed a Cer ficate of Amendment to its Ninth Amended and Restated Cer ficate of Incorpora on, or its Charter, to increase the
number of authorized shares of common stock from 175,000,000 to 350,000,000. As of December 31, 2023, the authorized capital stock of the Company
included 350,000,000 shares of common stock, par value $0.00001 per share, of which 194,582,539 and 184,135,714 shares were issued and outstanding at
December 31, 2023 and 2022, respec vely; and 25,000,000 shares of undesignated preferred stock, par value $0.00001 per share, of which no shares were
issued and outstanding at December 31, 2023 and 2022.
At-the-Market Facility
On April 7, 2022, the Company entered into an at-the-market, or ATM, sales agreement with Jefferies LLC, or Jefferies, as the Company's sales agent, under
which the Company may offer and sell from me to me up to $26.0 million of shares of the Company's common stock in nego ated transac ons or
transac ons that are deemed to be an ATM offering. During the year ended December 31, 2023, the Company sold 6,189,974 shares of common stock under
this program for gross proceeds of $6.8 million ($6.7 million, net of offering expenses). During January and February 2024, the Company sold 13,261,311
shares of its common stock under the ATM sales agreement with gross proceeds of $19.2 million, ($18.7 million, net of offering expenses). The Company paid
the Agent commissions for its services of ac ng as agent of up to 3.0% of the gross proceeds from the sale of the common stock pursuant to the ATM.
Prior At-the-Market Facility
On March 1, 2022, the Company filed a prospectus supplement rela ng to the Company's sales agreement with Cantor Fitzgerald & Co., or Prior Sales
Agreement, pursuant to which it was authorized to offer and sell up to $25.3 million of its common stock at current market prices from me to me. On
March 16, 2022, the Company terminated the Prior Sales Agreement. During the year ended December 31, 2022, the Company sold 404,600 shares of
common stock under this program with net proceeds (a er deduc ng commissions and other offering expenses) of $0.8 million.
Unregistered Common Stock
In connec on with the Vifor Agreement, CSL Vifor owns 7,571,429 shares of common stock that are unregistered under the Securi es Act. See Note 8,
Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royal es, for more informa on.
Warrants to Purchase Common Stock
In connec on with the BlackRock Credit Agreement, described in more detail in Note 7, Indebtedness, the Company issued a warrant to purchase 3,076,923
shares of the Company’s common stock, at an exercise price per share of $1.30, and upon borrowing of Tranche C, the Company will become obligated to
issue addi onal warrants to purchase 1,153,846 shares of the Company’s common stock at an exercise price per share of $1.30. Each warrant shall be
exercisable for eight years from date
Akebia Therapeu cs, Inc. | Form 10-K | Page 159
Table of Contents
of issuance. The warrants and the common stock issuable upon the exercise of such warrants were not registered under the Securi es Act of 1933.
Accordingly, the holder thereof may only sell common stock issued upon exercise of such warrants pursuant to an effec ve registra on statement under the
Securi es Act covering the resale of those shares, an exemp on under Rule 144 under the Securi es Act or another applicable exemp on under the
Securi es Act.
14. STOCK-BASED COMPENSATION AND EMPLOYEE RETIREMENT PLANS
Stock-Based Compensa on Plans
The Company incurred stock-based compensa on expenses of $9.3 million and $17.8 million for the years ended December 31, 2023 and 2022, respec vely.
Equity Incen ve Plans
The following table contains informa on about the Company's equity incen ve plans:
Title of Plan
(1)(2)
Keryx Equity Plans
(2)
Akebia Therapeu cs, Inc.
Amended and Restated 2008
Equity Incen ve Plan (the 2008
Plan)
Akebia Therapeu cs, Inc. 2014
(2) (3)
Incen ve Plan, as amended
(the 2014 Plan)
(replaces 2008 Plan)
Akebia Therapeu cs, Inc. 2023
Stock Incen ve Plan (the 2023
Plan)
(replaces 2014 Plan)
(3)
December 31, 2023
December 31, 2022
Group Eligible
Employees, directors and
consultants
Employees, directors and
consultants
Type of Award Granted (or
to be Granted)
Common stock op ons and
RSUs
Common stock op ons and
RSUs
Awards
Outstanding
232,203
—
Addi onal
Awards Available
for Grant
Awards
Outstanding
Addi onal
Awards
Available for
Grant
—
—
387,976
419
—
—
Employees, directors,
consultants and advisors
Common stock op ons,
RSUs, SARs and
performance awards
Employees, officers,
directors, consultants and
advisors
Common stock op ons,
SARs, restricted stock,
unrestricted stock, RSUs,
performance awards, other
share-based awards and
dividend equivalents
15,311,501
—
17,018,832
5,498,984
1,712,400
17,382,722
—
—
(1) The Keryx Equity Plans consist of the Keryx Biopharmaceu cals, Inc. 1999 Share Op on Plan, Keryx Biopharmaceu cals, Inc., as amended, the 2004 Long-Term Incen ve Plan, as amended,
the Keryx Biopharmaceu cals, Inc. 2007 Incen ve Plan, the Keryx Biopharmaceu cals Inc. Amended and Restated 2013 Incen ve Plan and the Keryx Biopharmaceu cals, Inc. 2018 Equity
Incen ve Plan.
(2) New awards are no longer being granted under these plans.
(3) This table includes the following inducement awards that are subject to the terms and condi ons of the applicable plan but were granted as inducement awards consistent with Nasdaq
Lis ng Rule 5635(c)(4) and not under the applicable plan: 1,616,019 op ons outstanding under the 2014 Plan and 794,000 op ons outstanding under the 2023 Plan as of December 31,
2023 and 2,513,512 op ons outstanding under the 2014 Plan as of December 31, 2022.
Common Stock Op ons and Stock Apprecia on Rights
During the year ended December 31, 2023, the Company granted 2,489,500 op ons to employees under the 2014 Plan and 315,000 op ons to directors
under the 2023 Plan. During the year ended December 31, 2023, the Company granted 635,313 stock appreciate rights, or SARs, to one execu ve under the
2014 Plan. Op ons and SARs granted by the Company generally vest over periods of between 12 and 48 months, subject, in each case, to the individual’s
con nued service through the applicable ves ng date. Op ons and SARs generally vest either 100% on the first anniversary of the grant date or in
installments of (i) 25% at the one year anniversary and (ii) 12 equal quarterly installments beginning a er the one year anniversary of the grant date, subject
to the individual’s con nuous service with the Company. Op ons and SARs generally expire ten years a er the date of grant.
The Company also maintains an inducement award program with a share pool that is separate from the Company's equity plans under which inducement
awards may be granted consistent with Nasdaq Lis ng Rule 5635(c)(4). During the year ended December 31, 2023, the Company granted 845,000 op ons to
purchase shares of the Company’s common stock to new hires as inducements to such employees entering into employment with the Company, of which
842,000 op ons remained outstanding at December 31, 2023.
Akebia Therapeu cs, Inc. | Form 10-K | Page 160
Table of Contents
The Company grants annual service-based stock op ons to employees and directors and SARs to certain execu ves under the 2023 and 2014 Plans. In
addi on, the Company issues common stock op ons to directors, new hires and occasionally to other employees not in connec on with the annual grant
process.
Finally, the Company grants performance-based stock op ons which generally vest in connec on with the achievement of specified commercial, regulatory
and corporate milestones. The performance-based stock op ons also generally feature a me-based ves ng component. The expense recognized for these
awards is based on the grant date fair value of the Company’s common stock mul plied by the number of op ons granted and recognized over me based on
the probability of mee ng such commercial, regulatory and corporate milestones. The Company did not grant any performance-based stock op ons under
the 2023 Plan or the 2014 Plan during the year ended December 31, 2023. The Company granted 400,000 performance-based op ons during the year ended
December 31, 2022. The Company had 400,000 performance-based op ons outstanding at December 31, 2023 and 2022.
The combined stock op on ac vity for the year ended December 31, 2023, is as follows:
Outstanding, December 31, 2022
Granted
Exercised
Expired
Canceled and forfeited
Outstanding at December 31, 2023
Exercisable at December 31, 2023
Vested and expected to vest at December 31, 2023
Stock Op ons
Weighted-Average
Exercise Price
11,775,411 $
4,284,813 $
(2,250) $
(528,099) $
(2,217,040) $
13,312,835 $
7,354,561 $
13,312,835 $
5.82
0.84
0.37
5.16
6.06
4.20
6.37
4.20
Weighted-Average
Contractual Life
(years)
Aggregate Intrinsic
Value
(in thousands)
7.26 years $
180
7.27 years $
6.05 years $
$
2,680
792
2,680
There was immaterial intrinsic value of op ons exercised during the years ended December 31, 2023 and 2022, as the value of op ons exercised in 2023 and
2022 was immaterial. The fair value of op ons that vested during the years ended December 31, 2023 and 2022 were $6.4 million and $8.4 million,
respec vely. As of December 31, 2023, there was approximately $5.2 million of unrecognized compensa on cost related to common stock op ons
outstanding under the Company’s 2023 Plan or the 2014 Plan or made pursuant to the Company's inducement award program, which is expected to be
recognized over a weighted average period of 2.19 years.
Restricted Stock Units
Generally, RSUs, granted by the Company vest in one of the following ways: (i) 100% of each RSU grant vests on the first anniversary of the grant date, (ii) one
third of each RSU grant vests on the first, second and third anniversaries of the grant date, (iii) 50% of each RSU grant vests on the first anniversary and 25%
of each RSU grant vests every six months a er the one year anniversary of the grant date, or (iv) one third of each RSU grant vests on the first anniversary of
the grant date and the remaining two thirds vests in eight substan ally equal quarterly installments beginning a er the one year anniversary, subject, in each
case, to the individual’s con nued service through the applicable ves ng date. The grant-date fair value of the RSUs is recognized as expense on a straight-line
basis. The Company determines the fair value of the RSUs based on the closing price of the common stock on the date of the grants.
The Company also periodically grants performance-based restricted stock units, or PSUs, to employees under the 2023 Plan and previously granted PSUs
under the 2014 Plan. The PSUs granted by the Company generally vest in connec on with the achievement of specified commercial, regulatory and corporate
milestones. The PSUs also generally feature a me-based ves ng component. The expense recognized for these awards is based on the grant date fair value
of the Company’s common stock mul plied by the number of units granted and recognized over me based on the probability of mee ng such commercial,
regulatory and corporate milestones. The Company did not grant any PSUs under the 2023 Plan or the 2014 Plan during the year ended December 31, 2023.
The Company granted 400,000 PSUs during the year ended December 31, 2022.
RSU and PSU ac vity is as follows:
Akebia Therapeu cs, Inc. | Form 10-K | Page 161
Table of Contents
Unvested as of December 31, 2022
Granted
Vested
Forfeited and canceled
Unvested as of December 31, 2023
2014 Plan
2023 Plan
Number of Shares
Weighted Average
Grant Date Fair Value
Number of Shares
Weighted Average
Grant Date Fair Value
5,674,406
2,759,675
(4,047,676)
(1,046,536)
3,339,869
$2.10
$0.68
$2.06
$1.06
$1.30
—
603,400
—
—
603,400
$—
$1.48
$—
$—
$1.48
The total fair value of RSUs and PSUs that vested during 2023 and 2022 (measured on the date of ves ng) was $8.4 million and $11.2 million, respec vely. As
of December 31, 2023, there was approximately $3.0 million of unrecognized compensa on cost related to RSUs and PSUs, which is expected to be
recognized over a weighted average period of 1.65 years.
Employee Stock Purchase Plan
On June 6, 2019, the Company’s stockholders approved the Amended and Restated 2014 Employee Stock Purchase Plan, or ESPP. Under the ESPP
substan ally all employees may voluntarily enroll to purchase shares of the Company’s common stock through payroll deduc ons at a price equal to 85% of
the lower of the fair market values of the stock as of the beginning or the end of the six-month offering period. An employee's payroll deduc ons under the
ESPP are limited to 15% of the employee's compensa on, and an employee may not purchase more than $25,000 worth of stock during any calendar year. In
addi on, an employee may not purchase more than 1,500 shares in any six-month offering period. As of December 31, 2023 and 2022, a total of 4,637,801
and 4,837,995 shares of the Company's common stock were available for future issuance under the ESPP, respec vely. The Company issued 200,194 shares
during the year ended December 31, 2023.
Stock-Based Compensa on Expense
The Black-Scholes op on pricing model is used to es mate the fair value of the common stock op ons. The weighted-average assump ons used in calcula ng
the fair values of the rights to acquire stock under the 2023 Plan, the 2014 Plan and inducement awards were as follows:
Common Stock Op ons
Risk-free interest rate
Expected vola lity
Expected term (years)
Expected dividend yield
Weighted average grant date fair value
3.54%
100.97%
5.51
2023
-
-
-
—%
$0.69
Years ended December 31,
4.81%
111.71%
6.25
1.69%
79.77%
5.51
4.17%
91.57%
6.25
2022
-
-
-
—%
$1.27
The Company has classified stock-based compensa on in its consolidated statements of opera ons and comprehensive loss as follows (in thousands):
Cost of goods sold
Research and development
Selling, general and administra ve
Restructuring
Total
Years ended December 31,
2023
2022
267 $
1,964
6,456
630
9,317 $
448
3,378
10,826
3,197
17,849
$
$
Stock-based compensa on by type of award was as follows (in thousands):
Akebia Therapeu cs, Inc. | Form 10-K | Page 162
Table of Contents
Stock op ons
Restricted stock units
Performance RSUs
Employee stock purchase plan
Total
Employee Re rement Plan
Years ended December 31,
2023
2022
5,310 $
3,637
297
73
9,317 $
8,968
8,619
116
146
17,849
$
$
In 2008, the Company established a re rement plan, or the Plan, authorized by Sec on 401(k) of the Internal Revenue Code, or IRC. In accordance with the
Plan, all employees who have a ained the age of 21 are eligible to par cipate in the Plan as of the first Entry Date, as defined, following their date of
employment. Each employee can contribute a percentage of compensa on up to a maximum of the statutory limits per year. Company contribu ons are
discre onary and contribu ons in the amount of approximately $1.7 million and $2.6 million were made during the years ended December 31, 2023 and
2022, respec vely.
15. INCOME TAXES
The Company’s income tax provision was computed based on the federal statutory rate and the state statutory rates, net of the related federal benefit. There
was no current or deferred income tax expense or benefit for the years ended December 31, 2023 and 2022 due to the Company’s net losses and increases in
its valua on allowance against its deferred tax assets.
The Company's effec ve income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2023 and 2022:
Federal tax at statutory rate
State and local tax at statutory rate
Research and development tax credits
Change in valua on allowance
Other permanent differences
Stock op on cancella ons
Stock op on shor alls
Effect of rate changes
Provision to return adjustment
Other
Effec ve tax rate
Years Ended December 31,
2023
2022
21.0 %
2.7
0.3
(9.1)
(2.0)
(3.7)
(1.7)
(7.7)
(0.3)
0.5
— %
21.0 %
2.5
—
(19.3)
(1.0)
(2.5)
(1.6)
0.6
0.3
—
— %
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabili es for financial repor ng
purposes and the amounts used for income tax purposes. When realiza on of the deferred tax asset is more likely than not to occur, the benefit related to the
deduc ble temporary differences a ributable to opera ons is recognized as a reduc on of income tax expense. A valua on allowance is recorded against
deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized. The Company cannot be certain that future
taxable income will be sufficient to realize its deferred tax assets. Accordingly, the Company has recorded a valua on allowance against the Company’s
otherwise recognizable net deferred tax assets. The Company con nues to maintain the underlying tax benefits to offset future taxable income and to
monitor the need for a valua on allowance based on the profitability of its future opera ons. The valua on allowance increased by approximately $4.7
million and $18.2 million during the years ended December 31, 2023 and 2022, respec vely. Significant components of the Company’s deferred tax assets and
liabili es are as follows (in thousands):
Akebia Therapeu cs, Inc. | Form 10-K | Page 163
Table of Contents
Deferred tax assets:
Accrued expenses and other current liabili es
Deferred revenue
Sale of royalty
Stock-based compensa on
R&D credits
Capitalized R&D costs
Other non-current liabili es
Net opera ng loss carryforward
ASC 842 lease liability
Inventories reserve
Return reserve
Refund liability
Other
Total deferred tax assets
Less valua on allowance
Total deferred tax assets, net of valua on allowance
Deferred tax liabili es:
Intangible assets
481(a) adjustments
ROU asset (ASC 842)
Other
Total deferred tax liabili es
Net deferred tax liability
December 31,
2023
2022
$
1,411 $
9,534
12,346
6,183
4,843
18,295
3,434
288,939
2,959
4,537
1,624
8,829
14,036
376,970
(365,330)
11,640
(6,868)
(1,924)
(2,734)
(114)
(11,640)
$
— $
2,924
1,250
13,291
8,317
4,827
13,825
2,754
288,842
8,032
17,411
—
9,478
13,159
384,110
(360,621)
23,489
(15,981)
—
(7,426)
(82)
(23,489)
—
At December 31, 2023 and 2022, the Company had no start-up expenses capitalized for income tax purposes (a er amor za on of $1.9 million) and $0.1
million of start-up expenses capitalized for income tax purposes (a er amor za on of $1.7 million), respec vely, with amor za on available to offset future
federal, state and local income tax.
As of December 31, 2023 and 2022, the Company had approximately $1,230.4 million and $1,230.7 million, respec vely, of federal net opera ng losses, or
NOLs, carry-forwards which expire through 2037. Included in the $1,230.4 million of federal NOLs are losses of $648.3 million that will carry forward
indefinitely as a result of the Tax Cuts and Jobs Act. Addi onally, at December 31, 2023 and 2022, the Company had approximately $1,807.8 million and
$1,808.5 million, respec vely, of state NOL carry-forwards, which expire through 2043. The Company also has approximately $2.7 million of federal research
and development tax credit carryforwards which expire through 2040 and $2.7 million of state R&D tax credit carryforwards which expire through 2036.
Under the provisions of the IRC, the NOLs and tax credit carry-forwards are subject to review and possible adjustment by the Internal Revenue Service and
state tax authori es. NOLs and tax credit carryforwards may become subject to an annual limita on under IRC Sec ons 382 and 383 if there is more than a
50% change in ownership of the stockholders that own 5% or more of the Company’s outstanding stock over a three-year period. The Company completed an
evalua on of its ownership changes and concluded that an ownership change did occur on December 12, 2018 for both Akebia and Keryx in connec on with
the Merger. As a consequence of this ownership change, the Company’s NOLs and tax credit carryforwards allocable to the tax periods preceding the
ownership change became subject to limita on under Sec on 382 of the IRC. The Company reduced its associated deferred tax assets by $44.9 million as a
result of the limita on. The Company completed an evalua on of its ownership changes as of March 31, 2022 and concluded that an ownership change had
not occur since the previous evalua on done through December 12, 2018. The Company may experience ownership changes in the future as a result of
subsequent shi s in our stock ownership, some of which may be outside the Company’s control. As a result, the Company’s ability to u lize these a ributes
to offset taxable income may be subject to limita ons.
The Company has not conducted a full study of it’s research and development credit carryforwards. A study may result in an adjustment to the Company’s
research and development credit carryforwards; however, un l a study is completed, and any adjustment is known, no amounts will be presented as an
uncertain tax posi on. A full valua on allowance has been provided
Akebia Therapeu cs, Inc. | Form 10-K | Page 164
Table of Contents
against the Company’s research and development credit carryforwards and, if an adjustment is required, this adjustment would be offset by an adjustment to
the valua on allowance. Thus, there would be no impact to the balance sheet or statement of opera ons at this me, if an adjustment were required.
The Company files income tax returns in the U.S. federal and various state and local jurisdic ons. For federal and state income tax purposes, the 2022, 2021
and 2020 tax years remain open for examina on under the normal three-year statute of limita ons. The statute of limita ons for income tax audits in the U.S.
will commence upon u liza on of NOLs and will expire three years from the filing of the tax return the loss was u lized on.
A reconcilia on of the beginning and ending amounts of unrecognized tax benefits for the years ending December 31, 2023 and 2022 are as follows (in
thousands):
Balance at December 31, 2021
Addi ons based on tax posi ons of current years
Balance at December 31, 2022
Reduc ons based on tax posi ons of current years
Balance at December 31, 2023
$
$
2,513
184
2,697
(2,697)
—
The Company does not believe there will be a material change in its unrecognized tax posi ons over the next twelve months. All of the unrecognized tax
benefits, if recognized, would be offset by the valua on allowance.
16. NET LOSS PER SHARE
Poten ally dilu ve securi es, common stock op ons, RSUs and SARs have been excluded from the calcula on of diluted net loss per share as their effects
would be an -dilu ve. For periods in which the Company reports a net loss, the weighted average number of shares outstanding used to calculate both basic
and diluted net loss per share were the same. The shares in the table below were excluded from the calcula on of diluted net loss per share, prior to the use
of the treasury stock method, due to their an -dilu ve effect:
Outstanding common stock op ons
Unvested restricted stock units
Stock apprecia on rights
Total
17. RESTRUCTURING
Years Ended December 31,
2022
2023
11,726,090
12,690,624
5,681,137
3,930,167
—
635,313
17,407,227
17,256,104
On April 4, 2022, the Company restructured its opera ons and executed a Board approved reduc on of workforce by approximately 42% across all areas of
the Company (47% inclusive of the closing of the majority of open posi ons) following the receipt of the CRL from the FDA to the Company’s NDA for
vadadustat for the treatment of anemia due to CKD in adult pa ents. On May 5, 2022, the Company laid off several members of management. As a result of
the restructuring, during the year ended December 31, 2022, the Company recognized $14.5 million of restructuring charges in the consolidated statement of
opera ons and comprehensive loss, including $11.3 million of one- me termina on benefits and contractual termina on benefits for severance, healthcare
and related benefits and $3.2 million of non-cash stock-based compensa on expense.
On November 7, 2022, the Company further reduced its workforce by approximately 14% of the then current headcount primarily focused on the commercial
organiza on as a result of the Company’s decision to shi to a strategic account management focused model for its commercial efforts. This shi in approach
supported the Company’s strategic pillars to drive Auryxia revenue while also con nuing to decrease opera ng costs. During the year ended December 31,
2022, the Company recognized $1.4 million of restructuring charges in the consolidated statement of opera ons and comprehensive loss, including one- me
termina on benefits and contractual termina on benefits for severance, healthcare and related benefits and non-cash stock-based compensa on expense.
The workforce reduc ons were completed as of December 31, 2022, and the Company has incurred all related charges.
Akebia Therapeu cs, Inc. | Form 10-K | Page 165
Table of Contents
The following table is a reconcilia on of the beginning and ending restructuring liability for the year ended December 31, 2023 and 2022 respec vely (in
thousands):
Beginning balance
Restructuring accrual and adjustments
Cash payments
Ending balance
December 31,
2023
2022
3,758 $
(521)
(2,230)
1,007 $
—
12,735
(8,977)
3,758
$
$
As of December 31, 2023, $0.7 million and $0.3 million of the accrued severance, benefits and associated costs are reflected in accrued expenses and other
current liabili es and other non-current liabili es, respec vely. As of December 31, 2022, $2.8 million and $1.0 million of the accrued severance, benefits and
associated costs are reflected in accrued expenses and other current liabili es and other non-current liabili es, respec vely.
18. SUBSEQUENT EVENTS
The Company has evaluated events and transac ons occurring a er the balance sheet date through the date of the Company's consolidated financial
statements were issued and concluded that there were no events or transac ons occurring during this period that required recogni on or disclosure in the
Company's consolidated financial statements, except for ma ers described in Note 7, Indebtedness, related to the entering into the BlackRock Credit
Agreement and the termina on of the Pharmakon Term Loans and Note 13, Capital Stock, related to warrants issued in connec on with the BlackRock Credit
Agreement and the offerings under the At-the-Market facility.
Item 9. Changes in and Disagreements with Accountants on Accoun ng and Financial Disclosure
None.
Item 9A. Controls and Procedures
Management’s Evalua on of our Disclosure Controls and Procedures
“Disclosure controls and procedures”, as defined in Rules 13a-15(e) and 15d-15(e) under the Securi es Exchange Act of 1934, as amended, or the Exchange
Act, are controls and other procedures that are designed to ensure that informa on required to be disclosed in our reports filed or submi ed under the
Exchange Act is recorded, processed, summarized and reported within the me periods specified in the U.S. Securi es and Exchange Commission, or the SEC,
rules and forms. Disclosure controls and procedures include, without limita on, controls and procedures designed to ensure that informa on required to be
disclosed in company reports filed or submi ed under the Exchange Act is accumulated and communicated to our management, including our principal
execu ve and principal financial officers, as appropriate to allow mely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our management, with the par cipa on of our principal execu ve officer and principal
financial officer, carried out an evalua on of our disclosure controls and procedures as of December 31, 2023. Based upon their evalua on, our principal
execu ve officer and principal financial officer concluded that as of December 31, 2023, our disclosure controls and procedures were not effec ve because of
a material weakness in the design of our internal control over financial repor ng related to our accoun ng for inventories and inventory related transac ons
which is described in more detail below.
Management’s Annual Report on Internal Control Over Financial Repor ng
Our management, with the par cipa on of our principal execu ve officer and principal financial officer, is responsible for establishing and maintaining
adequate internal control over financial repor ng. Internal control over financial repor ng is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the
Exchange Act as a process designed by, or under the supervision of, our principal execu ve officer and principal financial officer and effected by our board of
directors, management and other personnel to provide reasonable assurance regarding the reliability of our financial repor ng and the prepara on of
financial statements for external purposes in accordance with accoun ng principles generally accepted in the United States of America.
Our management conducted the assessment of the effec veness of our internal control over financial repor ng as of December 31, 2023, based on criteria
established in Internal Control— Integrated Framework issued by the Commi ee of Sponsoring Organiza ons of the Treadway Commission in 2013. As a
result of this assessment, our management has concluded that, as of December 31, 2023, our internal control over financial repor ng was ineffec ve due to
the material weakness described below.
Akebia Therapeu cs, Inc. | Form 10-K | Page 166
Table of Contents
Material Weakness - Inventories
As of December 31, 2023, our management concluded that we did not design and maintain effec ve controls over the completeness and accuracy of
accoun ng for inventory and inventory related transac ons, including inventory reconcilia ons, calcula on of overheads, presenta on of inventories in our
balance sheet between short-term and long-term and our liabili es related to the calcula on of firm purchase commitment liability. A material weakness is a
deficiency, or combina on of deficiencies, in internal control over financial repor ng, such that there is a reasonable possibility that a material misstatement
of a company’s annual or interim consolidated financial statements will not be prevented or detected on a mely basis. Specifically, we did not maintain
effec ve controls related to (i) the review of inventory reconcilia ons, (ii) the valida on of the inventory cos ng, (iii) the classifica on of inventory within the
balance sheet and cost of product and other revenue related costs in the statement of opera ons, (iv) the calcula on of es mated excess firm purchase
commitment liability and (v) the verifica on that the existence of all inventories subject to physical inventory counts were accurately counted.
Remedia on Efforts of the Material Weakness - Inventories
The control deficiencies described above resulted in certain accoun ng errors, including in our internal preliminary consolidated financial statements for the
year ended December 31, 2023, that were corrected prior to the issuance of such annual consolidated financial statements.
Our management has taken, plans to con nue to take, ac ons to remediate the deficiency in our internal control over financial repor ng and has
implemented new processes, procedures and controls designed to address the underlying causes associated with the material weakness.
For example, we are in the process of:
(i) implemen ng and documen ng new processes and controls to help ensure the completeness and accuracy of our inventory reconcilia ons,
(ii) engaging addi onal third-party subject ma er experts and accoun ng personnel with U.S. GAAP experience specific to inventory accoun ng,
(iii) enhancing the accuracy of key reports used to calculate the firm purchase commitment liability; and
(iv) establishing effec ve monitoring and oversight controls to help to ensure the completeness and accuracy of inventory included in our financial
statements and related disclosures.
These control deficiencies did not have any material impact on our current or prior period consolidated annual or interim financial statements, but could have
resulted in material misstatements of our annual or interim financial statements that would not have been prevented or detected on a mely basis.
Accordingly, our management has concluded that the control deficiencies were a material weakness in the Company’s internal control over financial
repor ng.
As management con nues to evaluate and work to improve our internal control over financial repor ng, management may determine it is necessary to take
addi onal measures to address the material weakness. Un l the controls have been opera ng for a sufficient period of me and management has concluded,
through tes ng, that these controls are opera ng effec vely, the material weakness described above will con nue to exist.
Remedia on of Previously Iden fied Material Weakness - Product Return Reserves
As disclosed in our 2022 Annual Report on Form 10-K/A, our management iden fied a material weakness in our internal control over financial repor ng
rela ng to product return reserves. Management is commi ed to maintaining a strong internal control environment. In response to the material weakness
previously iden fied, management, with the oversight of the Audit Commi ee of the Board of Directors, took comprehensive ac ons to remediate the
material weakness in internal control over financial repor ng rela ng to our product return reserves, including; (i) designed controls to address the
completeness and accuracy of key reports u lized in the execu on of internal controls related product return reserve calcula ons, (ii) engaged addi onal
third party subject ma er experts with U.S. GAAP experience specific to product returns accoun ng and (iii) established effec ve monitoring and oversight
controls to help to ensure the completeness and accuracy of our accrued product returns included in our financial statements and related disclosures as well
as con nued to engage an outside firm to assist management with performing sufficient tes ng throughout the year to validate the opera ng effec veness of
certain controls over financial repor ng. These remedia on efforts also enhanced our overall financial repor ng control environment related to product
return reserves. As of December 31, 2023, we determined that our previously reported material weakness related to product return reserves has been
remediated.
Akebia Therapeu cs, Inc. | Form 10-K | Page 167
Table of Contents
Changes in Internal Control over Financial Repor ng
Except for the remedia on efforts as noted “—Remedia on Efforts of the Material Weakness – Inventory” and “—Remedia on of Previously Iden fied
Material Weakness – Returns” above, there have been no changes in our internal control over financial repor ng during the year ended December 31, 2023,
as defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Exchange Act, that have materially affected, or are reasonably likely to materially affect,
our internal control over financial repor ng.
Limita ons of Effec veness of Controls and Procedures
In designing and evalua ng our disclosure controls and procedures, management recognizes that any controls and procedures, no ma er how well designed
and operated, can provide only reasonable assurance of achieving their objec ves and management necessarily applies its judgment in evalua ng the cost-
benefit rela onship of possible controls and procedures.
Report of Independent Registered Public Accoun ng Firm
To the Stockholders and the Board of Directors of Akebia Therapeu cs, Inc.
Opinion on Internal Control Over Financial Repor ng
We have audited Akebia Therapeu cs, Inc.’s internal control over financial repor ng as of December 31, 2023, based on criteria established in Internal Control
—Integrated Framework issued by the Commi ee of Sponsoring Organiza ons of the Treadway Commission (2013 framework) (the COSO criteria). In our
opinion, because of the effect of the material weakness described below on the achievement of the objec ves of the control criteria, Akebia Therapeu cs,
Inc. (the “Company”) has not maintained effec ve internal control over financial repor ng as of December 31, 2023, based on the COSO criteria.
A material weakness is a deficiency, or combina on of deficiencies, in internal control over financial repor ng, such that there is a reasonable possibility that
a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a mely basis. The following material
weakness has been iden fied and included in management’s assessment. Management has iden fied a material weakness in controls related to the
Company’s inventory process.
We also have audited, in accordance with the standards of the Public Company Accoun ng Oversight Board (United States) (PCAOB), the consolidated balance
sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of opera ons and comprehensive loss, stockholders’ (deficit)
equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes. This material weakness was considered in
determining the nature, ming and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our
report dated March 14, 2024, which expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effec ve internal control over financial repor ng and for its assessment of the effec veness of
internal control over financial repor ng included in the accompanying Management’s Annual Report on Internal Control over Financial Repor ng. Our
responsibility is to express an opinion on the Company’s internal control over financial repor ng based on our audit. We are a public accoun ng firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securi es laws and the
applicable rules and regula ons of the Securi es and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effec ve internal control over financial repor ng was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial repor ng, assessing the risk that a material weakness exists, tes ng and
evalua ng the design and opera ng effec veness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Defini on and Limita ons of Internal Control Over Financial Repor ng
A company’s internal control over financial repor ng is a process designed to provide reasonable assurance regarding the reliability of financial repor ng and
the prepara on of financial statements for external purposes in accordance with generally accepted accoun ng principles. A company’s internal control over
financial repor ng includes those policies and procedures
Akebia Therapeu cs, Inc. | Form 10-K | Page 168
Table of Contents
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transac ons and disposi ons of the assets of the
company; (2) provide reasonable assurance that transac ons are recorded as necessary to permit prepara on of financial statements in accordance with
generally accepted accoun ng principles, and that receipts and expenditures of the company are being made only in accordance with authoriza ons of
management and directors of the company; and (3) provide reasonable assurance regarding preven on or mely detec on of unauthorized acquisi on, use,
or disposi on of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limita ons, internal control over financial repor ng may not prevent or detect misstatements. Also, projec ons of any evalua on of
effec veness to future periods are subject to the risk that controls may become inadequate because of changes in condi ons, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Boston, Massachuse s
March 14, 2024
Item 9B. Other Informa on
Rule 10b5-1 - Director and Officer Trading Arrangements
From me to me, the Company's directors and officers (as defined in Rule 16a-1(f) under the Securi es Exchange Act of 1934, as amended, or the Exchange
Act, engage in open-market transac ons with respect to Company securi es, including to sa sfy tax withholding obliga ons when equity awards vest or are
exercised, and for diversifica on or other personal reasons.
Transac ons in Company securi es by directors and officers are required to be made in accordance with the Company’s insider trading policy, which requires
that the transac ons be in accordance with applicable U.S. federal securi es laws that prohibit trading while in possession of material nonpublic informa on.
Rule 10b5-1 under the Exchange Act provides an affirma ve defense that enables directors and officers to prearrange transac ons in the Company’s
securi es in a manner that avoids concerns about ini a ng transac ons while in possession of material nonpublic informa on.
The following table describes, for the fourth quarter of 2023, each trading arrangement for the sale or purchase of Company securi es adopted or terminated
by our directors and officers that is either (1) a contract, instruc on or wri en plan intended to sa sfy the affirma ve defense condi ons of Rule 10b5-1(c) (a
“Rule 10b5-1 trading arrangement”) or (2) a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regula on S-K):
Name (Title)
John P. Butler
(President and
Chief Execu ve
Officer)
Ellen Snow (Senior
Vice President,
Chief Financial
Officer and
Treasurer)
Steven K. Burke,
M.D. (Senior Vice
President, Research
& Development and
Chief Medical
Officer)
Ac on Taken (Date
of Ac on)
December 1, 2023
November 20, 2023
November 17, 2023
Type of Trading Arrangement
Durable Rule 10b5-1 trading
arrangement for sell-to-cover
transac ons rela ng to all equity
awards that have or may be granted
Durable Rule 10b5-1 trading
arrangement for sell-to-cover
transac ons rela ng to all equity
awards that have or may be granted
Durable Rule 10b5-1 trading
arrangement for sell-to-cover
transac ons rela ng to all equity
awards that have or may be granted
Nature of Trading
Arrangement
Dura on of Trading
Arrangement
Aggregate Number of
Securi es
Sale
Sale
Sale
Un l final se lement of
any RSUs
Indeterminable
(1)
Un l final se lement of
any RSUs
Indeterminable
(1)
Un l final se lement of
any RSUs
Indeterminable
(1)
Akebia Therapeu cs, Inc. | Form 10-K | Page 169
Table of Contents
Michel Dahan
(Senior Vice
President, Chief
Opera ng Officer)
Nicole R. Hadas
(Senior Vice
President, Chief
Legal Officer and
Corporate
Secretary)
December 3, 2023
November 14, 2023
Durable Rule 10b5-1 trading
arrangement for sell-to-cover
transac ons rela ng to all equity
awards that have or may be granted
Durable Rule 10b5-1 trading
arrangement for sell-to-cover
transac ons rela ng to all equity
awards that have or may be granted
Sale
Sale
Un l final se lement of
any RSUs
Indeterminable
(1)
Un l final se lement of
any RSUs
Indeterminable
(1)
(1) The number of shares subject to RSUs that will be sold to sa sfy applicable tax withholding obliga ons upon ves ng is unknown as the number will vary
based on the extent to which ves ng condi ons are sa sfied, the market price of the Company’s common stock at the me of se lement and the poten al
future grant of addi onal RSUs subject to this arrangement. This trading arrangement, which applies to RSUs whether ves ng is based on the passage of me
and/or the achievement of performance goals, provides for the automa c sale of shares that would otherwise be issuable on each se lement date of a RSU
in an amount sufficient to sa sfy the applicable tax withholding obliga on, with the proceeds of the sale delivered to the Company in sa sfac on of the
applicable tax withholding obliga on.
Item 9C. Disclosure Regarding Foreign Jurisdic ons that Prevent Inspec ons
Not applicable.
Item 10. Director, Execu ve Officers and Corporate Governance
PART III
The informa on required by this Item 10 will be included in our Defini ve Proxy Statement to be filed with the Securi es and Exchange Commission, or SEC,
with respect to our 2024 Annual Mee ng of Stockholders and is incorporated herein by reference.
Item 11. Execu ve Compensa on
The informa on required by this Item 11 will be included in our Defini ve Proxy Statement to be filed with the SEC with respect to our 2024 Annual Mee ng
of Stockholders and, other than the informa on required by Item 402(v) of Regula on S-K, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Ma ers
The informa on required by this Item 12 will be included in our Defini ve Proxy Statement to be filed with the SEC with respect to our 2024 Annual Mee ng
of Stockholders and is incorporated herein by reference.
Item 13. Certain Rela onships and Related Transac ons, and Director Independence
The informa on required by this Item 13 will be included in our Defini ve Proxy Statement to be filed with the SEC with respect to our 2024 Annual Mee ng
of Stockholders and is incorporated herein by reference.
Item 14. Principal Accountant Fees and Services
The informa on required by this Item 14 will be included in our Defini ve Proxy Statement to be filed with the SEC with respect to our 2024 Annual Mee ng
of Stockholders and is incorporated herein by reference.
Akebia Therapeu cs, Inc. | Form 10-K | Page 170
Table of Contents
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Documents filed as part of this Annual Report on Form 10-K.
(b) Consolidated Financial Statements
Report of Independent Registered Public Accoun ng Firm
Consolidated Balance Sheets
Consolidated Statements of Opera ons and Comprehensive Loss
Consolidated Statements of Stockholders’ (Deficit) Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(2) Schedules
Schedules have been omi ed as all required informa on has been disclosed in the consolidated financial statements and related footnotes.
(3) Exhibits
The Exhibits listed below are filed as part of this Annual Report on Form 10-K.
Akebia Therapeu cs, Inc. | Form 10-K | Page 171
Table of Contents
Exhibit
Number
2.1**
2.2
3.1
3.2
3.3
4.1
4.2
4.3#
4.4#
4.5!
4.6
4.7*
10.1†
10.2
10.3
10.4
Incorporated by Reference
Schedule/
Form
File No.
Exhibit
Filed Date/ Period End
Date
8-K
001-36352
2.1
June 28, 2018
Descrip on of Exhibit
Agreement and Plan of Merger, dated as of June 28, 2018, by and among
Akebia Therapeu cs, Inc., Alpha Therapeu cs Merger Sub, Inc., and
Keryx Biopharmaceu cals, Inc.
First Amendment to Agreement and Plan of Merger, dated as of October
1, 2018, by and among Akebia Therapeu cs, Inc., Alpha Therapeu cs
Merger Sub, Inc. and Keryx Biopharmaceu cals, Inc.
Ninth Amended and Restated Cer ficate of Incorpora on
Cer ficate of Amendment of Ninth Amended and Restated Cer ficate of
Incorpora on of Akebia Therapeu cs, Inc.
Second Amended and Restated Bylaws of Akebia Therapeu cs, Inc.
8-K
8-K
8-K
8-K
001-36352
001-36352
001-36352
001-36352
Form of Common Stock Cer ficate
S-1/A
333-193969
Fourth Amended and Restated Investors’ Rights Agreement, dated March
5, 2014
10-K
001-36352
Amendment No. 1 to Fourth Amended and Restated Investors’ Rights
Agreement, dated June 28, 2017
10-K
001-36352
Investment Agreement between Akebia Therapeu cs, Inc. and Vifor
(Interna onal) Ltd., dated May 12, 2017
10-Q
001-36352
Investment Agreement between Akebia Therapeu cs, Inc. and Vifor
(Interna onal) Ltd., dated February 18, 2022
10-K
001-36352
Descrip on of Registrant’s Securi es
10-K
001-36352
Form of Warrant
2.1
3.1
3.1
3.1
4.1
4.4
4.5
4.1
4.5
4.6
October 1, 2018
March 28, 2014
June 9, 2020
April 28, 2023
March 4, 2014
March 4, 2015
March 12, 2018
August 8, 2017
March 1, 2022
February 25, 2021
Form of Director and Officer Indemnifica on Agreement
10-K
001-36352
10.1
March 12, 2018
Office Lease Agreement Between MA-Riverview/245 First Street, L.L.C.
and Akebia Therapeu cs, Inc., dated December 3, 2013
S-1
333-193969
10.2
February 14, 2014
First Amendment to Office Lease Agreement Between Jamestown
Premier 245 First, LLC and Akebia Therapeu cs, Inc., dated December 15,
2014
Second Amendment to Office Lease Agreement Between Jamestown
Premier 245 First, LLC and Akebia Therapeu cs, Inc., dated November 23,
2015
10-K
001-36352
10.3
March 4, 2015
10-K
001-36352
10.4
March 14, 2016
Akebia Therapeu cs, Inc. | Form 10-K | Page 172
Table of Contents
Exhibit
Number
10.5
Descrip on of Exhibit
Third Amendment to Office Lease Agreement Between Jamestown
Premier 245 First, LLC and Akebia Therapeu cs, Inc., dated July 25, 2016
Incorporated by Reference
Schedule/
Form
File No.
10-Q
001-36352
Exhibit
10.1
Filed Date/ Period End
Date
November 9, 2016
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13†
10.14†
10.15†
10.16†
10.17†
10.18†
10.19†
10.20†
Fourth Amendment to Office Lease Agreement Between CLPF-Cambridge
Science Center, LLC and Akebia Therapeu cs, Inc., dated May 1, 2017
10-K
001-36352
10.6
March 12, 2018
Fi h Amendment to Office Lease Agreement Between CLPF-Cambridge
Science Center, LLC and Akebia Therapeu cs, Inc. dated April 9, 2018
10-Q
001-36352
10.1
August 8, 2018
Sixth Amendment to Office Lease Agreement Between CLPF-Cambridge
Science Center, LLC and Akebia Therapeu cs, Inc. dated November 30,
2020
One Marina Park Drive Office Lease dated April 29, 2015, by and
between Keryx Biopharmaceu cals, Inc. and Fallon Cornerstone One
MPD LLC
First Amendment to One Marina Park Drive Office Lease, dated February
24, 2022, by and between Keryx Biopharmaceu cals, Inc. and CLPF One
Marina Park Drive LLC (successor-in-interest to Fallon Cornerstone One
MPD LLC)
Assignment and Assump on Agreement, dated February 24, 2022, by
and between Keryx Biopharmaceu cals, Inc. and Akebia Therapeu cs,
Inc.
10-K
001-36352
10.8
February 25, 2021
10-K
000-30929
10.29
March 1, 2017
10-K
001-36352
10.10
March 1, 2022
10-K
001-36352
10.11
March 1, 2022
Sublease, dated as of September 9, 2019, by and between Keryx
Biopharmaceu cals, Inc. and Founda on Medicine, Inc.
10-Q
001-36352
10.1
November 12, 2019
Amended and Restated 2008 Equity Incen ve Plan
Amendment No. 1 to Amended and Restated 2008 Equity Incen ve Plan
Execu ve Employment Agreement with John P. Butler, dated September
16, 2013
S-1
S-1
S-1
333-193969
333-193969
10.5
10.6
February 14, 2014
February 14, 2014
333-193969
10.7
February 14, 2014
Offer Le er to David Spellman, dated as of June 13, 2020
10-Q
001-36352
10.1
August 10, 2020
Form of Non-Statutory Stock Op on Agreement for Officers
S-1/A
333-193969
10.24
March 4, 2014
Form of Non-Statutory Stock Op on Agreement for Non-Employee
Directors
S-1/A
333-193969
10.25
March 4, 2014
Amended and Restated Non-Employee Director Compensa on Program,
effec ve April 27, 2023
10-Q
001-36352
10.1
May 8, 2023
Second Amended and Restated Non-Employee Director Compensa on
Program, effec ve June 6, 2023
10-Q
001-36352
10.8
August 28, 2023
Akebia Therapeu cs, Inc. | Form 10-K | Page 173
Table of Contents
Exhibit
Number
10.21†*
10.22†
10.23†
10.24†
10.25†
Descrip on of Exhibit
Third Amended and Restated Non-Employee Director Compensa on
Program, effec ve January 1, 2024
Incorporated by Reference
Schedule/
Form
File No.
Exhibit
Filed Date/ Period End
Date
Form of Execu ve Severance Agreement for Officers
S-1/A
333-193969
10.27
March 4, 2014
2014 Incen ve Plan
Amendment No. 1 to the Akebia Therapeu cs, Inc. 2014 Incen ve Plan
S-1
S-8
333-193969
10.29
March 4, 2014
333-229366
4.4
January 25, 2019
Amended and Restated 2014 Employee Stock Purchase Plan
DEF 14A
001-36352
Appendix A
April 26, 2019
10.26†
Amended and Restated Cash Incen ve Plan, effec ve January 19, 2022
10-K
001-36352
10.28
March 1, 2022
10.27†
10.28†
10.29†
10.30†
10.31†
10.32†
10.33†
10.34†
Form of Officer Restricted Stock Unit Award Agreement under 2014
Incen ve Plan
10-K
001-36352
10.18
March 12, 2018
Form of Officer Restricted Stock Unit Award Agreement under 2014
Incen ve Plan
10-K
001-36352
10.29
March 26, 2019
Form of Officer Inducement Award Non-Statutory Stock Op on
Agreement
Form of Inducement Award Non-Statutory Stock Op on Agreement for
Non-Officers
S-8
S-8
333-222728
333-222728
4.4
4.5
January 26, 2018
January 26, 2018
Form of Officer Performance-Based Stock Op on Award, under the
Company's 2014 Incen ve Plan, as amended
10-Q
001-36352
10.1
November 4, 2021
Form of Officer Performance-Based Stock Restricted Stock Unit Award,
under the Company's 2014 Incen ve Plan, as amended
10-Q
001-36352
10.2
November 4, 2021
Form of Officer Restricted Stock Unit Award Agreement under 2014
Incen ve Plan (Reten on Awards)
10-Q
001-36352
10.6
August 4, 2022
Form of Officer Non-Statutory Stock Op on Agreement under 2014
Incen ve Plan (Reten on Awards)
10-Q
001-36352
10.7
August 4, 2022
10.35†!
Form of Officer Cash Bonus Le er Agreement
10-Q
001-36352
10.3
November 4, 2021
10.36†
Form of Officer Stock Apprecia on Rights Award Agreement under 2014
Incen ve Plan
10-Q
001-36352
10.3
May 8, 2023
10.37†
Akebia Therapeu cs, Inc. 2023 Stock Incen ve Plan
S-8
333-272453
99.1
June 6, 2023
10.38†
Form of Non-Employee Director Stock Op on Agreement under 2023
Stock Incen ve Plan
10-Q
001-36352
10.10
August 28, 2023
Akebia Therapeu cs, Inc. | Form 10-K | Page 174
Table of Contents
Exhibit
Number
10.39†
Descrip on of Exhibit
Incorporated by Reference
Schedule/
Form
File No.
Exhibit
Filed Date/ Period End
Date
Form of Non-Employee Director Restricted Stock Unit Agreement under
2023 Stock Incen ve Plan
10-Q
001-36352
10.12
August 28, 2023
10.40†
Form of Officer Stock Op on Agreement under 2023 Stock Incen ve Plan
10-Q
001-36352
10.11
August 28, 2023
10.41†
10.42†
10.43*†
10.44*†
10.45*†
10.46*†
10.47*†
10.48†
10.49†
10.50†
10.51†
10.52†
10.53†
10.54†
10.55†
Form of Officer Restricted Stock Unit Agreement under 2023 Stock
Incen ve Plan
10-Q
001-36352
10.13
August 28, 2023
Form of Officer Inducement Award Stock Op on Agreement under 2023
Stock Incen ve Plan
10-Q
001-36352
10.14
August 28, 2023
Form of Officer Execu ve Severance Agreement (Reflec ng Clawback
Policy)
Form of Officer Cash Bonus Agreement (Reflec ng Clawback Policy)
Form of Officer Stock Op on Agreement under 2023 Stock Incen ve Plan
(Reflec ng Clawback Policy)
Form of Officer Restricted Stock Unit Agreement under 2023 Stock
Incen ve Plan (Reflec ng Clawback Policy)
Form of Officer Inducement Award Stock Op on Agreement under 2023
Stock Incen ve Plan (Reflec ng Clawback Policy)
Keryx Biopharmaceu cals, Inc. 1999 Stock Op on Plan
10-Q
001-30929
10.2
March 21, 2003
Keryx Biopharmaceu cals, Inc. 2004 Long-Term Incen ve Plan
DEF 14A
000-30929
Annex C
April 29, 2004
Amendment to the Keryx Biopharmaceu cals, Inc. 2004 Long-Term
Incen ve Plan dated April 11, 2006
10-Q
000-30929
10.1
August 9, 2006
Keryx Biopharmaceu cals, Inc. 2007 Incen ve Plan
DEF 14A
000-30929
Annex D
April 30, 2007
Keryx Biopharmaceu cals, Inc. Amended and Restated 2013 Incen ve
Plan
Keryx Biopharmaceu cals, Inc. 2018 Equity Incen ve Plan
8-K
S-8
000-30929
10.1
May 27, 2016
333-226005
99.1
June 29, 2018
Form of Indemnifica on Agreement between Keryx Biopharmaceu cals,
Inc. and its Directors and Officers
10-Q
000-30929
10.1
November 9, 2016
Form of Employee Agreement (Confiden ality, Non-Compe on, Non-
Solicita on and Development Agreement) applicable to Officers
10-K
001-36352
10.56
March 26, 2019
Akebia Therapeu cs, Inc. | Form 10-K | Page 175
Table of Contents
Exhibit
Number
10.56†
10.57†
10.58†
Descrip on of Exhibit
Keryx Biopharmaceu cals, Inc. Fourth Amended and Restated Directors
Equity Compensa on Plan
Incorporated by Reference
Schedule/
Form
File No.
8-K
000-30929
Exhibit
10.2
Filed Date/ Period End
Date
May 27, 2016
Keryx Biopharmaceu cals, Inc. Third Amended and Restated Directors
Equity Compensa on Plan
10-Q
000-30929
10.1
August 7, 2014
Keryx Biopharmaceu cals, Inc. Director Non-Statutory Stock Op on
Award Terms and Condi ons under the Third Amended and Restated
Directors Equity Compensa on Plan
10-K
001-36352
10.59
March 26, 2019
10.59†
Form of Officer Reten on Le er Agreement
10-Q
001-36352
10.6
May 9, 2022
10.60†!
10.61†!
10.62†!
10.63†!
10.64†!
10.65†!
10.66*†!
10.67*†!
Form of Reten on and Separa on Agreement for Michel Dahan and
Nicole R. Hadas
10-Q
001-36352
10.7
May 9, 2022
Form of Amendment to Reten on and Separa on Agreement for Michel
Dahan and Nicole R. Hadas
10-Q
001-36352
10.2
November 3, 2022
Form of May 2023 Amendment to Reten on and Separa on Agreement
for Michel Dahan and Nicole R. Hadas
10-Q
001-36352
10.4
August 28, 2023
July 2023 Amendment to Reten on and Separa on Agreement for
Michel Dahan
10-Q
001-36352
10.5
August 28, 2023
July 2023 Amendment to Reten on and Separa on Agreement for Nicole
R. Hadas
10-Q
001-36352
10.6
August 28, 2023
October 2023 Amendment to Reten on and Separa on Agreement for
Nicole R. Hadas
10-Q
001-36352
10.3
November 8, 2023
February 2024 Amendment to Reten on and Separa on Agreement for
Nicole R. Hadas
February 2024 Amendment to Reten on and Separa on Agreement for
Michel Dahan
10.68†
Reten on Agreement with David Spellman, dated June 22, 2022
10-Q
001-36352
10.5
August 4, 2022
10.69†
10.70!
10.71#
Separa on Agreement with David Spellman, dated June 9, 2023 and
Amendment to Separa on Agreement dated July 6, 2023
10-Q
001-36352
10.7
August 28, 2023
Collabora on Agreement between Akebia Therapeu cs, Inc. and
Mitsubishi Tanabe Pharma Corpora on, dated December 11, 2015
10-K
001-36352
10.49
March 1, 2022
Le er Agreement between Akebia Therapeu cs, Inc. and Mitsubishi
Tanabe Pharma Corpora on, dated September 26, 2017
10-Q
001-36352
10.1
November 8, 2017
Akebia Therapeu cs, Inc. | Form 10-K | Page 176
Table of Contents
Exhibit
Number
10.72!
10.73!
10.74!
10.75!
10.76
10.77!
10.78#
10.79!
10.80#
10.81#
10.82
10.83
Descrip on of Exhibit
Amendment No. 1 to Collabora on Agreement, dated December 2,
2022, by and between Akebia Therapeu cs, Inc. and Mitsubishi Tanabe
Pharma Corpora on
Incorporated by Reference
Schedule/
Form
File No.
Exhibit
Filed Date/ Period End
Date
10-K
001-36352
10.53
March 10, 2022
Termina on and Se lement Agreement, dated June 30, 2022, by and
between the Company and Otsuka Pharmaceu cal Co. Ltd.
10-Q
001-36352
10.8
August 4, 2022
Packaging Valida on Transfer Agreement, dated April 20, 2023, by and
between the Company and Otsuka Pharmaceu cal Co. Ltd.
10-Q
001-36352
10.3
August 28, 2023
Second Amended and Restated License Agreement, dated February 18,
2022, by and between Akebia Therapeu cs, Inc. and Vifor (Interna onal)
Ltd.
10-K
001-36352
10.54
March 1, 2022
Open Market Sale Agreement
Akebia Therapeu cs, Inc. and Jefferies LLC
SM
, dated April 7, 2022, by and between
8-K
001-36352
1.1
April 7, 2022
Second Amended and Restated License Agreement dated April 17, 2019,
by and between Akebia Therapeu cs, Inc. and Panion & BF Biotech, Inc.
10-Q
001-36352
10.1
August 8, 2019
Amended and Restated Sub-License Agreement, dated June 8, 2009, as
amended by the First Amendment thereto, dated June 12, 2013, by and
between Keryx Biopharmaceu cals, Inc., Japan Tobacco, Inc. and Torii
Pharmaceu cal Co., Ltd
Master Manufacturing Services Agreement by and between Keryx
Biopharmaceu cals, Inc. and Patheon Manufacturing Services LLC and
certain of its affiliates, dated September 27, 2016, and related Product
Agreement dated September 27, 2016, and related Product Agreement
dated October 12, 2016
Product Agreement, dated August 29, 2017, by and between Keryx
Biopharmaceu cals, Inc. and Patheon Inc. (an affiliate of Patheon
Manufacturing Services LLC) related to the Master Manufacturing
Services Agreement by and between Keryx Biopharmaceu cals, Inc. and
Patheon Manufacturing Services LLC and certain of its affiliates dated
November 12, 2016
Master Manufacturing Services and Supply Agreement, dated December
20, 2017, by and between Keryx Biopharmaceu cals, Inc. and Siegfried
Evionnaz SA
Amendment No. 1 to Master Manufacturing Services and Supply
Agreement, dated as of December 21, 2020, by and between Siegfried
Evionnaz SA and Keryx Biopharmaceu cals, Inc.
Amendment No. 2 to Master Manufacturing Services and Supply
Agreement, dated as of January 29, 2021, by and between Siegfried
Evionnaz SA and Keryx Biopharmaceu cals, Inc.
10-Q
000-30929
10.1
November 7, 2017
10-K
001-36352
10.58
March 1, 2022
10-Q
000-30929
10.2
November 7, 2017
10-K
000-30929
10.13
February 21, 2018
10-K
001-36352
10.57
February 25, 2021
10-K
001-36352
10.58
February 25, 2021
Akebia Therapeu cs, Inc. | Form 10-K | Page 177
Table of Contents
Exhibit
Number
10.84!
10.85
10.86!
10.87#
10.88!
10.89!
10.90!
10.91!
10.92!
10.93*!
10.94!
10.95!
Descrip on of Exhibit
Amendment No. 3 to Master Manufacturing Services and Supply
Agreement, dated as of February 11, 2021, by and between Siegfried
Evionnaz SA and Keryx Biopharmaceu cals, Inc.
Amendment No. 4 to Master Manufacturing Services and Supply
Agreement, dated as of December 17, 2021, by and between Siegfried
Evionnaz SA and Keryx Biopharmaceu cals, Inc.
Incorporated by Reference
Schedule/
Form
File No.
Exhibit
Filed Date/ Period End
Date
10-K
001-36352
10.59
February 25, 2021
10-K
001-36352
10.64
March 1, 2022
Amendment No. 5 to Master Manufacturing Services and Supply
Agreement, dated February 28, 2023, by and between Keryx
Biopharmaceu cals, Inc. and Siegfried Evionnaz SA
10-Q
001-36352
10.2
May 8, 2023
Exclusive Distribu on Agreement between Keryx Biopharmaceu cals,
Inc. and Cardinal Health 105, Inc., dated October 16, 2014 and First
Amendment to Exclusive Distribu on Agreement between Keryx
Biopharmaceu cals, Inc. and Cardinal Health 105, Inc., dated April 14,
2015
10-K
001-36352
10.60
March 26, 2019
Termina on and Se lement Agreement, dated December 22, 2022, by
and between Keryx Biopharmaceu cals, Inc. and BioVectra Inc.
10-K
001-36352
10.70
March 10, 2023
Loan Agreement, dated November 11, 2019, by and among the
Company, Keryx Biopharmaceu cals, Inc., Biopharma Credit plc and
Biopharma Credit Investments V (Master) LP
First Amendment and Waiver, dated February 18, 2022, by and among
the Company, Biopharma Credit plc, BPCR Limited Partnership and
Biopharma Credit Investments V (Master) LP
Second Amendment and Waiver, dated July 15, 2022, by and among the
Company, Biopharma Credit plc, BPCR Limited Partnership and
Biopharma Credit Investments V (Master) LP
Third Amendment to Loan Agreement, dated as of June 30, 2023, by and
among the Company, Biopharma Credit plc, BPCR Limited Partnership
and Biopharma Credit Investments V (Master) LP
Fourth Amendment to Loan Agreement dated as of October 31, 2023, by
and among the Company, BioPharma Credit PLC, BPCR Limted
Partnership, and BioPharma Credit Investments V (Master) LP
Guaranty and Security Agreement, dated November 25, 2019, by and
between the Company, Keryx Biopharmaceu cals, Inc. and Biopharma
Credit plc
10-K
001-36352
10.62
March 12, 2020
10-K
001-36352
10.69
March 1, 2022
10-Q
001-36352
10.9
August 4, 2022
10-Q
001-36352
10.2
August 28, 2023
10-K
001-36352
10.63
March 12, 2022
Supply Agreement, dated as of March 11, 2020, by and between Akebia
Therapeu cs, Inc. and Patheon, Inc.
10-Q
001-36352
10.1
May 5, 2020
Akebia Therapeu cs, Inc. | Form 10-K | Page 178
Table of Contents
Exhibit
Number
10.96!
10.97!
10.98!
10.99!
10.100!
10.101!
10.102*!
10.103*
21.1
23.1*
31.1*
31.2*
32.1*
Descrip on of Exhibit
Supply Agreement, dated as of April 2, 2020, by and between Akebia
Therapeu cs, Inc. and STA Pharmaceu cal Hong Kong Limited
Incorporated by Reference
Schedule/
Form
File No.
10-Q
001-36352
Exhibit
10.2
Filed Date/ Period End
Date
August 10, 2020
Amendment No. 1 to the Supply Agreement, dated as of April 15, 2021,
by and between Akebia Therapeu cs, Inc, and STA Pharmaceu cal Hong
Kong Limited
10-Q
001-36352
10.1
August 5, 2021
Supply Agreement, dated February 10, 2021, by and between the
Company and STA Pharmaceu cal Hong Kong Limited
10-Q
001-36352
10.4
May 10, 2021
Royalty Interest Acquisi on Agreement, dated February 25, 2021, by and
between the Company and HealthCare Royalty Partners IV, L.P.
10-Q
001-36352
10.5
May 10, 2021
License Agreement, dated December 22, 2022, by and among Akebia
Therapeu cs, Inc., Keryx Biopharmaceu cals, Inc. and Averoa SAS
10-K
001-36352
10.81
March 10, 2023
License Agreement, dated May 24, 2023, by and between the Company
and MEDICE Arzneimi el Pü er GmbH & Co. KG
10-Q
001-36352
10.1
August 28, 2023
Agreement for the Provision of a Loan Facility dated January 29, 2024
between the Company and Kreos Capital VII (UK) Limited
Warrant Agreement dated January 29, 2024 by and between the
Company and Kreos Capital VII Aggregator SCSp
List of Subsidiaries
10-K
001-36352
21.1
February 25, 2021
Consent of Ernst & Young LLP
Cer fica on of Principal Execu ve Officer Required Under Rule 13a-14(a)
of the Securi es Exchange Act of 1934, as amended
Cer fica on of Principal Financial Officer Required Under Rule 13a-14(a)
of the Securi es Exchange Act of 1934, as amended
Cer fica on of Principal Execu ve Officer and Principal Financial Officer
Required Under Rule 13a-14(b) of the Securi es Exchange Act of 1934, as
amended, and 18 U.S.C. 1350
97.1†*
Akebia Therapeu cs, Inc. Dodd-Frank Compensa on Recovery Policy
101.INS*
Inline XBRL Instance Document (the instance document does not appear
in the Interac ve Data File because XBRL tags are embedded within the
Inline XBRL document)
Akebia Therapeu cs, Inc. | Form 10-K | Page 179
Table of Contents
Exhibit
Number
Descrip on of Exhibit
Incorporated by Reference
Schedule/
Form
File No.
Exhibit
Filed Date/ Period End
Date
101.SCH*
Inline XBRL Taxonomy Extension Schema Document
101.CAL*
Inline XBRL Taxonomy Extension Calcula on Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Defini on Linkbase Document
101.LAB*
101.PRE*
104
Inline XBRL Taxonomy Extension Labels Linkbase Document
Inline XBRL Taxonomy Extension Presenta on Linkbase Document
Cover Page Interac ve Data File (forma ed as Inline XBRL and contained
in Exhibit 101)
* Filed, or submi ed electronically, herewith
† Indicates management contract or compensatory plan
# Indicates por ons of the exhibit (indicated by asterisks) have been omi ed pursuant to a request for confiden al treatment
! Indicates por ons of the exhibit (indicated by asterisks) have been omi ed pursuant to Item 601(b)(10)(iv) of Regula on S-K
** The schedules to the Agreement and Plan of Merger have been omi ed pursuant to Item 601(b)(2) of Regula on S-K. The Company will furnish copies of such schedules
to the Securi es and Exchange Commission upon request by the Commission
Item 16. Form 10-K Summary
None.
Akebia Therapeu cs, Inc. | Form 10-K | Page 180
Table of Contents
Pursuant to the requirements of Sec on 13 or 15(d) of the Securi es Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SIGNATURES
Date: March 14, 2024
AKEBIA THERAPEUTICS, INC.
By:
/s/ John P. Butler
John P. Butler
President and Chief Execu ve Officer
Pursuant to the requirements of the Securi es Exchange Act of 1934, this report was signed by the following persons on behalf of the registrant and in the
capaci es and on the date indicated.
Akebia Therapeu cs, Inc. | Form 10-K | Page 181
Table of Contents
Date: March 14, 2024
By:
/s/ John P. Butler
John P. Butler
Director, President and Chief Execu ve Officer (Principal Execu ve Officer)
Date: March 14, 2024
By:
/s/ Ellen E. Snow
Ellen E. Snow
Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)
Date: March 14, 2024
/s/ Richard C. Malabre
Richard C. Malabre
Chief Accoun ng Officer (Principal Accoun ng Officer)
Date: March 14, 2024
By:
Date: March 14, 2024
By:
Date: March 14, 2024
By:
Date: March 14, 2024
Date: March 14, 2024
Date: March 14, 2024
Date: March 14, 2024
By:
By:
By:
By:
/s/ Adrian Adams
Adrian Adams
Chairperson and Director
/s/ Ron Frieson
Ron Frieson
Director
/s/ Steven C. Gilman
Steven C. Gilman
Director
/s/ Michael Rogers
Michael Rogers
Director
/s/ Cynthia Smith
Cynthia Smith
Director
/s/ Myles Wolf
Myles Wolf
Director
/s/ LeAnne M. Zumwalt
LeAnne M. Zumwalt
Director
Akebia Therapeu cs, Inc. | Form 10-K | Page 182
Exhibit 4.7
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
WARRANT
AKEBIA THERAPEUTICS, INC.
1
Warrant Shares: [_________]
Issue Date: [_________]
Initial Exercise Date: [____________]
THIS WARRANT (the “Warrant”) certifies that, for value received, Kreos Capital VII Aggregator SCSp or its assigns (the “Holder”)
2
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after [_______]
(the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on [_______] (the “Termination Date”) but not thereafter, to
subscribe for and purchase from Akebia Therapeutics, Inc., a Delaware corporation (the “Company”), up to the number of Warrant Shares set
forth above (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock
under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
3
Section 1. Definitions. In addition to the terms defined elsewhere in this Warrant, the following terms have the meanings indicated
in this Section 1:
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is
under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on a Trading Market, the bid price of a share of Common Stock for the time in question (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading
Market, the volume weighted average per share price of the Common Stock for such date (or the nearest preceding date) on OTCQB
or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for
the Common Stock are then reported on The Pink Open Market (or a similar organization or agency succeeding to its functions of
reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest
of the Warrants then outstanding and reasonably acceptable to the Company, the reasonable fees and expenses of which shall be paid
by the Company.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New
York are authorized or required by law to remain closed; provided, however, for clarification, commercial banks shall not be deemed
to be authorized or required by law to remain closed due to “stay at home,” “shelter-in-place,” “non-essential employee” or any other
similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority so long as
the electronic funds
1
To be determined pursuant to Section 2(a) of the Warrant Agreement for the Initial Warrant and Section 2(b) of the Warrant Agreement for the Tranche C Warrant.
2
To be the Issue Date.
3
To be eight years from Issue Date.
transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers
on such day.
“Commission” means the United States Securities and Exchange Commission.
“Common Stock” means the common stock of the Company, par value $0.00001 per share, and any other class of securities
into which such securities may hereafter be reclassified or changed.
“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder
thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,
Common Stock.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Subsidiaries” means any direct or indirect subsidiary of the Company.
“Trading Day” means a day on which the Common Stock is traded on a Trading Market.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for
trading on the date in question: The Nasdaq Capital Market, The Nasdaq Global Market, The Nasdaq Global Select Market, the New
York Stock Exchange or the NYSE American (or any successors to any of the foregoing).
“Transfer Agent” means Continental Stock Transfer and Trust Company, the current transfer agent of the Company, and any
successor transfer agent of the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common
Stock is then listed or quoted on a Trading Market, the daily volume weighted average price per share of the Common Stock for such
date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by
Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or
OTCQX is not a Trading Market, the volume weighted average price per share of the Common Stock for such date (or the nearest
preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or
OTCQX and if prices for the Common Stock are then reported on The Pink Open Market (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all
other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Warrants then outstanding and reasonably acceptable to the Company, the reasonable fees
and expenses of which shall be paid by the Company.
“Warrants” means this Warrant and other Common Stock purchase warrants issued by the Company pursuant in the event
this Warrant is subdivided.
Section 2. Exercise.
a)
Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at
any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly
executed PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form attached hereto as Annex A (the
“Notice of Exercise”). Within the earlier of (i) two Trading Days and (ii) the number of Trading Days comprising the Standard
Settlement Period (as defined in Section 2(d)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the
aggregate Exercise
2
Price for the Warrant Shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United
States bank, in either case in immediately available funds, unless the cashless exercise procedure specified in Section 2(c) below is
specified in the applicable Notice of Exercise. No ink-original Notice of Exercise shall be required, nor shall any medallion
guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. The Company shall have no obligation
to inquire with respect to or otherwise confirm the authenticity of the signature(s) contained on any Notice of Exercise nor the
authority of the person so executing such Notice of Exercise. Notwithstanding anything herein to the contrary, the Holder shall not be
required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available
hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for
cancellation within three Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial
exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the
effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of
Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased
and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one Trading Day of receipt
of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.
b)
Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $1.30, subject to
adjustment hereunder (the “Exercise Price”).
c)
Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the
prospectus contained therein is not available for the issuance of the Warrant Shares by the Holder, or if otherwise elected by the
Holder at any time, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in
which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where:
(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if
such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening
of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the Exchange Act) on
such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the
date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market
as reported by Bloomberg L.P. (“Bloomberg”) as of the time of the Holder’s execution of the applicable Notice of
Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered
within two hours thereafter (including until two hours after the close of “regular trading hours” on a Trading Day)
pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such
Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section
2(a) hereof after the close of “regular trading hours” on such Trading Day;
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this
Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section
3(a)(9) of the Securities Act, the Warrant Shares shall take on the registered characteristics of the Warrants being exercised. The
Company agrees not to take any position contrary to this Section 2(c).
3
d)
Mechanics of Exercise.
i. Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be
transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance
account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if
the Company’s transfer agent is then a participant in such system and either (A) there is an effective registration
statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder, (B) the
Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations or the requirement
for current public information, in each case, pursuant to Rule 144 (assuming cashless exercise of the Warrant), or (C)
pursuant to a resale on a case-by-case basis by the Holder without volume or manner-of-sale limitations pursuant to
Rule 144 (assuming cashless exercise of the Warrant), and otherwise by physical delivery of a certificate, registered
in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by
the date that is the earliest of (i) two Trading Days after the delivery to the Company of the Notice of Exercise, (ii)
one Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days
comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date,
the “Warrant Share Delivery Date”); provided that the Company shall have received payment of the aggregate
Exercise Price (other than in the case of a cashless exercise) prior to such applicable date. Upon delivery of the
Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the
Warrant Shares, provided that the Company shall have received payment of the aggregate Exercise Price (other than
in the case of a cashless exercise) within the earlier of (i) two Trading Days and (ii) the number of Trading Days
comprising the Standard Settlement Period following delivery of the Notice of Exercise. The Company agrees to
maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and
exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a
number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect
on the date of the delivery of the Notice of Exercise.
ii.
Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the
Company shall, at the request of a Holder and upon surrender of this Warrant, at the time of delivery of the Warrant
Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant
Shares remaining available under this Warrant, which new Warrant shall in all other respects be identical with this
Warrant.
iii.
Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the
Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to
rescind such exercise; provided, however, that the Holder shall be required to return any Warrant Shares subject to
any such rescinded exercise notice concurrently with the return to Holder of the aggregate Exercise Price paid to the
Company for such Warrant Shares and the restoration of Holder’s right to acquire such Warrant Shares pursuant to
this Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).
iv.
No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled
to
4
purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final
fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
v.
Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the
Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all
of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of
the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event that
Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the assignment form attached hereto as Annex B (the “Assignment Form”) duly
executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for
same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established
clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.
vi.
Closing of Books. The Company will not close its stockholder books or records in any manner
which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
e)
Beneficial Ownership Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not
have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such
issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any
other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its Affiliates and Attribution Parties shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made,
but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised
portion of this Warrant beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common
Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned
by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section
2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such
calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required
to be filed in accordance therewith and the calculations required under this Section 2(e). To the extent that the limitation contained in
this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which portion of this Warrant is exercisable shall be in the sole discretion
of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as
contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a
Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or
annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more
recent
5
written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the
written or oral request of a Holder, the Company shall within one Trading Day confirm orally and in writing to the Holder the
number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be
determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its
Affiliates or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The
“Beneficial Ownership Limitation” shall be 4.99% (or, upon election by a Holder prior to the issuance of any Warrants, 9.99% or
19.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of
Common Stock issuable upon exercise of this Warrant. The Holder, upon notice to the Company, may increase or decrease the
Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event
exceeds 19.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply.
Any increase in the Beneficial Ownership Limitation will not be effective until the 61 day after such notice is delivered to the
Company. The provisions of this Section 2(e) shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 2(e) to correct this Section 2(e) (or any portion hereof) which may be defective or inconsistent with the
intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly
give effect to such limitation. The limitations contained in this Section 2(e) shall apply to a successor holder of this Warrant. This
provision shall not restrict the number of shares of Common Stock which the holder of this Warrant may receive or beneficially own
in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental
Transaction. This restriction may not be waived without stockholder approval.
st
Section 3. Certain Adjustments.
a)
Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend
or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the
Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii)
combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv)
issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise
Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made
pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision,
combination or re-classification.
b)
Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time while this
Warrant is outstanding the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the
Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the
Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is
taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result
in the Holder exceeding the Beneficial Ownership
6
Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such
shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in
abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial
Ownership Limitation); provided, that such Purchase Right shall terminate on, and shall not be held in abeyance for any period
subsequent to the Termination Date.
c)
Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of
capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation,
the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such
Distribution (provided, however, that to the extent that the Holder’s right to participate in any such Distribution would result in the
Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to
such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the
portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would
not result in the Holder exceeding the Beneficial Ownership Limitation); provided, that such Purchase Right shall terminate on, and
shall not be held in abeyance for any period subsequent to the Termination Date.
d)
Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company (and all of its
Subsidiaries, taken as a whole), directly or indirectly, in one or more related transactions effects any merger or consolidation of the
Company with or into another Person (other than for the purpose of changing the Company’s name and/or the jurisdiction of
incorporation of the Company or a holding company for the Company), (ii) the Company, directly or indirectly, effects any sale,
lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related
transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is
completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities,
cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock or 50% or more of the
voting power of the common equity of the Company, (iv) the Company, directly or indirectly, in one or more related transactions
effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to
which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company,
directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business
combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with
another Person or group of Persons whereby such other Person or group acquires 50% or more of the outstanding shares of Common
Stock or 50% or more of the voting power of the common equity of the Company (each a “Fundamental Transaction”), then this
Warrant shall be deemed to have been automatically converted pursuant to Section 2(c), and thereafter the Holder shall be entitled to
participate in the Fundamental Transaction on the same terms as other holders of the same class of securities of the Company;
provided, however, that if the VWAP of the Warrant Shares on the date of the closing of such Fundamental Transaction is less than
the aggregate Exercise Price, then this Warrant shall terminate without exercise or conversion immediately prior, and subject, to the
closing of such Fundamental Transaction.
e)
Calculations. All calculations under this Section 3 shall be made by the Company to the nearest cent or the nearest
1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued
and outstanding as of a
7
given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
f)
Notice to Holder.
i.
Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of
this Section 3, the Company shall promptly deliver to the Holder by email a notice setting forth the Exercise Price
after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief
statement of the facts requiring such adjustment.
ii.
Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other
distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of
the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any
rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification
of the Common Stock, any consolidation or merger to which the Company (and all of its Subsidiaries, taken as a
whole) is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in
each case, the Company shall cause to be delivered by email to the Holder at its last email or other address as it shall
appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of
such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the
holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other
property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that
the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the
corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant
constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the
Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
Section 4. Transfer of Warrant.
a)
Restricted Securities. The Holder understands that neither this Warrant nor the Warrant Shares have been registered
under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act. The Holder
understands that the Warrant and the Warrant Shares are “restricted securities” under applicable U.S. federal and state securities
laws and that, pursuant to these laws, the Holder must hold the Warrant or the Warrant Shares indefinitely unless they are registered
with the Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is
available. The Holder understands that this Warrant and the Warrant Shares and any securities issued in respect of or exchange for
such securities, may bear one or all of the following legends (in substantially the form set forth below):
8
“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT.”
and, any legend required by the securities laws of any state to the extent such laws are applicable to the Securities represented by
the certificate so legended.
b)
Transferability. Subject to the restrictions of Section 4(a), this Warrant and all rights hereunder (including, without
limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the
Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant
shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender
this Warrant to the Company within three Trading Days of the date on which the Holder delivers a duly executed Assignment Form
to the Company assigning this Warrant in full. The Warrant, if properly assigned in accordance herewith, may be exercised by a
new holder for the purchase of Warrant Shares without having a new Warrant issued.
c)
New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the
aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be
involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall
be dated the initial issuance date of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares
issuable pursuant thereto.
d)
Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that
purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, absent actual notice to the contrary.
Section 5. Piggyback Registration Rights. If during the six-month period following the date of this Warrant the Company proposes to file a
registration statement on Form S-1 or Form S-3 under the Securities Act providing for shelf registration of the Common Stock of
any other person pursuant to “piggyback” registration rights of such other person, the Company shall promptly give notice to the
Holder of this Warrant and, upon the request of such Holder, use its reasonable best efforts to also cause to be registered for the
resale thereof the Warrant Shares on such registration statement for any remaining portion of the six-month period following the
date of this Warrant. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 5
with respect to the Warrant Shares that the Holder shall furnish to the Company such information regarding itself, the Warrant
Shares held by it, the intended
9
method of disposition of such securities and any other information as is reasonably required to effect the registration of such
Warrant Shares.
Section 6. Miscellaneous.
a)
No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any
voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i),
except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise”
pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, including if the
Company is for any reason unable to issue and deliver Warrant Shares upon exercise of this Warrant as required pursuant to the
terms hereof, in no event shall the Company be required to net cash settle an exercise of this Warrant or cash settle in any other
form.
b)
Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to
the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case
of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate,
if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation,
in lieu of such Warrant or stock certificate.
c)
Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any
right required or granted herein shall not be a Trading Day, then such action may be taken or such right may be exercised on the
next succeeding Trading Day.
d)
Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the
exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute
full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading
Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon
the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant
and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and
free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such
actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without
limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount
payable therefor upon such exercise immediately prior to such increase in par value, (ii) take such action as may be necessary or
appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise
of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under
this Warrant.
10
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is
exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as
may be necessary from any public regulatory body or bodies having jurisdiction thereof.
e)
Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. The Company and, by accepting this Warrant, the Holder each agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant (whether
brought against the Company or the Holder or their respective affiliates, directors, officers, stockholders, partners, members,
employees, or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. The Company
and, by accepting this Warrant, the Holder each hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert
in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is improper or is an inconvenient venue for such proceeding. The Company and, by accepting this Warrant, the
Holder each hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to it at the
address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other
manner permitted by law. If the Company or the Holder shall commence an action, suit or proceeding to enforce any provisions of
this Warrant, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for their reasonable
attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or
proceeding.
f)
Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not
registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal
securities laws.
g)
Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of
Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any
other provision of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which
results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any
costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by
the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
h)
Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder
including, without limitation, any Notice of Exercise, shall be in writing and delivered personally, by email or sent by a nationally
recognized overnight courier service, addressed to the Company, at 245 First Street, Cambridge, MA 02142, Attention: Chief
Financial Officer and Chief Legal Officer, email address: legal@akebia.com or such other email address or address as the Company
may specify for such purposes by notice to the Holder with a copy (which shall not constitute notice) to Latham & Watkins LLP,
200 Clarendon Street, Boston, MA 02116, Attention: Wesley C. Holmes, email address: Wesley.Holmes@LW.com. Any and all
notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered
personally, by email, or sent by a nationally recognized overnight courier service addressed to the Holder at the email address or
address of the Holder appearing on the books of the Company with a copy (which shall not constitute notice) to 1 Boulevard de la
Foire, 1528, Luxembourg, Attention: Sonia Benhamida, Guy Arbib, Alexander Babulevich,
address:
Sonia.Benhamida@blackrock.com, Guy.Arbib@blackrock.com, Alexander.Babulevich@blackr
email
11
ock.com. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the
time of transmission, if such notice or communication is delivered via email at the email address set forth in this Section prior to
5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the time of transmission, if such notice or
communication is delivered via email at the email address set forth in this Section on a day that is not a Trading Day or later than
5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.
To the extent that any notice provided by the Company hereunder constitutes, or contains, material, non-public information
regarding the Company or any subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.
i)
Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this
Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any
liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
j)
Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages
would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby
agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
k)
Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced
hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors
and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of
this Warrant and shall be enforceable by such Holder.
l)
Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of
the Company and the holders of at least a majority of the Common Stock issuable upon the exercise of the then outstanding
Warrants (determined without giving effect to Section 2(e) of the Warrants); provided such modification, amendment or waiver
applies to all of the then outstanding Warrants.
m)
Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or
the remaining provisions of this Warrant.
n)
Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any
purpose, be deemed a part of this Warrant.
o)
Electronic Signatures. Electronically scanned and transmitted signatures, including by email attachment, shall be
deemed originals for all purposes of this Warrant.
p) Withholding. The Company shall be entitled to deduct and withhold, or cause to be deducted and withheld, taxes on
all payments and distributions (or deemed distributions) with respect to this Warrant (or upon the exercise thereof) to the extent
required by applicable law; provided, however, prior to deducting or withholding any such amounts, the Company shall use
commercially reasonable efforts to inform the Holder in writing of its intent to withhold or deduct such amounts and to cooperate
with the Holder to reduce or eliminate the requirement to withhold or deduct such amounts. To the extent that any amounts are so
deducted or withheld, such amounts shall be treated for all purposes of this Warrant as having been paid to the Person in respect of
which such deduction or withholding was made. In the event the Company previously remitted any amounts to a governmental
authority on account of taxes required to be deducted or withheld in respect of any payment or distribution (or deemed distribution)
with respect to this Warrant or upon the exercise thereof, the Company shall be
12
entitled (i) to offset any such amounts against any amounts otherwise payable in respect of this Warrant, any Warrant Shares
otherwise required to be issued upon the exercise of this Warrant or any amounts otherwise payable in respect of Warrant Shares
received upon the exercise of this Warrant, or (ii) to require the Person in respect of whom such deduction or withholding was made
to reimburse the Company for such amounts (and such Person shall promptly so reimburse the Company upon demand).
(Remainder of page left blank | Signature page follows)
13
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the
date first above indicated.
AKEBIA THERAPEUTICS, INC.
By:____________________________________
Name:
Title:
14
TO: AKEBIA THERAPEUTICS, INC.
NOTICE OF EXERCISE
(1)
The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached
Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if
any.
Annex A
(2)
Payment shall take the form of (check applicable box):
in lawful money of the United States; or
if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with
the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum
number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in
subsection 2(c).
(3)
Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:
_______________________________
The Warrant Shares shall be delivered to the following DWAC Account Number:
_______________________________
_______________________________
_______________________________
[SIGNATURE OF HOLDER]
Name of Investing Entity: ________________________________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________________________________
Name of Authorized Signatory: ___________________________________________________________________
Title of Authorized Signatory: ____________________________________________________________________
Date: ________________________________________________________________________________________
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to exercise the Warrant to
purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant to purchase shares of Akebia Therapeutics, Inc., a Delaware corporation, and all
rights evidenced thereby are hereby assigned to
Annex B
Name:
Address:
Phone Number:
Email Address:
Dated: _______________ __, ______
Holder’s Signature:
Holder’s Address:
(Please Print)
(Please Print)
______________________________________
______________________________________
Exhibit 10.21
AKEBIA THERAPEUTICS, INC.
THIRD AMENDED AND RESTATED NON-EMPLOYEE
DIRECTOR COMPENSATION PROGRAM
Effective January 1, 2024
Non-employee members of the Board of Directors (the “Board”) of Akebia Therapeutics, Inc. (the “Company”) shall
be eligible to receive cash and equity compensation as set forth in this Third Amended and Restated Non-Employee Director
Compensation Program (this “Program”). The cash and equity compensation described in this Program shall be paid or be made,
as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the
Company or any parent or subsidiary of the Company (each, a “Non-Employee Director”) who is eligible to receive such cash or
equity compensation, unless such Non-Employee Director declines the receipt of such cash or equity compensation by written
notice to the Company. This Program shall remain in effect until it is revised or rescinded by further action of the Board. This
Program shall be reviewed by the Board periodically and may be amended, modified or terminated by the Board at any time in its
sole discretion and nothing herein should be construed as a guarantee to any Non-Employee Director of any particular level of
cash or equity compensation. The terms and conditions of this Program shall supersede any prior cash and/or equity
compensation arrangements for service as a member of the Board between the Company and any of its Non-Employee
Directors. This Program shall become effective on the date set forth above (the “Effective Date”).
1. Cash Compensation.
for service on the Board, effective as of January 1, 2024.
(a) Annual Retainers. Each Non-Employee Director shall be eligible to receive an annual retainer of $50,000
Non-Employee Director shall be eligible to receive the following annual retainers:
(b) Additional Annual Retainers. In addition to the annual retainer payable pursuant to Section 1(a) above, a
(i) Chairperson of the Board. A Non-Employee Director serving as Chairperson of the Board shall
be eligible to receive an additional annual retainer of $35,000 for such service; provided, that, in the event that a Non-Employee
Director is one of two concurrently serving Chairpersons of the Board, the additional annual retainer payable to such Non-
Employee Director pursuant to this Section 1(b)(i) shall be $17,500.
(ii) Audit Committee. A Non-Employee Director serving as Chairperson of the Audit Committee of
the Board (the “Audit Committee”) shall be eligible to receive an additional annual retainer of $20,000 for such service. A Non-
Employee Director serving as a member of the Audit Committee (other than the Chairperson of the Audit Committee) shall be
eligible to receive an additional annual retainer of $10,000 for such service.
(iii) Compensation Committee. A Non-Employee Director serving as Chairperson of the
Compensation Committee of the Board (the “Compensation Committee”) shall be eligible to receive an additional annual
retainer of $15,000 for such service. A Non-Employee Director serving as a member of the Compensation Committee (other than
the Chairperson of the Compensation Committee) shall be eligible to receive an additional annual retainer of $7,500 for such
service.
Exhibit 10.21
(iv) Nominating and Corporate Governance Committee. A Non-Employee Director serving as
Chairperson of the Nominating and Corporate Governance Committee of the Board (the “NCG Committee”) shall be eligible to
receive an additional annual retainer of $10,000 for such service. A Non-Employee Director serving as a member of the NCG
Committee (other than the Chairperson of the NCG Committee) shall be eligible to receive an additional annual retainer of
$5,000 for such service.
(v) Research and Development Committee. A Non-Employee Director serving as Chairperson of
the Research and Development Committee of the Board (the “R&D Committee”) shall be eligible to receive an additional annual
retainer of $10,000 for such service. A Non-Employee Director serving as a member of the R&D Committee (other than the
Chairperson of the R&D Committee) shall be eligible to receive an additional annual retainer of $5,000 for such service.
(c) Payment of Retainers. The annual retainers described in Sections 1(a) and 1(b) shall be earned on a
quarterly basis based on a calendar quarter and shall be paid in cash by the Company in arrears not later than the fifteenth day
following the end of each calendar quarter. In the event a Non-Employee Director does not serve as a Non-Employee Director, or
in the applicable positions described in Section 1(b), for an entire calendar quarter, the retainer paid to such Non-Employee
Director shall be prorated for the portion of such calendar quarter actually served as a Non-Employee Director, or in such
position, as applicable.
2. Equity Compensation. Non-Employee Directors shall be granted the equity awards described below. Each award
described below shall be granted under and shall be subject to the terms and provisions of the Company’s 2023 Stock Incentive
Plan, as amended, or any other successor Company equity incentive plan under which awards are permitted to be made to Non-
Employee Directors (the “Equity Plan”) and (i) for option awards, a non-qualified stock option award agreement, including
attached exhibits, in substantially the form of award agreement applicable to Non-Employee Directors most recently approved by
the Board and/or the Compensation Committee, as applicable, and (ii) for restricted stock unit awards, a restricted stock unit
award agreement, including attached exhibits, in substantially the form of award agreement applicable to Non-Employee
Directors most recently approved by the Board and/or the Compensation Committee, as applicable. All applicable terms of the
Equity Plan apply to this Program as if fully set forth herein. For the avoidance of doubt, if there is any conflict between the
terms of the Equity Plan (including the applicable award agreements thereunder) and this Program, the Equity Plan (including the
applicable award agreements thereunder) shall control.
(a) Initial Awards. Each Non-Employee Director who is initially elected or appointed to the Board after the
Effective Date shall be eligible to receive, on the date of such initial election or appointment, an option to purchase 180,000
shares of the Company’s common stock (subject to adjustment as provided in the Equity Plan). The awards described in this
Section 2(a) shall be referred to as “Initial Awards.” No Non-Employee Director shall be granted more than one Initial Award.
(b) Subsequent Awards. A Non-Employee Director who (i) has been serving on the Board for at least six
months as of the date of any annual meeting of the Company’s stockholders after the Effective Date and (ii) will continue to serve
as a Non-Employee Director immediately following such meeting, shall be automatically granted, on the date of such annual
meeting, an option to purchase 45,000 shares of the Company’s common stock (subject to adjustment as provided in the Equity
Plan) and 30,000 restricted stock units of the Company. The option awards described in this Section 2(b) shall be referred to as
“Subsequent Options”, the restricted stock unit awards described in this Section 2(b) shall be referred to as “Subsequent RSUs”,
and the Subsequent Options and Subsequent RSUs shall together be
Exhibit 10.21
referred to as the “Subsequent Awards.” For the avoidance of doubt, a Non-Employee Director elected for the first time to the
Board at an annual meeting of the Company’s stockholders shall only receive an Initial Award in connection with such election,
and shall not receive any Subsequent Awards on the date of such meeting as well.
(c) Termination of Service of Employee Directors. Members of the Board who are employees of the
Company or any parent or subsidiary of the Company who subsequently terminate their service with the Company and any parent
or subsidiary of the Company and remain on the Board will not receive an Initial Award pursuant to Section 2(a) above, but to the
extent that they are otherwise eligible, will be eligible to receive, after termination from service with the Company and any parent
or subsidiary of the Company, Subsequent Awards as described in Section 2(b) above.
(d) Terms of Awards Granted to Non-Employee Directors.
(i) Purchase Price. The per share exercise price of each option granted to a Non-Employee Director
shall equal the fair market value (as determined pursuant to the Equity Plan) of a share of the Company’s common stock on the
date the option is granted.
(ii) Vesting. Each Initial Award shall vest and become exercisable in accordance with the following
schedule, subject to the Non-Employee Director remaining in continuous employment or other service relationship with the
Company (“Service”) through each such vesting date: 33 1/3% of the Initial Award shall vest on the one-year anniversary of the
date of grant and 66 2/3% shall vest ratably on the first day of each calendar quarter between the one-year anniversary of the date
of grant and the third anniversary of the date of grant. Each Subsequent Option shall vest and become exercisable in full on the
first anniversary of the date of grant (or, if earlier, immediately prior to the first annual meeting of the Company’s stockholders
occurring after the date of grant), subject to the Non-Employee Director remaining in continuous Service through such vesting
date. Each Subsequent RSU shall vest in full on the first anniversary of the date of grant (or, if earlier, immediately prior to the
first annual meeting of the Company’s stockholders occurring after the date of grant), subject to the Non-Employee Director
remaining in continuous Service through such vesting date. Each Initial Award and Subsequent Award that is then-outstanding
shall vest and become exercisable in full upon a change in control of the Company or termination of the Non-Employee
Director’s Service due to the Non-Employee Director’s death or Disability. For purposes of the Program, “Disability” means
Executive’s inability by reason of physical or mental impairment to perform his/her job duties for a period exceeding twelve (12)
consecutive weeks.
from the date the option is granted.
(iii) Term. The term of each option granted to a Non-Employee Director shall be ten (10) years
3. Non-Employee Director Compensation Limit. Notwithstanding anything herein to the contrary, the cash
compensation and equity compensation that each Non-Employee Director is entitled to receive under this Program shall be
subject to any limits set forth in the applicable Equity Plan with respect to limits on awards to Non-Employee Directors.
4. Reimbursements. The Company shall reimburse each Non-Employee Director for all reasonable, documented, out-
of-pocket travel and other business expenses incurred by such Non-Employee Director in the performance of such Non-
Employee Director’s duties to the Company in accordance with the Company’s applicable expense reimbursement policies and
procedures, as in effect from time to time. To the extent that any reimbursement under this Program provides for a deferral of
compensation under Section 409A of the Internal Revenue Code of 1986, as amended: (a) the amount eligible for reimbursement
in one calendar year may not affect the amount eligible for reimbursement in any other calendar year; (b) the right to
Exhibit 10.21
reimbursement is not subject to liquidation or exchange for another benefit; and (c) any such reimbursement of an expense must
be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.
EXECUTIVE SEVERANCE AGREEMENT
Exhibit 10.43
This EXECUTIVE SEVERANCE AGREEMENT (the “Agreement”) is entered into by and between Akebia Therapeutics, Inc., a
Delaware corporation (“Akebia” or the “Company”), and _________________, a resident of _________________________________ (the
“Executive”), and is effective as of ____________ (the “Effective Date”).
WHEREAS, Executive is a valued employee of the Company; and
WHEREAS, the Company desires to provide certain severance benefits to Executive according to, and contingent upon, the terms and
conditions stated herein (the “Severance Benefits”).
NOW, THEREFORE, in consideration of the foregoing and the mutual promises contained herein, and of other good and valuable
consideration, including the compensation to be received by Executive from the Company from time to time, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending legally to be bound, hereby agree as follows:
1. Definitions.
(a) Cause. For purposes of this Agreement, and in each case as determined by the Compensation Committee of the Company’s
Board of Directors (the “Compensation Committee”) in its sole and reasonable discretion, the following will constitute “Cause”:
(i) indictment or conviction for either any felony offense or any other crime involving dishonesty;
of its subsidiaries;
(ii) participation in any fraud, theft, embezzlement or other misconduct or act of dishonesty involving the Company or any
(iii) intentional damage to any property of the Company or any of its subsidiaries;
(iv) breach of the holder’s duties of good faith and fair dealing that are owed to the Company or any of its subsidiaries;
limitation, any employment, confidentiality, non-competition, non-solicitation or assignment of inventions agreement;
(v) breach or violation of any agreement between Executive and the Company or any of its subsidiaries, including, without
to serve;
(vi) conduct which in the good faith and reasonable determination of the Board of Directors demonstrates gross unfitness
Company that have been approved by the Board of Directors or its authorized delegate,
(vii) failure to comply with the code of conduct of the Company or any of its subsidiaries or any other policies of the
President of the Company; or
(viii) insubordination or failure to follow the directions of the Board of Directors or of the Chief Executive Officer or
Company or any of its subsidiaries.
(ix) any other conduct by Executive that could be expected to be harmful to the business, interests or reputation of the
Executive shall have thirty (30) days after notice from the Company to cure the deficiency leading to the Cause determination (except with
respect to Sections 1(a)(i) and 1(a)(ii) above, for which no notice is required) if, in the sole and reasonable discretion of the Compensation
Committee, such deficiency is curable.
1
(b) Good Reason. For purposes of this Agreement the following will constitute “Good Reason” for Executive to terminate his/her
employment with the Company. For the avoidance of doubt, Executive shall not be considered to have terminated his/her employment for
Good Reason unless Executive has (A) reasonably determined in good faith that a Good Reason condition has occurred; (B) not consented to
the occurrence that s/he alleges constitutes Good Reason; (C) given the Company written Notice of Termination for Good Reason not more
than sixty (60) days after the initial existence of the alleged condition giving rise to Good Reason; (D) given the Company at least thirty (30)
days after receipt of such notice to cure the alleged deficiency; and (E) terminated his/her employment within sixty (60) days following the
Company’s receipt of such notice:
(i)
a material reduction in the nature or status of Executive’s responsibilities, authority, position or duties (unless arising
directly or indirectly in connection with a documented and significant performance issue in Executive’s then-current position, as determined
by the Compensation Committee in its sole and reasonable discretion). Notwithstanding the foregoing, neither of the following shall
constitute Good Reason: (A) a reassignment of Executive to a position within the Company of substantially equivalent level or status with
respect to Executive’s responsibilities and duties existing immediately prior to such reassignment, or (B) a change in reporting structure;
a material adverse reduction in the amount of aggregate cash compensation provided to Executive or failure by the
Company to pay such compensation, except where such reduction occurs contemporaneously with the implementation of a firm-wide cost-
reduction program affecting comparable executives (a “Reduction Program”);
(ii)
(iii)
the failure by the Company to continue in effect any incentive compensation plan in which Executive participates,
unless an equitable alternative compensation arrangement has been provided, except that to the extent that participation in such plans has
been reduced or eliminated for all other eligible executives, in which case the failure to continue Executive in any such plan shall not
constitute Good Reason; or
Massachusetts; provided, that Executive primarily provides services in Cambridge at the time of such establishment.
(iv)
establishment of the Company’s primary operations in any place beyond a fifty (50) mile radius of Cambridge,
In all respects, the definition of Good Reason shall be interpreted to comply with Code Section 409A, and any successor statute, regulation
and guidance thereto.
(c) Change in Control. For purposes of this Agreement, a “Change in Control” means the occurrence of any of the following
events other than in connection with the consummation of an initial public offering of the Company’s securities:
(i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended)
who is not a shareholder of the Company as of the date of this Agreement or an affiliate thereof is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power
represented by the Company’s then outstanding voting securities;
(ii) a change in the composition of the Board occurring within a two-year period, as a result of which less than a majority
of the directors are Incumbent Directors. “Incumbent Directors” will mean directors who either (A) are directors of the Company as of the
date hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the remaining
Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to the election of directors to the Company);
(iii) the date of the consummation of a merger, scheme of arrangement or consolidation of the Company with any other
corporation that has been approved by the stockholders of the Company, other than a merger, scheme of arrangement or consolidation which
would result in the
2
voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or
assets.
(iv) the date of the consummation of the sale or disposition by the Company of all or substantially all the Company’s
Notwithstanding the foregoing, a transaction will not constitute a Change in Control if: (a) its sole purpose is to change the domicile of the
Company’s incorporation; or (b) its sole purpose is to create a holding company that will be owned in substantially the same proportions by
the persons who held the Company’s securities immediately before such transaction.
In all respects, the definition of Change in Control shall be interpreted to comply with Code Section 409A, and any successor statute,
regulation and guidance thereto.
(d) Notice of Termination. For purposes of this Agreement, a “Notice of Termination” means a notice which, if applicable, sets
forth the specific “cause” or “good reason” provision of this Section 1 and sets forth the effective date of termination.
(e) Disability. For purposes of this Agreement, “Disability” means Executive’s inability by reason of physical or mental
impairment to perform his/her job duties for a period exceeding twelve (12) consecutive weeks.
2. Termination of Agreement. This Agreement will terminate automatically upon (a) Executive’s termination for Cause; (b)
mutual agreement between the Company and Executive; (c) Executive’s death, or (d) Executive’s Disability. Upon termination of this
Agreement, Executive or his/her heirs or estate (as applicable) only will be entitled to payments required by law or agreement and benefits
afforded under the Company’s employee benefit plans existing at the time of termination and in which the Executive participates.
3. Severance Benefits Upon Termination of Executive’s Employment. If Executive’s employment is terminated, then s/he may
be entitled to certain monetary and non-monetary compensation and benefits as set forth below (the “Severance Benefits”):
(a) Termination by the Company for Cause; Executive’s Death or Disability. If Executive’s employment is terminated by the
Company for Cause or on account of the Executive’s Disability, or if Executive’s employment is terminated due to the Executive’s death,
then the Company shall pay Executive all amounts earned or accrued but not paid as of the effective date of such termination, including (i)
Executive’s then-current base salary; (ii) legitimate business expenses incurred by Executive in the performance of his/her duties to the
Company in accordance with the Company’s normal policies and practices; (iii) vacation pay in accordance with applicable law and the
Company’s normal policies and practices; and (iv) any earned or accrued bonus or incentive compensation with respect to the calendar year
ended prior to the year in which the termination became effective (collectively, “Accrued Compensation”).
(b) Termination by Executive without Good Reason. If Executive terminates his/her employment without Good Reason, then the
Company will pay Executive all Accrued Compensation earned through the date of such resignation. Nothing herein shall prohibit the
Company, in its discretion, from effectuating Executive’s resignation sooner than the date set forth in Executive’s Notice of Termination.
(c) Termination by the Company without Cause or by Executive for Good Reason (No Change in Control). If Executive’s
employment is terminated by the Company without Cause or by the Executive for Good Reason where there has not been a Change in
Control, and provided that the Executive has satisfied all conditions precedent as set forth herein, then the Company shall:
(i) pay Executive all Accrued Compensation;
3
(ii) continue paying Executive’s then-base salary for a period of twelve (12) months payable in accordance with the normal
payroll practices of the Company for its executives generally, with the first such payment to be made on the first payroll date that occurs after
the day that is sixty (60) days after the date of termination, retroactive to the date of Executive’s termination, or such other method of
payment as determined by the Company; and
(iii) provided that Executive appropriately and timely completes all required elections, the Company shall reimburse (on a
taxable basis) premiums paid by Executive for health and dental insurance premiums (for himself/herself and all eligible dependents) under
the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) at the same amount and to the same extent it would if Executive still was
employed by the Company until the earliest of (A) the last day of the month which falls twelve (12) months from the date of Executive’s
termination (or such other period as required by applicable law); (B) the date that Executive and eligible dependents are no longer eligible to
receive continuation coverage under COBRA; or (C) the date Executive becomes eligible to receive health or dental care coverage pursuant
to the health or dental care plan of a new employer.
In the event that the Company terminates Executive’s employment without Cause as set forth in this Section 3(c), but the Company
determines within one (1) year of such termination that the Company had the right to terminate Executive’s employment for Cause pursuant
to Sections 1(a) and 3(a) above, the Company may terminate the payment of any amounts still owed to Executive pursuant to this Section
3(c).
(d) Termination by the Company without Cause or by Executive for Good Reason (Change in Control). If Executive’s employment
is terminated by the Company without Cause or by Executive for Good Reason, and provided that such termination occurs within twelve (12)
months after the occurrence of such qualifying event giving rise to the Change in Control; then the Company shall:
(i) pay Executive all Accrued Compensation;
(ii) continue paying Executive’s then-base salary for a period of twelve (12) months payable in accordance with the normal
payroll practices of the Company for its executives generally, with the first such payment to be made on the first payroll date that occurs after
the day that is sixty (60) days after the date of termination, retroactive to the date of Executive’s termination, or such other method of
payment as determined by the Company;
(iii) pay Executive an amount equal to fifty percent (50%) of his/her annual target bonus for the year in which the
termination occurs, pro-rated to reflect the month in which the termination occurs, such amount to be payable in a lump-sum on the date that
is the day that is sixty (60) days after the date of termination; and
(iv) provided that Executive appropriately and timely completes all required elections, the Company shall reimburse (on a
taxable basis) premiums paid by Executive for health and dental insurance premiums (for himself/herself and all eligible dependents) under
COBRA at the same amount and to the same extent it would if Executive still was employed by the Company until the earliest of (A) the last
day of the month which falls twelve (12) months from the date of Executive’s termination (or such other period as required by applicable
law); (B) the date that Executive and eligible dependents are no longer eligible to receive continuation coverage under COBRA; or (C) the
date Executive becomes eligible to receive health or dental care coverage pursuant to the health or dental care plan of a new employer.
In the event that the Company terminates Executive’s employment without Cause as set forth in this Section 3(d), but the Company
determines within one (1) year of such termination that the Company had the right to terminate Executive’s employment for Cause pursuant
to Sections 1(a) and 3(a) above, the Company may terminate the payment of any amounts still owed to Executive pursuant to this Section
3(d).
(e) Notice of Termination Required. Any purported termination by the Company or by Executive must be communicated by a
written Notice of Termination to the other party. For purposes of
4
this Agreement, no purported termination of employment will be effective without a Notice of Termination.
(f) Timing of Payments. The Accrued Compensation payable to Executive as provided in this Section 3 will be paid pursuant to
applicable state law or within ten (10) business days after the effective date of Executive’s employment termination, whichever period is
shorter. Any other compensation provided for in this Section 3 will be paid as set forth above, subject to Section 9 below.
(g) Payroll Taxes and Withholdings. All Severance Benefits provided for in this Section 3 shall, to the extent required, be subject to
ordinary and required payroll taxes, deductions and income tax withholding.
(h) Reemployment. If Executive becomes reemployed by the Company prior to the end of the period in which Executive is entitled
to receive Severance Benefits, Executive will no longer be entitled to receive such Severance Benefits (except for any Accrued
Compensation) as of the effective date of such reemployment.
(i) Benefit Plans. Executive’s entitlement to any other compensation or benefits upon termination of his/her employment shall be
determined in accordance with the Company’s employee benefit plans and other applicable programs and practices then in effect.
4. Conditions Precedent to Receipt of Severance Benefits. Executive shall not be entitled to receive (or continue to receive) any
Severance Benefits, except for Accrued Compensation, and shall not be entitled to any continued vesting of outstanding equity awards
pursuant to Section 5(b) below unless:
(a) Executive executes (prior to the deadline established by the Company), does not revoke and complies with a general release of
all claims against the Company and its officers, directors and employees upon terms and in a form reasonably acceptable to the Company;
(b) Executive executes (and does not rescind such acceptance within seven (7) business days after such execution) and complies
fully with a new agreement to be entered into between Executive and the Company containing post-termination restrictive covenants
(including, without limitation, covenants of non-disclosure, non-solicitation and non-competition, and covenants regarding the assignment of
intellectual property) with the same scope, duration and conditions as any post-termination restrictive covenants previously agreed to
between Executive and the Company at any time during Executive’s employment with the Company; and
(c) Executive complies fully with Section 7 hereof.
5. Accelerated Vesting of Equity.
(a) Upon a Change in Control. One hundred percent (100%) of Executive’s outstanding unvested options, restricted shares,
restricted stock units or other equity-based awards shall immediately vest upon a Change in Control. The exercisability of stock options (or
other awards requiring exercise) shall be extended, to the extent feasible and to the extent consistent with applicable law and the terms of the
Company’s equity plans or programs (each, as in effect from time to time, a “Company Equity Plan” and, together, the “Company Equity
Plans”) and the award agreements issued thereunder, beyond any lockup or similar restrictive period set forth in any documents executed in
connection with a Change in Control. The Compensation Committee may determine in its reasonable discretion whether it is advisable or
feasible to amend a Company Equity Plan or Plans and/or any equity agreements issued thereunder between the Company and Executive in
order to effect the extended period of exercise contemplated by this Section 5(a). For the avoidance of doubt, no amendment shall be made by
the Compensation Committee in furtherance of this Section 5(a) other than in accordance with Section 409A of Internal Revenue Code of
1986, as amended (the “Code”) and the regulations and guidance issued thereunder.
(b) Upon Termination by the Company without Cause or by Executive for Good Reason. Executive’s outstanding unvested
options, restricted shares, restricted stock units or other equity-based awards shall remain outstanding and continue to vest in accordance with
the terms of the applicable equity agreement(s) for the period of time during which Executive continues to receive Severance
5
Benefits, as if he or she remained employed during such time, in accordance with Section 3(c)(ii) hereof. The Compensation Committee may
determine in its reasonable discretion whether it is advisable or feasible to amend a Company Equity Plan or Plans and/or any equity
agreements issued thereunder existing between the Company and Executive in order to effect the extended period of vesting contemplated by
this Section 5(b). For the avoidance of doubt, no amendment shall be made by the Compensation Committee in furtherance of this Section
5(b) other than in accordance with Code Section 409A and the regulations and guidance issued thereunder.
6. Cooperation. During employment and after the termination of Executive’s employment for any reason, Executive agrees to cooperate
with, and at the request of, the Company in the defense or prosecution of any legal matter or claim in which the Company, any of its
affiliates, or any of their past or present employees, agents, officers, directors, attorneys, successors or assigns, may be or become involved
and which arises or arose during Executive’s employment, to the extent such cooperation does not unreasonably interfere with Executive’s
personal or professional schedule. Executive will be reimbursed for any reasonable out-of-pocket expenses incurred thereby.
7. Non-Disparagement. Executive agrees that during his/her employment and for the greater of (A) one (1) year following the
termination of his/her employment (regardless of the reason for termination) or (B) the period during which Executive receives Severance
Benefits hereunder, Executive will not make any statements that are disparaging about or adverse to the business interests of the Company or
which are intended to harm the reputation of the Company including, but not limited to, any statements that disparage any product, service,
finances, employees, officers, directors, capabilities or any other aspect of the Company’s business, products or services.
8. Successors and Assigns.
(a) Assignment by Company. The Company may, without the consent of Executive, assign this Agreement or delegate its
obligations hereunder to any firm, entity, company or person (collectively, a “Person”) in the event that the Company shall hereafter effect a
reorganization, consolidate with, or merge into, such Person or transfer all or substantially all of its properties or assets to such Person.
(b) Assignment by Executive. Neither this Agreement nor any right or interest hereunder will be assignable or transferable by
Executive, his/her beneficiaries or legal representatives, except by will or by the laws of descent and distribution. All payments under this
Agreement will inure to the benefit of and be enforceable by Executive’s legal personal representative(s).
9. Tax Consequences.
(a) The Company does not guarantee the tax treatment or tax consequences associated with Severance Benefits received by
Executive hereunder.
(b) Parachute Payments. To the extent consistent with applicable law, the payment of any amounts or the provision of any benefits
under this Agreement including, without limitation, the payment of Severance Benefits pursuant to Section 3 above or the accelerated vesting
of equity pursuant to Section 5 above, will be reduced or adjusted to avoid triggering the excise tax imposed by Section 4999 of the Code, if
such adjustment would result in the provision of a greater total benefit, on a net after-tax basis (after taking into account taking any applicable
federal, state and local income taxes and the excise tax imposed by Section 4999), to Executive.
(c) Section 409A. The provisions of this Agreement are intended to comply with the requirements of Code Section 409A or with
the conditions for an exemption from such requirements, and shall be construed accordingly. Notwithstanding any provision of this
Agreement to the contrary, if at the time of Executive’s separation from service (as defined below) Executive is a specified employee (as
defined below), as determined by the Company, any and all amounts payable in connection with such separation from service that constitute
deferred compensation subject to Code Section 409A, as determined by the Company, and that would otherwise be payable within six (6)
months following such separation from service, shall instead be paid on the date that follows the date of such separation from service by six
(6) months (or, if earlier, upon the Executive’s death). For purposes of this Agreement, all references to “termination of employment” and
correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury regulations
after giving
6
effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Company to be a
specified employee under Treasury regulation Section 1.409A-1(i).
Each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments
under this Agreement is to be treated as a right to a series of separate payments.
Any reimbursement for expenses that would constitute nonqualified deferred compensation subject to Section 409A shall be subject
to the following additional rules: (i) no reimbursement of any such expense shall affect Executive’s right to reimbursement of any such
expense in any other taxable year; (ii) reimbursement of the expense shall be made, if at all, promptly, but not later than the end of the
calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursement shall not be subject to
liquidation or exchange for any other benefit.
10. Notices. All notices, requests, demands, and other communications called for hereunder will be in writing and will be deemed
given (a) on the date of delivery if delivered personally, (b) one (1) day after being sent overnight by a well-established commercial overnight
service, or (c) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or
their successors at the following addresses, or at such other addresses as the parties may later designate in writing:
If to the Company:
Akebia Therapeutics, Inc.
Attention: Chief Legal Officer
245 First Street
Cambridge, Massachusetts 02142
If to Executive:
at the last residential address known by the Company
11. Non-Exclusivity of Rights. Nothing in this Agreement will prevent or limit Executive’s continuing or future participation in
any benefit, bonus, incentive or other plan or program provided by the Company or any of its subsidiaries and for which Executive may
qualify, nor will anything herein limit or reduce such rights as Executive may have under any other agreements with the Company or any of
its subsidiaries. Amounts which are vested benefits or which Executive is otherwise entitled to receive under any plan or program of the
Company or any of its subsidiaries will be payable in accordance with such plan or program, except as explicitly modified by this
Agreement.
12. Amendments. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by Executive and the Chief Executive Officer of the Company.
13. No Waiver. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
14. Governing Law. This Agreement will be governed by and construed and enforced in accordance with the laws of the
Commonwealth of Massachusetts, without giving effect to the conflict of law principles thereof.
15. Dispute Resolution/Jurisdiction/Venue. Any dispute concerning this Agreement shall be heard by a court of competent
jurisdiction within Massachusetts. The parties hereby acknowledge that they are subject to the personal jurisdiction of the Massachusetts
courts in any county where the Company has operations or facilities and/or Executive resides.
7
16. Expenses. To the extent Executive elects to have independent legal counsel review and or negotiate the terms of this
Agreement or any release required by this Agreement, Executive shall be solely responsible for all associated costs and fees, including but
not limited to attorneys’ fees.
17. Severability. The provisions of this Agreement will be deemed severable and the invalidity or unenforceability of any
provision will not affect the validity or enforceability of the other provisions hereof.
18. Effect on Other Agreements. The terms of this Agreement replace and supersede the terms in all other and prior agreements
between Executive and the Company that relate to (i) post-separation severance and other post-separation benefits and (ii) equity acceleration
in connection with a change of control, whether written or oral or express or implied, and no representations, promises, assurances or
agreements have been made regarding the subject matter of this Agreement, except such as has been stated in this Agreement. For the
avoidance of doubt, (a) the terms of any existing employment agreement or other agreement between Executive and the Company regarding
assignment of intellectual property, confidentiality and non-disclosure, non-competition and non-solicitation between Executive and the
Company shall remain in full force and effect and (b) all other terms in offer letters, employment agreements or any other agreements
between Executive and the Company that do not relate to (1) post-separation severance or other post-separation benefits or (2) equity
acceleration in connection with a change of control, will remain in full force and effect.
19. Clawback Policy. Notwithstanding any other provision of this Agreement, Executive agrees and acknowledges that they are
and remain subject to, and bound by, the terms and conditions of Akebia Therapeutic Inc.’s Compensation Recovery Policy (as it may be
amended, restated, supplemented or otherwise modified from time to time, the “Policy”). In the event it is determined in accordance with the
Policy that any compensation or compensatory award granted, earned or paid to Executive must be forfeited or reimbursed to the Company,
Executive will promptly take any action necessary to effectuate such forfeiture and/or reimbursement as determined by the Company.
THE COMPANY AND EXECUTIVE ACKNOWLEDGE THAT (A) EACH HAS CAREFULLY READ THIS AGREEMENT, (B)
EACH UNDERSTANDS ITS TERMS, (C) ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND
EXECUTIVE RELATING TO THE SUBJECTS COVERED IN THIS AGREEMENT ARE CONTAINED IN IT, AND (D) EACH HAS
ENTERED INTO THIS AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY
THE OTHER, OTHER THAN THOSE CONTAINED IN THIS AGREEMENT ITSELF.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized person and Executive has
executed this Agreement effective as of the day and year first above written.
EXECUTIVE
By:
Name:
Title:
8
AKEBIA THERAPEUTICS, INC.
By:
John P. Butler, Chief Executive Officer
Exhibit 10.44
[Date]
Personal and Confiden al
[First Name Last name]
[Address]
Re: ELT Special Bonus Program
Dear [First Name Last name]:
I am pleased to offer you the opportunity to earn addi onal bonus payments related to your important work on the vadadustat
program (the “ELT Special Bonus Program”) in recogni on of your significant value to Akebia Therapeu cs, Inc. (“Akebia” or the
“Company”) and in an cipa on of the important contribu ons you will make in the next year and beyond. The purpose of this
le er agreement (the “Agreement”) is to outline the terms and condi ons associated with the bonus payments (“Bonus
Payments”) offered to you by Akebia. These Bonus Payments are in addi on to your annual bonus payment. If you accept the
terms of this Agreement, please return a signed Agreement to [Name] no later than [Date].
1. Special Bonus Payment. Subject to the terms and condi ons set forth below, and in recogni on of your contribu ons to the
vadadustat program to date, the Company will provide you with a lump sum payment of $[●], less all required taxes,
withholdings and deduc ons, payable within fi een (15) days of the date hereof (the “Special Bonus Payment”).
2. Reten on Cash Incen ve Award. Subject to the terms and condi ons set forth below and the terms of the Company’s Cash
Incen ve Plan, the Company will provide you with the following:
(a) lump sum payment of $[●], less all required taxes, withholdings and deduc ons (“Incen ve Payment 1”) upon [●]
(“Event 1”), payable within fi een (15) days of Event 1.
(b) lump sum payment of $[●], less all required taxes, withholdings and deduc ons (“Incen ve Payment 2” and
together with Incen ve Payment 1, the “Incen ve Payments”) upon [●] (“Event 2”), payable within fi een (15) days of
Event 2.
In order to be eligible for any Incen ve Payment, you must remain an employee of the Company in good standing (i.e., mee ng
the requirements of your posi on) through the date of the corresponding event.
3. Repayment of Special Bonus Payment Upon Termina on. If you voluntarily terminate your employment with the Company
within twelve (12) months a er you receive the Special Bonus Payment, then you shall repay $[●] within thirty (30) days a er
the effec ve date of such termina on. Should you become obligated to repay to the Company the Special Bonus Payment as set
forth herein, you hereby authorize the Company to deduct any owed amount from your final, accrued wages (including, without
limita on, any accrued but unused paid me off). You acknowledge and agree that any such deduc ons would cons tute
permissible, valid offsets under the Massachuse s
1
Payment of Wages Act, M.G.L. c. 149 § 148 et seq. You further agree that should your final, accrued wages be insufficient to
sa sfy your en re repayment obliga on, you will repay any outstanding amount by personal check. You agree that you will be
responsible for paying the Company’s costs of collec on, if any (including a orneys’ fees and other expenses), should the
Company be required to resort to legal ac on to collect any such then-outstanding amount.
4. Prior Agreements. Upon your acceptance of the terms and condi ons of this Agreement, the Employee Agreement
(Confiden ality, Non-Solicita on, Non-Compe on and Developments Agreement) last executed by you in connec on with your
employment with Akebia and the Execu ve Severance Agreement between you and the Company will remain in full force and
effect in accordance with their terms, and by your signature below are confirmed, ra fied and incorporated herein.
5. At-Will Employment. Nothing in this Agreement should be taken as a guarantee of con nued employment, a specific term
of employment and/or a contract of employment, and at all mes you will be expected to meet Company performance
standards and abide by all Company policies and procedures. Your employment remains at will and you and the Company agree
that this Agreement does not in any way modify the at-will nature of your employment by the Company. Accordingly, your
employment, as well as the terms and condi ons thereof (except for this Agreement), may be modified or terminated with or
without Cause or no ce. For purposes of this Agreement, the defini on of “Cause” shall be the same defini on of “Cause”
included in your Execu ve Severance Agreement.
6. Confiden ality. The terms and condi ons of this Agreement, the existence of the ELT Special Bonus Program, and the Bonus
Payments are strictly confiden al except as required by applicable law. To the extent permi ed by applicable law, you shall not
discuss or reveal any informa on concerning this Agreement to any past or present employee of the Company or any third
person or en ty other than the individual who presented you with this Agreement, an Akebia Human Resources representa ve,
counsel and members of your immediate family.
7. Complete Agreement; Miscellaneous. This Agreement, together with the Cash Incen ve Plan and the Execu ve Severance
Agreement, sets forth the complete agreement between you and the Company with respect to your eligibility for, and the
payment to you of, the Bonus Payments. The provisions of this Agreement will not supersede or modify the provisions of the
Employee Agreement, and nothing herein shall preclude the con nued validity of the Employee Agreement which shall remain
in full force and effect. You agree that each provision and the subparts of each provision in this Agreement shall be treated as
separate and independent clauses, and the unenforceability of any one clause shall in no way impair the enforceability of any of
the other clauses of this Agreement. In the event of any dispute, this Agreement will be construed as a whole, will be
interpreted in accordance with its fair meaning, and will not be construed strictly for or against either you or the Company. This
Agreement may not be changed, amended, modified, altered or rescinded except upon the express wri en consent of both you
and an authorized Company officer, subject to the terms of the Cash Incen ve Plan, as applicable. Any waiver of any provision of
this Agreement by the Company shall not cons tute a waiver of any other provision of this Agreement unless the Company
expressly so indicates otherwise. This Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachuse s without regard to conflicts of laws principles thereof. Both par es agree that any dispute
under this Agreement shall be heard by a court of competent jurisdic on within Massachuse s. The par es hereby
acknowledge that they are subject to the personal jurisdic on of the
2
Massachuse s courts in any county where the Company has opera ons or facili es and/or you reside.
8. Assignment. Except as otherwise provided herein, this Agreement shall be binding upon, inure to the benefit of and be
enforceable by the Company and you and their respec ve heirs, legal representa ves, successors and assigns. If the Company
shall be merged into or consolidated with another en ty, the provisions of this Agreement shall be binding upon and inure to
the benefit of the en ty surviving such merger or resul ng from such consolida on.
9. Clawback Policy. In accep ng these payments, you agree and acknowledge that you are subject to, and bound by, the terms
of any clawback policy that the Company has in place or may adopt in the future, including without limita on Akebia
Therapeu c Inc.’s Compensa on Recovery Policy adopted in accordance with stock exchange lis ng requirements. You agree
that in the event it is determined in accordance with any such policy that any compensa on or compensatory award granted,
earned or paid to you including these payments or pursuant to any other compensa on arrangement must be forfeited or
reimbursed to the Company, you will promptly take any ac on necessary to effectuate such forfeiture and/or reimbursement as
determined by the Company.
We are pleased to be able to offer you par cipa on in the ELT Special Bonus Program, and we look forward to your con nuing
commitment and focus on fulfilling your responsibili es. Please feel free to reach out to me should you have any ques ons.
Sincerely,
[First Name, Last name]
[Title]
3
AGREED AND ACCEPTED:
I acknowledge and agree that I have read the foregoing Agreement and the Cash Incen ve Plan, have had the opportunity to
consult with counsel and that I have freely and voluntarily entered into this Agreement.
________________________________
[First Name, Last name]
Dated: _______________
4
AKEBIA THERAPEUTICS, INC.
STOCK OPTION AGREEMENT FOR OFFICERS
2023 STOCK INCENTIVE PLAN
Akebia Therapeutics, Inc. (the “Company”) hereby grants the following stock option pursuant to its 2023 Stock Incentive
Plan (the “Plan”). The terms and conditions attached hereto are also a part hereof.
Notice of Grant
Exhibit 10.45
Name of optionee (the “Participant”):
Grant Date:
Incentive Stock Option or Nonstatutory Stock Option:
Number of shares of the Company’s Common Stock subject
to this option (“Shares”):
1
Option exercise price per Share:
Number, if any, of Shares that vest immediately on the grant
date:
Shares that are subject to vesting schedule:
Vesting Start Date:
2
Final Exercise Date:
Vesting Schedule:
Vesting Date:
Number of Options that Vest:
All vesting is dependent on the Participant remaining an Eligible Participant, as provided herein.
This option satisfies in full all commitments that the Company has to the Participant with respect to the issuance of stock,
stock options or other equity securities.
1
This must be at least 100% of the Grant Date Fair Market Value (as defined in the Plan) of the Common Stock on the date of grant (110% in the case of
a Participant that owns more than 10% of the total combined voting power of all classes of stock of the Company or its parent or subsidiary (a “10%
Shareholder”) when the option is intended to qualify as an incentive stock option (an “ISO”) under Section 422 of the Internal Revenue Code).
2
The Final Exercise Date must be no more than 10 years (5 years in the case of a 10% Shareholder for an option intended to qualify as an ISO) from the
date of grant. The correct approach to calculate the final exercise date is to use the day immediately prior to the date ten years out from the date of the stock
option award grant (or 5 years, as applicable).
Signature of Participant
Street Address
City/State/Zip Code
Akebia Therapeutics, Inc.
By:
Name of Officer
Title:
Akebia Therapeutics, Inc.
Stock Option Agreement for Officers
Incorporated Terms and Conditions
1.
Grant of Option.
This agreement evidences the grant by the Company, on the grant date (the “Grant Date”) set forth in the Notice of Grant
that forms part of this agreement (the “Notice of Grant”), to the Participant of an option to purchase, in whole or in part, on the
terms provided herein and in the Company’s 2023 Stock Incentive Plan (the “Plan”), the number of Shares set forth in the Notice
of Grant of common stock, $0.00001 par value per share, of the Company (“Common Stock”), at the exercise price per Share set
forth in the Notice of Grant. Unless earlier terminated, this option shall expire at 5:00 p.m., Eastern time, on the Final Exercise
Date set forth in the Notice of Grant (the “Final Exercise Date”).
The option evidenced by this agreement is intended to be an incentive stock option as defined in Section 422 of the
Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”) to the maximum extent
permitted by law, solely to the extent designated as an incentive stock option in the Notice of Grant. Except as otherwise
indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the
right to exercise this option validly under its terms.
2.
Vesting Schedule.
(a)
General. Subject to this Agreement and the terms of any Executive Severance Agreement or other written
agreement between the Participant and the Company, this option will become exercisable (“vest”) in accordance with the vesting
schedule set forth in the Notice of Grant.
(b)
Change in Control.
(1)
Treatment of Option in a Change in Control. The option, to the extent outstanding immediately prior to a
Change in Control but not then vested in full, shall automatically become fully vested and exercisable upon such Change in
Control.
(2)
Definitions.
(i) “Change in Control” means the occurrence of any of the following events other than in connection
with the consummation of an initial public offering of the Company’s securities: (A) any “person” (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) who is not a
shareholder of the Company as of the date of this Agreement or an affiliate thereof is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the
Company representing 50% or more of the total voting power represented by the Company’s then
outstanding voting securities; (B) a change in the composition of the Board occurring within a two-year
period, as a result of which less than a majority of the directors are Incumbent Directors; (C) the date of the
consummation of a merger, scheme of arrangement or consolidation of the Company with any other
corporation that has been approved by the stockholders of the Company, other than a merger, scheme of
arrangement or consolidation which would result in the voting securities of the Company outstanding
immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity outstanding immediately after such merger or
consolidation; or (D) the date of the consummation of the sale or disposition by the Company of all or
substantially all the Company’s assets. Notwithstanding the foregoing, a transaction will not constitute a
Change in Control if: (I) its sole purpose is to change the domicile of the Company’s incorporation; or (II)
its sole purpose is to create a holding company that will be owned in substantially the same proportions by
the persons who held the Company’s securities immediately before such transaction. In all respects, the
definition of Change in Control shall be interpreted to comply with Section 409A of the Code, and any
successor statute, regulation and guidance thereto.
“Incumbent Directors” means directors who either (A) are directors of the Company as of the date
(ii)
hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a
majority of the remaining Incumbent Directors at the time of such election or nomination (but will not
include an individual whose election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company).
(c)
Exercisability. The right of exercise shall be cumulative so that to the extent the option is not exercised in any
period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all Shares for
which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 hereof or the Plan.
3.
Exercise of Option.
(a)
Form of Exercise. Each election to exercise this option shall be in writing, in the form of the Stock Option
Exercise Notice attached as Annex A, signed by the Participant, and received by the Company at its principal office,
accompanied by this agreement, or in such other form (which may be electronic) as is approved by the Company, together with
payment in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby,
provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares.
(b)
Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option
may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the
Grant Date, an employee, officer, or director of, or consultant or advisor to, the Company or any other entity the employees,
officers, directors, consultants, or advisors of which are eligible to receive option grants under the Plan (an “Eligible
Participant”).
(c)
Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any
reason, then, except as provided in this paragraph or in paragraphs (d) and (e) below, the right to exercise this option shall
terminate three months after such cessation (but in no event after the Final Exercise Date), provided that this option shall be
exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation; and, provided,
further, that to the extent the Participant is a party to an Executive Severance Agreement or other written agreement with the
Company that provides for the option to remain outstanding and continue to vest during a specified period of time following the
Participant’s cessation of status as an Eligible Participant (such period, the “Severance
Period”), the option shall remain outstanding and shall continue to vest in accordance with the terms of this Agreement during the
Severance Period as if the Participant had remained an Eligible Participant during such period, subject to any conditions on
continued vesting as may be contained in such Executive Severance Agreement or other written agreement. Any portion of this
option that vests during such Severance Period will remain exercisable until the earlier of (A) the date that is three (3) months
following the date that is the last day of such Severance Period, or (B) the Final Exercise Date, and except to the extent
previously exercised as permitted by this Section 3(c) will thereupon immediately terminate. For the avoidance of doubt, any
portion of the option that fails to vest during the Severance Period will immediately be forfeited on the last day of such period.
Notwithstanding the foregoing, if the Participant, prior to the Final Exercise Date, violates the restrictive covenants (including,
without limitation, the non-competition, non-solicitation, or confidentiality provisions) of any employment contract, any non-
competition, non-solicitation, confidentiality or assignment agreement to which the Participant is a party, or any other agreement
between the Participant and the Company, the right to exercise this option shall terminate immediately upon such violation.
(d)
Exercise Period Upon Death. If the Participant dies prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as specified in paragraph (e) below, this option
shall be exercisable, within the period of one year following the date of death of the Participant, by an authorized transferee of the
Participant, provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on
the date of his or her death, and further provided that this option shall not be exercisable after the Final Exercise Date.
(e)
Termination for Cause. If, prior to the Final Exercise Date, the Participant’s employment, consulting, director or
advisor relationship with the Company is terminated by the Company for Cause (as defined below), the right to exercise this
option shall terminate immediately upon the effective date of such termination. If, prior to the Final Exercise Date, the Participant
is given notice by the Company of the termination of his or her service by the Company for Cause, and the effective date of such
termination is subsequent to the date of delivery of such notice, the right to exercise this option shall be suspended from the time
of the delivery of such notice until the earlier of (i) such time as it is determined or otherwise agreed that the Participant’s service
shall not be terminated for Cause as provided in such notice or (ii) the effective date of such termination (in which case the right
to exercise this option shall, pursuant to the preceding sentence, terminate upon the effective date of such termination). If the
Participant is a party to an Executive Severance Agreement or other written agreement with the Company, in any case which
agreement contains a definition of “cause” for termination of service, “Cause” shall have the meaning ascribed to such term in
such agreement. Otherwise, “Cause” shall mean willful misconduct by the Participant or willful failure by the Participant to
perform his or her responsibilities to the Company (including, without limitation, breach by the Participant of any fiduciary duty
or of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreement between
the Participant and the Company), as determined by the Company, which determination shall be conclusive. The Participant shall
be considered to have been terminated for Cause if the Company determines, within 30 days after the Participant’s resignation,
that termination for Cause was warranted.
4.
Tax Matters.
(a) Withholding. No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to
the Company, or makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes
required by law to be withheld in respect of this option.
(b) Disqualifying Disposition. If this option is an incentive stock option and the Participant disposes of Shares acquired upon
exercise of this option within two years from the Grant Date or one year after such Shares were acquired pursuant to exercise of
this option, the Participant shall notify the Company in writing of such disposition.
5.
Transfer Restrictions; Clawback.
(a)
This option may not be sold, assigned, transferred, pledged, encumbered or otherwise disposed of by the
Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the Participant.
(b)
In accepting this option, the Participant agrees to be bound by any clawback policy that the Company has in place
or may adopt in the future.
6.
Provisions of the Plan.
This option is subject to the provisions of the Plan (including the provisions relating to amendments to the Plan), a copy
of which is furnished to the Participant with this option. Notwithstanding the foregoing, to the extent the Participant has entered
in to an Executive Severance Agreement with the Company, for so long as such Executive Severance Agreement remains in
effect, the terms of such Executive Severance Agreement as they relate to the option shall control in the event of a conflict with
this Agreement or the Plan.
7.
Clawback Policy.
In accepting this option, the Participant agrees and acknowledges that the Participant is subject to, and bound by, the
terms of any clawback policy that the Company has in place or may adopt in the future, including without limitation Akebia
Therapeutic Inc.’s Compensation Recovery Policy adopted in accordance with stock exchange listing requirements. The
Participant agrees that in the event it is determined in accordance with any such policy that any compensation or compensatory
award granted, earned or paid to the Participant including this option or pursuant to any other compensation arrangement must be
forfeited or reimbursed to the Company, the Participant will promptly take any action necessary to effectuate such forfeiture
and/or reimbursement as determined by the Company.
ANNEX A
Akebia Therapeutics, Inc.
245 First Street
Cambridge, MA 02142
Dear Sir or Madam:
Akebia Therapeutics, Inc.
Stock Option Exercise Notice
I, (the “Participant”), hereby irrevocably exercise the right to purchase shares of the Common Stock, $0.00001
par value per share (the “Shares”), of Akebia Therapeutics, Inc. (the “Company”) at $ per share pursuant to the Company’s
2023 Stock Incentive Plan and a stock option agreement with the Company dated (the “Option Agreement”). Enclosed
herewith is a payment of $ , the aggregate purchase price for the Shares. The Shares should be registered in my name as it
appears below or, if so indicated below, jointly in my name and the name of the person designated below, with right of
survivorship.
Dated:
Signature
Print Name:
Address:
Name and address of persons in whose name the Shares are to be jointly registered (if applicable):
AKEBIA THERAPEUTICS, INC.
RESTRICTED STOCK UNIT AGREEMENT FOR OFFICERS
2023 STOCK INCENTIVE PLAN
Exhibit 10.46
Akebia Therapeutics, Inc. (the “Company”) hereby grants the following restricted stock units pursuant to its 2023 Stock
Incentive Plan (the “Plan”). The terms and conditions attached hereto are also a part hereof.
Notice of Grant
Name of recipient (the “Participant”):
Grant Date:
Number of restricted stock units (“RSUs”) granted:
Vesting Start Date:
Vesting Schedule:
Vesting Date:
Number of RSUs that Vest:
All vesting is dependent on the Participant remaining an Eligible Participant, as provided herein.
This grant of RSUs satisfies in full all commitments that the Company has to the Participant with respect to the issuance of
stock, stock options or other equity securities.
Signature of Participant
Street Address
City/State/Zip Code
Akebia Therapeutics, Inc.
By:
Name of Officer
Title:
Akebia Therapeutics, Inc.
Restricted Stock Unit Agreement for Officers
Incorporated Terms and Conditions
For valuable consideration, receipt of which is acknowledged, the parties hereto agree as follows:
1.
Award of Restricted Stock Units.
The Company has granted to the Participant, subject to the terms and conditions set forth in this Restricted Stock Unit
Agreement (this “Agreement”) and in the Company’s 2023 Stock Incentive Plan (the “Plan”), an award with respect to the
number of RSUs set forth in the Notice of Grant that forms part of this Agreement (the “Notice of Grant”). Each RSU represents
the right to receive one share of common stock, $0.00001 par value per share, of the Company (the “Common Stock”) upon
vesting of the RSU, subject to the terms and conditions set forth herein.
2.
Vesting; Delivery.
(a) General. The RSUs shall vest in accordance with the Vesting Schedule set forth in the Notice of Grant (the “Vesting
Schedule”), subject to the terms of any Executive Severance Agreement or other written agreement between the
Participant and the Company. Any fractional shares resulting from the application of any percentages used in the Vesting
Schedule shall be rounded down to the nearest whole number of RSUs.
(b) Change in Control.
i. Treatment of RSUs in a Change in Control. The RSUs, to the extent outstanding immediately prior to a Change
in Control but not then vested in full, will automatically and immediately become fully vested upon such Change
in Control.
ii. Definitions.
(A) “Change in Control” means the occurrence of any of the following events other than in connection
with the consummation of an initial public offering of the Company’s securities: (A) any “person” (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) who is not a
shareholder of the Company as of the date of this Agreement or an affiliate thereof is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the
Company representing 50% or more of the total voting power represented by the Company’s then
outstanding voting securities; (B) a change in the composition of the Board occurring within a two-year
period, as a result of which less than a majority of the directors are Incumbent Directors; (C) the date of the
consummation of a merger, scheme of arrangement or consolidation of the Company with any other
corporation that has been approved by the stockholders of the Company, other than a merger, scheme of
arrangement or consolidation which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more
than fifty percent (50%) of the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or consolidation; or (D) the date of the
consummation of the sale or disposition by the Company of all or substantially all the Company’s assets.
Notwithstanding the foregoing, a transaction will not constitute a Change in Control if: (I) its sole purpose
is to change the domicile of the Company’s incorporation; or (II) its sole purpose is to create a holding
company that will be owned in substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction. In all respects, the definition of Change in Control shall be
interpreted to comply with Section 409A of the Code, and any successor statute, regulation and guidance
thereto.
(B) “Incumbent Directors” means directors who either (A) are directors of the Company as of the date
hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a
majority of the remaining Incumbent Directors at the time of such election or nomination (but will not
include an individual whose election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company).
(c) Delivery. Upon the vesting of the RSU, the Company will deliver to the Participant, for each RSU that becomes vested,
one share of Common Stock, subject to the payment of any taxes pursuant to Section 7. The Common Stock will be
delivered to the Participant as soon as practicable following each vesting date, but in any event within 30 days of such
date.
3.
Forfeiture of Unvested RSUs Upon Cessation of Service.
In the event that the Participant ceases to be an employee, officer, or director of, or consultant or advisor to, the Company or
any other entity the employees, officers, directors, consultants, or advisors of which are eligible to receive awards under the Plan
(an “Eligible Participant”) for any reason or no reason, with or without cause, all of the RSUs that are unvested as of the time of
such cessation shall be forfeited immediately and automatically to the Company, without the payment of any consideration to the
Participant, effective as of such cessation. The Participant shall have no further rights with respect to the unvested RSUs or any
Common Stock that may have been issuable with respect thereto. If the Participant provides services to a subsidiary of the
Company, any references in this Agreement to provision of services to the Company shall instead be deemed to refer to service
with such subsidiary.
Notwithstanding the foregoing, to the extent the Participant is a party to an Executive Severance Agreement or other written
employment agreement with the Company that provides for the RSUs to remain outstanding and continue to vest during a
specified period of time following Participant’s cessation of status as an Eligible Participant (such period, the “Severance
Period”), the RSUs will remain outstanding and will continue to vest, and the Shares will be delivered upon such vesting, in
accordance with the terms of this Agreement during the Severance Period as if the Participant had continued to be an Eligible
Participant during such period, subject to any conditions on the vesting and delivery as may be contained in such Executive
Severance Agreement or other written agreement. For the avoidance of doubt, any portion of the RSUs that fails to vest during
the Severance Period will immediately be forfeited on the last day of such period.
4.
Restrictions on Transfer.
The Participant shall not sell, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of, by operation of law or
otherwise (collectively “transfer”) any RSUs, or any interest therein. The Company shall not be required to treat as the owner of
any RSUs or issue any Common Stock to any transferee to whom such RSUs have been transferred in violation of any of the
provisions of this Agreement.
5.
Rights as a Stockholder.
The Participant shall have no rights as a stockholder of the Company with respect to any shares of Common Stock that may
be issuable with respect to the RSUs until the issuance of the shares of Common Stock to the Participant following the vesting of
the RSUs.
6.
Provisions of the Plan.
This Agreement is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this Agreement.
7.
Tax Matters.
(a) Acknowledgments; No Section 83(b) Election. The Participant acknowledges that he or she is responsible for
obtaining the advice of the Participant’s own tax advisors with respect to the award of RSUs and the Participant is relying solely
on such advisors and not on any statements or representations of the Company or any of its agents with respect to the tax
consequences relating to the RSUs. The Participant understands that the Participant (and not the Company) shall be responsible
for the Participant’s tax liability that may arise in connection with the acquisition, vesting and/or disposition of the RSUs. The
Participant acknowledges that no election under Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), is
available with respect to RSUs.
(b) Withholding. The Participant acknowledges and agrees that the Company has the right to deduct from payments of
any kind otherwise due to the Participant any federal, state, local or other taxes of any kind required by law to be withheld with
respect to the vesting of the RSUs. At such time as the Participant is not aware of any material nonpublic information about the
Company or the Common Stock and is not prohibited from doing so by the Company’s insider trading policy or otherwise, the
Participant shall execute the instructions set forth in Schedule A attached hereto (the “Durable Automatic Sell-to-Cover
Instruction”) as the means of satisfying such tax obligation unless the Participant has already executed such instruction, as
determined by the Company. If the Participant does not execute the Durable Automatic Sell-to-Cover Instruction prior to an
applicable vesting date, then the Participant agrees that if under applicable law the Participant will owe taxes at such vesting date
on the portion of the award then vested the Company shall be entitled to immediate payment from the Participant of the amount
of any tax required to be withheld by the Company. The Company shall not deliver any shares of Common Stock to the
Participant until it is satisfied that all required withholdings have been made.
8.
Miscellaneous.
(a) No Right to Continued Service. The Participant acknowledges and agrees that, notwithstanding the fact that the
vesting of the RSUs is contingent upon his or her continued service to the Company, this Agreement does not constitute an
express or implied promise of continued service relationship with the Participant or confer upon the Participant any rights with
respect to a continued service relationship with the Company or any affiliate of the Company.
(b) Section 409A. The RSUs awarded pursuant to this Agreement are intended to be exempt from or comply with the
requirements of Section 409A of the Code and the Treasury Regulations issued thereunder (“Section 409A”). The delivery of
shares of Common Stock on the vesting of the RSUs may not be accelerated or deferred unless permitted or required by
Section 409A.
(c) Participant’s Acknowledgments. The Participant acknowledges that he or she: (i) has read this Agreement; (ii) has
been represented in the preparation, negotiation and execution of this Agreement by legal counsel of the Participant’s own choice
or has voluntarily declined to seek such counsel; (iii) understands the terms and consequences of this Agreement; (iv) is agreeing,
in accepting this award, to be bound by any clawback policy that the Company has in place or may adopt in the future; and (v) is
fully aware of the legal and binding effect of this Agreement.
(d) Governing Law. This Agreement shall be construed, interpreted and enforced in accordance with the internal laws
of the State of Delaware without regard to any applicable conflicts of laws provisions.
9.
Clawback Policy.
In accepting this award, the Participant agrees and acknowledges that the Participant is subject to, and bound by, the terms
of any clawback policy that the Company has in place or may adopt in the future, including without limitation Akebia
Therapeutic Inc.’s Compensation Recovery Policy adopted in accordance with stock exchange listing requirements. The
Participant agrees that in the event it is determined in accordance with any such policy that any compensation or compensatory
award granted, earned or paid to the Participant including this award or pursuant to any other compensation arrangement must be
forfeited or reimbursed to the Company, the Participant will promptly take any action necessary to effectuate such forfeiture
and/or reimbursement as determined by the Company.
Schedule A
Durable Automatic Sell-to-Cover Instruction
This Durable Automatic Sell-to-Cover Instruction (this “Instruction”), which is being delivered to Akebia Therapeutics,
Inc. (the “Company”) by the undersigned on the date set forth below (the “Adoption Date”), relates to the Covered RSUs (as
defined following my signature below). This Instruction provides for “eligible sell-to-cover transactions” (as described in Rule
10b5-1(c)(1)(ii)(D)(3) under the Securities Exchange Act of 1934 (the “Exchange Act”)) and is intended to satisfy the affirmative
defense conditions of Rule 10b5-1(c)(1) under the Exchange Act.
I acknowledge that upon vesting and settlement of any Covered RSUs in accordance with the applicable RSU’s terms,
whether vesting is based on the passage of time or the achievement of performance goals, I will have compensation income equal
to the fair market value of the shares of the Company’s common stock subject to the RSUs that are settled on such settlement date
and that the Company is required to withhold income and employment taxes in respect of that compensation income.
I desire to establish a plan and process to satisfy such withholding obligation in respect of all Covered RSUs through an
automatic sale of a portion of the shares of the Company’s common stock that would otherwise be issuable to me on each
applicable settlement date, such portion to be in an amount sufficient to satisfy such withholding obligation, with the proceeds of
such sale delivered to the Company in satisfaction of such withholding obligation.
I understand that the Company has arranged for the administration and execution of its equity incentive programs and the
sale of securities by participants thereunder pursuant to a platform administered by a third party (the “Administrator”) and the
Administrator’s designated brokerage partner.
Upon the settlement of any of my Covered RSUs after the 30th day following the Adoption Date (or if I am an officer of
the Company on the Adoption Date, after the 120th day following the Adoption Date), I hereby appoint the Administrator (or any
successor administrator) to automatically sell such number of shares of the Company’s common stock issuable with respect to
such RSUs that vested and settled as is sufficient to generate net proceeds sufficient to satisfy the Company’s minimum statutory
withholding obligations with respect to the income recognized by me in connection with the vesting and settlement of such RSUs
(based on minimum statutory withholding rates for all tax purposes, including payroll and social security taxes, that are
applicable to such income), and the Company shall receive such net proceeds in satisfaction of such tax withholding obligation.
I hereby appoint the Chief Executive Officer, Chief Financial Officer, General Counsel and Secretary of the Company to
serve as my attorneys in fact to arrange for the sale of shares of the Company’s common stock in accordance with this
Instruction. I agree to execute and deliver such documents, instruments and certificates as may reasonably be required in
connection with the sale of the shares of common stock pursuant to this Instruction.
Unless the last box in the definition of Covered RSUs below is checked, if I have previously adopted an automatic sale or
sell-to-cover instruction relating to Covered RSUs, this Instruction shall be void ab initio.
I hereby certify that, as of the Adoption Date:
(i) I am not prohibited from entering into this Instruction by the Company’s insider trading policy or otherwise;
(ii) I am not aware of any material nonpublic information about the Company or its common stock; and
(iii) I am adopting this Instruction in good faith and not as part of a plan or scheme to evade the prohibitions of
Rule 10b-5 under the Exchange Act.
________________________________
Print Name: _____________________
Date: __________________________
Covered RSUs:
The following restricted stock units (“RSUs”) are covered by this Instruction.
Check all applicable boxes:
☐ The first award of RSUs granted to me on or after ______________ [insert date of grant of current RSUs the grant of which is
triggering the execution of this Instruction; if Instruction is being executed in advance of a grant of RSUs, insert the Adoption
Date] and any RSUs that may, from time to time following such date, be granted to me by the Company, other than any future
granted RSUs which by the terms of the applicable award agreement require the Company to withhold shares for tax withholding
obligations in connection with the vesting and settlement of such RSUs, and therefore do not permit sell-to-cover transactions.
☐ Any outstanding RSUs that were granted to me by the Company prior to the Adoption Date that (1) are not subject to any prior
automatic sale or sell-to-cover instruction and (2) for which the next vesting date is after the cooling-off period referred to above,
other than any previously granted RSUs which by the terms of the applicable award agreement require the Company to withhold
shares for tax withholding obligations in connection with the vesting and settlement of such RSUs, and therefore do not permit
sell-to-cover transactions.
☐ With respect to any RSUs, whether or not granted to me by the Company prior to the Adoption Date, that already are subject
to an automatic sale or sell-to-cover instruction (a “Prior Instruction”), I elect to have such sales effected pursuant to this
Instruction and confirm that doing so does not modify or change the amount, price, or timing of such sales from those provided
by the Prior Instruction (and, as a result the cooling-off period referred to above is not applicable to sales pursuant to this
Instruction that were previously subject to the Prior Instruction).
AKEBIA THERAPEUTICS, INC.
OFFICER INDUCEMENT AWARD
STOCK OPTION AGREEMENT
Exhibit 10.47
Akebia Therapeutics, Inc. (the “Company”) hereby grants the following inducement non-statutory stock option award.
The terms and conditions attached hereto are also a part hereof.
Notice of Grant
Name of optionee (the “Participant”):
Grant Date:
Number of shares of the Company’s Common Stock subject
to this option (“Shares”):
1
Option exercise price per Share:
Number, if any, of Shares that vest immediately on the grant
date:
Shares that are subject to vesting schedule:
Vesting Start Date:
2
Final Exercise Date:
Vesting Schedule:
Vesting Date:
Number of Options that Vest:
All vesting is dependent on the Participant remaining an Eligible Participant, as provided herein.
This option satisfies in full all commitments that the Company has to the Participant with respect to the issuance of stock,
stock options or other equity securities.
Signature of Participant
Street Address
City/State/Zip Code
Akebia Therapeutics, Inc.
By:
Name of Officer
Title:
1
This must be at least 100% of the Grant Date Fair Market Value (as defined in the Plan) of the Common Stock on the date of grant.
2
The Final Exercise Date must be no more than 10 years from the date of grant. The correct approach to calculate the final exercise date is to use the day
immediately prior to the date ten years out from the date of the stock option award grant.
Akebia Therapeutics, Inc.
Officer Inducement Award
Non-Statutory Stock Option Agreement
Incorporated Terms and Conditions
1.
Grant of Option.
This agreement evidences the grant by the Company, on the grant date (the “Grant Date”) set forth in the Notice of Grant
that forms part of this agreement (the “Notice of Grant”), to the Participant of an option to purchase, in whole or in part, on the
terms provided herein, the number of Shares set forth in the Notice of Grant of common stock, $0.00001 par value per share, of
the Company (“Common Stock”), at the exercise price per Share set forth in the Notice of Grant. Unless earlier terminated, this
option shall expire at 5:00 p.m., Eastern time, on the Final Exercise Date set forth in the Notice of Grant (the “Final Exercise
Date”).
The option evidenced by this agreement is being granted to the Participant pursuant to the inducement grant exception
under Nasdaq Stock Market Rule 5635(c)(4) as an inducement that is material to the Participant’s employment with the
Company, and not pursuant to the Company’s 2023 Stock Incentive Plan (the “Plan”), or any equity incentive plan of the
Company. Notwithstanding the foregoing, the option shall be subject to, and governed by, and shall be construed and
administered in accordance with, the terms of the Plan, which terms and conditions are incorporated herein by reference, but any
shares of Common Stock issued hereunder shall not reduce the number of shares of Common Stock available under the Plan.
The option evidenced by this agreement is not intended to be an incentive stock option as defined in Section 422 of the
Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”). Except as otherwise
indicated by the context, the term “Participant”, as used in this option, shall be deemed to include any person who acquires the
right to exercise this option validly under its terms.
2.
Vesting Schedule.
(a)
General. Subject to this Agreement and the terms of any Executive Severance Agreement or other written
agreement between the Participant and the Company, this option will become exercisable (“vest”) in accordance with the vesting
schedule set forth in the Notice of Grant.
(b)
Change in Control.
(1)
Treatment of Option in a Change in Control. The option, to the extent outstanding immediately prior to a
Change in Control but not then vested in full, shall automatically become fully vested and exercisable upon such Change in
Control.
(2)
Definitions.
(i) “Change in Control” means the occurrence of any of the following events other than in connection
with the consummation of an initial public offering of the Company’s securities: (A) any “person” (as such
term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended) who is not a shareholder of the Company as of the date of this Agreement or an affiliate
thereof is or becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing 50% or more of the total voting power represented by
the Company’s then outstanding voting securities; (B) a change in the composition of the Board occurring
within a two-year period, as a result of which less than a majority of the directors are Incumbent Directors;
(C) the date of the consummation of a merger, scheme of arrangement or consolidation of the Company
with any other corporation that has been approved by the stockholders of the Company, other than a
merger, scheme of arrangement or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding
or by being converted into voting securities of the surviving entity) more than fifty percent (50%) of the
total voting power represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation; or (D) the date of the consummation of the
sale or disposition by the Company of all or substantially all the Company’s assets. Notwithstanding the
foregoing, a transaction will not constitute a Change in Control if: (I) its sole purpose is to change the
domicile of the Company’s incorporation; or (II) its sole purpose is to create a holding company that will
be owned in substantially the same proportions by the persons who held the Company’s securities
immediately before such transaction. In all respects, the definition of Change in Control shall be
interpreted to comply with Section 409A of the Code, and any successor statute, regulation and guidance
thereto.
“Incumbent Directors” means directors who either (A) are directors of the Company as of the date
(ii)
hereof, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a
majority of the remaining Incumbent Directors at the time of such election or nomination (but will not
include an individual whose election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company).
(c)
Exercisability. The right of exercise shall be cumulative so that to the extent the option is not exercised in any
period to the maximum extent permissible it shall continue to be exercisable, in whole or in part, with respect to all Shares for
which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 hereof or the Plan.
3.
Exercise of Option.
(a)
Form of Exercise. Each election to exercise this option shall be in writing, in the form of the Stock Option
Exercise Notice attached as Annex A, signed by the Participant, and received by the Company at its principal office,
accompanied by this agreement, or in such other form (which may be electronic) as is approved by the Company, together with
payment in full in the manner provided in the Plan. The Participant may purchase less than the number of shares covered hereby,
provided that no partial exercise of this option may be for any fractional share or for fewer than ten whole shares.
(b)
Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option
may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the
Grant Date, an employee,
officer, or director of, or consultant or advisor to, the Company or any other entity the employees, officers, directors, consultants,
or advisors of which are eligible to receive option grants under the Plan (an “Eligible Participant”).
(c)
Termination of Relationship with the Company. If the Participant ceases to be an Eligible Participant for any
reason, then, except as provided in this paragraph or in paragraphs (d) and (e) below, the right to exercise this option shall
terminate three months after such cessation (but in no event after the Final Exercise Date), provided that this option shall be
exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation; and, provided,
further, that to the extent the Participant is a party to an Executive Severance Agreement or other written agreement with the
Company that provides for the option to remain outstanding and continue to vest during a specified period of time following the
Participant’s cessation of status as an Eligible Participant (such period, the “Severance Period”), the option shall remain
outstanding and shall continue to vest in accordance with the terms of this Agreement during the Severance Period as if the
Participant had remained an Eligible Participant during such period, subject to any conditions on continued vesting as may be
contained in such Executive Severance Agreement or other written agreement. Any portion of this option that vests during such
Severance Period will remain exercisable until the earlier of (A) the date that is three (3) months following the date that is the last
day of such Severance Period, or (B) the Final Exercise Date, and except to the extent previously exercised as permitted by this
Section 3(c) will thereupon immediately terminate. For the avoidance of doubt, any portion of the option that fails to vest during
the Severance Period will immediately be forfeited on the last day of such period. Notwithstanding the foregoing, if the
Participant, prior to the Final Exercise Date, violates the restrictive covenants (including, without limitation, the non-competition,
non-solicitation, or confidentiality provisions) of any employment contract, any non-competition, non-solicitation, confidentiality
or assignment agreement to which the Participant is a party, or any other agreement between the Participant and the Company, the
right to exercise this option shall terminate immediately upon such violation.
(d)
Exercise Period Upon Death. If the Participant dies prior to the Final Exercise Date while he or she is an Eligible
Participant and the Company has not terminated such relationship for “cause” as specified in paragraph (e) below, this option
shall be exercisable, within the period of one year following the date of death of the Participant, by an authorized transferee of the
Participant, provided that this option shall be exercisable only to the extent that this option was exercisable by the Participant on
the date of his or her death, and further provided that this option shall not be exercisable after the Final Exercise Date.
(e)
Termination for Cause. If, prior to the Final Exercise Date, the Participant’s employment, consulting, director or
advisor relationship with the Company is terminated by the Company for Cause (as defined below), the right to exercise this
option shall terminate immediately upon the effective date of such termination. If, prior to the Final Exercise Date, the Participant
is given notice by the Company of the termination of his or her service by the Company for Cause, and the effective date of such
termination is subsequent to the date of delivery of such notice, the right to exercise this option shall be suspended from the time
of the delivery of such notice until the earlier of (i) such time as it is determined or otherwise agreed that the Participant’s service
shall not be terminated for Cause as provided in such notice or (ii) the effective date of such termination (in which case the right
to exercise this option shall, pursuant to the preceding sentence, terminate upon the effective date of such termination). If the
Participant is subject to an Executive Severance Agreement or other written agreement with the Company, in any case which
agreement contains a definition of “cause” for termination of service, “Cause” shall have the meaning ascribed to such term in
such agreement. Otherwise, “Cause” shall mean willful misconduct by the Participant or willful failure by the Participant to
perform his or her responsibilities to the Company (including, without limitation, breach by the Participant of any fiduciary duty
or of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or other similar agreement between the Participant and the Company), as determined by the
Company, which determination shall be conclusive. The Participant shall be considered to have been terminated for Cause if the
Company determines, within 30 days after the Participant’s resignation, that termination for Cause was warranted.
4.
Tax Matters.
No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or
makes provision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be
withheld in respect of this option.
5.
Transfer Restrictions; Clawback.
(a)
This option may not be sold, assigned, transferred, pledged, encumbered or otherwise disposed of by the
Participant, either voluntarily or by operation of law, except by will or the laws of descent and distribution, and, during the
lifetime of the Participant, this option shall be exercisable only by the Participant.
(b)
In accepting this option, the Participant agrees to be bound by any clawback policy that the Company has in place
or may adopt in the future.
6.
Provisions of the Plan.
As described in Section 1 of this Agreement, this option is subject to the provisions of the Plan (including the provisions
relating to amendments to the Plan), a copy of which is furnished to the Participant with this option. Notwithstanding the
foregoing, to the extent the Participant has entered in to an Executive Severance Agreement with the Company, for so long as
such Executive Severance Agreement remains in effect, the terms of such Executive Severance Agreement as they relate to the
option shall control in the event of a conflict with this Agreement or the Plan.
7.
Clawback Policy.
In accepting this option, the Participant agrees and acknowledges that the Participant is subject to, and bound by, the
terms of any clawback policy that the Company has in place or may adopt in the future, including without limitation Akebia
Therapeutic Inc.’s Compensation Recovery Policy adopted in accordance with stock exchange listing requirements. The
Participant agrees that in the event it is determined in accordance with any such policy that any compensation or compensatory
award granted, earned or paid to the Participant including this option or pursuant to any other compensation arrangement must be
forfeited or reimbursed to the Company, the Participant will promptly take any action necessary to effectuate such forfeiture
and/or reimbursement as determined by the Company.
ANNEX A
Akebia Therapeutics, Inc.
245 First Street
Cambridge, MA 02142
Dear Sir or Madam:
Akebia Therapeutics, Inc.
Stock Option Exercise Notice
I, (the “Participant”), hereby irrevocably exercise the right to purchase shares of the Common Stock, $0.00001
par value per share (the “Shares”), of Akebia Therapeutics, Inc. (the “Company”) at $ per share pursuant to a stock option
agreement with the Company dated (the “Option Agreement”). Enclosed herewith is a payment of $ , the aggregate
purchase price for the Shares. The Shares should be registered in my name as it appears below or, if so indicated below, jointly in
my name and the name of the person designated below, with right of survivorship.
Dated:
Signature
Print Name:
Address:
Name and address of persons in whose name the Shares are to be jointly registered (if applicable):
Exhibit 10.66
February 8, 2024
BY EMAIL
Nicole R. Hadas
[Address]
Dear Nikki:
Upon your execution of this Amendment, the following amendments will be made to your Separation
Agreement with Akebia Therapeutics, Inc. (“Akebia”) dated May 5, 2022 (as previously amended, the
“Separation Agreement”). Paragraph 1(ii) of the Separation Agreement shall be replaced in its entirety with
the following:
(ii) Separation Date. Unless your employment is terminated by the Company for Cause or by you for
Good Reason (as those terms are de ined in your Executive Severance Agreement dated March
3, 2014, the “ESA”), you will remain employed until June 14, 2024 (as may be amended from
time to time, the "Separation Date"). The Separation Date may be modi ied only upon mutual
written agreement between you and the Company.
All other terms and conditions of the Separation Agreement shall remain in full force and effect.
Very truly yours,
AKEBIA THERAPEUTICS, INC. Accepted and Agreed to Under Seal:
/s/ John P. Butler______________________ /s/ Nicole R. Hadas__________________
President and Chief Executive Of icer Nicole R. Hadas
Dated: February 8, 2024
Exhibit 10.67
February 7, 2024
BY EMAIL
Michel Dahan
[Address]
Dear Michel:
Upon your execution of this Amendment, the following amendments will be made to your Separation
Agreement with Akebia Therapeutics, Inc. (“Akebia”) dated May 5, 2022 (as previously amended, the
“Separation Agreement”). Paragraph 1(ii) of the Separation Agreement shall be replaced in its entirety with
the following:
(ii) Separation Date. Unless your employment is terminated by the Company for Cause or by you for
Good Reason (as those terms are de ined in your Executive Severance Agreement dated March
3, 2014, the “ESA”), you will remain employed until June 28, 2024 (as may be amended from
time to time, the "Separation Date"). The Separation Date may be modi ied only upon mutual
agreement between you and the Company.
All other terms and conditions of the Separation Agreement shall remain in full force and effect.
Very truly yours,
AKEBIA THERAPEUTICS, INC. Accepted and Agreed to Under Seal:
/s/ John P. Butler_______________________ /s/Michel Dahan______________________
President and Chief Executive Of icer Michel Dahan
Dated: February 8, 2024
Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) is the type of
information that the registrant treats as private or confidential. Double asterisks denote omissions.
Exhibit 10.93
Execution Version
FOURTH AMENDMENT TO LOAN AGREEMENT
This FOURTH AMENDMENT TO LOAN AGREEMENT (this “Amendment”), dated and effective as of October 31, 2023 (the “Fourth
Amendment Effective Date”), by and among AKEBIA THERAPEUTICS, INC., a Delaware corporation (as “Borrower”), BIOPHARMA
CREDIT PLC, a public limited company incorporated under the laws of England and Wales (as the “Collateral Agent”), BPCR LIMITED
PARTNERSHIP, a limited partnership established under the laws of England and Wales (as a “Lender”), and BIOPHARMA CREDIT
INVESTMENTS V (MASTER) LP, a Cayman Islands exempted limited partnership (as a “Lender”).
Recitals
A. Collateral Agent, Lenders, Borrower and the other Credit Parties thereunder have entered into that certain Loan Agreement,
dated as of November 11, 2019, and amended by that certain First Amendment and Waiver, dated as of February 18, 2022, that certain
Second Amendment and Waiver, dated as of July 15, 2022, and that certain Third Amendment to Loan Agreement, dated as of June 30, 2023
(the “Existing Loan Agreement”) and as further amended by this Fourth Amendment, (the “Loan Agreement”).
B. In accordance with Section 11.5 of the Existing Loan Agreement, Borrower (acting for its own behalf and on behalf of the other
Credit Parties other than Parent), Collateral Agent and Lenders desire to amend the Existing Loan Agreement on the terms and conditions set
forth herein.
Agreement
Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
1.
Definitions. All capitalized terms used in this Amendment (including in the recitals hereof) and not otherwise defined herein
shall have the meanings assigned to them in the Loan Agreement. The rules of interpretation set forth in the first paragraph of Section 13.1 of
the Loan Agreement shall be applicable to this Amendment and are incorporated herein by this reference.
2.
Amendments to Loan Agreement. With effect from and including the Third Amendment Effective Date, the Existing Loan
Agreement shall be amended so that it shall be read and construed for all purposes as set forth in Schedule A attached hereto.
Agreement and replacing it as follows:
a. The Existing Loan Agreement shall be amended by deleting in its entirety Section 2.2(b)(i) of the Existing Loan
“(i) Subject to clauses (ii) and (iii) of this clause (b), with respect to each applicable Term Loan, Borrower shall make
equal monthly payments of principal of such Term Loan commencing on October 31, 2024, and continuing on a monthly basis on the
last date of each month thereafter through the Term Loan Maturity Date; provided, however, that if any such day is not a Business
Day, the applicable payment shall be due and payable on the first Business Day immediately preceding such payment date.”
Agreement and replacing it as follows:
b. The Existing Loan Agreement shall be amended by deleting in its entirety Section 2.2(b)(ii) of the Existing Loan
“(ii) Notwithstanding clause (i) of this clause (b), and subject to clause (iii) of this clause (b), with respect to each
applicable Term Loan, on the date on which a [**] occurs (a
“[**]”), (x) Borrower shall make equal quarterly payments of principal of such Term Loan commencing on the Payment Date
immediately following such [**] and continuing on a quarterly basis on each Payment Date thereafter through the Term Loan
Maturity Date, provided, however, that if any such day is not a Business Day, the applicable payment shall be due and payable on the
first Business Day immediately preceding such Payment Date, and (y)(1) if the [**] occurs on or before July 1, 2024, then Borrower
shall repay on July 1, 2024 all unpaid principal that would have been due and payable during the period commencing on the Payment
Date immediately following the Fourth Amendment Effective Date and ending on the Payment Date immediately following July 1,
2024 (including all accrued and unpaid interest thereon, if any), as if Borrower had been required hereunder to make equal quarterly
payments of principal of such Term Loan commencing on the Payment Date immediately following the Fourth Amendment Effective
Date, and (2) if the [**] occurs after July 1, 2024, then Borrower shall promptly, and in any event no later than [**] after such [**],
repay all unpaid principal that would have been due and payable during the period commencing on the Payment Date immediately
following the Fourth Amendment Effective Date and ending on the Payment Date immediately following such [**] (including all
accrued and unpaid interest thereon, if any), as if Borrower had been required hereunder to make equal quarterly payments of
principal of such Term Loan commencing on the Payment Date immediately following the Fourth Amendment Effective Date.”
Agreement and replacing it as follows:
c. The Existing Loan Agreement shall be amended by deleting in its entirety Section 2.2(b)(iii) of the Existing Loan
“(iii) Notwithstanding clauses (i) and (ii) of this clause (b), with respect to each Term Loan, as applicable, in connection
with a decrease in the Term Loan Maturity Date and scheduled amortization of such Term Loan pursuant to Section 5.7(c), each of
the then outstanding Payment Dates on which monthly payments of principal of such Term Loan are payable shall be reduced by the
number of days equal to the Amortization Reduction Days in accordance with Section 5.7(c) hereof.”
Agreement and replacing it as follows:
d. The Existing Loan Agreement shall be amended by deleting in its entirety Section 2.3(a)(iii) of the Existing Loan
“(iii) Interest is due and payable quarterly on each Interest Date, as calculated by the Collateral Agent (which calculations
shall be deemed correct absent manifest error), commencing on the Interest Date occurring from and after the Fourth Amendment
Effective Date; provided, however, that if any such date is not a Business Day, the applicable interest shall be due and payable on the
first Business Day immediately preceding such Interest Date.”
e. Section 2.3(d) of the Existing Loan Agreement and replacing it as follows:
“(d) Payments. Except as otherwise expressly provided herein, all Term Loan payments and any other payments hereunder
by (or on behalf of) Borrower shall be made on the date specified herein to such bank account of each applicable Lender as such
Lender (or the Collateral Agent) shall have designated in a written notice to Borrower delivered on or before the Tranche A Closing
Date (which such notice may be updated by such Lender (or the Collateral Agent) by written notice to Borrower from time to time
after the Tranche A Closing Date). Except as otherwise expressly provided herein, interest is payable quarterly on each Interest Date
provided, however, that if any such Interest Date is not a Business Day, the applicable interest shall be due and payable on the
immediately preceding Business Day. Payments of principal or interest received after [**] (New York City time) on such date (or any
Payment Date) are considered received at the opening of business on the next Business Day. All payments to be made by Borrower
hereunder or under any other Loan Document, including payments of principal and interest made hereunder and pursuant to any
other Loan Document, and all fees, expenses, indemnities and reimbursements, shall be made without set-off, recoupment or
counterclaim, in lawful money of the United States and in immediately available funds.”
Agreement and replacing it as follows:
f. The Existing Loan Agreement shall be amended by deleting in its entirety Section 4.21(c) of the Existing Loan
“(c) Except as disclosed on Schedule 4.21(c) of the Disclosure Letter, no Credit Party or any of its Subsidiaries has
received any notice, oral or written, from any party to any Manufacturing Agreement containing any indication by or intent or threat
of, such party to reduce or cease, in any material respect, the supply of Product or the active pharmaceutical ingredient incorporated
therein in the Territory through [**] (or such earlier date in accordance with the terms and conditions of such Manufacturing
Agreement, as applicable).”
Loan Agreement with a reference to [**].
g. The Existing Loan Agreement shall be amended by replacing the reference to [**] in Section 5.7(c) of the Existing
Agreement and replacing it as follows:
h. The Existing Loan Agreement shall be amended by deleting in its entirety Section 7.1 of the Existing Loan
“7.1 Payment Default. Any Credit Party fails to (a) make any payment of any principal of the Term Loans when and as
the same shall become due and payable, whether at the due date thereof (including pursuant to Section 2.2(c)) or at a date fixed for
prepayment (whether voluntary or mandatory) thereof or by acceleration thereof or otherwise, or (b) within [**] after the same
becomes due, any payment of interest or premium pursuant to Section 2.2, including any applicable Additional Consideration,
Makewhole Amount or Prepayment Premium, or any other Obligations (which [**] cure period shall not apply to any such payments
due on the Term Loan Maturity Date, such earlier date pursuant to Section 2.2(b)(y), Section 2.2(c)(ii) or Section 2.2(c)(iii) hereof or
the date of acceleration pursuant to Section 8.1(a) hereof). A failure to pay any such interest, premium or Obligations pursuant to the
foregoing clause (b) prior to the end of such [**]-period shall not constitute an Event of Default (unless such payment is due on the
Term Loan Maturity Date, such earlier date pursuant to Section 2.2(b)(y), Section 2.2(c)(ii) or Section 2.2(c)(iii) hereof or the date of
acceleration pursuant to Section 8.1(a) hereof).”
Prepayment Premium” and replacing it as follows:
i. The Existing Loan Agreement shall be amended by deleting in its entirety clause (c) of the definition of “Tranche A
“(c) if such prepayment occurs on or after the 4 -year anniversary of the Tranche A Closing Date but prior to March 31,
th
2025, 0.005.”
j. The Existing Loan Agreement shall be amended by deleting in its entirety each of the definitions of Interest Date,
Payment Date, Term Loan Maturity Date, and Term SOFR, in Section 13.1 of the Existing Loan Agreement and replacing them, in
alphabetical order, as follows:
““Interest Date” means the last day of each calendar quarter, commencing with the last day of the calendar quarter during
which the Fourth Amendment Effective Date occurs.”
st
th
““Payment Date” means, with respect to each Term Loan, (a) the Interest Date occurring on or immediately following each
of the following dates: (i) the 34 -month anniversary of the Closing Date applicable to such Term Loan, (ii) the 36 -month
anniversary of such Closing Date, (iii) the 39 -month anniversary of such Closing Date, (iv) the 42 -month anniversary of such
Closing Date, (v) the 45 -month anniversary of such Closing Date, (vi) the 48 -month anniversary of such Closing Date, (vii) the
51 -month anniversary of such Closing Date, (viii) the 54 -month anniversary of such Closing Date, (ix) the 57 -month anniversary
of such Closing Date, (x) the 60 -month anniversary of such Closing Date, (xi) the 63 -month anniversary of such Closing Date and
(b) the Term Loan Maturity Date, as the context dictates; provided, however, that if any such date is not a Business Day, the
applicable payment shall be due and payable on the first Business Day immediately preceding such Payment Date. Notwithstanding
the foregoing, “Payment Date” shall be subject to further adjustment in accordance with Section
nd
rd
th
th
th
th
th
th
th
2.2(b)(iii) hereof (in which case, for the avoidance of doubt, the proviso above shall apply to any such adjusted date).”
““Term Loan Maturity Date” means March 31, 2025; provided, however, that the Term Loan Maturity Date shall be
decreased by the number of days equal to the Amortization Reduction Days if applicable in accordance with Section 5.7(c) hereof.”
““Term SOFR” means, for any day in any calendar month, the Term SOFR Reference Rate for a tenor of three (3) months
on the day (such day, the “Periodic Term SOFR Determination Day”) that is [**] prior to the first day of such Interest Period, as
such rate is published by the Term SOFR Administrator; provided, however, that if as of [**] (New York City time) on any Periodic
Term SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not been published by the Term SOFR
Administrator and a Benchmark Replacement Date with respect to the Term SOFR Reference Rate has not occurred, then Term
SOFR will be the Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator on the first preceding
U.S. Government Securities Business Day for which such Term SOFR Reference Rate for such tenor was published by the Term
SOFR Administrator so long as such first preceding U.S. Government Securities Business Day is not more than [**] prior to such
Periodic Term SOFR Determination Day.”
Notice” in Section 13.1 of the Existing Loan Agreement.
k. The Existing Loan Agreement shall be amended by deleting in its entirety the definition of “Delayed Amortization
Section 13.1 of the Existing Loan Agreement:
l. The Existing Loan Agreement shall be amended by adding, in alphabetical order, each of the following definitions to
““Fourth Amendment Effective Date” means October 31, 2023.”
““[**]” means [**]”
““[**]” means: [**]”
““[**]” is defined in Section 2.2(b)(ii).”
3.
Representations and Warranties; Reaffirmation; Covenant to Deliver.
a.
Borrower hereby represents and warrants to each Lender and the Collateral Agent as follows:
i. Borrower has all requisite power and authority to enter into this Amendment and to carry out the
transactions contemplated hereby.
ii.This Amendment has been duly executed and delivered by Borrower and is the legally valid and binding
obligation of Borrower, enforceable against Borrower in accordance with its respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating
to or limiting creditors’ rights generally or by general principles of equity.
iii.
The execution, delivery and performance by Borrower of this Amendment have been duly
authorized and do not: (A) contravene the terms of any of Borrower’s Operating Documents; (B) violate any
Requirements of Law, except to the extent that such violation could not, individually or in the aggregate,
reasonably be expected to result in a
Material Adverse Change; (C) conflict with or result in any breach or contravention of, or require any
payment to be made under any provision of any security issued by Borrower or of any agreement, instrument
or other undertaking to which Borrower is a party or affecting Borrower or the assets or properties of
Borrower or any of its Subsidiaries or any order, writ, judgment, injunction, decree, determination or award
of any Governmental Authority by which Borrower or any of its assets or properties are subject, except to
the extent that such conflict, breach, contravention or payment could not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Change; (D) require any Governmental Approval, or
other action by, or notice to, or filing with, any Governmental Authority (except such Governmental
Approvals or other actions, notices and filings which have been duly obtained, taken, given or made on or
before the Fourth Amendment Effective Date and are in full force and effect); (E) require any approval,
consent, exemption or authorization, or other action by, or notice to, or filing with, any Person other than a
Governmental Authority, including Borrower’s stockholders, members or partners, (except such approvals,
consents, exemptions, authorizations, actions, notices and filings which have been or will be duly obtained,
taken, given or made on or before the Fourth Amendment Effective Date and are in full force and effect),
except for those approvals, consents, exemptions, authorizations or other actions, notices or filings, the
failure of which to obtain or make could not, individually or in the aggregate, reasonably be expected to
result in a Material Adverse Change; or (F) constitute a material breach of or a material default under (which
such default has not been cured or waived) or an event of default (or the equivalent thereof, however
described) under, or could reasonably be expected to give rise to the cancellation, termination or invalidation
of or the acceleration of Borrower’s or any Subsidiary’s obligations under, any Material Contract.
iv.
Both before and immediately after giving effect to this Amendment, no Event of Default or Default
has occurred and is continuing.
b.
Borrower hereby ratifies, confirms, reaffirms, and acknowledges its obligations under the Loan Documents to which
it is a party and agrees that the Loan Documents remain in full force and effect, undiminished by this Amendment, except as expressly
provided herein. By executing this Amendment, Borrower acknowledges that it has read, consulted with its attorneys regarding, and
understands, this Amendment.
c.
Borrower hereby agrees to deliver to the Collateral Agent, within here (3) Business Days of the Fourth Amendment
Effective Date, originally-signed copies of the Amended and Restated Tranche A Notes, in the form attached as Exhibit B-1 hereto, in
replacement of the Tranche A Notes, dated June 30, 2023, issued by Borrower to each Lender (whereupon, the Tranche A Notes, dated June
30, 2023, issued by Borrower to the each Lender shall be treated as cancelled and of no further force or effect and the Lenders shall promptly
destroy any and all copies or originals of such Tranche A Notes and confirm the same by email to Borrower), the failure of which such
delivery constitutes an Event of Default for all purposes under the Loan Agreement.
4.
References to and Effect on Loan Agreement. Except as specifically set forth herein, this Amendment shall not modify or
in any way affect any of the terms, conditions, covenants, representations and warranties contained in the Loan Agreement, or any of the
rights of the Lenders and the Collateral Agent therein, which shall remain in full force and effect and are hereby ratified and confirmed in all
respects. Except as specifically set forth herein, the execution, delivery and effectiveness
of this Amendment shall not directly or indirectly (i) constitute a consent or waiver of any past, present or future breaches, violations or
defaults of or under any provisions of the Loan Agreement nor constitute a novation of any of the Obligations under the Loan Agreement, (ii)
amend, modify or operate as a waiver of any provision of the Loan Agreement or any right, power or remedy of any Lender or the Collateral
Agent, or (iii) constitute a course of dealing or other basis for altering the Loan Agreement or any other Loan Document. Except as set forth
herein, each of the Lenders and the Collateral Agent reserves all of its rights, powers, and remedies under the Loan Documents and
Requirements of Law. On and after the Fourth Amendment Effective Date, all references in the Loan Agreement to “this Agreement,”
“hereto,” “hereof,” “hereunder,” or words of like import shall mean the Loan Agreement as amended by this Amendment.
5.
Successors and Assigns. This Amendment binds and is for the benefit of Borrower, the other Credit Parties, Lenders and
Collateral Agent and each of their respective successors and permitted assigns.
6.
Governing Law; Venue; Jury Trial Waiver. This Amendment shall be construed in accordance with and governed by the
law of the State of New York. The provisions of Section 10 (Choice of law, Venue and Jury Trial Waiver Etc.) of the Loan Agreement shall
apply hereto as if more fully set forth herein as if references therein to “this Agreement” were references to this Amendment.
7.
Counterparts. This Amendment may be executed in any number of counterparts and by different parties on separate
counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Amendment. Delivery of an
executed counterpart of a signature page of this Amendment by facsimile or other electronic imaging means (e.g. “pdf” or “tif”) shall be
effective as delivery of a manually executed counterpart of this Amendment. The words “execution,” “signed,” “signature,” and words of like
import in this Amendment shall be deemed to include electronic signatures or electronic records, each of which shall be of the same legal
effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to
the extent and as provided for under any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act,
the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
8.
Conflict. In the event of any conflict between any term, covenant, or condition of this Amendment and any term, covenant or
condition of the Loan Agreement, the provisions of the Loan Agreement shall control and govern.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned hereto have caused this Amendment to be executed as of the date first written above by
each of their officers thereunto duly authorized.
BORROWER (on its own behalf and on behalf of each other Credit Party):
AKEBIA THERAPEUTICS, INC.,
a Delaware corporation
By:/s/ Ellen Snow
Name: Ellen Snow
Title: Chief Financial Officer
[Signature page to Fourth Amendment]
BIOPHARMA CREDIT PLC,
as Collateral Agent
By: Pharmakon Advisors, LP,
its Investment Manager
By: Pharmakon Management I, LLC,
its General Partner
By__/s/ Pedro Gonzalez de Cosio______________
Name: Pedro Gonzalez de Cosio
Title: Managing Member
BPCR LIMITED PARTNERSHIP,
as a Lender
By: Pharmakon Advisors, LP,
its Investment Manager
By: Pharmakon Management I, LLC,
its General Partner
By__/s/ Pedro Gonzalez de Cosio______________
Name: Pedro Gonzalez de Cosio
Title: Managing Member
BIOPHARMA CREDIT INVESTMENTS V (MASTER) LP,
as Lender
By: BioPharma Credit Investments V GP LLC,
its general partner
By: Pharmakon Advisors, LP,
its Investment Manager
By__/s/ Pedro Gonzalez de Cosio______________
Name: Pedro Gonzalez de Cosio
Title: CEO and Managing Member
Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) is the type of information that the registrant
treats as private or confidential. Double asterisks denote omissions.
Exhibit 10.102
Execution Version
AGREEMENT FOR THE PROVISION OF A LOAN FACILITY
Dated January 29, 2024 (the “Closing Date”)
Between
KREOS CAPITAL VII (UK) LIMITED,
and
AKEBIA THERAPEUTICS, INC.
Page
3
17
18
20
20
22
23
27
38
41
44
44
44
45
46
TABLE OF CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
DEFINITIONS
INTERPRETATION
LOAN FACILITY
TERM
REPAYMENT AND PREPAYMENT
INTEREST
REPRESENTATIONS AND WARRANTIES
UNDERTAKINGS
EVENTS OF DEFAULT
FEES, EXPENSES AND TAXES
INDEMNITIES
[RESERVED]
RELEASE OF SECURITY
NOTICES
GENERAL
SCHEDULE A – FORM OF DRAWDOWN NOTICE
SCHEDULE B – FORM OF COMPLIANCE CERTIFICATE
SCHEDULE C – POST-CLOSING OBLIGATIONS
SCHEDULE D – EXISTING FINANCIAL INDEBTEDNESS
SCHEDULE E – EXISTING INVESTMENTS
SCHEDULE F – EXISTING SECURITY INTERESTS
SCHEDULE G – PERMITTED LICENSES
SCHEDULE H – DISCLOSURES TO REPRESENTATIONS AND WARRANTIES
EXHIBIT A-1 – FORM OF U.S. TAX COMPLIANCE CERTIFICATE
EXHIBIT A-2 – FORM OF U.S. TAX COMPLIANCE CERTIFICATE
EXHIBIT A-3 – FORM OF U.S. TAX COMPLIANCE CERTIFICATE
EXHIBIT A-4 – FORM OF U.S. TAX COMPLIANCE CERTIFICATE
i
AGREEMENT FOR THE PROVISION OF A LOAN FACILITY
Dated __________________ 2024 (the “Closing Date”)
Between
KREOS CAPITAL VII (UK) LIMITED, a company incorporated in England and Wales under registration number 13611522 whose registered office is at 25-28 Old
Burlington Street, London W1S 3AN, as a Lender (the "Lender Representative", which expression shall include its permitted successors and permitted assigns);
and
AKEBIA THERAPEUTICS, INC., a Delaware corporation (the "Borrower Representative") and any wholly-owned domestic subsidiary of the Borrower Representative (if
any) that may from time to time after the date hereof be joined to this Loan Agreement as an additional Borrower pursuant to a joinder (in form and substance reasonably
acceptable to the Lender) executed by such additional Borrower and the Lender Representative (the Borrower Representative and each such wholly-owned domestic subsidiary
of the Borrower Representative (if any) who so becomes a Borrower hereunder, each individually a “Borrower” and together the “Borrowers”).
WHEREAS:
1. The Borrowers wish to borrow up to the Total Loan Facility (as defined below) and the Lender wishes to make the Total Loan Facility available to the Borrowers subject to
the terms of this agreement (this "Loan Agreement"); and
2. Each Borrower hereby confirms that on or about the date of this Loan Agreement it (and it shall procure each relevant Subsidiary Guarantor) shall enter into the Initial
Security and Guarantee Documents as security for the obligations of the Loan Parties under the Loan Documents.
LOAN FACILITY TERMS:
Total Loan Facility
Expiry Date
Advance Payments
Interest and Amortization
$55,000,000, to be drawn down as follows:
Tranche A: $37,000,000, to be drawn in full on the Closing Date
Tranche B: $8,000,000
Tranche C: $10,000,000
In relation to the ability to drawdown a Tranche, the Expiry Date with respect to
each Tranche is as follows:
Tranche A: the Closing Date
Tranche B: December 31, 2024
Tranche C: December 31, 2024
In relation to each Tranche, the repayment amount (comprising principal and
interest) for such Tranche for the last Month of the Loan Term for such Tranche as
set out in the Repayment Schedule (assuming the Vadadustat FDA Approval has
been obtained and 24-month amortization).
During the Interest Only Period, the Borrowers shall make payments of interest on
each applicable Tranche in accordance with Clause 5.1.1 and Clause 6.1.
After the Interest Only Period, the Borrowers shall make payments of principal
and interest on each applicable Tranche in accordance with Clause 5.1.1.
Notwithstanding the foregoing:
A. if the Vadadustat FDA Approval is not received on or prior to June 30,
2024, the Interest Only Period will terminate on October 1, 2024,
followed by 7 equal payments of principal and interest, which shall
continue to accrue and become due and payable in accordance with the
terms hereof (for the avoidance of doubt, the first 6 such payments shall
be due on October 1, 2024 and each Monthly Payment Date thereafter
through and including March 1, 2025, with the seventh and final such
payment due on the Maturity Date); and
B. if a Vadadustat Withdrawal Event occurs, the Borrowers shall repay, in
advance, all principal and interest in respect of each Tranche in equal
payments on (1) each of the twelve immediately succeeding Monthly
Repayment Dates or (2) if less than twelve Monthly Repayment Dates
remain before the Maturity Date, each such Monthly Repayment Date
remaining before the Maturity Date, in each case commencing with the
first Monthly Repayment Date to occur after the occurrence of such
Vadadustat Withdrawal Event (as an illustrative example, if, after the
occurrence of such Vadadustat Withdrawal Event, five Monthly
Repayment Dates remain before the Maturity Date, the Borrowers shall
repay all outstanding principal and interest in five equal payments: one
on each such Monthly Repayment Date).
1
Loan Term
Transaction Fee
End of Loan Payments
Minimum Drawdown Amount
1. DEFINITIONS
The Total Loan Facility will mature on March 31, 2025; provided, that if the
Borrower Representative receives the Vadadustat FDA Approval on or prior to
June 30, 2024, the maturity date will be automatically extended to January 29,
2028 (such applicable date, the “Maturity Date”).
Tranche A: [**]% of the aggregate committed amount in respect of Tranche A,
payable upon the Closing Date.
Tranche B: [**]% of the aggregate committed amount in respect of Tranche B,
which shall be payable as follows:
(a) on the Closing Date, [**]% of the aggregate committed amount in
respect of Tranche B, and
(b) [**]% of the aggregate committed amount in respect of Tranche B as
of the Closing Date shall be payable on the earliest to occur of (i) the
date Tranche B is funded, (ii) the date that the commitments in respect
of Tranche B are terminated or cancelled and (iii) the date on which the
availability period of Tranche B terminates.
Tranche C: [**]% of the aggregate committed amount in respect of Tranche C,
which shall be payable as follows:
(a) on the Closing Date, [**]% of the aggregate committed amount in
respect of Tranche C, and
(b) [**]% of the aggregate committed amount in respect of Tranche C as
of the Closing Date shall be payable on the earliest to occur of (i) the
date Tranche C is funded, (ii) the date that the commitments in respect
of Tranche C are terminated or cancelled and (iii) the date on which the
availability period of Tranche C terminates.
In relation to each Tranche, [**]% of the amount funded pursuant to the relevant
Tranche, which amount shall be due and payable in accordance with Clause 10.2.
$[**]
In this Loan Agreement, including the recitals set out above, unless otherwise defined:
1.1 “Acquisition Consideration Condition” means, as of any date of determination, a condition that is satisfied if (a) Cash Flow as of the last day of the month most
recently ended is greater than $0 and (b) the Borrower Representative has delivered to the Lender Representative Pro Forma Projections demonstrating aggregate
Cash Flow greater than $0 for the last three months of the period covered by such Pro Forma Projections (taken as a whole);
1.2 "Adjusted Term SOFR" means, for purposes of any calculation, the rate per annum equal to the greater of (a) 4.25% per annum and (b) Term SOFR for such calculation;
1.3 "Advance Payment" has the meaning given in Clause 5.3 and is in the amount set forth in the Loan Facility Terms;
1.4 "Affiliate" means, in relation to any person, (i) any other person directly or indirectly owned by or controlled by such person, including subsidiaries, or (ii) any person that
directly or indirectly owns or controls such person, including holding companies (it being understood that in no event shall the Lender be deemed to be an Affiliate of
Borrower or any of its Subsidiaries);
1.5 "Affected Financial Institution" means (a) any EEA Financial Institution or (b) any UK Financial Institution.
1.6 "Anti-Corruption Laws" means the UK Bribery Act 2010, the US Foreign Corrupt Practices Act 1977 and/or any other applicable anti-bribery or anti-corruption law, in
each case as amended, re-enacted, consolidated or replaced;
1.7 "Anti-Money Laundering Laws" means any and all laws applicable to any Borrower or any other Group Company from time to time concerning or relating to terrorism
financing or money laundering;
1.8 "Applicable Interest Rate" has the meaning given in Clause 6.2;
2
1.9 "Asset Sale" means any sale, conveyance, transfer or other disposition of assets or properties of a Group Company pursuant to clause 8.2.1(xv);
1.10 "Assignee" has the meaning given in Clause 15.5;
1.11 "Available Tenor" means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor
for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Loan Agreement or (b) otherwise,
any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making
payments of interest calculated with reference to such Benchmark pursuant to this Loan Agreement, in each case, as of such date;
1.12 “Bail-In Action” means the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial
Institution;
1.13 “Bail-In Legislation” means, (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the
Council of the European Union, the implementing law, rule, regulation or requirement for such EEA Member Country from time to time which is described in the EU
Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any
other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or
their affiliates (other than through liquidation, administration or other insolvency proceedings);
1.14 "Benchmark" means, initially, the Term SOFR Reference Rate; provided that if a Benchmark Transition Event has occurred with respect to the Term SOFR Reference
Rate or the then-current Benchmark, then "Benchmark" shall mean the applicable Benchmark Replacement to the extent that such Benchmark Replacement has
replaced such prior benchmark rate pursuant to Clause 6.4;
1.15 "Benchmark Floor" shall mean the benchmark rate floor provided in this Loan Agreement (as of the execution of this Loan Agreement, the modification, amendment or
renewal of this Loan Agreement or otherwise) with respect to Term SOFR. As of the Closing Date the Benchmark Floor is equal to 4.25% per annum;
1.16 "Benchmark Replacement" means the sum of: (a) the alternate benchmark rate that has been selected by the Lender Representative and the Borrowers giving due
consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii)
any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the then-current Benchmark for Dollar-denominated
syndicated credit facilities and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than the
Benchmark Floor on any date of determination, the Benchmark Replacement will be deemed to be the Benchmark Floor for the purposes of this Loan Agreement and
the other Loan Documents;
1.17 "Benchmark Replacement Adjustment" means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for
each applicable Interest Period, the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or a negative value
or zero), that has been selected by the Lender Representative and the Borrowers giving due consideration to (a) any selection or recommendation of a spread
adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark
Replacement by the Relevant Governmental Body or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for
calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar-
denominated syndicated credit facilities at such time;
1.18 "Benchmark Replacement Conforming Changes" means, with respect to any Benchmark Replacement, any technical, administrative or operational changes
(including changes to the definition of "Business Day", timing and frequency of determining rates and making payments of interest and other administrative matters)
that the Lender Representative (in consultation with the Borrower) decides may be appropriate to reflect the adoption and implementation of such Benchmark
Replacement and to permit the administration thereof by the Lender Representative in a manner substantially consistent with market practice (or, if the Lender
Representative (in consultation with the Borrower) decides that adoption of any portion of such market practice is not administratively feasible or if the Lender
Representative (in consultation with the Borrower) determines that no market practice for the administration of the Benchmark Replacement exists, in such other
manner of administration as the Lender Representative reasonably determines is necessary in connection with the administration of this Loan Agreement and the
other Loan Documents);
1.19 "Benchmark Replacement Date" means the earlier to occur of the following events with respect to the then-current Benchmark: (a) in the case of clause (a) or (b) of
the definition of "Benchmark Transition Event", the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on
which the administrator of such Benchmark permanently or indefinitely ceases to provide such Benchmark; or (b) in the case of clause (c) of the definition of
"Benchmark Transition Event", the date of the public statement or publication of information referenced therein;
1.20 "Benchmark Transition Event" means the occurrence of one or more of the following events with respect to then-current Benchmark:
(a) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation
thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or
indefinitely; provided that,
3
at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such
component thereof);
(b) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the
calculation thereof), the Term SOFR Administrator, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator of such
Benchmark, a resolution authority with jurisdiction over the administrator of such Benchmark (or such component) or a court or an entity with similar insolvency or
resolution authority over the administrator of such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has
ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such
statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(c) a public statement or publication of information by or on behalf of the regulatory supervisor for the administrator of such Benchmark (or the published
component used in the calculation thereof or the regulatory supervisor for the administrator of such Benchmark or such component thereof) announcing that all
Available Tenors of such Benchmark are no longer representative;
1.21 "Benchmark Transition Start Date" means in the case of a Benchmark Transition Event, the earlier of (a) the applicable Benchmark Replacement Date and (b) if such
Benchmark Transition Event is a public statement or publication of information of a prospective event, the [**] prior to the expected date of such event as of such
public statement or publication of information (or if the expected date of such prospective event is fewer than [**] after such statement or publication, the date of such
statement or publication);
1.22 "Benchmark Unavailability Period" means, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the then-
current Benchmark and solely to the extent that such Benchmark has not been replaced with a Benchmark Replacement in accordance with Clause 6.4, the period (a)
beginning at the time that such Benchmark Replacement Date has occurred and (b) ending at the time that a Benchmark Replacement has replaced the then-current
Benchmark for all purposes hereunder pursuant to Clause 6.4;
1.23 "Board" means the Board of Governors of the Federal Reserve System of the United States of America and any successor thereto;
1.24 "Business Day" means (a) any day on which banks are generally open for business in London and New York other than a Saturday or Sunday and (b) with respect to the
calculation of Term SOFR, any day other than a day on which the Securities Industry and Financial Market Association recommends that the fixed income
departments of its members be closed for the entire day for purposes of trading in United States government securities;
1.25 “Cash Equivalents” means:
(a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof
to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within two years from the date of issuance
thereof;
(b) investments in commercial paper maturing within 2 years from the date of issuance thereof and having, at such date of acquisition, the highest credit rating
obtainable from S&P or from Moody’s;
(c) investments in certificates of deposit, banker’s acceptances and time deposits maturing within two years from the date of acquisition thereof issued or offered by or
guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the
United States of America or any State thereof that has a combined capital and surplus and undivided profits of not less than $100,000,000 and that issues (or the
parent of which issues) commercial paper rated at least “Prime 1” (or the then equivalent grade) by Moody’s or “A1” (or the then equivalent grade) by S&P;
(d) fully collateralized repurchase agreements with a term of not more than 30 days for securities described in clause (a) above and entered into with a financial
institution satisfying the criteria of clause (c) above;
(e) corporate obligations, including intermediate-term notes rated “A2/A” or higher by Moody’s and Standard and Poor’s and commercial paper rated “P1” or higher
by Moody’s and “A1” or higher by Standard and Poor’s;
(f) bank sweep or deposit programs and interest bearing programs from banks with a minimum $10,000,000,000 market capitalization and whose debt ratings
satisfying the criteria of clause (c) or (e) above;
(g) U.S. and dollar-denominated international corporate debt as long as the issuer meets credit rating and marketability guidelines; and
(h) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment Company Act of 1940, as amended, substantially all of whose assets are
invested in investments of the type described in clauses (a) through (g) above;
1.26 “Cash Flow” means the cash flow of the Borrower Representative and its consolidated Subsidiaries, determined in accordance with GAAP, excluding non-recurring or
extraordinary events and non-cash items.
4
1.27 “Cash Interest Condition” means, on any date of determination, a condition that is satisfied if Cash Flow as of the last day of each of the immediately preceding six
months was greater than $0 for each such month;
1.28 "Casualty Event" means any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any
property or asset of the Borrowers or any other Group Company;
1.29 "Change of Control" has the meaning as given in Clause 9.1.9;
1.30 "Code" means the Internal Revenue Code of 1986, as amended from time to time;
1.31 "Collateral" means all the "Collateral" as defined in any of the Security Documents and shall also include the Mortgaged Properties;
1.32 "Compliance Certificate" has the meaning given to it in Clause 8.1.9(iv);
1.33 "Confidential Information" means all information relating to any Group Company, the Loan Documents or a Loan of which the Lender becomes aware or which the
Lender receives in its capacity as the Lender from any member of the Group or any of its advisers in whatever form but excludes information that: (i) is or becomes
public information other than as a direct or indirect result of any breach by the Lender of this Loan Agreement; (ii) is identified in writing at the time of delivery as
non-confidential by any member of the Group or any of its advisers; or (iii) is known by the Lender before the date the information is disclosed to it or is lawfully
obtained by the Lender after that date, from a source which is, as far as the Lender is aware, unconnected with the Group and which, in either case, as far as the Lender
is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality;
1.34 “Connection Income Taxes” means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or
branch profits Taxes.
1.35 "Contractual Currency" has the meaning given to it in Clause 5.2;
1.36 "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.
1.37 "Controlled Foreign Subsidiary" means any Subsidiary of the Borrower Representative or of any Subsidiary Guarantor that is a “ controlled foreign corporation”
within the meaning of Section 957 of the Code as in effect on the date hereof.
1.38 "Default" means an Event of Default or any event or circumstance specified in Clause 9.1 which would (with the expiry of a grace period, the giving of notice, the making
of any determination under the Loan Documents or any combination of the foregoing) be an Event of Default;
1.39 "Designated Jurisdiction" means, at any time, any country, region or territory which is itself the subject or target of comprehensive Sanctions (which shall include, as
at the date of this Loan Agreement Cuba, Iran, North Korea, Syria, the Crimea region of Ukraine, the so-called Donetsk People’s Republic and Luhansk People’s
Republic);
1.40 "Domestic Subsidiary" means any Subsidiary of the Borrower Representative that is organized under the laws of the United States, any state thereof or the District of
Columbia.
1.41 "Drawdown" means the drawdown of a Tranche;
1.42 "Drawdown Account" means the deposit account ending [**] maintained with [**];
1.43 "Drawdown Date" means, subject to Clauses 3.2.1 and 3.2.2, the date specified by the Borrower Representative in the relevant Drawdown Notice or as may be otherwise
agreed in writing by the Borrower Representative and the Lender Representative;
1.44 "Drawdown Notice" means a drawdown notice served in accordance with Clause 3.2 in substantially the form attached to this Loan Agreement as Schedule A (as may be
amended with the prior written consent of the Lender Representative);
1.45 “EEA Financial Institution” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA
Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any
financial institution established in an EEA Member Country which is a subsidiary of an institution described in clause (a) or (b) of this definition and is subject to
consolidated supervision with its parent.
1.46 “EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein and Norway.
1.47 “EEA Resolution Authority” shall mean any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country
(including any delegee) having responsibility for the resolution of any EEA Financial Institution.
5
1.48 "End of Loan Payment" means the End of Loan Payment in the amount set forth in the Loan Facility Terms;
1.49 "Environmental Law" means any applicable law or regulation which relates to pollution, protection of the environment, the conditions of the workplace (to the extent
relating to exposure to Hazardous Materials) or the generation, handling, storage, use, release or spillage of Hazardous Materials;
1.50 "ERISA" means the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time, and the rules and regulations promulgated
thereunder;
1.51 "ERISA Affiliate" shall mean any trade or business (whether or not incorporated) that, together with the Borrower Representative, is treated as a single employer under
Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Sections 414(m) or
(o) of the Code;
1.52 "ERISA Event" shall mean (a) any “reportable event”, as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an
event for which the 30-day notice period is waived), (b) the failure to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section
302 of ERISA), whether or not waived or a determination that any Plan or Multiemployer Plan is, or would reasonably be expected to be, an at-risk plan or a plan in
endangered or critical status within the meaning of Section 430, 431 or 432 of the Code or Section 303, 304 or 305 of ERISA, (c) the filing pursuant to Section 412(c)
of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, (d) the incurrence by the Borrower
Representative or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan or the withdrawal or partial withdrawal
of the Borrower Representative or any of its ERISA Affiliates from any Plan or Multiemployer Plan, (e) the receipt by the Borrower Representative or any of its ERISA
Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, (f)
the failure by the Borrower Representative or any of its ERISA Affiliates to make a required contribution to any Plan that results in, or would reasonably be expected to
result in, the imposition of a lien or other encumbrance or the provision of security under Section 430 of the Code or Section 303 or 4068 of ERISA, (g) the receipt by
the Borrower Representative or any of its ERISA Affiliates of any notice, or the receipt by any Multiemployer Plan from the Borrower Representative or any of its
ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA, (h) the occurrence of a non-exempt “prohibited transaction” with respect to which the Borrower
Representative or any of its Subsidiaries would reasonably be expected to be liable, (i) any other event or condition with respect to a Plan or Multiemployer Plan that
could result in liability of the Borrower Representative or any of its Subsidiaries or (j) a Foreign Benefit Event;
1.53 "Event of Default" means any of the events or circumstances described in Clause9.1;
1.54 "Excluded Accounts" means (1) payroll, healthcare and other employee wage and benefit accounts, (2) sales, payroll and similar tax trust accounts, (3) escrow,
defeasance and redemption accounts, (4) fiduciary or trust accounts, (5) accounts located outside of the United States, (6) accounts used in connection with Medicaid
and Medicare in the ordinary course of business, (7) accounts used to cash collateralize letters of credit or other obligations to the extent permitted under this Loan
Agreement, (8) zero balance accounts and (9) accounts with an average daily balance of less than $[**] in the aggregate for all such accounts excluded pursuant to this
clause (9);
1.55 "Excluded Subsidiary" means any direct or indirect Subsidiary of the Borrower Representative that is (a) not wholly owned by the Borrower Representative or one or
more wholly-owned Subsidiaries of the Borrower Representative, (b) an Immaterial Subsidiary, (c) [reserved], (d) [reserved], (e) an MSC, (f) a Subsidiary that is
prohibited by applicable law, rule or regulation from guaranteeing the Loan Facility, or which would require governmental (including regulatory) consent, approval,
license or authorization to provide a guarantee unless, such consent, approval, license or authorization has been received, (g) a Subsidiary with respect to which a
guarantee by it of the Loan Facility could reasonably be expected to result in material and adverse Tax consequences to the Borrower Representative and its
Subsidiaries (taken as a whole) as reasonably determined by the Borrower Representative and the Lender Representative, (h) a Subsidiary that is prohibited from
guaranteeing the Loan Facility by any contractual obligation (to the extent such contractual restriction was not entered into in contemplation of the guarantee of the
Loan Facility by such Subsidiary), (i) not for profit subsidiary and (j) any other Subsidiary with respect to which, in the reasonable judgment of the Lender
Representative and the Borrower, the cost or other consequences of guaranteeing the Loan Facility would be excessive in view of the benefits to be obtained by the
Lender therefrom; provided that no Excluded Subsidiary may own any equity interests issued by any Loan Party;
1.56 "Excluded Taxes" means any of the following Taxes imposed on or with respect to a Lender or required to be withheld or deducted from a payment to a Lender, (a)
Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Lender
being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax
(or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) U.S. federal withholding Taxes imposed on amounts payable to or for the account of
such Lender with respect to an applicable interest in a Loan or commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in
the Loan or commitment or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Clause 10.5, amounts with respect to such
Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to the Lender immediately before it changed its lending
office, (c) Taxes attributable to such Lender’s failure to comply with Clause 10.5.7 and (d) any withholding Taxes imposed under FATCA;
1.57 "Existing Financial Indebtedness" means the Financial Indebtedness listed on Schedule D to this Loan Agreement;
1.58 "Expiry Date" means the relevant date(s) in relation to the ability to draw down a Tranche set forth in the Loan Facility Terms;
6
1.59 "FATCA" means Sections 1471 through 1474 of the Code, as of the date of this Loan Agreement (or any amended or successor version that is substantively comparable and
not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any agreements entered into pursuant to Section
1471(b)(1) of the Code and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among
Governmental Authorities and implementing such Sections of the Code;
1.60 “Federal Funds Effective Rate” means, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve
System, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business
Day, the average of the quotations for the day for such transactions received by the Lender from three Federal funds brokers of recognized standing selected by it;
1.61 "Financial Indebtedness" means, with respect to any person, without duplication: (i) monies borrowed and debit balances at banks or other financial institutions; (ii)
finance or capital leases, other than leases that would have been considered operating leases prior to the adoption of ASC 842; (iii) receivables sold or discounted, (iv)
other transactions or arrangements having the commercial effect of borrowing money; (v) the marked to market value of derivative transactions entered into in
connection with protection against or benefit from fluctuation in any rate or price; (vi) counter-indemnity obligations in respect of guarantees or other instruments
issued by a bank or financial institution; (vii) any acceptance under any acceptance credit or bill discounting facility, (viii) any amount of any liability under an advance
or deferred purchase agreement if the primary reason is to raise finance or to finance an acquisition or construction of the asset or service in question or the agreement
is in respect of the supply of assets or services, (ix) liabilities under guarantees or indemnities for any of the obligations referred to in items (i) to (viii), and (x) any
shares which are redeemable (other than at the option of the issuer) before the expiry of the Loan Term (provided that (A) if such shares are issued to any employee or
to any plan for the benefit of employees of the Borrower Representative or its Subsidiaries or by any such plan to such employees, such shares shall not constitute
Financial Indebtedness solely because they may be required to be repurchased by the Borrower or its Subsidiaries in order to satisfy applicable statutory or regulatory
obligations or as a result of such employee’s termination, death or disability and (B) any class of shares of such person that by its terms authorizes such person to
satisfy its obligations thereunder by delivery of shares that are not Financial Indebtedness shall not be deemed to be Financial Indebtedness), in each case of clauses (i)
through (x), to the extent that such item would appear as a liability on a balance sheet of such person prepared in accordance with GAAP;
Notwithstanding the foregoing, in no event shall the following constitute Financial Indebtedness:
(a) prepaid or deferred revenue arising in the ordinary course of business;
(b) operating leases;
(c) in connection with the purchase by a Group Company of any business, any post-closing payment adjustments to which the seller may become entitled to the
extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing;
provided, however, that, at the time of closing, the amount of any such payment is not determinable and such amount does not appear as a liability on the
balance sheet of such Group Member prepared in accordance with GAAP;
(d) any obligations in respect of workers’ compensation claims, early retirement or termination obligations, deferred compensatory or employee or director
equity plans, pension fund obligations or contributions or similar claims, obligations or contributions or social security or wage taxes;
(e) any Warrant Instrument or any Permitted Convertible Debt Call Transaction; or
(f) the [**].
1.62 "Financial Officer" of any person shall mean the chief executive officer, president, chief financial officer, principal accounting officer, treasurer, or similar officer of such
person;
1.63 "Financial Statements" means, in relation to the Borrower Representative, the audited consolidated financial statements of the Group for the period ended December
31;
1.64 "First Monthly Repayment Date" shall mean the first Monthly Repayment Date being either (i) the first Drawdown Date (where the Drawdown Date is the first day of
a calendar month); or (ii) the first day of the next calendar month following the first Drawdown Date (where the first Drawdown Date is not the first day of a calendar
month);
1.65 "Foreign Benefit Event" shall mean, with respect to any Foreign Pension Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any
applicable law, or in excess of the amount that would be permitted absent a waiver from a Governmental Authority, (b) the failure to make the required contributions
or payments, under any applicable law, on or before the due date for such contributions or payments, (c) the receipt of a notice by a Governmental Authority relating
to the intention to terminate any such Foreign Pension Plan or to appoint a trustee or similar official to administer any such Foreign Pension Plan, or alleging the
insolvency of any such Foreign Pension Plan, (d) the complete or partial termination of such Foreign Pension Plan or the complete or partial withdrawal of any
participating employer therein, or (e) the occurrence of any transaction that is prohibited under any applicable law;
1.66 "Foreign Pension Plan" means each employee benefit plan (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA) that is not subject to United
States law and is sponsored, maintained, contributed to or required to be contributed to by Borrowers or, to the extent Borrowers would have liability in connection
therewith, by an Affiliate;
7
1.67 "Foreign Subsidiary" means any Subsidiary of the Borrower Representative that is not a Domestic Subsidiary;
1.68 "GAAP" means United States generally accepted accounting principles in the United States, as in effect from time to time, or those required by government or regulatory
bodies or as may be in general use by significant segments of the accounting profession that are applicable to the circumstances as of the date of determination. All
references to "GAAP" used herein shall be to GAAP applied consistently with the principals used in the preparation of the financials delivered by the Borrower
Representative to the Lender prior to the date of this Loan Agreement and filed with the SEC;
1.69 "Governmental Authority" means any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body;
1.70 "Group" means the Borrower Representative and its direct and indirect subsidiaries (if any);
1.71 "Group Company" means any member of the Group;
1.72 "Guarantee and Collateral Agreement" means that certain Guarantee and Collateral Agreement, dated as of the Closing Date, by and among the Loan Parties and the
Lender Representative;
1.73 "Hazardous Materials" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, materials or wastes, including petroleum or
petroleum distillates, asbestos or asbestos-containing materials, toxic mold, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other toxic
substances, materials or wastes of any nature regulated pursuant to any Environmental Law due to their hazardous, toxic, dangerous or deleterious properties or
characteristics;
1.74 "[**]" means [**];
1.75 "Immaterial Subsidiary" means any Subsidiary of the Borrower Representative that (a) does not own or use any Intellectual Property that is material to the business of
the Group (taken as a whole), (b) does not have revenues (after eliminating intercompany obligations) in excess of [**]% of the consolidated revenue (calculated in
accordance with GAAP) of the Group and (c) does not have assets (after eliminating intercompany obligations) in excess of [**]% of the consolidated total assets
(calculated in accordance with GAAP) of the Group;
1.76 "Increased Cost” means (i) a reduction in the rate of return from the Loan Facility or on the Lender’s overall capital, (ii) an additional or increased cost; or (iii) a
reduction of any amount due and payable under any Loan Document, which is incurred or suffered by the Lender or any of its Affiliates to the extent that it is
attributable to the Lender having entered into any Loan or funding or performing its obligations under any Loan Document (in each case other than as a result of (A)
Indemnified Taxes, (B) Taxes described in clauses (b) through (d) of the definition of Excluded Taxes and (C) Connection Income Taxes);
1.77 “Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrowers
under any Loan Document and (b) to the extent not otherwise described in clause (a), Other Taxes;
1.78 “Indemnitee” has the meaning given to such term in Clause 11.1;
1.79 "Initial Security and Guarantee Documents" means the following documents: (A) the Guarantee and Collateral Agreement, (B) that certain Patent Security
Agreement, dated as of the Closing Date, executed by the Loan Parties and acknowledged and agreed by the Lender Representative and (C) that certain Trademark
Security Agreement, dated as of the Closing Date, executed by the Loan Parties and acknowledged and agreed by the Lender Representative;
1.80 "Intellectual Property" means copyrights and related rights (including, without limitation, rights in computer software), patents, supplementary protection certificates,
utility models, trade marks, trade names, service marks, domain name registrations, registered and unregistered rights in designs, database rights, semi-conductor
topography rights, plant variety rights, rights in undisclosed or confidential information (such as know how, trade secrets and inventions (whether patentable or not)),
other similar intellectual property rights (whether registered or not) and applications for such rights as may exist anywhere in the world;
1.81 "Interest Only Period" means the period commencing on the Closing Date and ending on December 31, 2025 (which date may be extended at any time on or prior to
December 31, 2025, at the discretion of the Borrower Representative, to December 31, 2026 by written notice from the Borrower to the Lender Representative).
Notwithstanding the foregoing, if the Vadadustat FDA Approval is not received on or prior to June 30, 2024, the Interest Only Period will terminate on October 1,
2024;
1.82 "Interim Payment" means, with respect to any Drawdown Date, the payment in respect of the period from such Drawdown Date (where the Drawdown Date is not the
first day of a calendar month) to the First Monthly Repayment Date calculated by dividing the first Monthly payment of interest and principal specified in the relevant
Repayment Schedule by thirty (30) and multiplying that figure by the number of days between (and including) such Drawdown Date and the First Monthly Repayment
Date;
1.83 "Joint Venture" means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity;
8
1.84 “Kreos Affiliate” means any direct Affiliate of Kreos Capital VII (UK) Limited.
1.85 "Lender" means, collectively, Kreos Capital VII (UK) Limited, a company incorporated in England and Wales under registration number 13611522 whose registered office
is at 25-28 Old Burlington Street, London W1S 3AN and the other lenders from time to time party hereto;
1.86 "Liquidity" means, as of any date of determination, the sum of the amount of cash and Cash Equivalents of the Loan Parties and each MSC as of such date; provided that
Liquidity shall not include (a) any cash or Cash Equivalents that are or should be listed as “restricted” on the consolidated balance sheet of the Borrower
Representative as of such date (as determined in accordance with GAAP) or (b) any cash or Cash Equivalents of a Loan Party that are held in any account that is not
subject to an account control agreement in favor of the Lender Representative; provided, that at all times prior to the DACA Deadline (as defined on Schedule C), cash
in all accounts of the Loan Parties shall be included in “Liquidity” even if an account control agreement is not in place;
1.87 "Loan" means any loan that is made by the Lender to the Borrower pursuant to this Loan Agreement;
1.88 "Loan Documents" means collectively this Loan Agreement, the Warrant Instrument, the Security Documents, and any other agreement designated as a "Loan
Document" by the Lender Representative and the Borrower Representative;
1.89 "Loan Facility" means the loan facility set out in this Loan Agreement;
1.90 "Loan Facility Terms" means the certain terms applicable to the Loan Facility as set forth under the heading Loan Facility Terms at the beginning of this Loan
Agreement;
1.91 “Loan Parties” means, collectively, the Borrowers and the Subsidiary Guarantors.
1.92 "Loan Term" means with respect to each Tranche, the period set forth in the Loan Facility Terms (or such other period as may be agreed by the Lender and the Borrower
Representative in writing);
1.93 "Loan to Own Investor" means:
(a) any person or entity whose principal business or material activity is in investment strategies the primary purpose of which is the purchase of distressed loans or
other distressed debt securities with the intention of (or view to) owning a controlling stake of the equity or gaining control of a business (directly or indirectly) (a
"loan to own strategy") (a "Principal Loan to Own Investor");
(b) any person or entity that is an Affiliate or affiliated fund of a Principal Loan to Own Investor (a "Connected Loan to Own Investor"), unless such Affiliate or
affiliated fund is a financial institution which has been established for at least six months and, during that period, regularly engaged in making, purchasing or investing
in loans or debt securities; does not have a loan-to-own strategy as one of its investment strategies; is managed and controlled independently from such person; and is
administered by persons operating behind appropriate information barriers implemented or maintained as required by law, regulation and internal policy and, in any
event, to the extent required to ensure that such administration is independent from such person's interests under the Loan Documents and any information provided
under the Loan Documents is not (and is not capable of being) disclosed or otherwise made available to any person operating behind such information barrier; or
(c) any Principal Loan to Own Investor which has acquired and holds loans or other debt securities in any business owned (directly or indirectly) by any Connected
Loan to Own Investor of such Principal Loan to Own Investor;
1.94 "Margin Stock" has the meaning assigned to such term in Regulation U.
1.95 "Material Adverse Change" means (i) a material adverse effect on the business, operations or financial condition of the Group Companies, taken as a whole; (ii) a
material adverse effect on the ability of the Loan Parties (taken as a whole) to be able to pay any portion of its payment obligations under any of the Loan Documents
in full or to perform its material obligations under the Loan Documents; or (iii) a material adverse effect on the rights or remedies of the Lender (taken as a whole)
under any of the Loan Documents (taken as a whole), unless caused by or related to the action or inaction of the Lender;
1.96 “Material Financial Indebtedness” means Financial Indebtedness of any Group Company with an individual outstanding principal amount in excess of $[**].
1.97 "Material Properties" means each parcel of real property (other than a parcel with a fair market value of less than $[**]) owned in fee by a Loan Party and located in the
United States, but excluding any portion of such real property that contains improvements located in an area identified by the Federal Emergency Management
Agency (or any successor agency) as a “special flood hazard area”;
1.98 "Minimum Drawdown Amount" means the minimum amount permitted to be drawn down in each Tranche and is the amount set forth in the Loan Facility Terms;
1.99 "Month" and "Monthly" means, in relation to any period for the accrual of commission or fees, a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month;
9
1.100 "Monthly Repayment Date" means the first day of a calendar month;
1.101 “MSC” means (a) Akebia Therapeutics Securities Corporation, a Massachusetts securities corporation, and (b) any other Subsidiary of the Borrower Representative that
is a securities corporation formed under the laws of the commonwealth of Massachusetts;
1.102 "Multiemployer Plan" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA;
1.103 "Net Cash Proceeds" means (A) with respect to any Asset Sale or Casualty Event, the cash proceeds (including cash proceeds subsequently received (as and when
received) in respect of noncash consideration initially received), net of (i) selling expenses (including broker’s fees or commissions, legal fees, transfer and similar
taxes and the Borrower Representative’s good faith estimate of income taxes paid or payable in connection with such sale), (ii) amounts provided as a reserve, in
accordance with GAAP, against any liabilities under any indemnification obligations or purchase price adjustment associated with such Asset Sale (provided that, to
the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds) and (iii) the principal amount,
premium or penalty, if any, interest and other amounts on any Financial Indebtedness (other than the obligations) which is secured by the asset sold in such Asset Sale
or subject to such Casualty Event and which is required to be repaid with such proceeds (other than any such financial Indebtedness assumed by the purchaser of such
asset) and (B) with respect to any incurrence of Financial Indebtedness, the cash proceeds received from such incurrence, net of taxes reasonably estimated to be
payable and customary investment banking fees, underwriting discounts and commissions, premiums, accrued interest and other customary costs and expenses
incurred by the Group in connection with such incurrence or issuance;
1.104 “Other Connection Taxes” means , with respect to any Lender, Taxes imposed as a result of a present or former connection between such Lender and the jurisdiction
imposing such Tax (other than connections arising from such Lender having executed, delivered, become a party to, performed its obligations under, received
payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an
interest in any Loan or Loan Document);
1.105 “Other Taxes” means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the
execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan
Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment;
1.106 "Party” means a party to this Loan Agreement;
1.107 "Perfection Exceptions” has the meaning given to such term in the Guarantee and Collateral Agreement;
1.108 "Permitted Acquisition” means any purchase or other acquisition of assets, property, business units or divisions, or equity interests of any person, so long as:
(i) no Default or Event of Default shall have occurred and be continuing at the time of, or would immediately result from, the consummation of such acquisition;
(ii) such assets, property, business units or divisions, or person whose equity interests are being acquired, are in the biopharma business or reasonably related,
ancillary or complementary businesses thereto (including reasonably related, complementary, synergistic or ancillary technologies) in which the Group is then
engaged;
(iii) the Loan Parties shall, to the extent applicable, comply with the requirements of (x) Clause 8.1.25 of this Loan Agreement with respect to such acquired equity
interests and (y) the Guarantee and Collateral Agreement and Clause 8.1.26 of this Loan Agreement with respect to such acquired assets and property, in each
case within the timeframes set forth therein; and
(iv) any Financial Indebtedness or Security Interests assumed in connection with such acquisition are otherwise permitted hereunder;
(v) such acquisition was not preceded by an unsolicited tender offer for such equity interests by, or proxy contest initiated by, the Borrower Representative or any of
its Affiliates;
(vi) the Borrowers would be in compliance with either of the financial covenants set forth in Clause 8.3 as of the most recently completed test period for such
financial covenant ending prior to such transaction for which financial statements have been delivered pursuant to Clause 8.1.9 after giving pro forma effect to
such transaction as if such transaction had occurred as of the first day of such test period; and
(vii) the Borrower Representative shall deliver Pro Forma Projections demonstrating that Cash Flow shall not be reduced by more than [**]% in the aggregate for the
last three months of the period covered by such Pro Forma Projections (taken as a whole) as compared to the last three months of the standalone (i.e. not pro
forma) board-approved projections for such period (taken as a whole);
provided, that (A) in the case of any acquisition of assets that will not be owned by a Loan Party, or any equity interests of a person who shall not become a
Loan Party, the consideration for all such acquisitions shall not exceed $[**] in any fiscal year (or, at the election of the Borrower Representative, $[**] for any
one such acquisition; provided that, if the Borrower makes such election, no Permitted Acquisition of a non-Loan Party or assets to be held by a non-Loan
Party shall have occurred prior to such acquisition and no Permitted Acquisition of a non-Loan
10
Party or assets to be held by a non-Loan Party shall be permitted following such acquisition) and (B) for any Permitted Acquisition, the aggregate consideration
for such Permitted Acquisition, when taken together with the aggregate consideration of all Permitted Acquisitions consummated after the Closing Date and
prior to such time, shall not exceed $[**], unless in the case of this clause (B) the Acquisition Consideration Condition is satisfied at the time of the
consummation of such acquisition.
1.109 "Permitted Bond Hedge Transaction" means any call or capped call option (or substantively equivalent derivative transaction) pursuant to which the Borrower
Representative acquires an option requiring the counterparty thereto to deliver to the Borrower Representative (i) shares of common stock of the Borrower
Representative (or other securities or property following a merger event, reclassification or other change of the common stock of the Borrower representative), (ii) the
cash value thereof or (iii) a combination thereof, in each case, from time to time upon exercise of such option entered into by the Borrower Representative in
connection with the conversion of any Permitted Convertible Debt; provided that the purchase price for such Permitted Bond Hedge Transaction, less the proceeds
received by the Borrower Representative from the sale of any related Permitted Warrant Transaction, does not exceed the net proceeds received by the Borrower
Representative from the sale of such Permitted Convertible Debt issued in connection with such Permitted Bond Hedge Transaction;
1.110 "Permitted Convertible Debt" means Financial Indebtedness that is either (i) convertible into a fixed number (subject to customary anti-dilution adjustments, “make-
whole” increases and other customary changes thereto) of shares of common stock of the Borrower Representative (and cash in lieu of fractional shares) (or other
securities or property following a merger event, reclassification or other change of the common stock of the Borrower Representative) or (ii) sold as units with call
options, warrants or rights to purchase (or substantially equivalent derivative transactions) that are exercisable for shares of common stock of the Borrower
Representative (and cash in lieu of fractional shares) (or other securities or property following a merger event or other change of the common stock of the Borrower
Representative); provided that such Financial Indebtedness shall (a) not require any scheduled amortization or otherwise require payment of principal in cash or, if
the Cash Interest Condition is not satisfied as of the date of the issuance of such Financial Indebtedness, cash-pay interest prior to, or have a scheduled maturity date,
in each case earlier than [**] after the Maturity Date (it being understood that neither (x) any offer to purchase such Financial Indebtedness as a result of “change of
control” or “fundamental change” under and as defined in any indenture governing any Permitted Convertible Debt, in each case at a price no greater than [**]% of the
principal amount of such Notes repurchased plus accrued but unpaid interest to, but not including, the date of such repurchase (which for the avoidance of doubt shall
not be calculated at a premium) nor (y) any early conversion of such Financial Indebtedness into shares of the Borrower’s common stock in accordance with the terms
thereof, in each case, shall violate the restriction of this clause (a)), (b) be unsecured or, if secured, be (i) secured by no collateral other than Collateral securing this
Loan Facility and (ii) subordinated to the obligations of the Loan Parties under the Loan Documents pursuant to terms satisfactory to the Lender Representative in its
sole discretion; (c) not be guaranteed by any Subsidiary of the Borrowers, and (d) shall be Financial Indebtedness of the Borrowers and not any Subsidiary thereof;
provided, further, that if any Borrower or any of its Affiliates seeks to issue any Financial Indebtedness that it intends to constitute Permitted Convertible Debt (the
“Proposed Convertible Debt”), the Borrower Representative shall promptly provide written notice to the Lender specifying the material proposed terms of such
Proposed Convertible Debt.
Notwithstanding anything to the contrary in this Loan Agreement or any other Loan Document, all terms of an accounting or financial nature used herein shall be
construed, and all computations of amounts and ratios referred to herein shall be made without giving effect to any treatment of Financial Indebtedness in respect of
convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard
having a similar result or effect) to value any such Financial Indebtedness in a reduced or bifurcated manner as described therein, and such Financial Indebtedness
shall at all times be valued at the full stated principal amount thereof. For the avoidance of doubt, and without limitation of the foregoing, Permitted Convertible Debt
shall at all times be valued at the full stated principal amount thereof and shall not include any reduction or appreciation in value of the shares deliverable upon
conversion thereof;
1.111 "Permitted Convertible Debt Call Transaction" means any Permitted Bond Hedge Transaction and any Permitted Warrant Transaction;
1.112 "Permitted Distributions" means:
(i) dividends, distributions or other payments by any wholly-owned Subsidiary on its equity interests to, or the redemption, retirement or purchase by any wholly-
owned subsidiary of its equity interests from, Borrower or any other wholly-owned Subsidiary;
(ii) dividends, distributions or other payments by any non-wholly-owned Subsidiary on its equity interests to, or the redemption, retirement or purchase by any non-
wholly-owned Subsidiary of its equity interests from, each owner
11
of such non-wholly-owned Subsidiary’s equity interests based on their relative ownership interests of the relevant class of such equity interests;
(iii) any such payments made in order to consummate a Permitted Acquisition or other Permitted Investment by Borrower or any of its Subsidiaries;
(iv) the payment of dividends by Borrower solely in non-cash pay and non-redeemable capital stock (including, for the avoidance of doubt, dividends and
distributions payable solely in equity interests);
(v) cash payments in lieu of the issuance of fractional shares arising (A) out of stock dividends, splits or combinations or (B) in connection with the exercise of
warrants, options or other securities convertible into or exchangeable for equity interests;
(vi) (i) the receipt or acceptance of the return to Borrower or any of its Subsidiaries of equity interests of Borrower constituting a portion of the purchase price
consideration in settlement of indemnification claims, or as a result of a purchase price adjustment (including earn-outs or similar obligations) resulting from
Permitted Acquisitions or Permitted Investments and (ii) payments or distributions to equity holders pursuant to appraisal rights required under requirements
of law;
(vii) the distribution of rights pursuant to any shareholder rights plan or the redemption of such rights for nominal consideration in accordance with the terms of any
shareholder rights plan in effect on the Closing Date;
(viii) purchases of equity interests of Borrower or its Subsidiaries in connection with the exercise of stock options or warrants or similar rights by way of cashless
exercise, or in connection with the satisfaction of withholding tax obligations;
(ix) issuance to directors, officers, employees or contractors of Borrower of common stock of Borrower upon the exercise of options or the vesting of restricted stock,
restricted stock units, or other rights to acquire common stock of Borrower pursuant to plans or agreements approved by Borrower’s Board of Directors or
stockholders;
(x) the repurchase, retirement or other acquisition or retirement for value of equity interests of Borrower or any of its Subsidiaries held by any future, present or
former employee, consultant, officer or director (or spouse, ex-spouse or estate of any of the foregoing or trust for the benefit of any of the foregoing or any
lineal descendants thereof) of Borrower or any of its Subsidiaries pursuant to any management equity plan or stock option plan or any other management or
employee benefit plan or agreement, or any stock subscription or shareholder agreement or employment agreement, or as otherwise approved by the board of
directors of the relevant Group Company; provided, however, that the aggregate payments made under this clause (x) do not exceed in any calendar year the
sum of (i) $[**] plus (ii) [**]; and
(xi) the payment of customary fees and reasonable out of pocket expenses to directors of the Group Companies and indemnities provided on behalf of directors and
officers of the Group Companies, in each case, in the ordinary course of business and to the extent attributable to the operation of the Group Companies;
1.113 "Permitted Financial Indebtedness" has the meaning given to that term in Clause 8.2.2;
1.114 "Permitted Licenses" means:
(i) any license, sublicense and any other agreement that grants any covenant not to sue, option or other preferential right for a license, or other similar right or
immunity, under any Intellectual Property, entered into by a Group Company with a person that is not an Affiliate of any Group Company and that involves the
granting by such person to such Group Company of any rights to such Intellectual Property for use in connection with the Group’s business, including for
research, development, manufacture, commercialization (including commercial sales to end users), marketing, promotion, co-promotion, sales, import, export
or distribution of any product or services;
(ii) any license, sublicense and any other agreement that grants any covenant not to sue, option or other preferential right for a license, or other similar right or
immunity, under any Intellectual Property, entered into by a Loan Party with any other Loan Party that involves the granting by such Loan Party to such other
Loan Party of any rights to such Intellectual Property for use in connection with such other Loan Party’s business, including for research, development,
manufacture, commercialization (including commercial sales to end users), marketing, promotion, co-promotion, sales, import, export or distribution of any
product or services;
(iii) any license, sublicense and any other agreement that grants any covenant not to sue, option or other preferential right for a license, or other similar right or
immunity, under any Intellectual Property, entered into by a Loan Party with a Person that is not an Affiliate of any Loan Party and that involves the granting
by such Loan Party to such Person of any rights to such Intellectual Property on a non-exclusive basis for any purpose;
(iv) any license, sublicense and any other agreement that grants any covenant not to sue, option or other preferential right for a license, or other similar right or
immunity, under any Intellectual Property other than Intellectual Property relating to vadadustat or Auryxia®, entered into by a Loan Party with a Person that
is not an Affiliate of any Loan Party and that involves the granting by such Loan Party to such Person of any rights to such Intellectual Property on an exclusive
basis for use in connection with such Person’s business, including research, development, manufacture, commercialization (including commercial sales to end
users), marketing, promotion, co-promotion, sales import, export or distribution, of products and services; provided, that any such exclusive license that is
12
exclusive to territory within the United States shall be subject to the consultation (but not the consent) of the Lender Representative;
(v) any license, sublicense and any other agreement that grants any covenant not to sue, option or other preferential right for a license, or other similar right or
immunity, under any Intellectual Property relating to vadadustat or Auryxia®, entered into by a Loan Party with a Person that is not an Affiliate of any Loan
Party and that involves the granting by such Loan Party to such Person of any rights to such Intellectual Property on an exclusive basis in territories where the
Loan Parties currently do not have a then existing commercial partner for commercial exploitation of vadadustat or Auryxia®, for use in connection with such
Person’s business, including research, development, manufacture, commercialization (including commercial sales to end users), marketing, promotion, co-
promotion, sales import, export or distribution, of vadadustat or Auryxia®, as applicable, in such territories; and
(vi) any licenses existing on the Closing Date as set forth on Schedule G hereto.
1.115 "Permitted Investments" has the meaning given to that term in Clause 8.2.6;
1.116 "Permitted Security Interests" has the meaning given to such term in Clause 8.2.3;
1.117 "Permitted Transfers" has the meaning given to that term in Clause 8.2.1;
1.118 “Permitted Warrant Transaction” means any call option, warrant or right to purchase (or substantively equivalent derivative transaction) relating to the Borrower
Representative’s common stock (or other securities or property following a merger event, reclassification or other change of the common stock of the Borrower
Representative) sold by the Borrower Representative substantially concurrently with any purchase by the Borrower Representative of a related Permitted Bond Hedge
Transaction.
1.119 "Plan" means an employee pension benefit plan (other than a Multiemployer Plan) which is subject to Title IV of ERISA or subject to the minimum funding standards
under Section 302 of ERISA or Section 412 of the Code and that is sponsored, maintained, contributed to or required to be contributed to by Borrowers or any ERISA
Affiliate.
1.120 “Pro Forma Projections” means, with respect to any acquisition, pro forma projections for the twelve fiscal month period immediately following such transaction.
1.121 “Register” has the meaning given in Clause 15.5.
1.122 "Regulation T" means Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof;
1.123 "Regulation U" means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof;
1.124 "Regulation X" means Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof;
1.125 “Related Fund” in relation to a fund or account (the "first fund"), means: (i) a fund or account which is managed or advised by the same investment manager or
investment adviser as the first fund; or (ii) if it is managed by a different investment manager or investment adviser, a fund or account whose investment manager or
investment adviser is an Affiliate of the investment manager or investment adviser of the first fund; or (iii) that investment manager or investment adviser itself.
1.126 "Relevant Governmental Body" means the Term SOFR Administrator, the Federal Reserve Board or the Federal Reserve Bank of New York, or a committee officially
endorsed or convene by the Federal Reserve Board or the Federal Reserve Bank of New York or any successor thereto;
1.127 "Repayment Schedule" has the meaning given in Clause 5.1.1;
1.128 "Representative" means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian;
1.129 “Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
1.130 "Sanctioned Person" means, at any time, any person, organisation or vessel that is: (i) listed on a Sanctions List; (ii) a government of a Designated Jurisdiction; (iii) an
agency or instrumentality of, a government of a Designated Jurisdiction; (iv) located, organised, operating from, incorporated or resident in a Designated Jurisdiction;
(v) any person 50% or greater owned or controlled by any such person or persons described in (i) - (iv) above; (vi) otherwise a target of Sanctions; or (vii) acting on
behalf of any of the persons listed in paragraphs (i) - (vi) above, for the purposes of evading or avoiding, or having the intended effect of or intending to evade or avoid,
or facilitating the evasion or avoidance of, any Sanctions;
13
1.131 "Sanctions" means all economic or financial sanctions, regulations, sectoral sanctions, secondary sanctions, trade embargoes or other restrictive measures enacted,
implemented, imposed, administered or enforced from time to time by any Sanctions Authority;
1.132 "Sanctions Authority" means any agency or person which is duly appointed, empowered or authorised to enact, administer, implement and/or enforce Sanctions,
including (without limitation): (i) the United Nations Security Council; (ii) the European Union or any of its member states; (iii) the United States government,
including the United States Department of the Treasury (including the Office of Foreign Assets Control (“OFAC”)), the United States Department of State and the
United States Department of Commerce; and (iv) the United Kingdom government, including HM Treasury, the Foreign, Commonwealth and Development Office and
the Department for Business, Energy & Industrial Strategy, including, in each case, any successor, replacement or other governmental institution or agency of the
foregoing;
1.133 "Sanctions List" means the “Specially Designated Nationals and Blocked Persons” list administered by OFAC, the EU Consolidated List of Financial Sanctions Targets,
the Consolidated List of Financial Sanctions Targets issued by HM Treasury, or any similar list administered or maintained and made public by any Sanctions
Authority each as amended, supplemented and/or substituted from time to time;
1.134 "Security Documents" means the Initial Security and Guarantee Documents, and any other applicable document, in the agreed form, evidencing the guarantees
provided by and security over assets of any Loan Party, or any document entered into by any Loan Party creating a Security Interest or guarantee in favor of the Lender
Representative or otherwise designated in writing as a Security Document;
1.135 "Security Interest" means any mortgage, charge (whether fixed or floating, legal or equitable), pledge, lien, hypothecation, assignment by way of security or otherwise,
trust arrangement, title retention or encumbrance or enforceable right of a third party, any other type of security interest or preferential arrangement having a similar
effect to any of the foregoing or in the nature of security of any kind whatsoever and in any jurisdiction; provided, that in no event shall an operating lease (as
determined prior to the adoption of ASC 842) or an agreement to sell be deemed to constitute a Security Interest.
1.136 "Security Period" means the period commencing on the date of this Loan Agreement and ending on the date all payment obligations (other than contingent
indemnification and expense reimbursement obligations for which no claim has been made) have been paid in full and all loan commitments under this Loan
Agreement have expired or been terminated;
1.137 "SOFR" means, with respect to any day, the secured overnight financing rate as administered by the SOFR Administrator;
1.138 "SOFR Administrator" shall mean the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate);
1.139 "subsidiary" means, with respect to any Person (herein referred to as the “parent”), any corporation, partnership, limited liability company, association or other
business entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination is being made, owned, Controlled or held, or (b) that is, at the time any determination
is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent;
1.140 "Subsidiary" means any subsidiary of the Borrower Representative;
1.141 "Subsidiary Guarantor" means any subsidiary of the Borrower Representative that is or becomes a party to the Guarantee and Collateral Agreement. As of the Closing
Date, the only Subsidiary Guarantor is Keryx Biopharmaceuticals, Inc., a Delaware corporation;
1.142 "Taxes" means all present and future income, value added and other taxes, levies, imposts, duties, deductions, charges and withholdings in the nature of taxes
whatsoever (including backup withholding), together with interest thereon and assessments, fees, charges or penalties with respect thereto made on or in respect
thereof and "Tax" shall be construed accordingly;
1.143 "Term SOFR” means the Term SOFR Reference Rate for a tenor of one month on the day (such day, the "Periodic Term SOFR Determination Day") that is [**]
prior to the first day of such calculation, as such rate is published by the Term SOFR Administrator; provided that that if as of [**]., New York City time, on any
Periodic Term SOFR Determination Day the Term SOFR Reference Rate has not been published by the Term SOFR Administrator and a Benchmark Replacement
Date with respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate as published by the Term SOFR
Administrator on the first preceding Business Day for which such Term SOFR Reference Rate was published by the Term SOFR Administrator so long as such first
preceding Business Day is not more than [**] prior to such Periodic Term SOFR Determination Day;
1.144 "Term SOFR Administrator" shall mean CME Group Benchmark Administration Limited (or a successor administrator of the Term SOFR Reference Rate selected by
the Lender Representative in its reasonable discretion);
1.145 "Term SOFR Reference Rate" means the forward-looking term rate based on SOFR;
1.146 "Total Loan Facility" means the amount set forth in the Loan Facility Terms;
14
1.147 "Tranche" means an amount drawn down out of the Total Loan Facility pursuant to this Loan Agreement (it being understood that there shall be three tranches, as set
forth in the Loan Facility Terms);
1.148 "Transaction Fee" means the amount set forth in the Loan Facility Terms;
1.149 "Unpaid Sum" means any sum due and payable but unpaid by any Loan Party under any Loan Document;
1.150 "Unadjusted Benchmark Replacement" shall mean the Benchmark Replacement, excluding the related Benchmark Replacement Adjustment;
1.151 "United States" and "U.S." mean the United States of America;
1.152 “U.S. Person” means any Person that is a “United States person” as defined in Section 7701(a)(30) of the Code;
1.153 "UK Financial Institution" shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the
United Kingdom Prudential Regulation Authority) or any person subject to IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the
United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or
investment firms;
1.154 "UK Resolution Authority" shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial
Institution;
1.155 "USA PATRIOT Act" shall mean The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
(Title III of Pub. L. No. 107-56 (signed into law October 26, 2001));
1.156 "Vadadustat FDA Approval" means the receipt by the Borrower Representative of notice from the United States Food and Drug Administration granting the Borrower
Representative or a Subsidiary Guarantor marketing approval for vadadustat;
1.157 “Vadadustat Withdrawal Event” means the withdrawal by the United States Food and Drug Administration of the marketing approval for vadadustat pursuant to a
final, non-appealable determination;
1.158 "VAT" means (i) any value added tax imposed by the United Kingdom Value Added Tax Act 1994; (ii) any tax imposed in compliance with the Council Directive of 28
November 2006 on the common system of value added tax (EC Directive 2006/112); and (iii) any other tax of a similar nature, whether imposed in the United
Kingdom or in a member state of the European Union in substitution for, or levied in addition to, such tax referred to in paragraph (i) or (ii) above, or imposed
elsewhere.
1.159 "[**]" means [**];
1.160 "Warrant Instrument" means a warrant instrument, in the agreed form, pursuant to which warrants over shares in the Borrower Representative are to be issued by
the Borrower Representative to Kreos Capital VII Aggregator SCSp on the date of this Loan Agreement;
1.161 Write-Down and Conversion Powers” means, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution
Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU
Bail-In Legislation Schedule and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel,
reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of
that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had
been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any
of those powers.
2. INTERPRETATION
2.1 In this Loan Agreement (unless the context requires otherwise) any reference to:
2.1.1 any law or legislative provision includes a reference to any subordinate legislation made under that law or legislative provision before the date of this Loan Agreement, to
any modification, re-enactment or extension of that law or legislative provision made before that date and to any former law or legislative provision which it
consolidated or re-enacted before that date;
2.1.2 any gender includes a reference to other genders and the singular includes a reference to the plural and vice versa;
2.1.3 a Clause or Schedule is to a clause or schedule (as the case may be) of or to this Loan Agreement;
2.1.4 a "person" or "Person" shall be construed as including a reference to an individual, firm, company, corporation, partnership, unincorporated body of persons or any
country (or state thereof or any agency thereof);
15
2.1.5 an "amendment" includes a supplement, novation or re-enactment in writing and "amended" is to be construed accordingly;
2.1.6 "assets" includes present and future properties;
2.1.7 an "authorization" includes an authorization, consent, approval, resolution, licence, exemption, filing, registration and notarisation;
2.1.8 a "regulation" includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, inter-governmental or
supranational body, agency, department or regulatory, self-regulatory or other authority or organisation;
2.1.9 [reserved];
2.1.10 "holding company" means, in relation to a person, any other person in respect of which it is a subsidiary;
2.1.11 [reserved];
2.1.12 this Loan Agreement (or to any specified provision of this Loan Agreement), any other document or a provision of any other document, shall be construed as a reference
to this Loan Agreement, that document or a provision of that document as in force for the time being and as amended in accordance with the terms thereof, or, as the
case may be, with the agreement of the relevant parties and (where such consent is, by the terms of this Loan Agreement or the relevant document, required to be
obtained as a condition to such amendment being permitted) the prior written consent of the Lender;
2.1.13 "other" and "otherwise" are not to be construed ejusdem generis with any foregoing words where a wider construction is possible and "include" and "including", "in
particular", "for example" or any similar expression are to be construed as being by way of illustration or emphasis only and are not to be construed as, nor shall they
take effect as, limiting the generality of any foregoing words;
2.1.14 a document being in "agreed form" is a document which is in a form reasonably acceptable to the Borrower Representative and the Lender Representative; and
2.1.15 $ is the official currency of the United States.
2.2 If a payment date in relation to any payment from the Borrowers or any other Loan Party under this Loan Agreement or the Security Documents falls on a day which is not
a Business Day, the relevant payment date shall be the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not). If the
performance of any other obligation by a Group Company under the Loan Documents is stated to be due on a day which is not a Business Day, the relevant date of
performance shall be the immediately succeeding Business Day.
2.3 A Default (other than an Event of Default) is continuing if it has not been remedied or waived and any reference to an Event of Default being continuing is a reference to an
Event of Default that has not been waived by the Lender.
2.4 The headings in this Loan Agreement are inserted for convenience only and do not form part of this Loan Agreement and do not affect its interpretation.
2.5 If there is any conflict between the provisions of this Loan Agreement and the provisions of any other Loan Document, the provisions of this Loan Agreement shall prevail.
3. LOAN FACILITY
3.1 Lender's Commitment
3.1.1 Subject to Clause 3.5 below, the Lender shall and agrees hereby to make available to the Borrowers the Total Loan Facility under the terms of this Loan Agreement, to be
drawn down as set forth in the Loan Facility Terms and in accordance with Clause 3.2.
3.1.2 The Lender shall not be under any commitment to advance any part of the Loan after the Expiry Date of the applicable part of such Loan or upon the earlier termination
of the Loan Facility, or on dates other than those specified in this Loan Agreement.
3.1.3 The unutilised portion (if any) of the Loan Facility shall be cancelled after the expiry of the final period for Drawdown as set forth in the Loan Facility Terms, whereupon
the Total Loan Facility shall be reduced accordingly.
3.1.4 In granting the Loan Facility, the Lender is relying on the representations and warranties contained in Clause 7.
3.1.5 Each Drawdown made under the Loan Facility shall be secured by the Security Documents.
16
3.2 Date of Advance(s) of the Loan
3.2.1 Subject to Clauses 3.1.2 and 3.2.2, (and subject to the satisfaction of the relevant conditions set forth in Clause 3.5), each Tranche shall be advanced and made available to
the Borrowers on the relevant Drawdown Date to the extent the Borrower has delivered an executed Drawdown Notice to the Lender Representative at least [**] (or in
the case of Tranche A, at least [**]) prior to the requested Drawdown Date (or such shorter period as the Lender Representative may reasonably agree in writing). Each
Drawdown Notice in respect of Tranche B or Tranche C must be received by the Lender Representative at least [**] prior to the end of the relevant Expiry Date. No
more than one Drawdown Notice may be served in respect of each Tranche. Once a Drawdown Notice has been delivered to the Lender Representative, it is
irrevocable. Each Tranche requested to be advanced pursuant to a Drawdown Notice shall be in an amount equal to or greater than the Minimum Drawdown Amount.
3.2.2 If the requested Drawdown Date falls on a day which is not a Business Day, the Lender shall only be obligated to pay the relevant Tranche to the applicable Borrower on
the next Business Day in that calendar month. Where there is no next Business Day in that calendar month, the Lender shall only be obligated to pay the relevant
Tranche to the applicable Borrower on the first Business Day of the next calendar month.
3.3 Method of Disbursement
3.3.1 The payment by the Lender to the Drawdown Account, or to such other bank account as is agreed in writing between the Lender and the Borrower Representative, shall
constitute the making of the Loan (or the relevant part thereof) and each Borrower shall thereupon become indebted, as principal and direct obligor, to the Lender in
an amount equal to the Loan (or the relevant part thereof) and all interest thereon and other payments due in connection therewith under this Loan Agreement.
3.3.2 Any delay or failure by the Lender to fund any loan as a result of a disruption not under the Lender’s control, including, without limitation, due to a cyber-attack,
computer hacking or similar event shall not constitute a breach by the Lender of its obligations under this Loan Agreement.
3.4 [Reserved]
3.5 Conditions Precedent requirements relative to the Advance of the Loans
3.5.1 Tranche A: The obligation of the Lender to make the initial Loan under Tranche A on the Closing Date is subject solely to the satisfaction or waiver of each of the following
conditions (except for any such items for which a post-closing period for completion has been granted pursuant to Schedule C):
(i) (A) the provision of copies of the articles of incorporation or formation, including all amendments thereto, of each Loan Party, certified as of a recent date by the
Secretary of State of the state of its organization, and a certificate as to the good standing of each Loan Party as of a recent date from such Secretary of State
and (B) a certificate of the Secretary, Financial Officer or Assistant Secretary of each Loan Party, dated the date of this Loan Agreement and certifying (I) that
attached thereto is a true and complete copy of the by-laws or limited liability company agreement, as applicable, of such Loan Party as in effect on such date
and at all times since a date prior to the date of the resolutions described in clause (II) below, (II) that attached thereto is a true and complete copy of
resolutions duly adopted by the board of directors or other applicable governing body of such Loan Party authorizing the execution, delivery and performance
of the Loan Documents to which such Person is a party and, in the case of the Borrowers, the borrowings hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (III) that the certificate or articles of incorporation or formation of such Loan Party have not
been amended since the date of the last amendment thereto shown on the certificate of good standing furnished pursuant to clause (A) above, and (IV) as to the
incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such
Loan Party (which certificate shall be countersigned by another officer to certify as to the incumbency and specimen signature of the Secretary, Financial
Officer or Assistant Secretary executing such certificate);
(ii) the relevant Parties having executed and delivered to the Lender Representative copies of the Initial Security and Guarantee Documents and this Loan
Agreement, and each other document required to be delivered on the Closing Date under the Initial Security and Guarantee Documents (including share
certificates and stock transfer forms where relevant). The Lender Representative shall have a security interest in the Collateral of the type and priority
described in each of the Security Documents;
(iii) the Borrowers’ compliance with Clauses 10.1 and (to the extent an invoice with respect thereto has been provided to the Borrower Representative at least [**]
prior to the Closing Date), 10.3.1(i);
(iv) evidence of the Borrowers’ compliance with Clause 8.1.15(ii);
(v) [reserved];
(vi) a customary legal opinion from Latham & Watkins LLP, dated as of the date of this Loan Agreement;
(vii) to the extent requested by the Lender in writing at least [**] prior to the Closing Date, all documents, confirmations and evidence required by the Lender to
satisfy its "know your customer" requirements or similar
17
identification checks (including the USA PATRIOT ACT) in order to meet its obligations under applicable money laundering, or similar, laws and regulations;
(viii) receipt by the Lender of customary lien searches in the jurisdiction of organization of each Loan Party;
(ix) a certificate, dated as of the date of this Loan Agreement and signed by a Financial Officer of the Borrower Representative, confirming compliance with the
conditions precedent set forth in the following clauses (x) and (xi);
(x) the representations and warranties set forth in Clause 7 and in each other Loan Document shall be true and correct in all material respects as of the Closing Date
with the same effect as though made as of such date (except to the extent that such representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct in all material respects as of such earlier date);
(xi) at the time of, and immediately after giving effect to the borrowing as of such Drawdown Date, no Default or Event of Default shall have occurred and be
continuing;
(xii) delivery to the Lender Representative of a customary solvency certificate (with “solvency” to be defined in an manner consistent with Clause 7.1.42);
(xiii) delivery to Kreos Capital VII Aggregator SCSp of a duly executed copy of the Warrant Instrument;
(xiv) delivery to Kreos Capital VII Aggregator SCSp of a duly executed copy of the relevant warrant certificate to be issued in accordance with the terms of the
Warrant Instrument; and
(xv) delivery to the Lender Representative of an executed intercompany subordination agreement (the “Intercompany Subordination Agreement”).
3.5.2 Tranche B: The obligation of the Lender to make the Loan under Tranche B is subject solely to the satisfaction or waiver of each of the following conditions:
(i) receipt by the Lender Representative of an executed Drawdown Notice in accordance with Clause 3.2;
(ii) the representations and warranties set forth in Clause 7 and in each other Loan Document shall be true and correct in all material respects as of the applicable
Drawdown Date with the same effect as though made as of such date (except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct in all material respects as of such earlier date);
(iii) at the time of, and immediately after giving effect to the borrowing as of the applicable Drawdown Date, no Default or Event of Default shall have occurred and
be continuing; and
(iv) the Vadadustat FDA Approval has been received on or prior to the applicable Drawdown Date.
3.5.3 Tranche C: The obligation of the Lender to make the Loan under Tranche C is subject solely to the satisfaction or waiver of each of the following conditions:
(i) receipt by the Lender Representative of an executed Drawdown Notice in accordance with Clause 3.2;
(ii) Tranche B has been drawn in full prior to the applicable Drawdown Date;
(iii) the representations and warranties set forth in Clause 7 and in each other Loan Document shall be true and correct in all material respects as of the applicable
Drawdown Date with the same effect as though made as of such date (except to the extent that such representations and warranties specifically refer to an
earlier date, in which case they shall be true and correct in all material respects as of such earlier date);
(iv) at the time of, and immediately after giving effect to the borrowing as of the applicable Drawdown Date, no Default or Event of Default shall have occurred and
be continuing; and
(v) the Borrower Representative has raised at least $[**] in cumulative gross cash proceeds in the form of equity or equity linked securities in one or more series of
transactions (including any public offering, private placement or “at-the-market” offering) after the date of the Loan Agreement (any such transaction, a
“Capital Raise”).
3.6 Post-Closing Obligations
3.6.1 Within the time periods specified on Schedule C hereto (as each may be extended by the Lender Representative in its reasonable discretion), the Borrower Representative
shall complete (or cause to be completed) such undertakings as are set forth on Schedule C hereto.
18
3.7 Use of Funds and Collateral
3.7.1 Unless the Lender Representative shall otherwise agree in writing, the Borrowers shall use the Loan solely for the purpose of general working capital, to repay certain
existing indebtedness on the Closing Date, for other general corporate purposes and for any other purpose not prohibited by the terms of this Loan Agreement
(including permitted acquisitions and investments). The Lender shall not be under any obligation to concern itself with the application of the Loan.
3.7.2 The security interest granted to the Lender Representative pursuant to the Security Documents shall form security for all monies and obligations owed to the Lender by
the Borrowers or any other Loan Party pursuant to this Loan Agreement or otherwise.
4. TERM
4.1 Subject to Clause 15.1, this Loan Agreement is effective when executed and dated by the Lender and the Borrower Representative and shall continue until the later of (i)
termination in accordance with its terms; and (ii) the date upon which each Borrower shall have performed and satisfied all its obligations (including making all
payments) under this Loan Agreement and the Security Documents (other than contingent indemnification and expense reimbursement obligations for which no
claim has been made).
5. REPAYMENT AND PREPAYMENT
5.1 Repayments and Interim Payment
5.1.1 The Borrowers shall repay to the Lender Representative, in advance, principal (and interest in accordance with Clause 6.1) in respect of each Tranche on each Monthly
Repayment Date in the amounts specified in the repayment schedule issued by the Lender Representative prior to the relevant Drawdown Date and attached to the
relevant Drawdown Notice as may be revised from time to time by the Lender Representative in accordance with Clause 5.1.3 (the "Repayment Schedule"),
provided that all payments in relation to each Tranche shall comprise interest only for the Interest Only Period, and following the Interest Only Period, the Borrowers
shall repay, in advance, all outstanding principal (and interest in accordance with Clause 6.1) in respect of each Tranche in equal payments on each Monthly
Repayment Date remaining, commencing with the first Monthly Repayment Date to occur after the end of the Interest Only Period (as an illustrative example, if, after
the end of the Interest Only Period, thirteen Monthly Repayment Dates remain before the Maturity Date, the Borrowers shall repay all outstanding principal and
interest in thirteen equal payments: one on each such Monthly Repayment Date).
5.1.2 All payments that any Borrower makes under this Loan Agreement shall be made in full, without any deduction, set-off or counterclaim and in immediately available
funds on the due date to an account which the Lender Representative shall specify to the Borrower Representative in writing at least [**] prior to the applicable
Monthly Repayment Date.
5.1.3 The Lender Representative shall have the right to issue a revised Repayment Schedule from time to time if the Lender Representative, in its reasonable discretion,
considers it necessary in order to correct a ministerial error or to ensure that, in respect of each Tranche, on the expiry of the relevant Loan Term there will be no
amounts owing from the Borrowers to the Lender in respect of the relevant Tranche(s) (and any additional payment in respect of any prior period that is required due
to such revised Repayment Schedule shall be made by the Borrowers within [**] of their receipt of such revised Repayment Schedule (or, if applicable, returned by the
Lender Representative to the Borrowers within [**] of the issuance of such revised Repayment Schedule). For the avoidance of doubt, any payment of an amount
shown on a then-in effect Repayment Schedule shall not result in a Default or Event of Default due to a later revision of the Repayment Schedule.
5.1.4 Each payment received by the Lender Representative in respect of any Tranche shall be applied as follows:
(i) first, to discharge all outstanding fees, costs, expenses and Unpaid Sums (other than any Unpaid Sums set forth in clause (ii) or (iii) below) that are then due to
the Lender in respect of such Tranche;
(ii) secondly, to discharge all accrued and unpaid interest in respect of such Tranche; and
(iii) thirdly, to reduce the outstanding principal balance of such Tranche.
5.1.5 Any amount repaid or prepaid may not be redrawn.
5.1.6 If any Drawdown Date is not a Monthly Repayment Date, the Borrowers shall pay to the Lender Representative, on such Drawdown Date (by way of deduction by the
Lender Representative of the amount of the Tranche actually advanced to the Borrowers), the Interim Payment.
5.2 Currency of Payments
Repayment of the Loan and payment of all other amounts owed to the Lender will be paid to the Lender Representative in the currency in which each Tranche has
been provided (the "Contractual Currency"), i.e. in Dollars, unless otherwise agreed by the Parties in writing. The Borrowers shall bear the cost in the event of and
in respect of any conversion by the Lender of an amount received by it in any currency other than the Contractual Currency.
19
5.3 Advance Payment
On each Drawdown Date with respect to a Tranche, the Borrowers shall pay to the Lender Representative (by way of deduction by the Lender Representative from the
amount of the Tranche advanced to the Borrowers) the advance payment as set forth under the heading Loan Facility Terms at the beginning of this Loan Agreement
with respect to the applicable Tranche (the "Advance Payment") which shall be held by the Lender Representative as security for and applied in or towards the
repayment amount (comprising principal and interest) for the last Month of the Loan Term of that particular Tranche unless a notice under Clause 9.2.2 has been
served, in which case the Advance Payment shall be applied, at the discretion of the Lender Representative, in accordance with Clause 5.1.4.
5.4 Prepayments
The Borrowers shall be entitled to prepay the Loan, in whole but not in part, subject to the following conditions:
5.4.1 the Borrower Representative shall submit to the Lender Representative a written notice of prepayment (which may be conditioned upon a specific event, in which case it
may be revoked at any time prior to the proposed repayment date) at least [**] in advance, indicating the amount to be prepaid and the date of the proposed
prepayment;
5.4.2 on the date of such optional prepayment (or of any acceleration), the Borrower Representative shall pay the Lender Representative an amount equal to:
(i) the outstanding principal amount of the Loan;
(ii) all accrued and unpaid interest;
(iii) should the prepayment be made:
(a) prior to the first anniversary of the Closing Date, a fee equal to the sum of (i) 4.00% of the amount repaid plus (ii) the aggregate of the Monthly interest
payments scheduled to be paid by the Borrowers on each Monthly Repayment Date for each then-outstanding Tranche (as is set out in the relevant
Repayment Schedule) for the period commencing on the date of prepayment and ending on the date that is twelve (12) months after the date of
prepayment (the “Yield Maintenance Premium”); and/or
(b) (I) on or after the first anniversary of the Closing Date, but prior to the [**], a fee equal to 4.00% of the amount repaid, (II) on or after the [**], but prior
to the [**]% of the amount repaid and (III) on or after the [**], but prior to the Maturity Date, 1.00% of the amount repaid (the “Early Payment Fee”);
(c) Notwithstanding anything to the contrary in this Loan Agreement or any other Loan Document, it is understood and agreed that if any Loans are
accelerated (whether as a result of the occurrence and continuance of any Event of Default, by operation of law or otherwise), any Yield Maintenance
Premium and any Early Payment Fee, as applicable, determined as of the date of acceleration, will also be due and payable and will be treated and deemed
as though the applicable Loans were repaid as of such date and shall constitute part of the obligations for all purposes herein. Any Yield Maintenance
Premium and any Early Payment Fee, as applicable, shall also be payable in the event the obligations, the Loans and this Loan Agreement are satisfied or
released by foreclosure (whether by power of judicial proceeding), deed in lieu of foreclosure or by any other similar means. The Group Companies
expressly waive the provisions of any present or future statute or law that prohibits or may prohibit the collection of the applicable premium in connection
with any such acceleration. The parties hereto further acknowledge and agree that any Yield Maintenance Premium and any Early Payment Fee, as
applicable, is not intended to act as a penalty or to punish the Group Companies for any repayment or redemption of the Loans. The Group Companies
expressly agree that (i) any Yield Maintenance Premium and any Early Payment Fee, as applicable, is reasonable and is the product of an arm’s length
transaction between sophisticated business people, ably represented by counsel, (ii) any Yield Maintenance Premium and any Early Payment Fee, as
applicable, shall be payable notwithstanding the then prevailing market rates at the time payment is made, (iii) there has been a course of conduct
between the Lender and the Group Companies giving specific consideration in this transaction for such agreement to pay any Yield Maintenance Premium
and any Early Payment Fee, as applicable, (iv) the Group Companies shall be estopped hereafter from claiming differently than as agreed to in this Clause,
(v) the agreement of the Group Companies to pay any Yield Maintenance Premium and any Early Payment Fee, as applicable, is a material inducement to
the Lender to extend the Loans, and (vi) any Yield Maintenance Premium and any Early Payment Fee, as applicable, represents a good-faith, reasonable
estimate and calculation of the lost profits or damages of the Lender and that it would be impractical and extremely difficult to ascertain the actual
amount of damages to the Lender or profits lost by the Lender as a result of such prepayment or acceleration.
(d) Notwithstanding anything herein to the contrary, no Yield Maintenance Premium or Early Payment Fee shall be due in connection with an optional
prepayment of the Loans that is in connection with a refinancing of the Loan Facility to the extent the Lender (or any Kreos Affiliate) will be a lender
under such new facility.
(iv) all unpaid End of Loan Payments;
(v) all unpaid fees, costs and expenses; and
(vi) all other unpaid sums payable by the Borrowers to the Lender under the Loan Documents.
20
5.5 Not later than the [**] following the receipt of Net Cash Proceeds in respect of any Asset Sale or Casualty Event, in each case, in excess of $[**] per transaction (or $[**] in
the aggregate per fiscal year), the Borrowers shall apply [**]% of the Net Cash Proceeds received with respect thereto to prepay outstanding Loans in accordance with
Clause 5.1.4; provided, that only the amount of Net Cash Proceeds in excess of $[**] per transaction or $[**] in the aggregate per fiscal year shall be subject to
prepayment pursuant to this Clause 5.5. Notwithstanding anything herein to the contrary, in lieu of making the prepayment contemplated by this Clause 5.5, the
Borrower Representative may instead elect to reinvest such Net Cash Proceeds in productive assets of a kind then used or usable in the business of the Borrower
Representative and its Subsidiaries (including, without limitation, through Permitted Acquisitions and Permitted Investments) or in research and development, so
long as (w) such reinvestment does not materially detract from the value of the Collateral (taken as a whole) as reasonably determined by the Borrower Representative
in consultation with the Lender Representative, (x) the Borrower Representative has delivered to the Lender Representative a certificate of the Borrowers’ intent to
reinvest such proceeds, (y) no Default or Event of Default is continuing as of the date of delivery of the certificate referred to in clause (x), and (z) such reinvestment is
made within [**] after receipt of such Net Cash Proceeds (or if a binding commitment to reinvest has been entered into within such [**] period, within [**] after the
end of such [**] period).
5.6 In the event that any Group Company shall receive Net Cash Proceeds from the issuance or incurrence of Financial Indebtedness for borrowed money that is not permitted
to be incurred pursuant to the terms of this Loan Agreement, the Borrowers shall, substantially simultaneously with (and in any event not later than the [**] following)
the receipt of such Net Cash Proceeds, apply an amount equal to [**]% of such Net Cash Proceeds to prepay the outstanding Loans in accordance with Clause 5.1.4.
5.7 In the event that the Borrowers seek to make a prepayment in connection with a refinancing of this Loan Agreement (a “Proposed Refinancing”), (i) the Borrower
Representative shall provide written notice to the Lender, (ii) the Lender and its Affiliates shall have the right (but not the obligation) to make a proposal to provide all
or a portion of such Proposed Refinancing by providing written notice to the Borrower Representative within [**] after receipt of any notice of a Proposed Refinancing
(such proposal, a “Financing Proposal”), which the Borrower Representative may elect to accept or decline in its sole discretion; provided that, during such [**] period,
neither the Borrower Representative nor any of its Subsidiaries may enter into exclusivity with a third party with respect to the Proposed Refinancing or consummate
any such Proposed Refinancing.
6. INTEREST
6.1 The Borrowers shall pay to the Lender Representative, in advance, all unpaid and accrued interest in respect of each Tranche outstanding on each Monthly Repayment
Date; provided that if the Borrowers prepay any Tranche on a day other than a Monthly Repayment Date, the Lender Representative shall return to the Borrower the
amount of interest paid that exceeds the amount of interest that accrued.
6.2 Interest on the principal amount of each Tranche from time to time shall accrue from day to day at a rate of Adjusted Term SOFR plus six point seven five per cent (6.75%
per annum) (the “Applicable Interest Rate”), from the applicable Drawdown Date until the repayment in full of such Loan; provided that the all-in interest rate
shall not exceed 15.00% per annum. Interest on the Loan and each part thereof shall be paid to the Lender Representative on each Monthly Repayment Date in the
Contractual Currency in the amounts to be specified in the Repayment Schedule.
6.3 Time of payment of any sum due from the Borrowers is of the essence under this Loan Agreement. If the Borrowers fail to pay any sum to the Lender Representative on its
due date for payment (after the expiration of any grace periods therefor), the Borrowers shall pay to the Lender Representative forthwith, on demand, interest on such
overdue sum (compounded on a Monthly basis) from the due date (or, if later, the date of expiration of the applicable grace period) to the date of actual payment (as
well after as before judgment) at a rate equal to the Applicable Interest Rate plus three per cent (3%) per annum. If the Borrowers fail to pay any sum within [**] after
such sum is due and payable, the Borrowers shall pay to the Lender forthwith on demand, a one-off late payment charge of two per cent (2)% of such overdue sum, to
compensate the Lender for additional administrative expense.
6.4
(i) Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event, the Lender
Representative and the Borrower Representative may amend this Loan Agreement to replace the then-current Benchmark with a Benchmark Replacement. No
replacement of the then-current Benchmark with a Benchmark Replacement pursuant to this clause (i) shall occur prior to the applicable Benchmark
Transition Start Date.
(ii) In connection with the use, administration, adoption or implementation of a Benchmark Replacement, the Lender Representative shall have the right (in
consultation with the Borrower) to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary
herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any
further action or consent of any other party to this Loan Agreement.
(iii) The Lender Representative shall promptly notify the Borrower Representative of (A) any occurrence of a Benchmark Transition Event and its related Benchmark
Replacement Date and Benchmark Transition Start Date, (B) the implementation of any Benchmark Replacement, (C) the effectiveness of any Benchmark
Replacement Conforming Changes and (D) (x) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (iv) below and (y) the
commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Lender
Representative pursuant to this Clause, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an
event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made
in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Clause.
21
(iv) Notwithstanding anything to the contrary herein or in any other Loan Document, at any time (including in connection with the implementation of a Benchmark
Replacement), (x) if the then-current Benchmark is a term rate (including the Term SOFR Reference Rate) and either (A) any tenor for such Benchmark is not
displayed on a screen or other information service that publishes such rate from time to time as selected by the Lender Representative or (B) the regulatory
supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such
Benchmark is not or will not be representative, then the Lender Representative may modify the interest period (or any similar or analogous definition) for any
Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (y) if a tenor that was removed pursuant to clause (x)
above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no
longer, subject to an announcement that it is not or will not be representative for a Benchmark (including a Benchmark Replacement), then the Lender
Representative may modify the interest period (or any similar or analogous definition) for all Benchmark settings at or after such time to reinstate such
previously removed tenor.
(v) Upon the Borrower Representative’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower Representative may revoke any
request for a SOFR Borrowing, conversion to or continuation of SOFR Loans to be made, converted or continued during any Benchmark Unavailability Period.
7. REPRESENTATIONS AND WARRANTIES
7.1 Each Borrower warrants and represents to the Lender, jointly and severally, that except as set forth on Schedule H, as of the date of this Loan Agreement:
7.1.1 (i) each Loan Party and each material Domestic Subsidiary is a corporation or limited liability company, as applicable, duly organized and validly existing under the laws
of its state of incorporation or formation, as applicable and (ii) each material Subsidiary that is not a Domestic Subsidiary is duly organized and validly existing under
the laws of its country of incorporation;
7.1.2 each Loan Party has the corporate capacity, and has taken all corporate action and obtained all corporate consents, necessary for it:
(i) to execute the Loan Documents to which it is or is to be party;
(ii) to borrow under this Loan Agreement and to make all the payments contemplated by, and to comply with all its other obligations under the Loan Documents to
which it is or is to be party; and
(iii) subject to the Perfection Exceptions, to grant the Lender Representative a first priority Security Interest in respect of the Collateral pursuant to the Security
Documents to which it is or is to be party;
7.1.3 each Group Company has good, valid and marketable title to, or valid leases and licences of, and all appropriate authorizations to use, the assets necessary to carry on its
business as it is being conducted, except in each case where the failure to possess the same would not reasonably be expected to have a Material Adverse Change;
7.1.4 [reserved];
7.1.5 the Loan Documents to which any Loan Party is or is to be party, do now or, as the case may be, will, upon execution and delivery (and, where applicable, registration as
provided for in the Loan Documents):
(i) constitute the relevant Loan Party’s legal, valid and binding obligations enforceable against it in accordance with their respective terms; and
(ii) subject to the Perfection Exceptions, create legal, valid and binding security interests enforceable in accordance with their respective terms;
in each case subject to subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors’ rights generally, and general equitable principles (whether considered in a proceeding in equity or at law);
7.1.6 the execution and (where applicable) registration by any Loan Party of the Loan Documents to which it is or is to be party and the performance of the transactions
contemplated thereunder, and the borrowing by each Borrower of the Loan and the compliance by each Loan Party with the Loan Documents to which it is or is to be
party, will not involve or lead to a contravention of:
(i) any applicable material law or other material legal or regulatory requirement;
(ii) the organizational documents of such Loan Party; or
(iii) any material contractual or other obligation or restriction which is binding on any Borrower or any other Group Company or any of their assets;
22
7.1.7 the payment obligations under the Loan Documents of the Loan Parties rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors,
except for obligations mandatorily preferred by law applying to companies generally;
7.1.8 all material consents, licences, approvals and authorizations required by any Loan Party in connection with the entry into, performance, validity and enforceability of the
Loan Documents to which it is or is to be party have been or (upon execution thereof) shall have been obtained by the Drawdown Date and are (or upon execution
thereof shall be) in full force and effect during the life of this Loan Agreement, except in each case where the failure to obtain or possess the same would not reasonably
be expected to have a Material Adverse Change;
7.1.9 all authorizations necessary for the conduct of the business, trade and ordinary activities of members of the Group have been obtained or effected and are in full force and
effect, except in each case where the failure to obtain or possess the same would not reasonably be expected to have a Material Adverse Change;
7.1.10 no corporate action, legal proceeding or other procedure or circumstance (including any creditors’ process) described in Clauses 9.1.7 has been taken, or to the
knowledge of the Borrower Representative, threatened in writing in relation to a member of the Group;
7.1.11 [reserved];
7.1.12 [reserved];
7.1.13 no financial or other written information furnished by or on behalf of any Borrower in connection with the negotiation of the Loan Documents delivered to the Lender
pursuant to the Loan Documents (other than projected financial information, pro forma financial information and information of a general economic or industry
nature), when taken as a whole, contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein (when taken as
a whole), in the light of the circumstances under which they were made, not materially misleading; provided that, with respect to projected and pro forma financial
information, the Borrowers represent only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time of
preparation and delivery; it being understood that actual results may vary from such forecasts and that such variances may be material;
7.1.14 the Financial Statements were prepared in accordance with GAAP and consistently applied, except as expressly noted therein, and fairly represent (in conjunction with
the notes thereto) in all material respects the financial condition of the Borrower Representative as at the date to which they were drawn up and the results of the
Borrower Representative’s operations during the financial year then ended;
7.1.15 since November 8, 2023, there has been no Material Adverse Change in the business or financial condition of the Group;
7.1.16 [reserved];
7.1.17 there is no litigation, action, proceeding, arbitration, investigation or claim pending or, so far as the Borrower Representative is aware, threatened in writing against any
Group Company before any court or administrative agency which would reasonably be expected to have a Material Adverse Change;
7.1.18 no judgment or order of a court, arbitral body or agency which would reasonably be expected to have a Material Adverse Change has been made against it or any Group
Company;
7.1.19 the Borrowers or the relevant Loan Party owns with good and marketable title all the Collateral, free from all security interests (other than Permitted Security Interests),
and all the Collateral is in good operating condition and repair, and are adequate for the uses to which they are being put, and none of such Collateral are in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that are not material in nature or cost;
7.1.20 the Group has no Financial Indebtedness other than Permitted Financial Indebtedness;
7.1.21 the Group has not granted any security over its assets to any third party except for Permitted Security Interests;
7.1.22 no other event or circumstance is outstanding which constitutes a default under any other agreement or instrument which is binding on any Borrower or any other
Group Company or to which its (or any of Group Company’s) assets are subject, in each case, which would reasonably be expected to cause a Material Adverse Change;
7.1.23 no Borrower nor any other Group Company has breached any law or regulation which breach has or would reasonably be expected to have a Material Adverse Change;
7.1.24 no labour disputes are current or, to the best of its knowledge and belief (after having made due and careful enquiry) has been threatened in writing against any
Borrower or any other Group Company which has or would reasonably be expected to have a Material Adverse Change;
7.1.25 each Borrower and each other Group Company is the sole legal and beneficial owner of, or otherwise to its knowledge, holds the necessary rights to use, the Intellectual
Property used in its business other than Permitted Licenses;
23
7.1.26 no material part of any Intellectual Property owned by any Borrower or a Group Company that is material to its business as of the date hereof or material to the business
contemplated to be conducted in the future has been judged invalid or unenforceable, in whole or in part;
7.1.27 to the knowledge of Borrower, no Borrower or a Group Company, in carrying on its business, infringes any Intellectual Property of any third party which has caused, or
would reasonably be expected to cause, a Material Adverse Change;
7.1.28 each Borrower and each other Group Company has taken all formal or procedural actions (including payment of fees) as reasonably required to: (i) maintain its material
Intellectual Property; (ii) maintain the confidentiality of any trade secrets; and (iii) to register any registrable Intellectual Property that is material to its business;
7.1.29 no Borrower nor any other Group Company is aware of any current, pending or threatened (in writing) challenge or objection by any third party to its use of any
Intellectual Property, or to the knowledge of Borrower, the infringement of any of its Intellectual Property by any third party, in each case where such challenge,
objection or infringement has caused, or would reasonably be expected to cause, a Material Adverse Change;
7.1.30 [reserved];
7.1.31 [reserved];
7.1.32 no Borrower or any Subsidiary is required to be registered as an “investment company” under the Investment Company Act of 1940;
7.1.33 none of the Borrowers, any of the Group Companies, any of their respective directors or officers, nor, to the knowledge of the Borrower Representative, any of their
respective employees, or any of their respective agents who act in any capacity in connection with the Loan Facility, is or are a Sanctioned Person;
7.1.34 in the past five years, each Borrower and each of the Group Companies and each of their respective directors and officers, and, to the knowledge of the Borrower
Representative, each of their respective employees and agents, in connection with their activities related to the Borrower or any Group Company, have conducted their
business in compliance with all applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions;
7.1.35 [reserved];
7.1.36 no loan, use of proceeds or transaction contemplated by this Loan Agreement will directly, or to the knowledge of the Borrower Representative, indirectly, violate
applicable Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions;
7.1.37 each Borrower and each other Group Company have instituted and maintain in effect policies and procedures reasonably designed to promote compliance by each
Borrower and each other Group Company and their respective directors, officers, employees, agents and representatives with all applicable Anti-Corruption Laws,
Anti-Money Laundering Laws and Sanctions;
7.1.38 [reserved];
7.1.39 [reserved];
7.1.40 each Borrower and each other Group Company is in compliance in all material respects with the EU General Data Protection Regulation 2016/679, the Data Protection
Act 2018 and any other analogous legislation in any applicable jurisdiction, in each case that is applicable to it and other than to the extent failure to so comply would
not reasonably be expected to result in a Material Adverse Change;
7.1.41 no Borrower or any of its respective Subsidiaries is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying
or carrying Margin Stock. No part of the proceeds of any Loan will be used for any purpose that entails a violation of, or that is inconsistent with, the provisions of the
Regulations of the Board, including Regulation T, U or X;
7.1.42 immediately after the consummation of the transactions to occur on the date of this Loan Agreement and immediately following the making of each Loan and after
giving effect to the application of the proceeds of each Loan, (a) the aggregate fair value of the assets of the Group will exceed the aggregate debts and liabilities,
subordinated, contingent or otherwise, of the Group; (b) the aggregate present fair saleable value of the property of the Group will be greater than the amount that will
be required to pay the probable liability of the debts and other liabilities of the Group, subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured; (c) the Group does not believe that it will incur debts and liabilities, subordinated, contingent or otherwise, beyond its ability to pay
such debts and liabilities as they become absolute and matured; and (d) the Group will not have unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be conducted following the date of this Loan Agreement;
7.1.43 except as would not reasonably be expected to have a Material Adverse Change, each Borrower is in compliance with the applicable provisions of ERISA and the Code
and the regulations and published interpretations thereunder. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events, would reasonably be expected to result in a material liability of any Borrower or any of its ERISA Affiliates. The present value of all benefit
liabilities under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting
24
Standards No. 87, as amended) did not, as of the last annual valuation date applicable thereto, exceed the fair market value of the assets of such Plan;
7.1.44 except as would not reasonably be expected to have a Material Adverse Change, each Foreign Pension Plan is in compliance with all laws applicable thereto and the
respective requirements of the governing documents for such plan. With respect to each Foreign Pension Plan, no Borrower, its respective Affiliates or any of their
respective directors, officers, employees or agents has engaged in a transaction which would subject any Borrower or any Subsidiary, directly or indirectly, to a tax or
civil penalty which would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Change. With respect to each Foreign Pension Plan,
reserves have been established in the financial statements furnished to the Lender Representative in respect of any unfunded liabilities in accordance with applicable
law and prudent business practice or, where required, in accordance with ordinary accounting practices in the jurisdiction in which such Foreign Pension Plan is
maintained, except as would not reasonably be expected to result in a Material Adverse Change; and
7.1.45 each Borrower and its respective Subsidiaries has filed or caused to be filed all U.S. federal and state income tax returns and other material U.S. federal, state, local and
foreign tax returns or materials required to have been filed by it and has paid or caused to be paid all material taxes due and payable by it and all assessments received
by it, except taxes that are being contested in good faith by appropriate proceedings and for which such Borrower or such Subsidiary, as applicable, shall have set aside
on its books adequate reserves.
7.1.46 The Borrowers’ representations and warranties set out in this Loan Agreement shall survive the execution and dating of this Loan Agreement.
8. UNDERTAKINGS
Each Borrower undertakes to the Lender, jointly and severally, to comply with the following provisions of this Clause 8 at all times during the Security Period, except
as the Lender Representative may otherwise agree in writing:
8.1 Affirmative Undertakings
8.1.1 each Borrower shall (and shall procure that each Group Company shall) comply in all respects with all laws, ordinances and regulations to which it/they may be
subject, if failure so to comply has or would reasonably be expected to result in a Material Adverse Change;
8.1.2 each Borrower shall (and shall procure that each Group Company shall) obtain, effect and keep effective all permissions, licences, consents and permits which
may from time to time be required to conduct its business, in each case to the extent that failure to so obtain, effect or keep effective would or would reasonably
be likely to result in a Material Adverse Change.
8.1.3 each Borrower shall (and shall procure that each Group Company shall) do or cause to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence except in a transaction permitted under Clause 8.2.1 or 8.2.5;
8.1.4 each Borrower shall (and shall procure that each Group Company shall) comply in all respects with all laws to which it may be subject, if failure to so comply
has or would reasonably be expected to result in a Material Adverse Change;
8.1.5 each Borrower shall (and shall ensure that each Group Company shall) comply with all Environmental Law and implement procedures reasonably designed to
monitor compliance with and to prevent liability under any Environmental Law;
8.1.6 each Borrower shall (and to the extent any Loan Party has pledged its assets pursuant to a Security Document, each Borrower shall procure that such Loan
Party shall) own only for its own account the Collateral free from all Security Interests and other interests and rights of every kind, except for Permitted
Security Interests and Permitted Agreements;
8.1.7 the Borrower Representative shall provide to the Lender Representative, promptly upon becoming aware of them, the details of any litigation, arbitration or
administrative proceedings which are current, threatened in writing or pending against any member of the Group and which would, if adversely determined,
reasonably be expected to constitute a Material Adverse Change;
8.1.8 the Borrower Representative shall provide to the Lender Representative, promptly upon becoming aware of them, the details of any judgment or order of a
court, arbitral body or agency which is made against any member of the Group and which would reasonably be expected to constitute a Material Adverse
Change;
8.1.9 the Borrower Representative shall provide the Lender Representative with:
(i) within [**] after the end of each fiscal year, its audited consolidated balance sheet and related audited consolidated statements of income, stockholders’
equity and cash flows showing the consolidated financial condition of the Borrower Representative and its consolidated Subsidiaries as of the close of
such fiscal year and the results of its operations and the operations of such Subsidiaries during such year, together with comparative figures for the
immediately preceding fiscal year, all audited by independent public accountants of recognized national standing and accompanied by an opinion of
such accountants (which
25
opinion shall not include (i) an explanatory paragraph expressing substantial doubt about the ability of the Borrower Representative and its
consolidated Subsidiaries to continue as a going concern or (ii) any qualification or exception as to the scope of such audit (provided that such opinion
may contain exceptions, qualifications or explanatory paragraphs that are with respect to, or resulting from, (A) an upcoming maturity date under the
Loan Facility or other indebtedness incurred in compliance with this Loan Agreement, (B) any actual or potential inability to satisfy a financial
maintenance covenant, including the applicable financial covenant under Clause 8.3, on a future date or in a future period, (C) a “going concern”
qualification or explanatory paragraph (or similar exception) with respect to liquidity or (D) an “emphasis of matter” paragraph) to the effect that such
consolidated financial statements fairly present the financial condition and results of operations of the Borrower Representative and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, together with a customary “management discussion and analysis”
provision;
(ii) within [**] after each of the first three fiscal quarters of each fiscal year of the Borrower Representative, its unaudited consolidated balance sheet and
related unaudited consolidated statements of income, stockholders’ equity and cash flows showing the consolidated financial condition of the Borrower
Representative and its consolidated Subsidiaries as of the close of such fiscal quarter and the results of its operations and the operations of such
Subsidiaries during such fiscal quarter and the then elapsed portion of the fiscal year, and comparative unaudited figures for the same periods in the
immediately preceding fiscal year, all certified by one of its Financial Officers as fairly presenting the financial condition and results of operations of the
Borrower Representative and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal
year-end audit adjustments, together with a customary “management discussion and analysis” provision;
(iii) [reserved];
(iv) (A) concurrently with any delivery of financial statements under the foregoing clauses (i) and (ii) above and (B) within [**] after the end of each of the
first two fiscal months of each fiscal quarter (commencing with the month ended February 29, 2024), a certificate of a Financial Officer in substantially
the form attached as Schedule B to this Loan Agreement (a "Compliance Certificate"), (x) except with respect to any Compliance Certificate
delivered pursuant to clause (B) above, certifying that no Default or Event of Default has occurred and is continuing or, if such a Default or Event of
Default has occurred and is continuing, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect
thereto, (y) setting forth computations in reasonable detail satisfactory to the Lender Representative demonstrating compliance with the financial
covenant contained in Clause 8.3 and (z) except with respect to any Compliance Certificate delivered pursuant to clause (B) above, including the details
of any Group Company incorporated or acquired on or after the date of this Loan Agreement to the extent not previously disclosed to the Lender
Representative;
(v) at the request of the Lender Representative, after the date of delivery of the financial information required pursuant to the foregoing clauses (i) and (ii),
the chief executive officer and/or the chief financial officer (or other applicable senior officer) of the Borrower Representative will hold and participate
in a [**] conference call or teleconference at a time selected by the Borrower Representative and reasonably acceptable to the Lender Representative to
(i) review such financial information with respect to the previous [**], and the financial condition of the Borrower Representative and its Subsidiaries
and (ii) discuss the operating performance, clinical progress financial condition and strategy of the Group;
(vi) within [**] of their approval by the relevant board of directors of such Group Company, a consolidated budget showing: (i) a projected quarterly
consolidated profit and loss statement (presented in management statement format, excluding non-cash items such as depreciation, amortization,
stock-compensation and non-recurring items), (ii) a projected quarterly cash forecast for the forthcoming financial year and (iii) solely to the extent
available in the customary practice of the Group, a projected quarterly consolidated balance sheet, in each case in the form customarily prepared by the
Borrower Representative (collectively, a "Budget");
(vii) any revised version of a Budget previously provided to the Lender Representative pursuant to clause (vi) above within [**] of the approval by the relevant
board of directors of the relevant Group Company of such revised Budget;
(viii) promptly after written request therefore, such further information regarding the financial condition, business and operations of any member of the
Group as the Lender Representative may reasonably request; and
(ix) all material documents or summaries thereof dispatched by the Borrower Representative and each other Group Company to all of its shareholders or to
its secured creditors generally, promptly after the time they are delivered to the shareholders or secured creditors; provided that the Group shall not be
required to disclose any such information that presents a conflict of interest, is confidential or otherwise protected by attorney-client privilege;
provided, that any documents required to be delivered pursuant to Clause 8.1.9 (or to the extent any such documents are included in materials otherwise filed
with the SEC) may be delivered electronically or by filing with the SEC and if so delivered or filed, shall be deemed to have been delivered on the date on which
such documents are posted on the relevant internet or intranet website, if any, to which the Lender Representative has access (including EDGAR); provided
that the Borrower shall notify (which may be by facsimile or electronic mail) the Lender Representative of the posting of any such documents described in
clauses (i) and (ii) above and provide to
26
the Lender Representative by electronic mail electronic versions (i.e., soft copies) of such documents to the extent requested by the Lender Representative.
8.1.10 the Borrower Representative shall provide to the Lender Representative all documents, confirmations and evidence reasonably requested in writing by any
Lender (through the Lender Representative) to satisfy its "know your customer" requirements or similar identification checks (including the USA PATRIOT
Act) in order to meet its obligations from time to time under applicable money laundering, or similar, laws and regulations;
8.1.11 promptly upon becoming aware of a Vadadustat Withdrawal Event, the Borrower Representative shall provide notice thereof to the Lender Representative;
8.1.12 during the continuance of an Event of Default pursuant to Clause 9.1.2, 9.1.3 (solely with respect to a breach of Clause 8.3) or 9.1.7, at the written request of the
Lender Representative, (x) the Lender Representative shall be entitled to have a representative attend all meetings of the Borrower Representative's (and each
Group Company's) board of directors and/or any committee thereof in a non-voting observer capacity and (y) the Borrower Representative agrees to give
notice of all such board and committee meetings to the Lender Representative at the same time as to its directors, and to facilitate attendance of the Lender
Representative’s representative at such board and/or committee meetings;
8.1.13 each Borrower shall (and shall procure that each Loan Party shall) maintain in force and promptly obtain or renew all consents required:
(i) for each Borrower and each other Loan Party to perform its obligations under the Loan Documents, as relevant;
(ii) for the legality, validity, admissibility or enforceability of the Loan Documents; and
(iii) for each Borrower and each other Loan Party to continue to own the Collateral (except to the extent such Collateral will cease to constitute Collateral as
the result of a Permitted Transfer, Permitted Investment or other transaction expressly permitted by the terms of this Loan Agreement),
and each Borrower shall, and shall procure that each Loan Party shall, comply with the terms of all such consents;
8.1.14 the Borrower Representative shall notify the Lender Representative promptly after it becomes aware of the occurrence of any Event of Default, and shall
thereafter keep the Lender Representative fully up to date with all material developments as reasonably requested by the Lender Representative;
8.1.15 insurance matters:
(i) the Borrower Representative shall (and shall ensure that each Group Company shall) maintain adequate risk protection through insurances on and in
relation to its business and assets to the extent reasonably required on the basis of good business practice (as reasonably determined by the Borrower
Representative), taking into account, inter alia, its (and any Group Company's) financial position and nature of operations. All insurances must be
with reputable independent insurance companies or underwriters (as reasonably determined by the Borrower Representative);
(ii) Subject to Clause 3.6, the Borrower Representative shall (A) use reasonable best efforts to ensure that the Lender Representative shall be named as (x)
an additional insured with respect to the U.S. general liability insurance policies (which, for the avoidance of doubt, shall not include any directors
and officers policies, workers compensation, business interruption policies or cyber policies) maintained by a Loan Party and (y) lender’s loss payee
with respect to the U.S. general property insurance policies maintained by a Loan Party and (B) use commercially reasonable efforts to cause each
such policy to provide that it shall not be cancelled, modified or not renewed (x) by reason of nonpayment of premium upon not less than [**] prior
written notice thereof by the insurer to the Lender Representative (giving the Lender Representative the right to cure defaults in the payment of
premiums) or (y) for any other reason upon not less than [**] prior written notice thereof by the insurer to the Lender Representative; provided that,
unless an Event of Default shall have occurred and be continuing and the Lender Representative shall have exercised its rights pursuant to Clause 9.2
of this Loan Agreement, (1) all proceeds from insurance policies shall be paid to the applicable Loan Party, (2) to the extent any Lender receives any
insurance proceeds, such Lender shall promptly turn over to the Borrower Representative such amounts received by it as an additional insured or
lender’s loss payee, and (3) the Lender agrees that the Borrower Representative and/or its Subsidiaries shall have the sole right to adjust or settle any
claims under such insurance;
8.1.16 subject to the Perfection Exceptions and any other exceptions, thresholds, limitations and deadlines contained in this Loan Agreement or the other Loan
Documents, each Borrower shall at the request of the Lender Representative from time to time (and shall procure that each Group Company shall) promptly
execute and deliver such further documents creating Security Interests in favour of the Lender Representative over such assets of the relevant Group Company
and in such form as the Lender Representative may reasonably require in its discretion from time to time to: (i) secure all monies, obligations and liabilities of
the Borrowers and/or any Group Company to the Lender Representative under the Loan Documents; (ii) facilitate the realisation of the Collateral (it being
understood that the Collateral shall not be realized upon unless an Event of Default is continuing); and/or (iii) exercise the powers conferred on the Lender
Representative or a receiver or administrator appointed under any Security Document;
27
8.1.17 each Borrower shall (and shall procure that each Group Company shall) maintain in good working order and condition (ordinary wear and tear excepted) all of
its assets necessary or desirable in the conduct of its business (subject to Permitted Transfers, Permitted Investments or other transactions permitted pursuant
to the terms of this Loan Agreement);
8.1.18 each Borrower shall (and it shall procure each Group Company shall):
(i) preserve and maintain the subsistence and validity of all Intellectual Property material to the operation of its business;
(ii) use commercially reasonable efforts to prevent, and take action against, any infringement in any material respect of the Intellectual Property necessary
for its business;
(iii) prosecute and maintain all applications and registrations in place in respect of material Intellectual Property which it has now or makes hereinafter
and pay all registration fees and taxes necessary to maintain such Intellectual Property in full force and effect and record its interest in such
Intellectual Property unless in Borrower’s reasonable judgement, such Intellectual Property is either (i) immaterial or (ii) no longer required in the
ordinary course of the Group's business; and
(iv) not use or permit the Intellectual Property necessary for its business to be used in a way or take any step or omit to take any step in respect of such
Intellectual Property which would reasonably likely materially and adversely affect the existence or value of such Intellectual Property or imperil the
right of the Group to use such Intellectual Property.
8.1.19 each Borrower shall (and shall procure that each Group Company shall) at all times comply with the requirements of all applicable Anti-Corruption Laws,
Anti-Money Laundering Laws and Sanctions;
8.1.20 each Borrower shall (and shall procure that each Group Company shall) maintain in effect and enforce policies and procedures reasonably designed to
promote compliance with applicable Anti-Corruption Laws, Anti-Money Laundering Laws and Sanctions;
8.1.21 each Borrower shall (and shall procure that each Group Company shall) pay and discharge all material Taxes imposed upon it or its assets within the time
period allowed without incurring penalties unless and only to the extent that such payment is being contested in good faith, adequate reserves are being
maintained for those Taxes and the costs required to contest them and reasonable details of which have been expressly notified to the Lender Representative in
writing, and such payment can be lawfully withheld;
8.1.22 each Borrower shall (and shall procure that each Group Company shall) keep proper books of record and account in which full, true and correct entries in
conformity with GAAP and all requirements of any applicable laws are made of all dealings and transactions in relation to its business and activities.
8.1.23 the Borrower Representative will, and will cause each of its Subsidiaries to, permit any representatives of the Lender Representative to visit and inspect the
financial records and the properties of such person at reasonable times and as often as reasonably requested and to make extracts from and copies of such
financial records, and permit any representatives designated by the Lender Representative to discuss the affairs, finances and condition of such person with the
officers thereof; provided that if no Event of Default has occurred and is continuing, then the (i) the Lender Representative shall conduct no more than [**]
such inspections per calendar year (in the aggregate for all such representatives) and (ii) Borrowers’ reimbursement obligations with respect to such
inspections shall be limited to [**] (in the aggregate for all such representatives) per calendar year;
8.1.24 each Borrower shall (and shall procure that each Group Company shall) subordinate any existing and future loans between the Group Companies to the rights
and interests hereunder pursuant to the Intercompany Subordination Agreement or another subordination agreement reasonably satisfactory to the Lender
Representative;
8.1.25 if the Borrower Representative shall form or acquire any new direct or indirect Subsidiary (other than an Excluded Subsidiary) or any Subsidiary shall cease to
be an Excluded Subsidiary, it shall, (i) within [**] after the acquisition, formation or cessation thereof, cause any such Subsidiary that is a Domestic Subsidiary
to become a Loan Party and (ii) within [**] after the acquisition, formation or cessation thereof, cause any such Subsidiary that is a Foreign Subsidiary to
become a Loan Party, in each case by delivering to the Lender Representative:
(i) in the case of any such Subsidiary that is to become an additional Borrower, a duly executed joinder to this Loan Agreement in form and substance
reasonably satisfactory to the Lender Representative;
(ii) in the case of any such Domestic Subsidiary, a duly executed joinder to the Guarantee and Collateral Agreement, in form and substance reasonably
satisfactory to the Lender Representative;
(iii) in the case of any such Foreign Subsidiary, a New York law guarantee agreement and a security agreement governed by the laws of the jurisdiction of
organization of such Foreign Subsidiary, in each case in form and substance reasonably satisfactory to the Lender Representative;
(iv) such other duly executed Security Documents and schedules as required by the Guarantee and Collateral Agreement or applicable foreign law security
agreement (including Intellectual Property security agreements, if applicable), consistent with the forms (if any) delivered on the Closing Date with
respect to
28
the Borrower Representative or otherwise in form and substance reasonably satisfactory to the Lender Representative;
(v) a customary certificate containing organizational documents, resolutions, a good standing certificate from the state of incorporation of such Subsidiary
and an incumbency certificate, substantially consistent with the certificate delivered pursuant to Clause 3.5.1(i); and
(vi) customary legal opinions from counsel to the Loan Parties (if customary in the relevant jurisdiction for such opinions to be provided by borrowers’
counsel) with respect to the above clauses (i) through (iv); and
8.1.26 if any Loan Party shall acquire any Material Property, it shall promptly notify the Lender Representative and, if reasonably requested by the Lender
Representative, shall execute and deliver a customary mortgage (together with customary ancillary documents and deliverables) in favor of the Lender
Representative within [**] of such request (all such properties that are subject to a mortgage, the “Mortgaged Properties”).
8.2 Negative Undertakings
8.2.1 each Borrower shall not (and shall procure that each Group Company shall not), by one or a series of transactions, whether related or not and whether at one
time or over a period of time, sell, lease, convey, transfer, assign, licence or otherwise dispose of (each, a “Transfer”) any asset (including (but not limited to)
by any form of sale and leaseback, invoice discounting or factoring), in each case other than the following (such following items, “Permitted Transfers”);
(i) Transfers of inventory, equipment, accounts receivable, notes receivable or other current assets in the ordinary course of business (other than, for the
avoidance of doubt, pursuant to factoring or receivables financing arrangements);
(ii) the discount without recourse or sale or other disposition or conversion into notes receivable of unpaid and overdue accounts receivable arising in the
ordinary course of business in connection with the compromise, collection or settlement thereof and not part of a financing transaction;
(iii) Transfers of surplus, damaged, worn out or obsolete equipment that is, in the reasonable judgment of Borrower exercised in good faith, no longer
economically practicable to maintain or useful in the ordinary course of business;
(iv) the lease, assignment, license, sublicense or sublease of any real or personal property (other than Intellectual Property) in the ordinary course of
business;
(v) the surrender or waiver of obligations of trade creditors or customers or other contract rights that were incurred in the ordinary course of business,
including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer or
compromise, settlement, release or surrender of a contract, tort or other litigation claim, arbitration or other disputes;
(vi) Transfers arising from foreclosures, condemnations, eminent domain, seizure, nationalization or any similar action with respect to assets, or
dispositions of property subject to Casualty Events;
(vii) Transfers of property to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property that is
promptly purchased or (ii) the proceeds of such Transfer are applied to the purchase price of such replacement property (which replacement property
is actually promptly purchased);
(viii) the unwinding of swap contracts;
(ix) Transfers that constitute Permitted Security Interests or Permitted Distributions, or that are made pursuant to the terms of any Permitted Agreement
or Permitted Investment;
(x) Transfers of cash and Cash Equivalents in the ordinary course of business for equivalent value and in a manner that is not prohibited by the terms of
this Loan Agreement or the other Loan Documents;
(xi) Transfers (A) between or among Loan Parties, (B) between or among Subsidiaries that are not Loan Parties, (C) from a Subsidiary that is not a Loan
Party to a Loan Party, (D) of cash and Cash Equivalents to any MSC, so long as no Default or Event of Default is continuing (provided that such MSC
may only hold such cash or Cash Equivalents in an investment account (which may not be subject to a Security Interest in favor of any other person
(other than Security Interests arising as a matter of law in favor of the financial institution at which such account is located)) and invest such cash
pursuant to the investment policy of the Group) and (E) from a Loan Party to a member of the Group (other than an MSC) that is not a Loan Party;
provided that all such Transfers pursuant to this clause (E) shall not exceed $[**] in the aggregate in any fiscal year;
(xii) (A) the sale or issuance of equity interests of any Subsidiary of Borrower to any Group Company and (B) the issuance of directors’ qualifying shares
and shares issued to foreign nationals to the extent required by applicable law;
29
(xiii) any Transfer, abandonment, cancellation, non-renewal or discontinuance of use or maintenance of Intellectual Property of the Group that the
Borrower Representative reasonably determines in good faith is (i) no longer useful to the business of the Group, (ii) no longer economically
practicable to maintain in the ordinary course of business or (ii) is not material to the business of the Group (taken as a whole);
(xiv) (i) the issuance or sale of any Permitted Convertible Debt by the Borrower Representative, (ii) the sale of any Permitted Warrant Transaction by the
Borrower Representative, (iii) the purchase of any Permitted Bond Hedge Transaction by the Borrower Representative or (iv) the performance by the
Borrower Representative of its obligations under any Permitted Convertible Debt, any Permitted Warrant Transaction or any Permitted Bond Hedge
Transaction; and
(xv) any other Transfer, provided that the fair market value of all property so Transferred pursuant to this clause (xv) shall not exceed $[**] in the
aggregate in any fiscal year;
8.2.2 each Borrower shall not (and shall ensure that no Group Company shall) incur or allow to remain outstanding any Financial Indebtedness, other than the
following (such following items, “Permitted Financial Indebtedness”):
(i) under this Loan Agreement and the other Loan Documents;
(ii) Existing Financial Indebtedness;
(iii) indebtedness pursuant to intercompany arrangements permitted under Clause 8.2.6(xv);
(iv) non-speculative hedging transactions in connection with protection against interest rate or currency fluctuations and forward purchase contracts, in
each case, entered into in the ordinary course of business;
(v) arising in the ordinary course of business with suppliers of goods or services with a maximum duration of [**] or that are being contested in good faith;
(vi) customer deposits and advance payments received in the ordinary course of business from customers for goods purchased in the ordinary course of
business;
(vii) indebtedness arising as a result of operating leases entered into by any Group Company in the ordinary course of business;
(viii) the Permitted Agreements (including any milestone payments or similar payments pursuant to the terms thereof);
(ix) indebtedness not to exceed $[**] in the aggregate at any time outstanding, consisting of (i) indebtedness incurred to finance the purchase, lease,
construction, installation, repair, or improvement of fixed or capital assets and (ii) capital lease obligations;
(x) indebtedness of with respect to letters of credit entered into in the ordinary course of business in an amount not to exceed $[**] outstanding at any
time;
(xi) (i) indebtedness with respect to workers’ compensation claims, payment obligations in connection with health, disability or other types of social
security benefits, unemployment or other insurance obligations, reclamation and statutory obligations or (ii) indebtedness related to employee benefit
plans, including annual employee bonuses, accrued wage increases and 401(k) plan matching obligations; in each case, incurred in the ordinary
course of business;
(xii) indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations arising in
the ordinary course of business;
(xiii) indebtedness in respect of (A) automated clearing house transactions and payment facilitation programs and (B) netting services, overdraft
protection and other cash management services (including depository, credit, purchasing or debit card, corporate credit cards, non-card e-payable
services, electronic funds transfer, treasury management services (including controlled disbursement services, return items and interstate depository
network services), other demand deposit or operating account relationships, foreign exchange facilities, credit card processing services and merchant
services), in each case of clauses (A) and (B), in the ordinary course of business and, in the case of clause (B), not to exceed $[**] in the aggregate
outstanding at any time;
(xiv) indebtedness consisting of the financing of insurance premiums in the ordinary course of business;
(xv) indebtedness consisting of guarantees resulting from endorsement of negotiable instruments for collection by any Group Company in the ordinary
course of business;
(xvi) indebtedness created or arising under any royalty, synthetic royalty or other monetization or similar transaction and in each case incurred solely in
connection with any properties or assets which do not
30
constitute Collateral under the Loan Documents; provided, however, that any such indebtedness is non-recourse to Borrower or any other Loan Party;
(xvii) indebtedness consisting of (A) indemnities and purchase price adjustments and (B) obligations of a Person to pay an earn-out, milestone payment or
similar contingent or deferred consideration to a counterparty incurred or created in connection with an acquisition, transfer, investment or other sale
or disposition permitted under this Loan Agreement, including, with respect to any purchase price holdback in respect of a portion of the purchase
price of an asset sold to that Person to satisfy unperformed obligations of the seller of such asset, any obligation to pay such seller the excess of such
holdback over such obligations; provided, that any indebtedness incurred under this clause (B) shall not, when taken together with the aggregate
outstanding amount of all other indebtedness incurred under this clause (B) after the Closing Date and prior to such time, exceed $[**] in the
aggregate unless the Acquisition Consideration Condition is satisfied as of the date such indebtedness is incurred;
(xviii) Permitted Convertible Debt;
(xix) other Financial Indebtedness not to exceed $[**] in the aggregate outstanding at any time;
(xx) guarantees of Permitted Financial Indebtedness incurred pursuant to clauses (i) through (xix) or (xxi); and
(xxi) extensions, refinancings, modifications, amendments and restatements of Permitted Indebtedness in clauses (i) through (xx) above; provided, that
the principal amount thereof is not increased (other than by any reasonable amount of premium (if any), interest (including post-petition interest),
fees, expenses, charges or additional or contingent interest reasonably incurred in connection with the same and the terms thereof);
8.2.3 each Borrower shall not (and shall ensure that no other Group Company shall) create or permit to subsist any Security Interest over any of its assets, other than
the following (such following items, “Permitted Security Interests”):
(i) a Security Interest provided to the Lender Representative or any Lender under this Loan Agreement or any other Loan Document;
(ii) any lien arising by operation of law or regulation (including landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, contractors’, suppliers of
materials’, architects’ and repairmen’s Liens and other similar Liens), in each case, arising in the ordinary course of business and securing obligations
that are not due and payable or are being contested in good faith;
(iii) deposits to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than capital lease obligations), statutory
obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;
(iv) Security Interests existing on the date hereof and set forth on Schedule F hereto;
(v) Security Interests for material taxes, assessments or governmental charges (A) which are not yet [**] past due or payable or (B) which are being contested
in good faith by appropriate proceedings and for which adequate reserves are being maintained to the extent required by GAAP;
(vi) (A) pledges and deposits made in the ordinary course of business in compliance with workmen’s compensation, payroll taxes, unemployment insurance
and other social security laws or regulations, (B) Security Interests made in the ordinary course of business securing liability for reimbursement or
indemnification obligations of insurance carriers providing property, casualty or liability insurance to the Borrower Representative or any of its
Subsidiaries, (C) Security Interests to secure performance of tenders, bids, leases, statutory or regulatory obligations, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other obligations of like nature, in each case other than for borrowed money and
entered into in the ordinary course of business and (D) Security Interests in favor of customs and revenue authorities arising as a matter of law to
secure payment of customs duties in connection with the importation and exportation of goods in the ordinary course of business;
(vii) Security Interests (including the right of set-off) of a collection bank arising under Section 4-210 of the Uniform Commercial Code, or any comparable or
successor provision, on items in the course of collection, and other Security Interests in favor of banks or other financial institutions incurred on
deposits made in accounts held at such institutions in the ordinary course of business; provided that such Security Interests (A) are not given in
connection with the incurrence of any Financial Indebtedness, (B) relate solely to obligations for administrative and other banking fees and expenses
incurred in the ordinary course of business in connection with the establishment or maintenance of such accounts and (C) are within the general
parameters customary in the banking industry;
(viii) Security Interests arising from attachments or judgments, orders, or decrees in circumstances not constituting an Event of Default;
31
(ix) Security Interests that are contractual rights of set-off (A) relating to pooled deposit or sweep accounts of Borrower or any of its Subsidiaries to permit
satisfaction of overdraft or similar obligations incurred in the ordinary course of business or (B) relating to purchase orders and other agreements
entered into with customers of Borrower or any of its Subsidiaries in the ordinary course of business;
(x) Security Interests solely on any cash earnest money deposits made by Borrower or any of its Subsidiaries in connection with any Permitted Acquisition,
Permitted Investment or other acquisition of assets or properties not otherwise prohibited under this Loan Agreement;
(xi) Security Interests on cash or Cash Equivalents securing obligations under Clause 8.2.2(x);
(xii) Security Interests securing obligations under (A) Clause 8.2.2(ix), to the extent such Security Interests extend only to the assets and property the
acquisition, lease, construction, installation, repair, replacement or improvement of which is financed thereby and any replacements, additions and
accessions thereto and any income or profits thereof; provided, that individual financings provided by a lender may be cross collateralized to other
financings provided by such lender or its affiliates or (B) Clause 8.2.2(iv);
(xiii) Security Interests on specific items of inventory or other goods and proceeds of any person securing such person’s obligations in respect of bankers’
acceptances or letters of credit entered into in the ordinary course of business issued or created for the account of such person to facilitate the
purchase, shipment or storage of such inventory or other goods, in an amount not to exceed $[**] in the aggregate outstanding at any time;
(xiv) Security Interests disclosed by the title insurance policies delivered for any Mortgaged Property;
(xv) servitudes, easements, rights-of-way, restrictions and other similar encumbrances on real property imposed by law and encumbrances consisting of
zoning or building restrictions, easements, licenses, restrictions on the use of property or minor defects or other irregularities in title which, in the
aggregate, are not material, and which do not in any case materially detract from the value of the property subject thereto or interfere with the
ordinary conduct of the business of any Borrower or any of its Subsidiaries;
(xvi) security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the
operations of a Group Company in the ordinary course of business;
(xvii) to the extent constituting a Security Interest, escrow arrangements securing indemnification obligations associated with any Permitted Acquisition or
Permitted Investment;
(xviii) Security Interests in favor of any Loan Party;
(xix) Security Interests arising from, or from Uniform Commercial Code financing statement filings regarding, operating leases or conditional sale, title
retention, consignment or similar arrangements entered into by a Group Company in the ordinary course of business;
(xx) Permitted Agreements;
(xxi) judgment and attachment Security Interests not giving rise to an Event of Default pursuant to Clause 9.1.8 and notices of lis pendens and associated
rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;
(xxii) other Security Interests not to exceed $[**] in the aggregate outstanding at any time; and
(xxiii) the modification, replacement, extension or renewal of the Security Interests described in clauses (i) through (xxii) above; provided, however, that any
such modification, replacement, extension or renewal must (A) be limited to the assets or properties encumbered by the existing Security Interest
(and any additions, accessions, parts, improvements and attachments thereto and the proceeds thereof) and (B) not increase the principal amount of
any Financial Indebtedness secured by the existing Security Interest (other than by any reasonable premium or other reasonable fees and expenses
reasonably incurred in connection therewith).
8.2.4 each Borrower shall not (and shall ensure that no other Group Company shall):
(i) declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash
or in kind) on or in respect of its share capital (or any class of its share capital);
(ii) repay or distribute any dividend or share premium reserve;
(iii) pay any management, advisory or other fee to or to the order of any of its shareholders in their capacity as a shareholder; or
32
(iv) redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so,
without the prior written consent of the Lender Representative, in each case, other than Permitted Distributions.
Notwithstanding the foregoing, and for the avoidance of doubt, this section shall not prohibit (i) the conversion or exchange by holders of (including any cash
payment upon conversion or exchange), or required payment of any principal or premium on (including, for the avoidance of doubt, in respect of a required
repurchase in connection with the redemption of Permitted Convertible Debt upon satisfaction of a condition related to the stock price of the Borrower
Representative’s common stock) or required payment of any interest with respect to, any Permitted Convertible Debt in each case, in accordance with the
terms of the indenture governing such Permitted Convertible Debt or (ii) the entry into (including the payment of premiums in connection therewith) or any
required payment with respect to, or required early unwind or settlement of, any warrant relating to the Borrower Representative’s common stock (including,
without limitation, the Warrant Instrument), Permitted Bond Hedge Transaction or Permitted Warrant Transaction, in each case, in accordance with the terms
of the agreement governing such warrant relating to the Borrower Representative’s common stock (including, without limitation, the Warrant Instrument),
Permitted Bond Hedge Transaction or Permitted Warrant Transaction.
Notwithstanding the foregoing, Borrowers may repurchase, exchange or induce the conversion of Permitted Convertible Debt by delivery of shares of the
Borrower Representative’s common stock and/or a different series of Permitted Convertible Debt; provided that, for the avoidance of doubt, substantially
concurrently with, or a commercially reasonable period of time before or after, the related settlement date for the Permitted Convertible Debt that are so
repurchased, exchanged or converted, Borrowers may exercise or unwind or terminate early (whether in cash, shares or any combination thereof) the portion
of the Permitted Bond Hedge Transactions and Permitted Warrant Transactions, if any, corresponding to such Permitted Convertible Debt that is so
repurchased, exchanged or converted;
8.2.5 each Borrower shall not (and shall procure that no other Group Company shall), enter into any amalgamation, demerger, merger or corporate reconstruction;
provided that:
(i) any Loan Party may merge, amalgamate or consolidate with (A) a Borrower, so long as such Borrower is the surviving entity or (B) any other Loan Party
(other than a Borrower);
(ii) any Group Company that is not a Loan Party may merge, amalgamate or consolidate with (i) any Loan Party, so long as such Loan Party is the surviving
entity or (ii) any other Group Company that is not a Loan Party;
(iii) any Group Company may liquidate or dissolve or change its legal form; provided that if such Group Company is a Loan Party, either (A) the validity,
perfection and priority of the Security Interests securing the Loan Facility are not adversely affected thereby or (B) such Loan Party shall at or before
the time of such liquidation or dissolution transfer its assets to another Loan Party; and
(iv) any Group Company may enter into any amalgamation, demerger, merger or corporate reconstruction in order to effect a Permitted Transfer, Permitted
Acquisition or other Permitted Investment;
8.2.6 each Borrower shall not (and shall procure that each Group Company shall not) (A) acquire any assets or equipment, other than in the normal course of
business and upon an arm’s length basis, (B) acquire any equity interests of any third party, or any business unit or division of any third party, (C) invest in or
acquire any shares, stocks, securities or other interest in any Joint Venture or transfer any assets or lend to or guarantee or give an indemnity for or give
security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing),
or (D) be a creditor in respect of any Financial Indebtedness, in each case, other than the following (such items, “Permitted Investments”):
(i) investments in Subsidiaries existing on the date hereof;
(ii) investments shown on Schedule E;
(iii) investments consisting of cash and Cash Equivalents;
(iv) investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business;
(v) guarantees of operating leases or of other obligations that do not constitute Financial Indebtedness, in each case, entered into in the ordinary course of
business;
(vi) non-cash Investments made in connection with reorganization activities otherwise permitted under this Loan Agreement or in connection with tax
planning;
(vii) investments that constitute Permitted Security Interests, Permitted Transfers or Permitted Distributions, or that are made in accordance with the terms
of Permitted Agreements or Permitted Financial Indebtedness (including guarantees of Permitted Financial Indebtedness);
(viii) investments consisting of (A) non cash loans to employees, officers or directors relating to the purchase of equity securities of the Borrower
Representative pursuant to employee stock purchase plans, or agreements approved by Borrower’s Board of Directors, (B) advances or other
investments to employees,
33
officers or directors to cover tax obligations in connection with the vesting of restricted stock issued to such employee, officer or director, (C) travel
advances and employee relocation loans and other employee advances in the ordinary course of business in an amount not to exceed $[**] at any time
outstanding, and (D) other loans to employees, officers or directors of any Group Company in an amount not to exceed, in the case of this clause (D),
$[**] in the aggregate at any time outstanding;
(ix) investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of business;
(x) investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers, distributors, suppliers, licensors and
licensees who are not Affiliates, in the ordinary course of business;
(xi) Permitted Acquisitions;
(xii) other investments consisting of (A) the formation of any Subsidiary for the purpose of effectuating a Permitted Acquisition, the capitalization of such
Subsidiary whether by capital contribution or intercompany loans, in each case, to the extent otherwise permitted by the terms of this Loan
Agreement, related investments in Subsidiaries necessary to consummate such Permitted Acquisition, and the receipt of any non-cash consideration
in a Permitted Acquisition, and (B) earnest money deposits required in connection with a Permitted Acquisition or other acquisition of properties or
assets not otherwise prohibited hereunder;
(xiii) investments of any person that (A) becomes a Subsidiary after the date hereof, or (B) are assumed after the date hereof by any Subsidiary in connection
with an acquisition of assets from such Person, in either case, in a Permitted Acquisition;
(xiv) investments constituting the licensing of Intellectual Property expressly permitted under this Loan Agreement;
(xv) investments by (i) any Loan Party in any other Loan Party, (ii) any Subsidiary which is not a Loan Party in any other Subsidiary which is not a Loan
Party, (iii) any Subsidiary which is not a Loan Party in any Loan Party, (iv) any Loan Party in a Subsidiary which is not a Loan Party, in an amount not
to exceed $[**] per fiscal year and (v) any Group Company in any MSC so long as no Default or Event of Default is continuing;
(xvi) investments in connection with, and the performance of obligations under (including, for the avoidance of doubt, the entry into, payments of any
premium with respect to, and the settlement of) any Permitted Bond Hedge Transactions and Permitted Warrant Transactions, in each case in
accordance with its terms; and
(xvii) other investments not to exceed $[**] in the aggregate per fiscal year;
8.2.7 notwithstanding any other provision of this Loan Agreement, each Borrower shall not request any Loan, and each Borrower shall not use, and shall ensure that
no Group Company, its or their respective directors, officers, employees, agents and representatives shall use, the proceeds of any Loan, directly or knowingly
indirectly, (i) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person
in violation of any applicable Anti-Corruption Laws, Anti-Money Laundering Laws or Sanctions, (ii) to fund, finance or facilitate any activities, business or
transaction of or with any Sanctioned Person or in any Designated Jurisdiction, or (iii) in any other manner that would result in the violation by any party of
any applicable Sanctions, Anti-Corruption Laws or Anti Money Laundering Laws;
8.2.8 each Borrower shall procure that no substantial change is made to the general nature of the business of the Borrower Representative or the Group from that
carried on at the date of this Loan Agreement (or any business reasonably related, complementary, synergistic or ancillary thereto or reasonable extensions
thereof);
8.2.9 each Borrower shall not (and shall procure that each Group Company shall not) make any distribution, whether in cash, property, securities or a combination
thereof, other than regular scheduled payments of interest as and when due (to the extent not prohibited by any applicable subordination provisions) in respect
of, or pay, or commit to pay, or directly or indirectly redeem, repurchase, retire or otherwise acquire for consideration, or set apart any sum for the aforesaid
purposes, any Financial Indebtedness with an individual outstanding principal amount in excess of $[**] that is contractually subordinated to the Loan Facility
(“Junior Debt”), or pay in cash any amount in respect of any Junior Debt that may at the obligor’s option be paid in kind or in other securities, in each case
other than (i) under intercompany loans permitted to be incurred pursuant to this Loan Agreement, (ii) pursuant to the terms of any Permitted Agreement or
(iii) refinancings of Permitted Financial Indebtedness to the extent such refinancing is permitted pursuant to Clause 8.2.2;
8.2.10 each Borrower shall not (and shall procure that each Group Company shall not) enter into, incur or permit to exist any agreement or other arrangement that
prohibits, restricts or imposes any condition upon (A) the ability of any Borrower or any Loan Party to create, incur or permit to exist any Security Interest
upon any of its property or assets, or (B) the ability of any Subsidiary to pay dividends or other distributions with respect to any of its equity interests or to
make or repay loans or advances to any Borrower or any other Subsidiary or to guarantee Financial Indebtedness of any Borrower or any other Subsidiary;
provided that the foregoing shall not apply to:
34
(i) restrictions in agreements listed on Schedules D, E, F or G;
(ii) restrictions contained in the [**] or the [**];
(iii) restrictions and conditions imposed by law, rule, regulation or order;
(iv) restrictions and conditions imposed by any Loan Document;
(v) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary or any assets pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold (or, in the case of an asset sale, only to the assets being sold) and such sale is
permitted hereunder;
(vi) restrictions or conditions imposed by any agreement relating to Permitted Agreements or secured Financial Indebtedness permitted by this Loan
Agreement if such restrictions or conditions apply only to the property or assets that are the subject of such Permitted Agreement or that secures such
Indebtedness;
(vii) solely in the case of clause (A) above, customary provisions in leases, subleases, licenses, sublicenses and other contracts;
(viii) customary provisions in leases, licenses and other contracts restricting assignment; and
(ix) any restriction contained in agreements covering Permitted Financial Indebtedness; provided that (i) such restrictions contained will not materially affect
the Borrowers’ ability to make anticipated principal or interest payments under this Loan Agreement (as determined by the Borrower Representative
in good faith) or (ii) such restrictions taken as a whole are not materially less favorable to the Borrowers than the restrictions contained in this Loan
Agreement and do not materially and adversely impair the Lender’s rights and remedies under this Loan Agreement (as determined by the Borrower
Representative in good faith);
8.2.11 each Borrower shall not (and shall procure that each Group Company shall not) permit any waiver, supplement, modification, amendment, termination or
release of (i) its certificate of incorporation, by-laws, operating, management or partnership agreement or other organizational documents or (ii) the [**] or the
[**], in each case, that, taken as a whole, is materially adverse to the interests of the Lender in its capacity as such, other than pursuant to a transaction or
action permitted by this Loan Agreement;
8.2.12 the Borrower Representative shall not change its fiscal year-end to a date other than December 31;
8.2.13 notwithstanding anything in this Loan Agreement to the contrary, the Borrower Representative and its Subsidiaries are permitted to enter into, maintain and
perform their respective obligations under, the following agreements: (i) the [**], (ii) the [**], (iii) any agreement providing for the sale, financing or other
monetization on commercially reasonable terms of non-U.S. royalties or milestones from the Borrowers’ proprietary products, vadadustat and Auryxia®, (iv)
any agreements providing for the sale, financing or other monetization on commercially reasonable terms of U.S. royalties from vadadustat, subject to (x) a cap
of [**]% royalty on net sales and (y) $[**] of total payments under any such outstanding agreements under this clause (iv) (other than any deferred
compensation, milestone payments or similar arrangements) (clauses (i) through (iv), together with all documents related thereto, collectively, the
“Permitted Royalty Agreements”) and (v) any Permitted License (together with the Permitted Royalty Agreements, collectively, “Permitted
Agreements”);
8.2.14 notwithstanding anything in this Loan Agreement to the contrary, the Borrower Representative and its Subsidiaries are permitted to complete Capital Raise
transactions and maintain and perform their respective obligations under any agreements related thereto; and
8.2.15 each Borrower shall:
(i) not permit any MSC to engage in any business activities or have any assets or liabilities other than its ownership of cash and Cash Equivalents and
liabilities incidental thereto;
(ii) not permit any assets owned or held by any MSC or any equity interests issued by any MSC to be subject to any Security Interest (other than Security
Interests arising as a matter of law in favor of the financial institution at which any account of an MSC is located); and
(iii) during the continuance of an Event of Default, cause each MSC to, at the option of the Lender Representative, transfer all cash and Cash Equivalents held
by such MSC to an account subject to a control agreement in favor of the Lender Representative within [**] of receipt by the Borrower Representative
of a written request therefor by the Lender Representative.
8.3 Financial Covenant
8.3.1 The Borrower Representative shall ensure that, as of the last day of each fiscal month (commencing with the month ended February 29, 2024), either:
35
(i) Liquidity is greater than or equal to $15,000,000; or
(ii) the consolidated revenue of the Group is greater than or equal to $150,000,000 for the 12-month period ending on such applicable test date.
For the avoidance of doubt, only one of the two covenants contained in clauses (i) and (ii) is required to be satisfied, and if the Borrower shall be in compliance with
one such covenant but not the other, that shall not constitute a Default or Event of Default.
9. EVENTS OF DEFAULT
9.1 An Event of Default occurs if:
9.1.1 [reserved];
9.1.2 any Group Company fails to pay (i) any principal sum payable under any Loan Document or under any document relating to the Loan Documents when due and payable
(or, if failure to pay is the result of an administrative error or technical problem, within [**] after the due date therefor), (ii) any interest payment payable under any
Loan Document within [**] after the due date therefor or (iii) any other amount payable under any Loan Document within [**] after the due date therefor; provided
that, in each case, if there has been a material disruption to those payment or communications systems or to those financial markets which are, in each case, required
to operate in order for payments to be made in connection with this Loan Agreement and which disruption is not caused by, and is beyond the control of, any of the
parties, failure to make such payment shall not result in an Event of Default so long as such payment is made within [**] after its due date;
9.1.3 any Group Company (as relevant) fails to perform any undertaking contained in Clause 8.1.3 (solely with respect to the Borrower), 8.2 or 8.3;
9.1.4 any Group Company (as relevant) fails to perform any undertaking (other than those described in Clause 9.1.2 or 9.1.3) contained in any Loan Document and such failure
continues for [**] after the earlier of the date on which (i) a Financial Officer of any Group Company becomes aware of such failure and (ii) written notice thereof shall
have been given to the Borrower Representative by the Lender Representative, unless the Lender Representative (at its sole discretion) notifies the Borrower
Representative in writing that it is satisfied that the breach has not put any of the security for the Loan immediately at risk and that it considers that the breach is
capable of remedy;
9.1.5 any representation, warranty or statement of fact made by, or by an officer of, any Group Company in any Loan Document or in the Drawdown Notice or any other notice
or document relating to any Loan Document is incorrect, untrue or misleading in any material respect when it is made or deemed repeated;
9.1.6 (i) any principal or interest, regardless of amount, due in respect of any Material Financial Indebtedness is not paid when due (after the expiration of any grace periods
therefor), (ii) any commitment for any Material Financial Indebtedness is cancelled by a creditor of any Group Company (other than at maturity or the stated
expiration of such commitment, or any cancellation that is at the request of a Group Company), (iii) any Security Interest over any of the assets of any Group Company
securing any Material Financial Indebtedness is enforced by the creditor thereof, or (iv) any other event or condition occurs that results in any Material Financial
Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, but after the expiration of any grace periods
therefor) the holder or holders of any Material Financial Indebtedness or any trustee or agent on its or their behalf to accelerate any Material Financial Indebtedness
prior to its scheduled maturity; provided that this clause 9.1.6 shall not apply (a) to Financial Indebtedness that becomes due as a result of the sale or transfer or other
disposition (including a Casualty Event) of property or assets and such Financial Indebtedness is repaid when required under the documents providing for such
Indebtedness, (b) to events of default, termination events or any other similar event under the documents governing swap contracts for so long as such event of
default, termination event or other similar event does not result in the occurrence of an early termination date or any acceleration or prepayment of any amounts or
other Financial Indebtedness payable thereunder or (c) if the relevant breach under such Financial Indebtedness is remedied or validly waived by the creditors of such
Financial Indebtedness prior to any acceleration of the Loans under this Loan Agreement pursuant to Clause 9.2; provided further, that this Clause 9.1.6 shall not
apply to (x) any redemption, exchange, repurchase, conversion or settlement with respect to any Permitted Convertible Debt, or satisfaction of any condition giving
rise to or permitting the foregoing, pursuant to their terms unless (i) such redemption, exchange, repurchase, conversion or settlement results from a default or event
of default thereunder or an event of the type that constitutes an Event of Default, (ii) there is a failure to consummate such redemption, exchange, repurchase,
conversion or settlement resulting in a default or event of default thereunder or an event of the type that constitutes an Event of Default or (iii) such redemption
exchange, repurchase, conversion or settlement is not permitted under the Loan Documents, or (y) early payment requirement or unwinding or termination with
respect to any Permitted Bond Hedge Transaction or Permitted Warrant Transaction, or satisfaction of any condition giving rise to or permitting the foregoing, in
accordance with the terms thereof, so long as, in any such case, the Borrower Representative is not the “defaulting party” (or substantially equivalent term) under the
terms of such Permitted Bond Hedge Transaction or Permitted Warrant Transaction, as applicable;
9.1.7
(i) an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of the
Borrower Representative or any Subsidiary, or of a substantial part of the property or assets of the Borrower Representative or a Subsidiary, under Title 11 of
the United States Code, as now constituted or hereafter amended, or any other Federal, state, provincial, territorial or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, interim receiver, receiver and manager, administrator, examiner, monitor, trustee, custodian,
sequestrator, conservator or similar official for the Borrower Representative or any Subsidiary) or for a substantial part of the property or assets of the
Borrower Representative
36
or a Subsidiary or (iii) the winding-up or liquidation of the Borrower Representative or any Subsidiary and, in each case, such proceeding or petition shall
continue undismissed or unstayed for [**], or an order or decree approving or ordering any of the foregoing shall be entered; or
(ii) the Borrower Representative or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other Federal, state, provincial, territorial or foreign bankruptcy, insolvency, receivership or similar law,
(ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in clause (i) above,
(iii) apply for or consent to the appointment of a receiver, interim receiver, receiver and manager, administrator, examiner, monitor, trustee, custodian,
sequestrator, conservator or similar official for the Borrower Representative or such Subsidiary or for a substantial part of the property or assets of the
Borrower Representative or such Subsidiary, or (iv) make a general assignment for the benefit of creditors;
9.1.8 any final judgment or order of a court, arbitral body or agency for the payment of money is made in relation to the Loan Documents or the transactions contemplated by
the Loan Documents or against any member of the Group or its assets which have, or has, or are, or would reasonably be likely to have a Material Adverse Change
(solely to the extent not covered by independent third-party insurance or indemnification as to which the insurer or indemnitor has been notified of such judgement,
order or award and has affirmed coverage thereof in writing);
9.1.9 there is a Change of Control in any Group Company; for purposes of this Clause 9.1.9, a "Change of Control" shall mean any of the following events (whether in one or in a
series of related transactions): (A) the sale of all or substantially all the assets of the Group to any person other than a Group Company or (B) a person or “group”
(within the meaning of Rule 13d-5 under the U.S. Securities Exchange Act of 1934, as in effect on the date hereof, but excluding any employee benefit plan of such
person and its subsidiaries and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), acquires beneficial
ownership of more than [**]% of the voting stock of the Borrower Representative (determined on a fully diluted basis); provided that the Lender Representative may
agree, by written notice to the Borrower Representative, that a Change of Control shall not be deemed an Event of Default, but that nevertheless the consequences set
forth in Clause 9.2.1 and 9.2.2 shall apply, and in such event the Loan, all accrued interest and all other amounts accrued, owing or payable under the Loan Documents
shall be due and payable simultaneously with the closing of the Change of Control transaction;
9.1.10 (i) Any material provision of the Loan Documents proves to have been or becomes invalid or unenforceable other than as permitted under the Loan Documents, (ii)
subject to the Perfection Exceptions, a Security Interest created by the Security Documents over any material portion of the Collateral ceases to be a valid, perfected,
first priority Security Interest in the Collateral covered thereby, other than as expressly permitted under the Loan Documents or (iii) the Borrower Representative or
any other Loan Party repudiates or rescinds a Loan Document or purports in writing to repudiate or rescind a Loan Document (other than in connection with the end
or termination of the Security Period), except, in each case, as a result of the failure of the Lender or the Lender Representative to (x) maintain possession of
certificates actually delivered to it representing securities pledged under the Loan Documents, (y) maintain possession of instruments actually delivered to it
representing indebtedness pledged under the Loan Documents or (z) file UCC continuation statements or amendments;
9.1.11 any guaranty under the Security Documents for any reason shall cease to be in full force and effect (other than in accordance with its terms or as otherwise permitted
under the Loan Documents) or any guarantor shall deny in writing that it has any further liability under the Security Documents (other than as a result of the
discharge of such guarantor in accordance with the terms of the Loan Documents);
9.1.12 a Material Adverse Change occurs; or
9.1.13 an ERISA Event or a Foreign Benefit Event shall have occurred that, when taken together with all other such ERISA Events and Foreign Benefit Events, would
reasonably be expected to result in liability of any Borrower in an aggregate amount that would result in a Material Adverse Change.
9.2 Lender's Rights
At any time during the continuance of any Event of Default, the Lender Representative may:
9.2.1 serve on the Borrower Representative a notice stating that all obligations of the Lender to the Borrower Representative under this Loan Agreement including (without
limitation) the obligation to advance the Loan (or any part thereof) are terminated;
9.2.2 serve on the Borrower Representative a notice stating that, the Loan, all interest and all other amounts accrued, owing or payable under the Loan Documents are
immediately due and payable;
9.2.3 serve on the Borrower Representative a notice stating that, the Loan, all interest and all other amounts accrued, owing or payable under the Loan Documents are due and
payable on demand;
9.2.4 declare the Security Documents to be enforceable; and/or
9.2.5 take any other action which, as a result of the Event of Default or any notice served under Clauses 9.2.1 or 9.2.2 above, the Lender is entitled to take under the Security
Documents or any applicable law.
37
9.3 End of Lender’s Obligations. At the time of service of a notice under Clause 9.2.1 and/or Clause 9.2.2, all the obligations of the Lender to the Borrower Representative
to extend new Loans under this Loan Agreement shall terminate.
9.4 Acceleration
(a) Other than with respect to any Event of Default occurring under Clause 9.1.7, on the service of a notice under Clause 9.2.2 the following sums shall become
immediately due and payable and (b) with respect to any Event of Default occurring under 9.1.7, the following sums shall automatically become immediately due and
payable, in each case without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Borrower Representative
and each other Group Company:
9.4.1 the outstanding principal amount of the Loan;
9.4.2 all accrued and unpaid interest;
9.4.3 all unpaid End of Loan Payments;
9.4.4 all unpaid fees, costs and expenses; and
9.4.5 all other outstanding sums payable by the Borrowers to the Lender under the Loan Documents.
9.5 Waiver of Event of Default
The Lender Representative, at its sole and absolute discretion, may waive any Default or Event of Default hereunder, prior to or after the event or events giving rise
thereto, provided that such waiver may be effected only by written notice provided by the Lender Representative to the Borrower Representative to that effect (and
subject further to Clause 15.3 below); it being understood and acknowledged, that if and so long as no notice of waiver of a Default or an Event of Default was so
provided, such Default or Event of Default shall be deemed as having occurred and in effect for all purposes hereunder (subject to the Borrower Representative’s right
to remedy or cure a Default).
10. FEES, EXPENSES AND TAXES
10.1 Transaction Fee
The Transaction Fee shall be paid by the Borrower Representative to the Lender Representative upon the date of this Loan Agreement, or with respect to the portion
thereof that is not payable on the date of this Loan Agreement in respect of Tranche B and Tranche C, on the earliest to occur of (i) the date Tranche B or Tranche C, as
appliable, is first funded, (ii) the date that the commitments in respect of Tranche B or Tranche C, as applicable, are terminated or cancelled and (iii) the date on which
the availability period of Tranche B or Tranche C, as applicable, terminates (in each case in accordance with the Loan Facility Terms).
10.2 End of Loan Payments
The End of Loan Payment shall accrue on the amount of each Tranche and shall be payable in respect of each Tranche on the earlier of: (i) the date on which the Loan
is prepaid in full or otherwise falls due for repayment in full (whether at maturity or by acceleration); and (ii) the date on which the final payment by the Borrowers in
respect of the relevant Tranche is due for payment (whether at maturity or by acceleration).
10.3 Documentary Costs
10.3.1 The Borrowers shall promptly pay to the Lender Representative within [**] of the Lender Representative's written demand (accompanied by a reasonably detailed
invoice), the reasonable and documented out-of-pocket expenses (including reasonable and documented out-of-pocket legal expenses of one external counsel and one
local counsel for each applicable jurisdiction) incurred by the Lender in connection with:
(i) the negotiation, execution, preparation and perfection of the Loan Documents entered into on or around the date of this Loan Agreement and the transactions
contemplated hereby and thereby;
(ii) the negotiation, execution, preparation and perfection of Security Documents after the date of this Loan Agreement and the transactions contemplated thereby;
(iii) any amendment or supplement to the Loan Documents, or any proposal for such an amendment to be made; and
(iv) any consent or waiver by the Lender concerned under or in connection with the Loan Documents or any request by the Borrower Representative for such a
consent or waiver.
10.3.2 The Borrowers shall promptly pay to the Lender Representative within [**] of the Lender Representative's written demand (together with a reasonably detailed invoice),
the reasonable and documented out-of-pocket expenses (including reasonable and documented out-of-pocket legal expenses of one external counsel and one local
counsel for each applicable
38
jurisdiction) incurred by the Lender in connection with any step taken by the Lender with a view to the protection or enforcement of any right or Security Interest
created by the Loan Documents.
10.4 Certain Taxes and Duties
10.4.1 [Reserved].
10.4.2 Where any Borrower is required by the Loan Documents to pay, reimburse or indemnify the Lender for any cost or expense, each Borrower, at the same time as it pays,
reimburses or indemnifies (as the case may be) the Lender for such cost or expense, shall also pay, reimburse or indemnify such part thereof as represents VAT, save to
the extent that the Lender reasonably determines that it is entitled to a credit or repayment in respect of such VAT from the relevant Tax authority.
10.4.3 All amounts expressed to be payable under a Loan Document by any Borrower to the Lender which (in whole or in part) constitute the consideration for any supply for
VAT purposes are deemed to be exclusive of any VAT which is chargeable on that supply, and accordingly, if VAT is or becomes chargeable on any supply made by the
Lender to a Borrower under a Loan Document and the Lender is required to account to the relevant tax authority for the VAT, such Borrower must pay to the Lender
(in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of the VAT (subject to the Lender providing a
valid VAT invoice to such Borrower).
10.4.4 In relation to any supply made by the Lender to the Borrower under a Loan Document, if reasonably requested by the Lender Representative, the Borrower must
promptly provide the Lender Representative with details of the Borrower’s VAT registration and such other information as is reasonably requested in connection with
the Lender’s VAT reporting requirements in relation to such supply.
10.4.5 Any reference in Clauses 10.4.2, 10.4.3, and 10.4.5 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where
appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" to have
the same meaning as in the United Kingdom Value Added Tax Act 1994 and shall include any similar or equivalent term in any other jurisdiction).
10.5 Liability for Taxes
10.5.1 Each Borrower shall make all payments to be made by it without any Tax deduction, unless a Tax deduction is required by law. Each Borrower shall promptly upon
becoming aware that it must make a Tax deduction (or that there is any change in the rate or the basis of a Tax deduction) notify the Lender Representative.
10.5.2 If any Borrower is required to make any Tax deduction by law from any payment due under the Loan Documents, such Borrower shall be entitled to make such Tax
deduction, and, if such Tax is an Indemnified Tax, the payment due from such Borrower shall be increased to an amount which (after making such Tax deduction,
including such Tax deduction applicable to additional sums payable under this Clause 10.5) leaves an amount equal to the amount which would have been due for
payment if no Tax deduction had been required.
10.5.3 The Borrowers shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Lender Representative timely
reimburse it for the payment of, any Other Taxes.
10.5.4 The Borrowers shall indemnify each Lender, within [**] after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or
asserted on or attributable to amounts payable under this Clause 10.5) payable or paid by such Lender or required to be withheld or deducted from a payment to such
Lender and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower Representative by the Lender
Representative shall be conclusive absent manifest error.
10.5.5 If any Borrower is required to make a Tax deduction, such Borrower shall make that Tax deduction and any payment required in connection with that Tax deduction
within the time allowed and in the minimum amount required by law.
10.5.6 Within [**] of making either a Tax deduction or any payment required in connection with that Tax deduction, the Borrower Representative shall deliver to the Lender
Representative evidence reasonably satisfactory to it that the Tax deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing
authority.
10.5.7 Each Lender shall deliver to the Borrower Representative, at the time or times reasonably requested by the Borrower Representative, such properly completed and
executed documentation reasonably requested by the Borrower Representative as will permit such payments to be made without withholding or at a reduced rate of
withholding. In addition, each Lender, if reasonably requested by the Borrower Representative, shall deliver such other documentation prescribed by applicable law or
reasonably requested by the Borrower Representative as will enable the Borrowers to determine whether or not such Lender is subject to backup withholding or
information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such
documentation (other than such documentation set forth in Clause 10.5.7(i), Clause 10.5.7(ii) and Clause 10.5.7(iv)) shall not be required if in the Lender’s reasonable
judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal
or commercial position of such Lender.
Without limiting the generality of the foregoing,
39
(i) if a Lender is a U.S. Person, it shall deliver to the Borrower Representative on or prior to the date on which such Lender becomes a Lender under this Loan
Agreement (and from time to time thereafter upon the reasonable request of the Borrower Representative), executed copies of IRS Form W-9 certifying that
such Lender is exempt from U.S. federal backup withholding tax;
(ii) if a Lender is not a U.S. Person, to the extent it is legally entitled to do so, it shall deliver to the Borrower Representative (in such number of copies as shall be
requested by the Borrower Representative) on or prior to the date on which such Lender becomes a Lender under this Loan Agreement (and from time to time
thereafter upon the reasonable request of the Borrower Representative), whichever of the following is applicable: (1) if such Lender is claiming the benefits of
an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed copies of IRS Form W-
8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax
treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an
exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (2) executed
copies of IRS Form W-8ECI; (3) if such Lender is claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate
substantially in the form of Exhibit A-1 to the effect that such Lender is not a “bank” within the meaning of Section 881(c)(3)(A) of the Code, a “10 percent
shareholder” of any Borrower within the meaning of Section 871(h)(3)(B) of the Code, or a “controlled foreign corporation” related to any Borrower as
described in Section 881(c)(3)(C) of the Code (a “U.S. Tax Compliance Certificate”) and (y) executed copies of IRS Form W-8BEN or IRS Form W-8BEN-
E; or (4) if the Lender is not the beneficial owner, executed copies of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form
W-8BEN-E, a U.S. Tax Compliance Certificate substantially in the form of Exhibit A-2 or Exhibit A-3, IRS Form W-9, or other certification documents from
each beneficial owner, as applicable; provided that if such Lender is a partnership and one or more direct or indirect partners of the Lender are claiming the
portfolio interest exemption, such Lender may provide a U.S. Tax Certificate substantially in the form of Exhibit A-4 on behalf of each such direct and indirect
partner;
(iii) if a Lender is not a U.S. Person, to the extent it is legally entitled to do so, deliver to the Borrower Representative (in such number of copies as shall be requested
by the Borrower Representative) on or prior to the date on which such Lender becomes a Lender under this Loan Agreement (and from time to time thereafter
upon the reasonable request of the Borrower Representative), executed copies of any other form prescribed by applicable law as a basis for claiming exemption
from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law
to permit the Borrowers to determine the withholding or deduction required to be made; and
(iv) if a payment made to any Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower Representative at the time or times prescribed by law and at such time or times reasonably requested by the Borrower
Representative such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional
documentation reasonably requested by the Borrower Representative as may be necessary for the Borrowers to comply with their obligations under FATCA
and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from
such payment. Solely for purposes of this Clause 10.5.7(iv), “FATCA” shall include any amendments made to FATCA after the date of this Loan Agreement.
10.5.8 [Reserved]
10.5.9 If any Lender determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this
Clause 10.5 (including by the payment of additional amounts pursuant to this Clause 10.5), it shall pay to the Borrowers an amount equal to such refund (but only to
the extent of indemnity payments made under this Clause 10.5 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes)
of such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). The Borrowers, upon the
request of a Lender, shall repay to such Lender the amount paid over pursuant to this Clause 10.5.9 (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) in the event that such Lender is required to repay such refund to such Governmental Authority. Notwithstanding anything to the
contrary in this Clause 10.5.9, in no event will any Lender be required to pay any amount to the Borrowers pursuant to this Clause 10.5.9 the payment of which would
place such Lender in a less favourable net after-Tax position than such Lender would have been in if the Tax subject to indemnification and giving rise to such refund
had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This
Clause 10.5.9 shall not be construed to require any Lender to make available its Tax returns (or any other information relating to its Taxes that it deems confidential)
to the Borrowers or any other Person.
10.5.10 Each party’s obligations under this Clause 10.5 shall survive the resignation or replacement of any Lender or any assignment of rights by, or the replacement of, any
Lender, the termination, expiration or cancellation of the commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.
10.5.11 If any Lender requests compensation under Clause 10.6 or requests any Borrower to pay any Indemnified Taxes or additional amounts to such Lender pursuant to
Clause 10.5, then such Lender shall (at the request of the Borrower Representative) use reasonable efforts to, as applicable, designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Clause 10.6 or Clause 10.5, as the case may be, in the future, and
(ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrowers hereby agree to
pay all reasonable costs and out-of-pocket expenses incurred by such Lender in connection with any such designation or assignment.
40
10.6 Illegality and Increased Costs
10.6.1 If it is or becomes contrary to any law or regulation for the Lender to make available the Loan Facility or to maintain its obligations to do so or fund the Loan, the Lender
shall promptly notify the Borrower Representative whereupon: (i) the Lender's obligations to make the Loan Facility available shall be terminated; and (ii) the
Borrowers shall be obliged to prepay the Loan either: (a) forthwith; or (b) on a future specified date on or before the latest date permitted by the relevant law or
regulation.
10.6.2 If the result of any change that occurs after the Closing Date in (or in the interpretation, administration or application of), or to the generally accepted interpretation or
application of, or the introduction of, any law or regulation is to subject the Lender to any Increased Cost, then: (i) the Lender shall notify the Borrower Representative
in writing of such event promptly upon its becoming aware of the same; and (ii) the Borrowers shall, within [**] of written demand (together with a reasonably
detailed invoice), pay to the Lender the amount of the Increased Costs which the Lender has suffered as a result.
11. INDEMNITIES
11.1 Indemnity for Non-Scheduled Payments
Without derogating from, and without prejudice to the Lender's right under, Clause 10 above, the Borrowers shall indemnify the Lender and its Affiliates and the
respective partners, directors, trustees, officers, employees, members, agents, administrators, managers and representatives of the Lender and its Affiliates (the
foregoing persons, each an “Indemnitee”) fully on its demand in respect of all expenses, liabilities and losses (but not lost profit) which are suffered or incurred by
such Indemnitee (except for such expenses, liabilities and losses due solely to such Indemnitee’s gross negligence or willful misconduct) as a result of or in connection
with:
11.1.1 any Tranche not being borrowed on the date specified in the Drawdown Notice for any reason other than a default by the Lender;
11.1.2 any failure (for whatever reason) by the Borrowers to make payment of any amount due under the Loan Documents on the due date or, if so payable, on demand; or
11.1.3 the occurrence and/or continuance of an Event of Default and/or the acceleration of repayment of the Loan under Clause 9.4.
11.2 [Reserved].
11.3 Third Party Claims Indemnity
The Borrowers shall indemnify each Indemnitee fully on its demand in respect of claims, demands, proceedings, liabilities, losses and reasonable, documented
expenses of every kind, including without limitation legal fees and expenses for one external counsel (and one local counsel for each relevant jurisdiction) ("liability
items") which may be made or brought against, or incurred by, such Indemnitee (except for such expenses, liabilities and losses due solely to such Indemnitee’s gross
negligence or willful misconduct), in any country, in relation to:
11.3.1 any action lawfully taken, or omitted or neglected to be taken, under or in connection with the Loan Documents by such Indemnitee or by any receiver appointed under
the Security Documents after the occurrence of any Event of Default; and
11.3.2 any breach or inaccuracy of any of the representations and warranties contained in Clause 7 of this Loan Agreement or in the Security Documents or any breach of any
undertaking contained in Clause 8 hereof or elsewhere in the Loan Documents.
Notwithstanding anything herein to the contrary, Clause 11 of this Loan Agreement shall not apply with respect to Taxes other than Taxes that represent expenses,
liabilities and losses arising from any non-Tax claim.
12. [RESERVED]
13. RELEASE OF SECURITY
13.1.1 The Lender hereby irrevocably agrees that the Security Interests granted to the Lender Representative or any Lender on any Collateral shall be immediately and
automatically released, in each case, without any further action by any person:
(i) upon payment in full of all obligations under the Loan Documents (other than contingent indemnification obligations and expense reimbursement obligations as
to which no claim has been asserted);
(ii) upon the sale, disposition, distribution or other transfer of such Collateral, as part of or in connection with any transaction permitted hereunder or under each
other Loan Document, in each case to a person that is not a Loan Party;
(iii) that constitutes an Excluded Asset (as defined in the Guarantee and Collateral Agreement) as a result of an occurrence not prohibited under this Loan
Agreement; or
41
(iv) to the extent such Collateral is owned by a Subsidiary Guarantor, upon release of such Subsidiary Guarantor from its obligations under its guaranty pursuant to
clause 13.1.2 below;
13.1.2 The Lender hereby irrevocably agrees that a Subsidiary Guarantor shall be immediately and automatically released from any applicable guaranty and all other
obligations under the Loan Documents if such Subsidiary Guarantor ceases to be a Subsidiary or otherwise becomes an Excluded Subsidiary as a result of a transaction
permitted under this Loan Document.
13.1.3 In each case described in Clauses 13.1.1 and 13.1.2, the Lender Representative shall (at the cost of the Borrowers, to the extent required by Clause 10.3) promptly take all
appropriate action, and execute and deliver to the Borrower Representative all documents, required (or reasonably requested by the Borrower Representative) to
evidence the release of the Security Interest in the applicable Collateral or the release of the guaranty and other obligations of the applicable Subsidiary Guarantor
(including the prompt return of possessory Collateral held by the Lender that is released from the Security Interest created by the Security Documents; provided that
in the event that the Lender had previously acknowledged receipt of possessory collateral and loses or misplaces any such possessory collateral, the Lender shall
provide a loss affidavit to the Borrower Representative, in a form reasonably satisfactory to the Borrower Representative).
13.1.4 In the case of Clause 13.1.3, upon the Lender Representative’s reasonable request, the Borrower Representative shall deliver to the Lender Representative a certificate
certifying that the applicable transaction causing the release of Security Interests or release of the Subsidiary Guarantor has been consummated in compliance with
this Loan Agreement and the other Loan Documents and that such release is permitted by this Loan Agreement (and for the avoidance of doubt, no other
documentation or information shall be required to be provided by the Borrower Representative or any other Group Company).
14. NOTICES
14.1 Any notice, demand or other communication (“Notice”) to be given by any Party under, or in connection with, this Loan Agreement shall be in writing and signed by or on
behalf of the Party giving it. Any Notice shall be served by sending it by email to the address set out in Clause 14.2, or delivering it by hand or by pre-paid first class
post to the address set out in Clause 14.2 and in each case marked for the attention of the relevant Party set out in Clause 14.2 (or as otherwise notified from time to
time in accordance with the provisions of this Clause 14). Any Notice so served by email, post or hand shall be deemed to have been duly given or made as follows:
14.1.1 if sent by email, at the time of transmission; or
14.1.2 in the case of delivery by hand, when delivered, or
14.1.3 in the case of delivery by first class post, on the second Business Day after posting,
provided that in each case where delivery by hand occurs after 5pm on a Business Day (local time in the place of receipt) or on a day which is not a Business Day,
service shall be deemed to occur at 9am on the next following Business Day (local time in the place of receipt).
References to time in this Clause are to local time in the country of the addressee.
14.2 The addresses and email addresses of the Parties for the purpose of Clause 14 are as follows:
14.2.1 Lender:
Address: Kreos Capital VII (UK) Limited, c/o BlackRock Investment Management (UK) Limited – Private Debt-EMEA Venture & Growth Lending Group
12 Throgmorton Avenue, London EC2N 2DL
For the attention of: [**]
Email: [**]
with copies to:
Email: [**]
For the attention of: [**]
and:
The Office of the General Counsel (EMEA) (Legal Transactions Group)
42
Email: [**]
For the attention of: [**]
14.2.2 Borrowers:
Address 245 First Street, Cambridge, MA 02142
For the attention of: Chief Financial Officer and Chief Legal Officer
Email: [**]
with a copy to:
Latham & Watkins LLP
555 11 Street NW, Suite 1000
th
Washington, DC 20004
Attention: [**]
Email: [**]
14.3 A Party may notify the other Party to this Loan Agreement of a change to its name, relevant addressee, address or email address for the purposes of this Clause 14,
provided that such notice shall only be effective on:
14.3.1 the date specified in the notification as the date on which the change is to take place; or
14.3.2 if no date is specified or the date specified is less than five (5) Business Days after the date on which notice is given, the date following five (5) Business Days after notice
of any change has been given.
14.4 In proving service it shall be sufficient to prove that the envelope containing such notice was properly addressed and sent or delivered to the address shown thereon or that
the facsimile transmission was made and a facsimile confirmation report was received, as the case may be.
15. GENERAL
15.1 All agreements, covenants, representations, warranties and indemnities of the Borrowers contained in this Loan Agreement or in the Drawdown Notices or other
documents delivered pursuant hereto or in connection herewith and continuing, shall survive and remain binding following the execution and delivery, and the
expiration, cancellation or other termination of this Loan Agreement and/or the Drawdown Notice.
15.2 [Reserved].
15.3 No failure to exercise, nor any delay in exercising, on the part of the Lender, any right or remedy hereunder shall operate as a waiver, nor shall any single or partial
exercise of any right or remedy prevent any further or other exercise, or the exercise of any other right or remedy. The rights and remedies provided in this Loan
Agreement are cumulative and not exclusive of any rights or remedies provided by law or in equity. Waiver by the Lender of any default shall not constitute waiver of
any other default.
15.4 During the continuance of an Event of Default, the Lender may set off any matured obligation due from the Borrowers or any other Loan Party under the Loan Documents
against any matured obligation owed by the Lender to that party, regardless of the place of payment, booking branch or currency of either obligation. If the obligations
are in different currencies, the Lender may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
15.5 No Borrower may assign or transfer its rights, benefits or obligations under this Loan Agreement. The Lender shall have the right, in its sole discretion, to assign, sell,
pledge, grant a Security Interest in or otherwise encumber its rights under the Loan Documents and/or one or more Drawdown Notices to any third party (an
"Assignee"), and/or may act as an agent for any Assignee in accepting any Drawdown Notice; provided that (A) the Lender may not assign the Loan to any competitor
of the Borrower or the Group (as identified in writing to the Lender Representative from time to time) or any Loan to Own Investor (collectively, "Disqualified
Institutions") and (B) as long as no Event of Default has occurred and is continuing, the Lender may not assign the Loan (other than assignments made to Affiliates
and Related Funds) without the prior written consent of the Borrower Representative. Each Borrower agrees that if it receives notice from the Lender that it is to make
payments under this Loan Agreement and/or any Drawdown Notice to such Assignee rather than to the Lender, or that any of its other obligations under the relevant
Drawdown Notice are to be owed to the named Assignee, each Borrower shall comply with any such notice (to the extent the assignment to such Assignee was made in
accordance with the terms of this Loan Agreement). Subject to the foregoing, this Loan Agreement and each Drawdown Notice inures to the benefit of, and is binding
upon, the successors and assigns of the Lender. The Lender, or any agent appointed by it, in either case acting solely for this purpose as an agent of the Borrowers,
shall maintain a register (the “Register”) for the recordation of (i) the name and address of the Lender, and the commitments of, and principal
43
amounts (and stated interest) of the Loans owing to, the Lender pursuant to the terms thereof from time to time and (ii) any transfers. The entries in the Register shall
be conclusive absent manifest error. The Register shall be available for inspection by the Borrowers and the Lender at any reasonable time and from time to time upon
reasonable prior notice. The obligations of the Borrowers under the Loan Agreement and the Security Documents are registered obligations and the right, title and
interest of the Lender and its Assignees in and to such obligations shall be transferable only upon notation of such transfer in the Register. This Clause 15.5 shall be
construed so that such obligations are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any
related regulations (and any other relevant or successor provisions of the Code or such regulations).
15.6 The Lender agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by Clauses 15.7 to 15.9, and to ensure that
all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.
15.7 The Lender may disclose:
15.7.1 to any of its Affiliates and Related Funds, limited partners, investors and any of its or their officers, directors, employees, professional advisers, auditors, partners and
Representatives such Confidential Information as the Lender shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to
this clause is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there
shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound
by requirements of confidentiality in relation to the Confidential Information;
15.7.2 to any person appointed by the Lender or by a person to whom clause 15.8.1 or 15.8.2 applies to provide administration or settlement services (including sustainability
service providers, valuation advisors, custodians and depositaries) in respect of one or more of the Loan Documents such Confidential Information as may be required
to be disclosed to enable such service provider to provide services if the service provider to whom the Confidential Information is to be given has entered into a form of
confidentiality undertaking agreed between the Borrower Representative and Lender; and
15.7.3 to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its
normal rating activities in relation to the Loan Documents and/or the Group Companies.
15.8 The Lender may additionally disclose to any person:
15.8.1 to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under the Loan Documents, and to any of
that person's Affiliates, Related Funds, Representatives and professional advisers;
15.8.2 with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under
which payments are to be made or may be made by reference to, one or more Loan Document and/or one or more Group Company and to any of that person's
Affiliates, Related Funds, Representatives and professional advisers;
15.8.3 appointed by the Lender or by a person to whom clause 15.8.1 or 15.8.2 applies to receive communications, notices, information or documents delivered pursuant to the
Loan Documents on its behalf;
15.8.4 who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in clause 15.8.1 or 15.8.2 or
leverage providers;
15.8.5 to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority
or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
15.8.6 to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations,
proceedings or disputes;
15.8.7 party to the Loan Documents; or
15.8.8 with the consent of the Borrower Representative,
in each case, such Confidential Information as the Lender shall consider appropriate if: (i) in relation to Clauses 15.8.1 to 15.8.3, the person to whom the Confidential
Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is
a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information; (ii) in relation to Clause 15.8.4, the
person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking or is otherwise bound by requirements of confidentiality in
relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information; and (iii) in
relation to Clauses 15.8.5 and 15.8.6, the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such
Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of the Lender, it is not practicable
so to do in the circumstances.
44
15.9 The Lender may disclose to any national or international numbering service provider appointed by it to provide identification numbering services in respect of this Loan
Agreement, the Loans and/or one or more Group Company the following information:
15.9.1 the names, country of domicile and place of incorporation of the Group Companies;
15.9.2 the date of this Loan Agreement (and any amendment and restatement agreement);
15.9.3 the governing law and jurisdiction of this Loan Agreement;
15.9.4 the amount, currencies, types, ranking and term of the Loans;
15.9.5 changes to any of the information previously supplied pursuant to the above; and
15.9.6 such other information agreed between the Lender and the Borrower Representative,
to enable such numbering service provider to provide its usual syndicated loan numbering identification services.
15.10 The Parties acknowledge and agree that each identification number assigned to this Loan Agreement, the Loans and/or one or more Group Companies by a numbering
service provider and the information associated with each such number may be disclosed to users of its services in accordance with the standard terms and conditions
of that numbering service provider.
15.11 The Borrowers and each other Group Company shall keep confidential the terms of this Loan Agreement except:
(a) as may be required by law (including SEC disclosure rules and regulations, it being understood that a copy of this Loan Agreement shall be publicly filed) or a court
of competent jurisdiction, or as requested or required by any governmental or regulatory authority;
(b) to the extent the relevant information is already in the public domain other than by reason of improper disclosure by a Group Company in violation of any
confidentiality obligations hereunder;
(c) the Group Companies may disclose the terms of this Loan Agreement and the other Loan Documents to its Affiliates and to the officers, directors, agents,
employees, attorneys, accountants, advisors or controlling persons (and, in each case, each of their attorneys and advisors) of any Group Company or any of its
Affiliates;
(d) to the extent necessary in connection with the enforcement of the Group’s rights under the Loan Documents; and
(e) if the Lender Representative consents in writing to such proposed disclosure.
15.12 [Reserved].
15.13 [Reserved].
15.14 This Loan Agreement may not be modified except in writing executed by the Lender Representative and the Borrowers. No supplier or agent of the Lender is authorised
to bind the Lender or to waive or modify any term of this Loan Agreement.
15.15 In any litigation or arbitration proceedings arising out of or in connection with a Loan Document, the entries made in the accounts maintained by the Lender are prima
facie evidence of the matters to which they relate.
15.16 Any certification or determination by the Lender Representative of a rate or amount under any Loan Document is, in the absence of manifest error, conclusive evidence of
the matters to which it relates.
15.17 This Loan Agreement may be executed in counterparts (including facsimile and .pdf copies), each of which shall be an original, but all such counterparts shall together
constitute one and the same instrument.
15.18 Each of the parties hereto agrees and acknowledges that (a) the transaction consisting of this Loan Agreement may be conducted by electronic means, (b) it is such party’s
intent that, if such party signs this Loan Agreement using an electronic signature, it is signing, adopting and accepting this Loan Agreement and that signing this Loan
Agreement using an electronic signature is the legal equivalent of having placed its handwritten signature on this Loan Agreement on paper and (c) it is being provided
with an electronic or paper copy of this Loan Agreement in a usable format. The words “execution,” “signed,” “signature,” and words of like import in any Loan
Document or any amendment or other modification thereof (including waivers and consents) shall be deemed to include electronic signatures or the keeping of
records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based
recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National
Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
45
15.19 THIS LOAN AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
15.20 This Loan Agreement shall become effective when it shall have been executed by the Borrowers and the Lender and when the Lender Representative shall have received
counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto.
15.21 Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are
treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be
contracted for, charged, taken, received or reserved by the Lender or participation in accordance with applicable law, the rate of interest payable in respect of such
Loan or participation hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Loan or participation but were not payable as a result of the operation of this Section shall be cumulated and
the interest and Charges payable to the Lender in respect of other Loans or participations or periods shall be increased (but not above the Maximum Rate therefor)
until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.
15.22 This Loan Agreement and the other Loan Documents constitute the entire contract between the parties relative to the subject matter hereof. Any other previous
agreement among the parties with respect to the subject matter hereof is superseded by this Loan Agreement and the other Loan Documents. Nothing in this Loan
Agreement or in the other Loan Documents, expressed or implied, is intended to confer upon any person (other than the parties hereto and thereto, their respective
successors and assigns permitted hereunder and, to the extent expressly contemplated hereby, the related parties of the Lender) any rights, remedies, obligations or
liabilities under or by reason of this Loan Agreement or the other Loan Documents.
15.23 EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS LOAN AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS LOAN
AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION.
15.24 In the event any one or more of the provisions contained in any Loan Document should be held invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall not in any way be affected or impaired thereby (it being understood that the invalidity of
a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
15.25 Each party hereto irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in the Borough of Manhattan in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or
relating to this Loan Agreement or the other Loan Documents, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by
law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Loan Agreement shall affect any right that the Lender may otherwise
have to bring any action or proceeding relating to this Loan Agreement or the other Loan Documents against any Borrower or its properties in the courts of any
jurisdiction.
15.26 Each party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this Loan Agreement or the other Loan Documents in any New York State or Federal court.
Each of the parties hereto irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
15.27 The Lender notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act, it is required to obtain, verify and record information that identifies the
Borrowers, which information includes the name and address of the Borrowers and other information that will allow the Lender to identify the Borrowers in
accordance with the USA PATRIOT Act.
15.28 Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto
acknowledges that any liability of any Affected Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the
write-down and conversion powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
46
15.28.1 the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by
any party hereto that is an Affected Financial Institution; and
15.28.2 the effects of any Bail-In Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent undertaking, or a
bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of
any rights with respect to any such liability under any Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of the applicable Resolution Authority.
15.29 Each Borrower hereby irrevocably appoints the Borrower Representative, as the agent for such Borrower on its behalf, to (i) request Loans from the Lender, (ii) to give
and receive notices under the Loan Documents and (iii) take all other action which the Borrower Representative or the Borrowers are permitted or required to take
under this Loan Agreement (including entering into amendments to any Loan Document). Each warranty, covenant, agreement and undertaking made on behalf of a
Borrower or the Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against
such Borrower to the same extent as if the same had been made directly by such Borrower. Each Borrower hereby agrees that such Borrower is jointly and severally
liable for, and hereby absolutely and unconditionally guarantees to the Lender, the full and prompt payment (whether at stated maturity, by acceleration or otherwise)
and performance of, all obligations owed or hereafter owing to the Lender by each other Borrower.
[Remainder of page left blank intentionally]
47
Duly executed by the Parties on the date first set out on the first page of this Loan Agreement.
BORROWER and BORROWER REPRESENTATIVE
AKEBIA THERAPEUTICS, INC.
By: /s/ Ellen Snow
Name: Ellen Snow
Title: Chief Financial Officer
48
LENDER and LENDER REPRESENTATIVE
Signed
For and on behalf of
KREOS CAPITAL VII (UK) LIMITED
Authorised signatory
By: /s/ Aris Constantinides
Name: Aris Constantinides
Title: Director
49
Exhibit 10.103
Execution Version
THIS WARRANT AGREEMENT (this “Agreement”), is made and entered into as of January 29, 2024 (the “Effective Date”), by
and between Akebia Therapeutics, Inc., a Delaware corporation (the “Company”), and Kreos Capital VII Aggregator SCSp (“Holder”).
WARRANT AGREEMENT
Recitals
In order to induce Kreos Capital VII (UK) Limited (“Lender”) to enter into that certain Loan Agreement dated as of January 29, 2024
(the “Loan Agreement”), between the Company, as borrower, and Lender, as lender, the Company has agreed to issue to Holder (an Affiliate
of the Lender), upon the occurrence of certain events, Warrants (as defined below) to purchase such number of shares of Common Stock, par
value $0.00001 (the “Common Stock”), of the Company (the “Warrant Shares” and, together with such Warrants and all shares of Common
Stock (as defined below) or other securities, if any, issuable upon conversion of the Warrants, the “Securities”), and at such exercise price, as
determined pursuant to this Agreement.
Terms
1.
Definitions. Terms used in this Agreement and not otherwise defined shall have the meaning given to them in the Loan
Agreement. In addition to terms separately defined in this Agreement, as used in this Agreement, the following terms have the following
meanings:
“Affiliate” means with respect to any specified entity, any other entity that, directly or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, the specified entity, where the term “control”, “controlled”, or “controlling” as
used in this definition means the possession, directly or indirectly, of the power to direct or cause the direction of the management and
policies of an entity, whether through the ownership of voting securities, by contract or otherwise.
“Related Fund” in relation to a fund or account (the "first fund"), means: (i) a fund or account which is managed or advised by the
same investment manager or investment adviser as the first fund; or (ii) if it is managed by a different investment manager or investment
adviser, a fund or account whose investment manager or investment adviser is an Affiliate of the investment manager or investment adviser
of the first fund; or (iii) that investment manager or investment adviser itself.
“Warrant” means a warrant to purchase Warrant Shares issued by the Company pursuant to this Agreement and in the form set forth
on Exhibit A.
2.
Issuance of Warrants.
3,076,923 Warrant Shares upon the closing of the transactions contemplated by the Loan Agreement (the “Initial Issue Date”).
(a)
Initial Warrant. The Company shall issue a Warrant (the “Initial Warrant”) reflecting the Holder’s right to purchase
Tranche C Warrant. The Company shall issue a Warrant (the “Tranche C Warrant”) reflecting the Holder’s right to
purchase 1,153,846 Warrant Shares upon the first drawdown of Tranche C as contemplated by the Loan Agreement (the “Tranche C Issue
Date” and together with the Initial Issue Date, as applicable, the “Issue Date”).
(b)
be equal to $1.30 (the “Exercise Price”).
(c)
Shares; Exercise Price. The Exercise Price per Warrant Share for the Initial Warrant and the Tranche C Warrant shall
exchange of documents. At the Warrant Closing, the Company
(d)
Warrant Closings; Deliveries. The closing of a Warrant issuance (a “Warrant Closing”) shall take place remotely via
shall deliver an original Warrant dated as of the date of the Warrant Closing, duly executed by an authorized officer of the Company.
3.
follows:
Representations and Warranties of the Company. The Company represents and warrants to, and agrees with, the Holder as
(a)
The Warrant Shares and all shares of Common Stock or other securities, if any, issuable upon conversion of the
Warrant Shares shall, upon issuance in accordance with the terms of the applicable Warrant, be duly authorized, validly issued, fully paid and
non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and
state securities laws. The Company covenants that it shall, if applicable, at all times following an Issue Date described in Section 2(a) or
Section 2(b) of this Agreement, as applicable, cause to be reserved and kept available out of its authorized and unissued capital stock such
number of shares of Common Stock and other securities as will be sufficient to permit the exercise in full of the Warrant and the conversion
of the Warrant Shares into Common Stock or such other securities.
securities laws, the Company will use its commercially reasonable efforts to obtain such approvals or registrations as may be appropriate.
(b)
If the issuance of any of the Securities require approvals or registrations under applicable state “blue sky” or federal
(c)
Any corporate action required to be taken by the Board of Directors and/or stockholders of the Company in order to
authorize the Company to enter into this Agreement and the Warrant, and to issue the applicable Securities has been taken or, with respect to
the Securities, will be taken prior to the date of issuance of such Securities. All action on the part of the officers of the Company necessary
for the execution and delivery of this Agreement and the Warrant and the performance of all respective obligations of the Company
thereunder has been taken or, in the case of the Warrant, will be taken prior to date of issuance of the Warrant. This Agreement constitutes,
and the Warrant will constitute, valid and legally binding obligations of the Company, enforceable against the Company in accordance with
their respective terms except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other
laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable remedies.
(d)
Assuming the accuracy of the Holder’s representations and warranties in Section 4 of this Agreement, the execution,
delivery and performance of the Agreement will not result in any violation or be in conflict with or constitute, with or without the passage of
time and giving of notice, (i) a default under any law applicable to the Company or any instrument, judgment, order, writ, decree, contract or
agreement to which the Company is a party or by which its assets are bound except such defaults as would not reasonably be expected to
materially and adversely affect the Company; or (ii) an event which results in the creation of any lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, forfeiture, or nonrenewal of any material permit or license applicable to the Company.
4.
Representations and Warranties of Holder. Holder represents and warrants to the Company as of the date hereof, and as of
the date of issuance of the Warrant, as follows:
Purchase for Own Account. The applicable Securities are being acquired for investment for Holder’s account, not as
a nominee or agent, and not with a view to the public resale or distribution within the meaning of the U.S. Securities Act of 1933, as amended
(the “Securities Act”). Holder also represents that it has not been formed for the specific purpose of acquiring any of the Securities.
(a)
(b)
Disclosure of Information. Holder is aware of the Company’s business affairs and financial condition and has
received or has had access to all the information it considers necessary or appropriate to make an informed investment decision with respect
to the acquisition of the applicable Securities. Holder further has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the applicable Securities and to obtain additional information (to the
2
extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any
information furnished to Holder or to which Holder has access.
(c)
Investment Experience. Holder understands that the purchase of the Securities involves substantial risk. Holder has
experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of
such Holder’s investment in the Securities and has such knowledge and experience in financial or business matters that Holder is capable of
evaluating the merits and risks of its investment in the applicable Securities and/or has a preexisting personal or business relationship with
the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the
character, business acumen and financial circumstances of such persons.
under the Securities Act.
(d)
Accredited Investor Status. Holder is an “accredited investor” within the meaning of Regulation D promulgated
(e)
The Securities Act. Holder understands that the applicable Securities will not be registered under the Securities Act
in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s
investment intent as expressed herein. Holder understands any Securities issued must be held indefinitely unless subsequently registered
under the Securities Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are
otherwise available.
5.
Restrictive Legends.
legend substantially similar to the following (in addition to any other legend required by applicable law):
(a)
Legend. Holder understands that any certificates representing the Securities shall be stamped or imprinted with a
THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER AND ANY SHARES ISSUABLE UPON CONVERSION
THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL
COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER
TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
Instructions Regarding Transfer Restrictions. Holder consents to the Company making a notation on its records and
giving instructions to any transfer agent, if applicable, in order to implement the restrictions on transfer established in Section 5(a) of this
Agreement.
(b)
(c)
Removal of Legend. The legend identified in Section 5(a) of this Agreement stamped or imprinted on any certificate
evidencing any Securities and any stock transfer instructions and record notations with respect to such Securities, if applicable, shall be
removed and the Company shall issue a certificate without such legend to the holder of such Securities if (i) such Securities are registered
under the Securities Act, or (ii) such holder provides the Company with an opinion of counsel reasonably satisfactory to the Company and its
transfer agent, if applicable, to the effect that a sale or transfer of such Securities may be made without registration or qualification. The
Company agrees that it shall not require an opinion of counsel if (x) there is no material question as to the availability of Rule 144 (without
restriction, including the provisions of Rule 144(c), (e) or (f)) promulgated under the Securities Act or (y) the transfer is to an Affiliate or
Related Fund of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the
Securities Act.
6.
Transfer of the Securities. The Securities may not be transferred or assigned in whole or in part except in compliance with
applicable federal and state securities laws by the transferor and the transferee.
7.
General Provisions.
3
(a)
Entire Agreement. This Agreement (including the Exhibit) constitutes the entire agreement among the parties and
supersedes and cancels any prior agreements, representations, warranties, or communications, whether oral or written, among the parties
relating to the subject matter of, or the transactions contemplated by, this Agreement. Neither this Agreement nor any of its provisions may
be modified, changed, waived, discharged, or terminated orally. This Agreement may only be modified, changed, waived, discharged, or
terminated by an agreement in writing signed by the party against whom or which the enforcement of such modification, change, waiver,
discharge, or termination is sought.
(b)
Assignment, Successors and Assigns. The rights and obligations under this Agreement may be assigned by Holder.
The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties or their respective
successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in
this Agreement.
(c)
Notices. All notifications, requests, demands, and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed given when mailed (with return receipt requested), emailed, faxed (which is confirmed),
or sent via a recognized overnight courier service such as Federal Express, to the parties at the addresses set forth on the signature page, or
pursuant to such other instructions as may be designated in writing by the party to receive such notice.
New York, without giving effect to its principles regarding conflicts of law.
(d)
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of
(e)
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail
(including PDF) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and
be valid and effective for all purposes.
Attorney’s Fees. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms
of this Agreement, the prevailing party in such shall be entitled to receive from the non-prevailing party the prevailing party’s reasonable
attorney’s fees, costs and necessary disbursements in addition to any other relief to which it may be entitled.
(f)
(g)
No Further Obligations. The Company acknowledges and agrees that the Holder has not made any representation,
undertaking, commitment or agreement to provide or assist the Company in obtaining any financing, investment or other assistance, other
than with regard to the Loan Agreement. In addition, the Company acknowledges and agrees that (i) no statements, whether written or oral,
made by the Holder or its representatives on or after the date of this Agreement shall create an obligation, commitment or agreement to
provide or assist the Company in obtaining any financing or investment, (ii) the Company shall not rely on any such statement by any the
Holder or its representatives and (iii) an obligation, commitment or agreement to provide or assist the Company in obtaining any financing or
investment may only be created by a written agreement, signed by the Holder and the Company, setting forth the terms and conditions of
such financing or investment and stating that the parties intend for such writing to be a binding obligation or agreement. The Holder shall
have the right, in its sole and absolute discretion, to refuse or decline to participate in any other financing of or investment in the Company,
and shall have no obligation to assist or cooperate with the Company in obtaining any financing, investment or other assistance.
(h)
Certain Remedies. Each party acknowledges and agrees that the other party would be damaged irreparably if this
Agreement is not performed in accordance with its terms or otherwise is breached and that a party will be entitled to an injunction and other
equitable relief (without posting any bond or other security) to prevent breaches hereof and to enforce specifically this Agreement and its
terms in addition to any other remedy to which such party may be entitled hereunder.
4
(i)
Tax Treatment. The Holder and the Company intend and agree that (i) the Initial Warrant and Tranche A drawn on
the Initial Issue Date pursuant to the Loan Agreement are to be treated as an “investment unit” within the meaning of Section 1273(c)(2) of
the Code and Treasury Regulation Section 1.1273-2(h), (ii) the Tranche C Warrant and the first drawn portion of the Tranche C pursuant to
the Loan Agreement are to be treated as an “investment unit” within the meaning of Section 1273(c)(2) of the Code and Treasury Regulation
Section 1.1273-2(h), and (iii) the fair market values of the Initial Warrant, Tranche C Warrant, Tranche A and Tranche C shall be reasonably
determined by the Company with the consent of the Holder (not to be unreasonably withheld, delayed or conditioned). The parties hereto
agree not to take a position inconsistent with this Section 7(i) for U.S. federal and applicable state and local income tax purposes unless
required by a final “determination” within the meaning of Section 1313 of the Code to the contrary.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
IN WITNESS WHEREOF, the duly authorized representatives of the parties have executed and delivered this Agreement as of the
Effective Date.
AKEBIA THERAPEUTICS, INC.
By: /s/ Ellen Snow
Name: Ellen Snow
Title: Chief Financial Officer
Address per Section 7(c):
245 First Street
Cambridge, MA 02142
Attn: Chief Financial Officer and Chief Legal Officer
Email: [**]
KREOS CAPITAL VII AGGREGATOR SCSp
By: /s/ Mark Collins
Name: Mark Collins
Title: Manager
Address per Section 7(c):
1 Boulevard de la Foire
1528, Luxembourg
Attn: Sonia Benhamida, Guy Arbib, Alexander Babulevich
Email: [**]
[Signature Page to Warrant Agreement]
EXHIBIT A
Form of Warrant
Incorporated by reference to Exhibit 4.7 of this Annual Report on Form 10-K filed with the
Securities Exchange Commission on March 14, 2024
Exhibit 23.1
We consent to the incorpora on by reference in the following Registra on Statements:
Consent of Independent Registered Public Accoun ng Firm
(1) Registra on Statement (Form S-8 No. 333-196748) pertaining to the Amended and Restated 2008 Equity Incen ve Plan, the 2014 Incen ve Plan, and
the 2014 Employee Stock Purchase Plan of Akebia Therapeu cs, Inc.,
(2) Registra on Statement (Form S-8 No. 333-209469) pertaining to the 2014 Incen ve Plan and the 2014 Employee Stock Purchase Plan of Akebia
Therapeu cs, Inc.,
(3) Registra on Statement (Form S-8 No. 333-216475) pertaining to the 2014 Incen ve Plan and the 2016 Inducement Award Program of Akebia
Therapeu cs, Inc.,
(4) Registra on Statement (Form S-8 No. 333-222728) pertaining to the 2014 Incen ve Plan and the 2016 Inducement Award Program of Akebia
Therapeu cs, Inc.,
(5) Registra on Statement (Form S-8 No. 333-228772) pertaining to the 2014 Incen ve Plan of Akebia Therapeu cs, Inc. and the 1999 Share Op on
Plan, 2004 Long-Term Incen ve Plan, 2007 Incen ve Plan, Amended and Restated 2013 Incen ve Plan, and 2018 Equity Incen ve Plan of Keryx
Biopharmaceu cals, Inc.,
(6) Registra on Statement (Form S-8 No. 333-229366) pertaining to the 2014 Incen ve Plan, the 2014 Employee Stock Purchase Plan, and the
Inducement Grant Awards (January 2018 – December 2018) of Akebia Therapeu cs, Inc.,
(7) Registra on Statement (Form S-8 No. 333-233140) pertaining to the Amended and Restated 2014 Employee Stock Purchase Plan of Akebia
Therapeu cs, Inc.,
(8) Registra on Statement (Form S-8 No. 333-236060) pertaining to the 2014 Incen ve Plan and the Inducement Grant Awards (January 2019 –
December 2019) of Akebia Therapeu cs, Inc.,
(9) Registra on Statement (Form S-8 No. 333-252336) pertaining to the 2014 Incen ve Plan and the Inducement Grant Awards (January 2020 –
December 2020) of Akebia Therapeu cs, Inc.,
(10) Registra on Statement (Form S-8 No. 333-262392) pertaining to the 2014 Incen ve Plan, as amended, and the Inducement Grant Awards (January
2021 – December 2021) of Akebia Therapeu cs, Inc.,
(11) Registra on Statement (Form S-8 No. 333-269457) pertaining to the 2014 Incen ve Plan, as amended, and the Inducement Stock Op on Awards
(January 2022 – December 2022) of Akebia Therapeu cs, Inc.,
(12) Registra on Statement (Form S-8 No. 333-272453) pertaining to the 2023 Stock Incen ve Plan of Akebia Therapeu cs, Inc., and
(13) Registra on Statement (Form S-8 No. 333-276770) pertaining to the Inducement Stock Op on Awards (January 2023 – December 2023) of Akebia
Therapeu cs, Inc.;
of our reports dated March 14, 2024, with respect to the consolidated financial statements of Akebia Therapeu cs, Inc. and the effec veness of internal
control over financial repor ng of Akebia Therapeu cs, Inc. included in this Annual Report (Form 10-K) of Akebia Therapeu cs, Inc. for the year ended
December 31, 2023.
/s/ Ernst & Young LLP
Boston, Massachuse s
March 14, 2024
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John P. Butler, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Akebia Therapeutics, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date:
March 14, 2024
By:
/s/ John P. Butler
John P. Butler
President, Chief Executive Officer and Director
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ellen E. Snow, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of Akebia Therapeutics, Inc.;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report;
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a)
(b)
(c)
(d)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the Audit Committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
(a)
(b)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal
control over financial reporting.
Date:
March 14, 2024
By:
/s/ Ellen E. Snow
Ellen E. Snow
Senior Vice President, Chief Financial Officer
and Treasurer
(Principal Financial Officer)
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. Section 1350)
In connection with the accompanying Annual Report of Akebia Therapeutics, Inc., or the Company, on Form 10-K for the fiscal year ended December 31,
2023, or the Report, I, John P. Butler, as Chief Executive Officer and President of the Company, and I, Ellen E. Snow, as Senior Vice President, Chief
Financial Officer and Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Exhibit 32.1
Date:
March 14, 2024
Date:
March 14, 2024
By:
By:
/s/ John P. Butler
John P. Butler
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Ellen E. Snow
Ellen E. Snow
Senior Vice President, Chief Financial Officer
and Treasurer
(Principal Financial Officer)
Exhibit 97.1
Akebia Therapeutics, Inc.
Dodd-Frank Compensation Recovery Policy
This Compensation Recovery Policy (this “Policy”) is adopted by Akebia Therapeutics, Inc. (the “Company”) in accordance with
Nasdaq Listing Rule 5608 (“Rule 5608”), which implements Rule 10D-1 under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”) (as promulgated pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection
Act of 2010). This Policy is effective as of October 2, 2023 (the “Effective Date”).
1.
Definitions
(a)
“Accounting Restatement” means a requirement that the Company prepare an accounting restatement due to the
material noncompliance of the Company with any financial reporting requirement under the U.S. federal securities laws,
including any required accounting restatement to correct an error in previously issued financial statements that is material to the
previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current
period or left uncorrected in the current period. Changes to the Company’s financial statements that do not represent error
corrections are not an Accounting Restatement, including: (A) retrospective application of a change in accounting principle; (B)
retrospective revision to reportable segment information due to a change in the structure of the Company’s internal organization;
(C) retrospective reclassification due to a discontinued operation; (D) retrospective application of a change in reporting entity,
such as from a reorganization of entities under common control; and (E) retrospective revision for stock splits, reverse stock
splits, stock dividends or other changes in capital structure.
(b)
“Committee” means the Compensation Committee of the Company’s Board of Directors (the “Board”).
(c)
“Covered Person” means a person who served as an Executive Officer at any time during the performance period
for the applicable Incentive-Based Compensation.
(d)
“Erroneously Awarded Compensation” means the amount of Incentive-Based Compensation that was Received
that exceeds the amount of Incentive-Based Compensation that otherwise would have been Received had the amount of
Incentive-Based Compensation been determined based on the restated amounts, computed without regard to any taxes paid by the
Covered Person or by the Company on the Covered Person’s behalf. For Incentive-Based Compensation based on stock price or
total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation
directly from the information in an Accounting Restatement, the amount of Erroneously Awarded Compensation will be based on
a reasonable estimate by the Committee of the effect of the Accounting Restatement on the stock price or total shareholder return
upon which the Incentive-Based Compensation was Received. The Company will maintain documentation of the determination
of that reasonable estimate and provide such documentation to Nasdaq.
(e)
“Executive Officer” means the Company’s officers as defined in Rule 16a-1(f) under the Exchange Act.
(f)
“Financial Reporting Measures” means (A) measures that are determined and presented in accordance with the
accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part
from such measures (whether or not such measures are presented within the Company’s financial statements or
1
included in a filing made with the U.S. Securities and Exchange Commission), (B) stock price and (C) total shareholder return.
Exhibit 97.1
(g)
“Incentive-Based Compensation” means any compensation that is granted, earned, or vested based wholly or in
part upon the attainment of a Financial Reporting Measure.
(h)
Incentive-Based Compensation is deemed to be “Received” in the Company’s fiscal period during which the
Financial Reporting Measure specified in the applicable Incentive-Based Compensation award is attained, even if the payment or
grant of the Incentive-Based Compensation occurs after the end of that period or is subject to additional time-based vesting
requirements.
(i)
“Recovery Period” means the three completed fiscal years immediately preceding the earlier of: (A) the date the
Board, a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not
required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting Restatement;
or (B) the date a court, regulator, or other legally authorized body directs the Company to prepare an Accounting Restatement. In
addition, if there is a change in the Company’s fiscal year end, the Recovery Period will also include any transition period to the
extent required by Rule 5608.
2.
Recovery of Erroneously Awarded Compensation
Subject to the terms of this Policy and the requirements of Rule 5608, if the Company is required to prepare an
Accounting Restatement, the Company will attempt to recover, reasonably promptly from each Covered Person, any Erroneously
Awarded Compensation that was Received by such Covered Person during the Recovery Period pursuant to Incentive-Based
Compensation that is subject to this Policy.
3.
Interpretation and Administration
(a)
Role of the Committee. This Policy will be interpreted by the Committee in a manner that is consistent with Rule
5608 and any other applicable law and will otherwise be interpreted in the business judgment of the Committee. All decisions
and interpretations of the Committee that are consistent with Rule 5608 will be final and binding.
(b)
Compensation Not Subject to this Policy. This Policy does not apply to Incentive-Based Compensation that was
Received before the Effective Date. With respect to any Covered Person, this Policy does not apply to Incentive-Based
Compensation that was Received by such Covered Person before beginning service as an Executive Officer.
(c)
Determination of Means of Recovery. Subject to the requirement that recovery be made reasonably promptly, the
Committee will determine the appropriate means of recovery, which may vary between Covered Persons or based on the nature
of the applicable Incentive-Based Compensation, and which may involve, without limitation, establishing a deferred repayment
plan or setting off against current or future compensation otherwise payable to the Covered Person. Recovery of Erroneously
Awarded Compensation will be made without regard to income taxes paid by the Covered Person or by the Company on the
Covered Person’s behalf in connection with such Erroneously Awarded Compensation.
(d)
Determination That Recovery is Impracticable. The Company is not required to recover Erroneously Awarded
Compensation if a determination is made by the Committee that either (A) after the Company has made and documented a
reasonable attempt to recover such
2
Exhibit 97.1
Erroneously Awarded Compensation, the direct expense paid to a third party to assist in enforcing this Policy would exceed the
amount to be recovered or (B) recovery of such Erroneously Awarded Compensation would likely cause an otherwise tax-
qualified retirement plan, under which benefits are broadly available to employees of the registrant, to fail to meet the
requirements of Section 401(a)(13) or 411(a) of the Internal Revenue Code and regulations thereunder.
(e)
No Indemnification or Company-Paid Insurance. The Company will not indemnify any Covered Person against
the loss of Erroneously Awarded Compensation and will not pay or reimburse any Covered Person for the purchase of a third-
party insurance policy to fund potential recovery obligations.
(f)
Interaction with Other Clawback Provisions. The Company will be deemed to have recovered Erroneously
Awarded Compensation in accordance with this Policy to the extent the Company actually receives such amounts pursuant to any
other Company policy, program or agreement, pursuant to Section 304 of the Sarbanes-Oxley Act or otherwise.
(g)
No Limitation on Other Remedies. Nothing in this Policy will be deemed to limit the Company’s right to terminate
employment of any Covered Person, to seek recovery of other compensation paid to a Covered Person, or to pursue other rights
or remedies available to the Company under applicable law.
Adopted by the Board on November 21, 2023.
3