10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 ___________________________________________________________

FORM 10-K

___________________________________________________________ 

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017.

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number 000-30929

 ___________________________________________________________

KERYX BIOPHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

___________________________________________________________ 

Delaware	13-4087132
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Marina Park Drive, 12th Floor Boston, Massachusetts	02210
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 466-3500

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, Par Value $0.001 Per Share	Nasdaq Capital Market
(Title of Class)	(Name of Each Exchange on Which Registered)

Securities registered pursuant to Section 12(g) of the Act:

None

 ___________________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  ý

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act). (Check one):

Large accelerated filer	ý	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if smaller reporting company)	Smaller reporting company	¨
		Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  ý

The aggregate market value of voting common stock held by non-affiliates of the registrant (assuming, for purposes of this calculation, without conceding, that all executive officers and directors are “affiliates”) was $662,026,612 as of June 30, 2017, based on the closing sale price of such stock as reported on the Nasdaq Capital Market.

There were 119,175,538 shares of the registrant’s common stock outstanding as of February 9, 2018.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for the 2018 Annual Meeting of Stockholders are incorporated by reference in Part III of this Annual Report on Form 10-K.

KERYX BIOPHARMACEUTICALS, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2017

TABLE OF CONTENTS

		Page
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS		1
PART I
ITEM 1	Business	2
ITEM 1A	Risk Factors	20
ITEM 1B	Unresolved Staff Comments	37
ITEM 2	Properties	37
ITEM 3	Legal Proceedings	37
ITEM 4	Mine Safety Disclosures	37
PART II
ITEM 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	38
ITEM 6	Selected Financial Data	40
ITEM 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
ITEM 7A	Quantitative and Qualitative Disclosures About Market Risk	52
ITEM 8	Financial Statements and Supplementary Data	52
ITEM 9	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	53
ITEM 9A	Controls and Procedures	53
ITEM 9B	Other Information	54
PART III
ITEM 10	Directors, Executive Officers and Corporate Governance	55
ITEM 11	Executive Compensation	55
ITEM 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	55
ITEM 13	Certain Relationships and Related Transactions, and Director Independence	55
ITEM 14	Principal Accountant Fees and Services	55
PART IV
ITEM 15	Exhibits and Financial Statement Schedules	56
ITEM 16	Form 10-K Summary	56

This Annual Report on Form 10-K contains trademarks and trade names of Keryx Biopharmaceuticals, Inc., including our name and logo. All other trademarks, service marks, and trade names referenced in this Annual Report on Form 10-K are the property of their respective owners.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. The words “anticipate,” “believe,” “estimate,” “may,” “expect,” “will,” “project” and similar expressions are generally intended to identify forward-looking statements. Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, those discussed under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, as well as other factors which may be identified from time to time in our other filings with the Securities and Exchange Commission, or the SEC, or in the documents where such forward-looking statements appear. All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements. Such forward-looking statements include, but are not limited to, statements about our:

• estimates regarding market size and projected growth, as well as our expectation of market acceptance of Auryxia^® (ferric citrate), market share and product sales guidance;

• expectations regarding the commercialization of Auryxia;

• expectations regarding our ability to successfully launch and then effectively continue to commercialize Auryxia for the treatment of iron deficiency anemia in adults with chronic kidney disease, not on dialysis in the United States;

• expectations regarding our ability to identify a commercial partner(s) to launch Fexeric^® (ferric citrate coordination complex) in the European market;

• expectations for generating revenue, producing positive cash flows or becoming profitable on a sustained basis;

• expectations for our mix of business between private commercial payers and government-sponsored insurance plans;

• estimates of the sufficiency of our existing cash and cash equivalents to finance our operating requirements;

• expected losses;

• expectations for future capital requirements;

• expectations for increases or decreases in expenses;

• expectations for clinical development and regulatory progress, including manufacturing, commercialization and reimbursement (including market acceptance) of ferric citrate or any other products that we may acquire or in-license;

• expectations for incurring capital expenditures to expand our development and manufacturing capabilities;

• expectations regarding our ability to successfully market Riona^® through our Japanese partner, Japan Tobacco, Inc. and its subsidiary Torii Pharmaceutical Co., Ltd.;

• expectations of the scope of patent protection with respect to Auryxia, Fexeric and Riona;

• expectations or ability to enter into marketing and other partnership agreements; and

• expectations or ability to enter into product acquisition and in-licensing transactions.

The forward-looking statements contained in this report reflect our views and assumptions only as of the date that this report is signed. Except as required by law, we assume no responsibility for updating any forward-looking statements.

In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

1

PART I

Unless the context requires otherwise, references in this report to “Keryx,” “Company,” “we,” “us” and “our” and similar designations refer to Keryx Biopharmaceuticals, Inc. and our subsidiaries.

ITEM 1. BUSINESS

OVERVIEW

We are a commercial stage biopharmaceutical company focused on bringing innovative medicines to people with kidney disease. Our long-term vision is to build a multi-product kidney care company. Our marketed product, Auryxia (ferric citrate) tablets, is an orally available, absorbable, iron-based medicine. Auryxia is approved by the U.S. Food and Drug Administration, or FDA, for two indications. Auryxia was originally approved in September 2014 for the control of serum phosphorus levels in patients with chronic kidney disease, or CKD, on dialysis. Additionally, in November 2017, the FDA approved Auryxia for the treatment of iron deficiency anemia in adults with CKD, not on dialysis. With two FDA-approved indications, we will leverage our U.S. clinical and commercial infrastructure to make Auryxia available to millions of people with CKD and either iron deficiency anemia or elevated levels of serum phosphorus, which is referred to as hyperphosphatemia. Ferric citrate is also approved in Japan under the trade name Riona and marketed by our Japanese partner, Japan Tobacco, Inc., or JT, and its subsidiary, Torii Pharmaceutical Co., Ltd., or Torii, and approved in Europe as Fexeric. We use the brand name Auryxia when we refer to ferric citrate for use in the approved indications in the United States. We refer to the product as ferric citrate when referring to its investigational use. Our vision of building a multi-product kidney care company includes expansion of our product portfolio with other medicines that can help patients with kidney disease.

OUR STRATEGY

Our business is focused on creating long-term stockholder value by bringing differentiated medicines to the market for the treatment of people with kidney disease that provide meaningful benefits to patients and their healthcare providers. The three pathways to our strategy are:

Maximize Auryxia's Potential

Auryxia is approved for two indications in the United States. We developed and subsequently launched Auryxia in the United States in late December 2014 following the FDA's approval of Auryxia for the control of serum phosphorus levels in adult patients with CKD on dialysis. In November 2017, the FDA approved Auryxia for the treatment of iron deficiency anemia in adult patients with CKD, not on dialysis. Auryxia is a non-calcium, non-chewable, orally-administered phosphate binder. Auryxia is the first FDA-approved oral iron medication that was specifically developed to treat iron deficiency anemia in CKD patients, not on dialysis. In the United States, there are approximately 450,000 adult patients with CKD requiring dialysis (referred to as End Stage Renal Disease, or ESRD), including approximately 350,000 adults currently taking a phosphate binder. We estimate that in the United States, approximately 1.7 million adults under the care of a nephrologist for CKD have iron deficiency anemia, not on dialysis, including approximately 650,000 adults currently being treated by nephrologists for iron deficiency anemia. Iron deficiency anemia is common in the non-dialysis population and the prevalence and severity increases as CKD advances. Iron deficiency anemia is symptomatic and can significantly impact quality of life. Auryxia is being marketed in the United States to nephrologists and renal care teams through our specialty salesforce and commercial infrastructure. Our field-based organization is aligned to 95 territories calling on target nephrologists and their associated dialysis centers. These target nephrologists treat CKD patients on dialysis and those not on dialysis. We believe strong fundamentals are in place to drive commercial adoption of Auryxia in the dialysis setting and maximize the potential of Auryxia as a treatment of iron deficiency anemia in adults with CKD, not on dialysis.

Expand Our Portfolio

We will evaluate opportunities to expand our product portfolio with other medicines that can help patients with kidney disease. Our business development activities include evaluating clinical-stage drug candidates, as well as commercially available medicines to in-license or acquire to add to our portfolio and provide us with new commercial opportunities. We will seek to add assets that leverage the infrastructure we have built to support our foundational medicine, Auryxia, including our clinical development and commercial teams. We believe these efforts have the potential to provide additional revenues to us in the future.

Manage Growth and Talent

We are committed to creating a culture of success and continue to engage a workforce of high-quality and talented people to support our potential growth.

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CORPORATE INFORMATION

We were incorporated in Delaware in October 1998 and commenced operations in November 1999. Our corporate offices are located at One Marina Park Drive, 12th Floor, Boston, Massachusetts 02210. Our telephone number is 617-466-3500, and our e-mail address is info@keryx.com.

We maintain a website with the address http://www.keryx.com. We make available free of charge through our Internet website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, as soon as reasonably practicable after we electronically file such material with, or furnish such material to the Securities and Exchange Commission, or SEC. We are not including the information on our website as a part of, nor incorporating it by reference into, this report. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549 on official business days during the hours of 10:00 a.m. to 3:00 p.m. Please call the SEC at 1-800-SEC-0330 for information on the Public Reference Room. Additionally, the SEC maintains a website that contains annual, quarterly, and current reports, proxy statements, and other information that issuers (including us) file electronically with the SEC. The SEC’s website address is http://www.sec.gov.

AURYXIA (FERRIC CITRATE)

Commercial Program

Auryxia is approved as a treatment for two common complications of CKD. Auryxia is a non-calcium, non-chewable, orally-administered phosphate binder approved in the United States for the control of serum phosphorus levels in patients with CKD on dialysis as well as for treatment of iron deficiency anemia in adults with CKD, not on dialysis. It is also marketed in Japan under the brand name Riona by our Japanese partner, JT and Torii, as an oral treatment for the improvement of hyperphosphatemia in patients with CKD, including dialysis and non-dialysis dependent, or NDD, CKD. We receive royalties from JT and Torii based on their sales in Japan. Our efforts and associated expenses are focused on commercializing Auryxia in the United States.

Auryxia’s supplemental new drug application, or sNDA, approval for the treatment of iron deficiency anemia in CKD patients not on dialysis was based on results from a 24-week placebo controlled Phase 3 clinical trial in 234 adults with stage 3-5 NDD-CKD. Patients enrolled in the trial had hemoglobin levels between 9.0 g/dL and 11.5 g/dL and were intolerant to or had an inadequate response to prior treatment with oral iron supplements. The starting dose in the trial was three tablets per day taken with meals; the mean dose was five tablets per day. Importantly, during the trial, patients were not allowed to receive any intravenous, or IV, or oral iron, or erythropoiesis-stimulating agents, or ESAs. In the trial, treatment with Auryxia demonstrated significant increases in hemoglobin levels of >1 g/dL at any point during the 16-week efficacy period for the majority of patients (52.1 percent, n=61/117, compared to 19.1 percent, n=22/115, in the placebo group), a clinically meaningful result. In the trial, ferric citrate was generally well tolerated and adverse events were consistent with its known safety profile. The most commonly reported adverse events in the Phase 3 trial were discolored feces (22%), diarrhea (21%), constipation (18%), nausea (10%), abdominal pain (5%), and hyperkalemia (5%). Results were published January 2017 in the online issue of the Journal of the American Society of Nephrology.

Auryxia is being marketed in the United States through our specialty salesforce and commercial infrastructure. Our sales organization is aligned to 95 territories calling on target nephrologists and their associated dialysis centers. In addition, we have a small team of national account managers who are primarily responsible for working with insurance plans, health maintenance organizations and other payers to secure reimbursement and formulary access for Auryxia. In December 2014, we created the Keryx Patient Plus program to assist with patient accessibility to Auryxia. The Keryx Patient Plus program offers benefit verification, co-pay assistance for eligible commercial patients, a no-cost drug program for those who qualify, and a short-term prescription bridge program that may assist those already on Auryxia who are in danger of suffering a lapse in coverage.

Currently, our only product is Auryxia. From January 2015 through September 2016, we recognized product sales based on prescription sales of Auryxia in the United States. Since October 2016, we recognize product sales based on product sales to our customers. We have also generated, and expect to continue to generate, revenue from the sublicensing of rights to Auryxia in Japan to our Japanese partner. We may engage in business development activities that include seeking strategic relationships for ferric citrate outside of the United States, as well as evaluating other compounds and companies for in-licensing or acquisition, with a focus on complementary assets.

3

On September 23, 2015, the European Commission, or EC, approved Fexeric (ferric citrate coordination complex) for the control of elevated serum phosphorus levels, or hyperphosphatemia, in adult patients with CKD, including dialysis and NDD-CKD. The EC also considered Fexeric as a New Active Substance, or NAS, which provides 10 years of data and marketing exclusivity in the European Union, or EU. We do not plan to launch Fexeric on our own in the EU.

Foreign Operations

We have no foreign operations. Revenues from outside of the United States amounted to approximately 8%, 15% and 26% of our total revenues for 2017, 2016 and 2015, respectively, representing the license revenue recognized on net sales of Riona in Japan. Sales of ferric citrate outside of the United States do not and are not expected to materially contribute to our revenues.

Market Opportunity

Hyperphosphatemia Market

In the United States, there are approximately 450,000 adult patients with CKD requiring dialysis (referred to as ESRD). Managing ESRD is complex as many metabolic factors, such as iron and phosphorus, are out of balance. Phosphate retention and the resulting hyperphosphatemia in dialysis patients are typically associated with increased risk for heart and bone disease and death. The majority of ESRD patients require chronic treatment with phosphate-binding agents to lower and maintain serum phosphorus at acceptable levels. There are approximately 2.9 million prescriptions written in the United States for phosphate binders annually. Although the majority of dialysis patients are treated with phosphate binders, according to the Dialysis Outcomes and Practice Patterns Study, or DOPPS, program, 30-40 percent of these patients still have serum phosphorus levels above the KDOQI guidelines recommended range. DOPPS is one of the largest prospective studies of ESRD patients worldwide and includes samples from dialysis patients and units in multiple countries, including the United States to identify clinical practices that benefit patients. As we continue to increase utilization of Auryxia in the dialysis setting, our sales force is focused on asking renal care teams to try Auryxia on patients with serum phosphorus levels outside of the target range. At the American Society of Nephrology's 2016 Kidney Week in November, case study data from 92 patient charts for Auryxia were presented that showed treatment with this medicine lowered and maintained serum phosphorus levels in CKD patients on dialysis. Specifically, the majority of patients when started on Auryxia achieved target serum phosphorus levels within the KDOQI guideline target range at six months of treatment -- 48 percent and 65 percent of patients at one and six months, respectively.

In addition, it is estimated that more than 10 percent of the U.S. adult population is affected by CKD. As kidney function declines, levels of serum phosphorus become more prevalent, especially in non-dialysis stages 3-5 of CKD, which are the more progressive stages of CKD. Several studies have shown that higher serum phosphorus concentrations may be associated with increased mortality and morbidity in CKD.

Iron Deficiency Anemia Market

Iron deficiency anemia is extremely prevalent in the NDD-CKD population and is associated with fatigue, lethargy, decreased quality of life and is also believed to be associated with cardiovascular complications, hospitalizations, and increased mortality. Given our field force interacts primarily with nephrologists, we have conducted market research to assess how many patients under the care of a nephrologist have iron deficiency anemia and how many of those are treated. Our research shows that approximately 650,000 patients in the United States under the care of a nephrologist are treated for their iron deficiency anemia, and another 250,000 to 400,000 have iron deficiency anemia, but are not currently being treated. To treat this type of anemia, iron replacement therapy is essential to increase iron stores, which is reflected in ferritin and TSAT levels, and to raise hemoglobin levels. Market insights from proprietary and primary market research show that a need exists for an effective, well-tolerated, convenient iron deficiency anemia treatment. Nephrologists report low satisfaction with existing oral iron therapies due to tolerability. Auryxia is the first oral iron medication approved by the FDA that was developed specifically as a treatment for iron deficiency anemia in patients with CKD, not on dialysis. Treatment guidelines recommend treating anemia in CKD patients with oral iron before trying more invasive therapies such as ESAs, and IV iron. ESAs and IV iron are both injectable treatments that are viewed as effective treatment but are not frequently administered in the NDD-CKD setting; complications with IV iron include potential hypersensitivity reactions, including anaphylaxis. Both of these treatment options also have logistical complications associated with administering IV medicines in office settings.

4

CKD on Dialysis: Auryxia Approval and Phase 3 Registration Clinical Program

In September 2014, we received approval from the FDA to market Auryxia for the control of elevated serum phosphorus levels in patients with CKD on dialysis. In January 2014, our Japanese partner received approval from the Japanese Ministry of Health, Labour and Welfare to market Riona in Japan as an oral treatment for the improvement of hyperphosphatemia in patients with CKD, including dialysis and NDD-CKD. In September 2015, the EC approved Fexeric for the control of serum phosphorus levels, or hyperphosphatemia, in adult patients with CKD, including dialysis and NDD-CKD. These approvals to treat patients with CKD on dialysis in the United States were based on our Phase 3 registration clinical program in which we conducted a Phase 3 short-term trial (completed in November 2010), a Phase 3 long-term trial (completed in January 2013) and a long-term open label extension, or OLE, trial (completed in July 2014). The two Phase 3 trials showed that treatment with Auryxia resulted in changes in serum phosphorus levels during and at the end of treatment as compared to baseline that were statistically significant and increases in certain iron parameters, including ferritin, TSAT and hemoglobin levels, as compared to baseline.

The side-effect profile of Auryxia in these Phase 3 trials appeared similar to the profile of the control groups, which received Renvela (sevelamer carbonate) and/or Phoslo (calcium acetate). No serious adverse events deemed to be drug-related were reported in the short-term Phase 3 trial. In the long-term Phase 3 trial, the most common adverse events were gastrointestinal-related, including: diarrhea, including soft stools (26% Auryxia vs. 14% control), nausea (15% Auryxia vs. 14% control), feces discoloration (17% Auryxia vs. 0% control), vomiting (9% Auryxia vs. 15% control) and constipation (8% Auryxia vs. 5% control). Adverse events were generally characterized as mild to moderate in nature in this trial. The overall serious adverse event rates in the long-term Phase 3 trial were 41.9% Auryxia vs. 49.7% control and there were no clinically meaningful or statistically significant differences between Auryxia and the control group in serum calcium levels, aluminum levels and liver enzymes, as measured by alanine transaminase, or ALT, and aspartate transaminase, or AST. The safety profile observed in the OLE trial was consistent with that seen in the long-term Phase 3 trial.

CKD on Dialysis: Auryxia Phase 3 Registration Clinical Program-Short-Term Trial

In November 2010, we completed a Phase 3 short-term, dose-ranging and efficacy trial of Auryxia for the treatment of hyperphosphatemia. This short-term trial was a multicenter, randomized, open-label trial with a two-week washout period, following which patients were randomized 1:1:1 to receive a fixed dose of Auryxia of either 1 gram, 6 grams or 8 grams per day for a treatment period of 28 days using a 1 gram oral tablet formulation. One hundred fifty-four hemodialysis patients were enrolled into the study. The intent-to-treat, or ITT, group included 146 patients, representing all patients who took at least one dose of Auryxia and provided a baseline (at the end of washout) and at least one post-baseline efficacy assessment. Efficacy assessments were taken weekly starting at baseline for four weeks.

The primary endpoint of the study was to determine whether there was a dose response in the change in serum phosphorus from baseline to Day 28 of treatment in the ITT group, using a regression analysis to evaluate this objective. The study met the primary endpoint, with the regression analysis indicating a highly statistically significant dose response (p<0.0001) where mean serum phosphorus levels changed from baseline to end of the trial by 0.1 mg/dL (n=50) with 1 g/day, -2.0 mg/dL (n=51) with 6 g/day and -2.2 mg/dL (n=45) with the 8 g/day dosing. Certain iron parameters, including serum ferritin and TSAT, were measured in the study. Over the 28-day treatment period, modest upward trends in ferritin and TSAT levels were observed in the 6 g/day and 8 g/day dose groups. No serious adverse events were deemed to be drug-related by the Data Safety Monitoring Committee in this clinical study.

CKD on Dialysis: Auryxia Phase 3 Registration Clinical Program-Long-Term Trial

In January 2013, we announced successful top-line results from the long-term Phase 3 study of Auryxia for the treatment of hyperphosphatemia in patients with CKD on dialysis. In this study, conducted pursuant to a special protocol assessment, or SPA, agreement with the FDA, Auryxia met the study’s primary endpoint, described below, demonstrating a statistically significant change in serum phosphorus levels as compared to placebo over the four-week efficacy assessment period of the study. In addition, Auryxia met the key pre-defined secondary endpoints of increasing ferritin and TSAT and reducing the use of IV iron and ESAs as compared to the active control group (Renvela (sevelamer carbonate) and/or Phoslo (calcium acetate)) over the 52-week safety assessment period of the study. This long-term study was the final component of our Phase 3 registration program.

5

This Phase 3 long-term study was a multicenter, randomized, open-label, safety and efficacy clinical trial in 441 CKD patients on hemodialysis or peritoneal dialysis. The study consisted of a 2-week washout period followed by a 52-week Safety Assessment Period in which patients were randomized 2:1 to receive either Auryxia or an active control (Renvela (sevelamer carbonate) and/or Phoslo (calcium acetate)). The 52-week Safety Assessment Period was followed by a 4-week efficacy assessment period. During the efficacy assessment period, only those patients randomized to treatment with Auryxia during the safety assessment period and completed the safety assessment period were randomized in a 1:1 ratio to either continue treatment with Auryxia or switch to placebo for a 4-week treatment period. Patients were titrated during the study to achieve serum phosphorus levels that ranged between 3.5 to 5.5 mg/dL. Patients were included in the trial if ferritin was less than 1000 ng/mL and TSAT < 50%.

The primary objectives of this study were to determine the long-term safety of Auryxia in patients with CKD undergoing either hemodialysis or peritoneal dialysis, and the efficacy of Auryxia following 52 weeks of treatment in a four-week, randomized, open-label, placebo-controlled efficacy assessment period. Auryxia was administered using a 1 gram oral tablet formulation. Oral iron therapy was not permitted during the course of the study. IV iron therapy was at the physician’s discretion, though was not permitted if a subject’s serum ferritin level was greater than 1000 ng/mL or TSAT was greater than 30%. The use of ESAs was at the physician’s discretion.

The primary efficacy endpoint of this trial was the mean change in serum phosphorus from baseline (Week 52) to end of the four-week efficacy assessment period (Week 56) versus placebo in the ITT group. The ITT group included 182 patients, representing all patients who took at least one dose of Auryxia or placebo in the efficacy assessment period and provided at least one post-baseline efficacy assessment. Auryxia met the primary efficacy endpoint with a highly statistically significant result (p<0.0001, in an analysis of covariance, or ANCOVA, model with treatment as the fixed effect and baseline as the covariate) where patients on placebo had a change in serum phosphorus form 5.4 mg/dL to 7.2 mg/dL and those on Auryxia changed from 5.1 mg/dL to 4.9 mg/dL demonstrating a 2.2 mg/dL least squares mean difference between groups.

During the 52-week safety assessment period, Auryxia maintained serum phosphorus in the normal range, with highly statistically significant changes in mean serum phosphorus concentration at Weeks 12, 24, 36, 48, and 52 as compared to baseline (Day 0, p<0.0001). In addition, as agreed to with the EC, the treatment difference between Auryxia and Renvela (sevelamer carbonate) at Week 12 of the safety assessment period in terms of change from baseline (Day 0) in serum phosphorus was analyzed. Auryxia successfully achieved the non-inferiority endpoint versus Renvela.

The objectives of the key iron-related secondary endpoints, which were all pre-specified in the statistical analysis plan in a sequential strategy to control overall Type I error rate, were to corroborate prior data which suggested that Auryxia may increase iron storage parameters and reduce the need for IV iron and/or ESAs as compared to the active control group. Auryxia met all the key pre-defined secondary efficacy endpoints related to iron storage parameters with statistically significant treatment differences as compared to the active control group (Renvela (sevelamer carbonate) and/or Phoslo (calcium acetate)), as follows:

• Auryxia demonstrated a statistically significant treatment difference as compared to the active control group in mean change in serum ferritin from baseline (Day 0) to Week 52 from 593 ng/mL (n=253) at baseline to 895 ng/mL at the end of 52 weeks for Auryxia compared to those on active control where the serum ferritin level at baseline was 610 ng/mL (n=137) and at the end of the 52-week period was 632 ng/mL. Auryxia also demonstrated a statistically significant treatment difference as compared to the active control group in mean change in TSAT from baseline (Day 0) to Week 52 where the TSAT at baseline for Auryxia was 31% (n=252) and at the end of the 52-week period was 39% compared to the active control group where baseline TSAT was 31% (n=137) and at the end of the 52-week period was 30%.

• Each subject’s average cumulative IV iron intake was calculated over the 52-week safety assessment period. The ITT group consisted of 271 patients and 138 patients for the Auryxia and active control groups, respectively. Auryxia demonstrated a 51% decrease in median IV iron intake as compared to the active control group (median 1.87 mg/day for Auryxia versus 3.83 mg/day for active control, p<0.0001). Each patient’s average cumulative ESA intake was calculated over the 52-week safety assessment period. The ITT group consisted of 273 patients and 141 patients for the Auryxia and active control groups, respectively. Auryxia demonstrated a 24% decrease in median ESA intake as compared to the active control group (median 756 units/day for Auryxia versus 993 units/day for active control, p<0.05).

• Auryxia demonstrated a statistically significant treatment difference as compared to the active control group in mean change in hemoglobin from baseline (Day 0) to Week 52 (p<0.05) with a mean change in hemoglobin in the Active control group of -0.6 g/dL and a mean change of -0.2 g/dL for those on Auryxia.

6

Safety and Tolerability Profile

For reference, patients previously intolerant to Renvela (sevelamer carbonate) and/or Phoslo (calcium acetate) were ineligible to participate in this study. Based on an analysis of safety data, the side-effect profile of Auryxia and the active control group, or Active Control, appeared similar, with the most common adverse events gastrointestinal-related. The most common gastrointestinal adverse events were: diarrhea, including soft stools (26% Auryxia vs. 14% Active Control), nausea (15% Auryxia vs. 14% Active Control), feces discoloration (17% Auryxia vs. 0% Active Control), vomiting (9% Auryxia vs. 15% Active Control) and constipation (8% Auryxia vs. 5% Active Control). Adverse events were generally characterized as mild to moderate in nature.

The overall serious adverse event rates in the study were 41.9% Auryxia vs. 49.7% Active Control. Importantly, there were no clinically meaningful or statistically significant differences between Auryxia and the active control group in serum calcium levels, aluminum levels and liver enzymes, as measured by ALT and AST.

CKD on Dialysis: Auryxia Open-Label Safety Extension Study

In July 2014, we completed the long-term, OLE study for Auryxia in dialysis-dependent CKD patients. Patients who had participated in and successfully completed the long-term pivotal Phase 3 study were eligible for enrollment in the 48-week OLE study, providing for cumulative exposure to Auryxia of up to two years (n=17). Patients in the OLE study (n=168) were titrated to achieve and maintain serum phosphorus levels within a range of 3.5 to 5.5 mg/dL, with a maximum daily dose of 12 grams per day of Auryxia. The safety profile observed in the OLE study was consistent with that seen in the long-term pivotal Phase 3 study and there were no clinically meaningful changes in liver enzymes or aluminum levels over the course of the study.

NDD-CKD: Auryxia Approval and Phase 3 Clinical Program

In November 2017, we received approval from the FDA to market Auryxia for the treatment of iron deficiency anemia in adults with CKD, not on dialysis. The approval to treat patients with iron deficiency anemia and CKD, not on dialysis was based on our Phase 3 clinical trial which completed in March 2016.

In September 2014, we initiated a pivotal Phase 3 study of ferric citrate for the treatment of iron deficiency anemia in patients with Stage 3-5 NDD-CKD. This was a 24-week Phase 3, multi-center clinical trial, comprised of a 16-week, randomized, double-blind, placebo-controlled period, or the Randomized Period, followed by an 8-week open label safety extension period, where all patients received ferric citrate, or the Extension Period. Patients with CKD Stage 3-5 who were intolerant of or had an inadequate therapeutic response to oral iron supplements (with a limit of up to 20% of the target randomization in CKD Stage 5) and had a hemoglobin between 9.0 g/dL and £11.5 g/dL at screening for enrollment in the trial. In addition, patients with serum phosphorus <3.5 mg/dL were excluded from the trial. Unlike the Phase 2 NDD-CKD trial where dosing was based on serum phosphorus levels, in the Phase 3 study, ferric citrate was dosed, with meals, to obtain an increase in Hgb of >1.0 g/dL from baseline. Increase of study drug dose occurred only if the subject’s serum phosphate is ≥3.0 mg/dL. The use of oral or IV iron, ESAs, receipt of blood transfusions and phosphate binders were not permitted at any time during the study.

The study’s primary endpoint is a between group comparison of the proportion of patients achieving a 1 g/dL or greater increase in hemoglobin at any point during the 16-week Randomized Period. Secondary endpoints in this Phase 3 study include change from baseline to end of Randomized Period for hemoglobin, ferritin, TSAT and serum phosphorus.

In March 2016, we announced positive top-line results from the U.S.-based Phase 3 study of ferric citrate in treating iron deficiency anemia in patients with Stage 3-5 NDD-CKD. The study met its primary endpoint and all pre-specified secondary endpoints with statistical significance.

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The pivotal Phase 3 study enrolled 234 patients who previously had not adequately responded to or tolerated oral iron therapies at 32 clinical sites in the United States. Patients were randomized 1:1 (ferric citrate versus placebo). Patients enrolled in this study were not allowed to receive any IV or oral iron, or ESAs during this study. The study had a 16-week, randomized, double-blind, placebo-controlled, efficacy period followed by an 8-week open-label safety extension period in which all patients remaining in the study, including the placebo group, received ferric citrate. During the 16-week efficacy period, ferric citrate was administered at a starting dose of three tablets per day with food and could be titrated every four weeks by an additional three tablets for up to a maximum of 12 tablets per day; the mean dose received in ferric citrate treated patients was 5 tablets per day. The primary endpoint was the proportion of patients achieving a 1 g/dL or greater increase in hemoglobin at any point during the 16-week efficacy period. Baseline laboratory values were similar between the treatment arms.

Baseline laboratory values:	Ferric Citrate (FC) (n=117)	Placebo (P) (n=115)
Hemoglobin (g/dL)	10.4	10.4
TSAT (%)	20.2	19.6
Ferritin (ng/mL)	85.9	81.7
Serum phosphate (mg/dL)	4.2	4.1

Efficacy analyses were performed on an intent-to-treat population and included all enrolled patients who received at least one dose of ferric citrate or placebo and one post-treatment laboratory assessment. The analysis also used a sequential gatekeeping strategy for statistical testing of the secondary endpoints.

Primary and Secondary Endpoint Results

	Ferric Citrate (FC) (n=117)		Placebo (P) (n=115)		P-Value
Primary Endpoint:
Proportion of patients achieving an increase in hemoglobin of > 1.0 g/dL at any time point during efficacy period* (%)	52.1		19.1		<0.001
Secondary Endpoints:
Mean change in hemoglobin (g/dL)	0.75		(0.08	)	<0.001
Mean change in TSAT (%)	17.8		(0.60	)	<0.001
Mean change in ferritin (ng/mL)	162.5		(7.70	)	<0.001
Proportion of patients with a durable response during the efficacy period (%)**	48.7		14.80		<0.001
Mean change in serum phosphate (mg/dL)	(0.43	)	(0.22	)	0.02

* Efficacy period defined as the 16-week randomized, double-blind, placebo controlled period.

** Sustained treatment effect on hemoglobin was defined as a mean change from baseline ≥0.75 g/dL over any 4-week time period during the efficacy period, provided that an increase of at least 1.0 g/dL had occurred during that 4-week period.

Safety and Tolerability Profile

The safety population in the study included all randomized patients who took at least one dose of study drug. The safety analysis demonstrated that ferric citrate was generally well tolerated in adults with Stage 3-5 NDD-CKD. Specifically, the results showed:

• During the efficacy period, the majority of adverse events reported were mild to moderate, with the most common being diarrhea (20.5% FC; 16.4% P), constipation (18.8% FC; 12.9% P), discolored feces (14.5% FC; 0% P), and nausea (11.1% FC; 2.6%P). During the efficacy period, hypophosphatemia was reported as an adverse event in four patients, one patient in the ferric citrate arm and three patients in the placebo arm.

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• During the efficacy period, 26 percent (31/117) of ferric citrate-treated patients and 30 percent (35/116) of those receiving placebo discontinued treatment. Of the patients who discontinued, 12 patients treated with ferric citrate discontinued due to an adverse event, compared to 10 patients who received placebo.

• During the efficacy period, the rate of serious adverse events was balanced between the ferric citrate and placebo treatment groups, at 12% and 11%, respectively. None of the serious adverse events were deemed drug related.

During the course of the study, there were two deaths reported, both in patients receiving ferric citrate; neither of which were related to study drug.

COMMERCIAL ORGANIZATION

We have established a commercial organization to support the sales of Auryxia in the United States. Our sales force and managed markets organizations are responsible for promoting our products to health care professionals, providers, and payors. Our U.S. sales force and managed markets organizations include approximately 120 employees. We market our products and educate physicians by calling on individual physicians and CKD support staff, including dietitians, registered nurses, nurse practitioners and physician assistants, as well as through advertising, public relation efforts, and other activities. We also have established programs in the United States that provide our products to qualified uninsured or underinsured patients at no charge or at a reduced charge, based on specific eligibility criteria.

INTELLECTUAL PROPERTY AND PATENTS

General

Patents and other proprietary rights are very important to the development of our business. Our ability to protect our proprietary technologies from unauthorized use by third parties is limited by the extent to which our proprietary rights are covered by valid and enforceable patents supported by regulatory exclusivity or are effectively maintained as trade secrets. It is our intention to seek and maintain patent and trade secret protection for Auryxia and our proprietary technologies. As part of our business strategy, our policy is to actively file patent applications in the United States and, when appropriate, internationally to cover methods of use, processes of manufacture, new chemical compounds, pharmaceutical compositions, dosing of the compounds and compositions, and improvements in each of these areas. We also rely on trade secret information, technical know-how, innovation and agreements with third parties to continuously expand and protect our competitive position. We have a number of patents and patent applications related to our compounds and other technology, but we cannot guarantee the scope of protection of the issued patents, or that such patents will survive a validity or enforceability challenge, or that any of the pending patent applications will issue as patents.

Generally, patent applications in the United States are maintained in secrecy for a period of 18 months or more. Since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we are not certain that we were the first to make the inventions covered by each of our pending patent applications or that we were the first to file those patent applications. The patent positions of biotechnology and pharmaceutical companies are highly uncertain and involve complex legal and factual questions. Therefore, we cannot predict the breadth of claims allowed in biotechnology and pharmaceutical patents, or their enforceability. To date, there has been no consistent policy regarding the breadth of claims allowed in biotechnology patents. Third parties or competitors may challenge or circumvent our patents or patent applications, if issued. If our competitors prepare and file patent applications in the United States that claim technology also claimed by us, we may have to participate in interference or derivation proceedings in front of the U.S. Patent and Trademark Office, or USPTO, to determine priority of invention, which could result in substantial cost, even if the eventual outcome is favorable to us.

Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that before we commercialize any of our products, any related patent may expire or remain in existence for only a short period following commercialization, thus reducing any advantage of the patent. However, the life of a patent covering a product that has been subject to regulatory approval may have the ability to be extended through the Patent Term Extension program available under 35 U.S.C. § 156, although any such extension could still be minimal.

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If a patent is issued to a third-party containing one or more preclusive or conflicting claims, and those claims are ultimately determined to be valid and enforceable, we may be required to obtain a license (if a license is available on commercially reasonable terms) under such patent or to develop or obtain alternative technology. In the event of a litigation involving a third-party claim, an adverse outcome in the litigation could subject us to significant liabilities to such third-party, require us to seek a license for the disputed rights from such third-party, and/or require us to cease use of the technology. Further, our breach of an existing license or failure to obtain a license to technology required to commercialize our products may seriously harm our business. We also may need to commence litigation to enforce any patents issued to us or to determine the scope and validity of third-party proprietary rights. Litigation would involve substantial costs.

Pursuant to our license with Panion & BF Biotech, Inc., or Panion, we have the exclusive rights under a series of patent and patent applications to commercialize Auryxia worldwide, excluding certain Asian-Pacific countries. These patents and patent applications include claims directed to compositions of matter, pharmaceutical compositions, methods of treatment, as well as methods for the manufacture of Auryxia.

Our patent rights include: (1) U.S. Patent No. 8,846,976, which expires in 2024 and includes claims covering a method of treating hyperphosphatemia using Auryxia and encompasses the dosing regimen approved by the FDA for Auryxia; (2) U.S. Patent Nos. 7,767,851, 8,299,298, 8,338,642, 8,609,896, 8,754,257, 8,754,258, 8,901,349, 9,050,316, 9,328,133 and 9,757,416, which expire in 2024 and include either composition of matter claims, methods of use claims or both covering Auryxia; and (3) U.S. Patent No. 8,093,423, which expires in 2026 and includes methods of use claims covering Auryxia. The expiration dates referenced above are without regard to potential patent term extension. In addition, our patent portfolio includes a U.S. patent with claims directed to formulations of ferric citrate and U.S. patent applications directed to methods for the prophylaxis or treatment of hyperphosphatemia comprising administering a ferric citrate tablet , methods of improving at least one iron storage parameter (e.g., hemoglobin) in certain CKD patients comprising orally administering ferric citrate, and methods for treating iron deficiency anemia in certain CKD patients comprising orally administering a certain tablet formulation of ferric citrate.

Pursuant to our sublicense with our Japanese partner, Japan Tobacco Inc., or JT, and its subsidiary, Torii Pharmaceutical Co. Ltd., or Torii, we have also exclusively sublicensed certain Japanese patent rights to JT and Torii. These sublicensed rights include: (1) Japanese Patent No. 4173553, which expires in 2022; (2) Japanese Patent No. 4964585, which expires in 2025; (3) Japanese Patent No. 5667343, which expires in 2026; and (4) five pending Japanese patent applications. Each of the foregoing patents and patent applications include either composition of matter claims, methods of use claims, or both, covering Riona, the trade name under which JT and Torii market ferric citrate in Japan. The terms of the Japanese patents referred to in (1) and (2) above have been extended based on the Japanese regulatory review process for Riona under the Japanese patent term extension program. To date, to our knowledge, no contested proceedings or third-party claims have been lodged against any of these three Japanese patents.

The term of a patent will vary depending upon the legal term for a patent in the country in which the patent is obtained. Generally, the term for a patent is 20 years from the earliest filing date of a non-provisional patent application in the United States. In the United States, the term of a patent may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the USPTO in examining and granting a patent or may be shortened if a patent is terminally disclaimed over an earlier filed patent. In addition, the term of a U.S. patent that covers a drug, biological product or medical device approved by the FDA for commercial marketing may be eligible for patent term extension, provided statutory and regulatory requirements are met.

Our pending patent applications may not issue as patents and may not issue in all countries in which we develop, manufacture or potentially sell our product(s) or in countries where others develop, manufacture and potentially sell products using our technologies. Moreover, our pending patent applications, if issued as patents, may not provide additional protection for our product.

Obtaining proof of direct infringement by a competitor for a method of use patent requires us to demonstrate that the competitors make and market a product for the patented use(s). Alternatively, we can prove that our competitors induce or contribute others in engaging in direct infringement. Proving that a competitor contributes to, or induces, infringement of a patented method by another has additional proof requirements. For example, proving inducement of infringement requires proof of intent by the competitor. If we are required to defend ourselves against claims or to protect our own proprietary rights against others, such defense or protection could result in substantial costs to us and the distraction of our management. An adverse ruling in any litigation or administrative proceeding could prevent us from marketing and selling Auryxia, increase the risk that a generic version of Auryxia could enter the market to compete with Auryxia, limit our development and commercialization of Auryxia, or otherwise harm our competitive position and result in additional significant costs. In addition, any successful claim of infringement asserted against us could subject us to monetary damages or injunction, which could prevent us from making or selling Auryxia. We also may be required to obtain licenses to use the relevant technology. Such licenses may not be available on commercially reasonable terms, if at all.

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Moreover, physicians may prescribe a competitive identical product for indications other than the one for which the product has been approved, or off-label indications, that are covered by the applicable patents. Although such off-label prescriptions may directly infringe or contribute to or induce infringement of method of use patents, such infringement is difficult to prevent.

In addition, any limitations of our patent protection described above may adversely affect the value of our product candidate and may inhibit our ability to obtain a corporate partner at terms acceptable to us, if at all.

Other Intellectual Property Rights

We depend upon trademarks, trade secrets, know-how and continuing technological advances to develop and maintain our competitive position. To maintain the confidentiality of trade secrets and proprietary information, we require our employees, scientific advisors, consultants and collaborators, upon commencement of a relationship with us, to execute confidentiality agreements and, in the case of parties other than our research and development collaborators, to agree to assign their inventions to us. These agreements are designed to protect our proprietary information and to grant us ownership of technologies that are developed in connection with their relationship with us. These agreements may not, however, provide protection for our trade secrets in the event of unauthorized disclosure of such information.

In addition to patent protection, we may utilize orphan drug regulations, pediatric exclusivity or other provisions of the Food, Drug and Cosmetic Act of 1938, as amended, or FDCA, such as new chemical entity exclusivity or new formulation exclusivity, to provide market exclusivity for a drug candidate. Orphan drug regulations provide incentives to pharmaceutical and biotechnology companies to develop and manufacture drugs for the treatment of rare diseases, currently defined as diseases that exist in fewer than 200,000 individuals in the United States, or, diseases that affect more than 200,000 individuals in the United States but that the sponsor does not realistically anticipate will generate a net profit. Under these provisions, a manufacturer of a designated orphan drug can seek tax benefits, and the holder of the first FDA approval of a designated orphan product will be granted a seven-year period of marketing exclusivity for such FDA-approved orphan product. In the United States, the FDA has the authority to grant additional data protection for approved drugs where the sponsor conducts specified testing in pediatric or adolescent populations. If granted, this pediatric exclusivity may provide an additional six months which are added to the term of data protection as well as to the term of a relevant patent, to the extent these protections have not already expired. We may also seek to utilize market exclusivities in other territories, such as in the EU. We cannot assure that our drug candidate, Auryxia, or any drug candidates we may acquire or in-license, will obtain such orphan drug designation, pediatric exclusivity, new chemical entity exclusivity or any other market exclusivity in the United States, EU or any other territory, or that we will be the first to receive the respective regulatory approval for such drugs so as to be eligible for any market exclusivity protection.

LICENSING AGREEMENTS AND COLLABORATIONS

We have formed strategic alliances with a number of companies for the development, manufacture and commercialization of ferric citrate. Our current key strategic alliances are discussed below.

Panion & BF Biotech, Inc.

In November 2005, we entered into a license agreement with Panion & BF Biotech, Inc., or Panion. Under the license agreement, we acquired the exclusive worldwide rights, excluding certain Asian-Pacific countries, for the development and marketing of ferric citrate. To date, we have expensed an aggregate of $11.6 million of milestone payments to Panion, including the $2.0 million paid upon European marketing approval in 2015. In addition, Panion is eligible to receive royalty payments based on a mid-single digit percentage of net sales of ferric citrate in the licensed territory, and through September 2017, was eligible to receive a manufacturing fee for product manufactured for us in the licensed territory. For the years ended December 31, 2017 and 2016, we recorded approximately $3.3 million and $1.6 million, respectively, in cost of goods sold related to royalty payments due Panion relating to sales of Auryxia (ferric citrate) in the United States.

The license agreement terminates upon the expiration of our obligations to pay royalties thereunder. In addition, we may terminate the license agreement (i) in its entirety or (ii) with respect to one or more countries of the territory covered by the agreement, in either case upon 90 days’ notice. We and Panion also have the right to terminate the license agreement upon the occurrence of a breach of a material provision of the license agreement and certain insolvency events.

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Japan Tobacco Inc. and Torii Pharmaceutical 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 commercialization of ferric citrate in Japan. Effective 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, which, among other things, provided for the elimination of all significant on-going obligations under the Sublicense Agreement.

In January 2013, JT and Torii filed its new drug application, or NDA, with the Japanese Ministry of Health, Labour and Welfare for marketing approval of ferric citrate in Japan for the treatment of hyperphosphatemia in patients with CKD. Under the terms of the Revised Agreement, we received a non-refundable milestone payment of $7.0 million in January 2013 for the achievement of the NDA filing milestone.

In January 2014, JT and Torii received manufacturing and marketing approval of ferric citrate from the Japanese Ministry of Health, Labour and Welfare. Ferric citrate, launched in May 2014 and being marketed in Japan by Torii under the brand name Riona, is indicated as an oral medicine for the improvement of hyperphosphatemia in patients with CKD. Under the terms of the license agreement with JT and Torii, we received a non-refundable payment of $10.0 million in February 2014 for the achievement of the marketing approval milestone. We also receive royalty payments based on a tiered double-digit percentage of net sales of Riona in Japan escalating up to the mid-teens and may also receive up to an additional $55.0 million upon the achievement of certain annual net sales milestones. In accordance with our revenue recognition policy, royalty revenues are recognized in the quarter that JT and Torii provide their written report and related information to us regarding sales of Riona, which generally will be one quarter following the quarter in which the underlying sales by JT and Torii occurred. We recorded $5.1 million and $4.8 million in license revenue related to royalties earned on net sales of Riona in Japan in 2017 and 2016, respectively. We record the associated mid-single digit percentage of net sales royalty expense due to Panion, the licensor of ferric citrate, in the same period as the royalty revenue from JT and Torii is recorded. We recorded $3.0 million and $2.9 million in license expense in 2017 and 2016, respectively, related to royalties due to the licensor of ferric citrate relating to sales of Riona in Japan.

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

COMPETITION

The pharmaceutical and biotechnology industries are highly competitive. Our competitors include pharmaceutical companies and biotechnology companies, as well as universities and public and private research institutions. In addition, companies that are active in different but related fields represent substantial competition for us. Many of our competitors have significantly greater capital resources, larger research and development staffs and facilities and greater experience in drug development, regulation, manufacturing and marketing than we do. These organizations also compete with us to recruit qualified personnel, attract partners for joint ventures or other collaborations, and license technologies that are competitive with ours. To compete successfully in this industry, we must identify novel and unique drugs or methods of treatment and then complete the development of those drugs as treatments in advance of our competitors.

Hyperphosphatemia Competition

Auryxia is competing in the United States with other FDA-approved phosphate binders such as Renagel^® (sevelamer hydrochloride) and Renvela (sevelamer carbonate), both marketed by Genzyme Corporation (a wholly-owned subsidiary of Sanofi), or Genzyme, PhosLo (calcium acetate), marketed by Fresenius Medical Care, Fosrenol^® (lanthanum carbonate), marketed by Shire Pharmaceuticals 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 options such as aluminum and magnesium. The majority of the phosphate binders listed above are now available in generic forms. Our strategy to compete against these existing treatments depends in part on physicians and patients accepting that Auryxia is differentiated in the marketplace versus these FDA-approved phosphate binders

Aluminum-type phosphate binders were widely used in the past. However, the systemic absorption of aluminum from these agents and the potential toxicity associated with their use no longer make this type of binder a viable long-term treatment option.

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Calcium-type phosphate binders are commonly used to bind dietary phosphate; however, they promote positive net calcium balance and an increased risk of metastatic calcification in many patients, especially in those patients taking vitamin D analogs and those with a dynamic bone disease. Calcification of the cardiovascular system is believed to represent a significant risk factor for morbidity and mortality in patients with CKD. Due to this, in 2017, Kidney Disease Improving Global Outcomes Mineral and Bone Disease Practice Guidelines strengthened the language restricting use of calcium-based binders.

Non-calcium-based, non-absorbed phosphate binders, including sevelamer hydrochloride and sevelamer carbonate are among the most prescribed phosphate binders in the United States. Compared to the calcium-type binders, fewer coronary and aortic calcifications have been documented, however, there is a risk of metabolic acidosis with sevelamer hydrochloride, as well as the potential for gastrointestinal problems, and sevelamer can affect concomitant vitamin K and vitamin D treatment.

Lanthanum-type phosphate binders are another alternative. Lanthanum is a rare earth element and is minimally absorbed in the gastrointestinal tract. Lower level tissue deposition, particularly in bone and liver, has been observed in animals. However, the long-term, potentially harmful, effects due to the accumulation of lanthanum in these tissues have not been clearly determined.

The need for alternative phosphate-binding agents has long been recognized, especially given the increasing prevalence of ESRD and shortcomings with current therapies available to such patients.

Iron Deficiency Anemia Competition

Auryxia is competing in the United States for the treatment of iron deficiency anemia in CKD patients, not on dialysis, with over-the-counter oral iron, other prescription oral iron formulations and IV iron. Auryxia is the only branded oral iron medicine that was developed and specifically approved for the treatment of iron deficiency anemia in this patient population. Nephrologists have reported limited success with traditional oral iron formulations (both over-the-counter and prescription products). IV iron is an effective treatment but is not frequently administered in the NDD-CKD setting due to potential hypersensitivity reactions, including anaphylaxis and logistical complications associated with administering IV medicines in office settings. Auryxia is the only oral iron medicine being actively promoted in the nephrology setting.

Auryxia, currently our only product, which we launched in its first approved indication in December 2014, is competing with existing therapies. In addition, other companies are pursuing the development of pharmaceuticals that target the same diseases and conditions that we are targeting with Auryxia, including the treatment of hyperphosphatemia and iron deficiency anemia. Other companies have products or product candidates in various stages of pre-clinical or clinical development to treat diseases for which we are also seeking to acquire and develop products. Additional information can be found in this report in Item 1A under the heading “Risk Factors—Other Risks Related to Our Business.”

SUPPLY AND MANUFACTURING

We have limited experience in manufacturing products for clinical or commercial purposes. We intend to continue, in whole or in part, to use third parties to manufacture and analytically test Auryxia, for use in clinical trials and for commercial sale.

We believe that we have established contract manufacturing relationships for the supply of Auryxia to ensure that we will have sufficient material for clinical trials and ongoing commercial sales. We currently have multiple suppliers of Auryxia's active pharmaceutical ingredient, or API, and one supplier with two approved sites for the supply of Auryxia drug product. We are currently working with our drug product supplier to have a third site approved. In addition, we are continuing to establish the basis for long-term commercial production capabilities to supply the potential expanded demand for Auryxia in future years. As with any supply program, obtaining raw materials and finished drug product of the required quality and quantity cannot be guaranteed and we cannot ensure that we will be successful in this endeavor.

As we continue to build inventory for the expanded commercialization of Auryxia, we intend to expand capacity to produce Auryxia under current Good Manufacturing Practice, or cGMP, requirements. Our third-party manufacturers have a limited number of approved facilities in which Auryxia can be produced and have limited experience in manufacturing Auryxia in quantities sufficient for higher levels of demand. Our third-party manufacturers have other clients and may have other priorities that could affect their ability to perform the work satisfactorily and/or on a timely basis. Both of these occurrences would be beyond our control.

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We expect to similarly rely on contract manufacturing relationships for any products that we may in-license or acquire in the future. However, there can be no assurance that we will be able to successfully contract with such manufacturers on terms acceptable to us, or at all.

Contract manufacturers are subject to ongoing periodic and unannounced inspections by the FDA, the Drug Enforcement Administration and corresponding state and foreign government agencies to ensure strict compliance with cGMP and other state and federal requirements and corresponding foreign standards. Any of our contractors in Europe face similar challenges from the numerous EU and member state regulatory agencies and authorized bodies. We do not have control over third-party manufacturers’ compliance with these regulations and standards, other than through contractual obligations and periodic auditing. If they are deemed out of compliance with cGMPs, approvals could be delayed, product recalls could result, inventory could be destroyed, production could be stopped, and supplies could be delayed or otherwise disrupted.

If we need to change manufacturers or add additional manufacturing sites after commercialization, the FDA and corresponding foreign regulatory agencies must approve these new manufacturers in advance, which will involve testing and additional inspections to ensure compliance with applicable requirements and standards and may require significant lead times and delay, and disruption of supply. Furthermore, switching manufacturers may be difficult because the number of potential manufacturers is limited. It may be difficult or impossible for us to find a replacement manufacturer quickly or on terms acceptable to us, or at all.

GOVERNMENT AND INDUSTRY REGULATION

FDA Approval Process

In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug, and Cosmetic Act, or the FDC Act, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending NDAs, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

Pharmaceutical product development in the United States typically involves the performance of nonclinical laboratory and animal tests, the submission to the FDA of an investigational new drug application, or IND, which must become effective before clinical testing may commence, and adequate, well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity, and novelty of the product or disease.

Preclinical tests include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal studies to assess the characteristics and potential safety and efficacy of the product. The conduct of the preclinical and other nonclinical tests must comply with certain federal regulations and requirements, including good laboratory practices. The results of preclinical testing are submitted to the FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long-term nonclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin.

Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance with federal regulations, (ii) in compliance with good clinical practice, or GCP, an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors, and (iii) under protocols detailing the objectives of the clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND.

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The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. The clinical trial protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board, or IRB, at each site where a clinical trial will be performed for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or it may impose other conditions.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In Phase 1, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess metabolism, pharmacokinetics, pharmacological actions, side effects associated with increasing doses, and, if possible, early evidence on effectiveness. Phase 2 usually involves clinical trials in a limited patient population to determine the effectiveness of the drug for a particular indication, dosage tolerance, and optimum dosage, and to identify common adverse effects and safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 clinical trials are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. A single Phase 3 clinical trial with other confirmatory evidence may be sufficient in instances where the clinical trial is a large multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity, or prevention of a disease with potentially serious outcome, and confirmation of the result in a second clinical trial would be practically or ethically impossible.

After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is required before marketing of the product may begin in the United States. The NDA must include the results of all nonclinical, clinical, and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDA is substantial. Under federal law, the submission of most NDAs is additionally subject to a substantial application user fee, and the manufacturer and/or sponsor under an approved NDA is also subject to annual product and establishment user fees which typically increase annually.

The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs. Most such applications for standard review drug products are reviewed within ten to twelve months, while most applications for priority review drugs are reviewed in six to eight months. Priority review can be applied to drugs that the FDA determines offer major advances in treatment or provide a treatment where no adequate therapy exists. For biologics, priority review is further limited only for drugs intended to treat a serious or life-threatening disease relative to the currently approved products. The review process for both standard and priority review may be extended by FDA for three additional months to consider certain late-submitted information, or information intended to clarify information already provided in the submission.

The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory committee, which is typically a panel that includes clinicians and other experts, for review, evaluation, and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with current good manufacturing practice requirements, or cGMP is satisfactory, and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.

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An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy, or REMS, to help ensure that the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for health care professionals, and elements to assure safe and effective use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

Disclosure of Clinical Trial Information

Sponsors of clinical trials of certain FDA-regulated products, including prescription drugs, are required to register and disclose certain clinical trial information on a public website maintained by the U.S. National Institutes of Health. Information related to the product, patient population, phase of investigation, clinical trial sites and investigator, and other aspects of the clinical trial is made public as part of the registration. Sponsors are also obligated to disclose the results of these clinical trials after completion. Disclosure of the results of these clinical trials can be delayed until the product or new indication being studied has been approved. Competitors may use this publicly-available information to gain knowledge regarding the design and progress of our development programs.

The Hatch-Waxman Act

Orange Book Listing

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent whose claims cover the applicant’s product. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an abbreviated new drug application, or ANDA. An ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence testing to be therapeutically equivalent to the listed drug. Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or submit results of, nonclinical or clinical tests to prove the safety or effectiveness of their drug product. Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed drug.

The ANDA applicant is required to make certain certifications to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. The ANDA applicant may also elect to submit a section viii statement, certifying that its proposed ANDA label does not contain or carve out any language regarding the patented method-of-use, rather than certify to a listed method-of-use patent.

If the applicant does not challenge the listed patents, the ANDA will not be approved until all the listed patents claiming the referenced product have expired. A certification 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 certification. If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the ANDA applicant.

The ANDA also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced product has expired.

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Exclusivity

Upon NDA approval of a new chemical entity, or NCE, which is a drug that contains no active moiety that has been approved by the FDA in any other NDA, that drug receives five years of marketing exclusivity during which time the FDA cannot receive any ANDA seeking approval of a generic version of that drug. Certain changes to a drug, such as the addition of a new indication 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 submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed. If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification, and, thus, no ANDA may be filed before the expiration of the exclusivity period.

Patent Term Extension

After 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 testing phase—the time between IND submission and NDA submission—and all of the review phase—the time between NDA submission and approval up to a maximum of five years. The time can be shortened if the FDA determines that the applicant did not pursue approval with due diligence. The total patent term after the extension may not exceed 14 years.

We have filed applications 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, 5,753,706, and 8,338,642 for delays caused by FDA regulatory review. If granted, we can utilize 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 expiration of these patents, competitors who obtain the requisite regulatory approval may potentially offer products with the same composition and/or method of use as our product, so long as the competitors do not infringe any other patents that we may own or license.

For patents that might expire before a determination 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 times. For each interim patent extension granted, the post-approval patent extension is reduced by one 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.

We have filed for an interim patent term extension in accordance with 35 U.S.C. § 156(e)(2) for U.S. Patent No. 5,753,706.

In addition, certain other non-jurisdictions, 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 Patents Nos. 4964585 and 4173553 will expire in November 2025 and November 2022, respectively.

Advertising and Promotion

Once an NDA is approved, a product will be subject to certain post-approval requirements. For instance, FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the internet. Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.

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Adverse Event Reporting and GMP Compliance

Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA. The FDA also may require post-marketing testing, known as Phase 4 testing, REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product. In addition, quality-control, drug manufacture, packaging, and labeling procedures must continue to conform to cGMPs after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with FDA and certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency inspects manufacturing facilities to assess compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality-control to maintain compliance with cGMPs. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.

Pediatric Information

Under the Pediatric Research Equity Act, or PREA, NDAs or supplements to NDAs must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective. The FDA may grant full or partial waivers, or deferrals, for submission of data. Unless otherwise required by regulation, PREA does not apply to any drug for an indication where orphan designation has been granted.

The Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month extension of any exclusivity—patent or non-patent—for a drug if certain conditions are met. Conditions for exclusivity include the FDA’s determination that information relating to the use of a new drug in the pediatric population may produce health benefits in that population, the FDA making a written request for pediatric clinical trials, and the applicant agreeing to perform, and reporting on, the requested clinical trials within the statutory timeframe. Applications under the BPCA are treated as priority applications, with all of the benefits that designation confers.

Foreign Approval

Should we wish to market our products outside the United States, we must receive marketing authorization from the appropriate foreign regulatory authorities. The requirements governing the conduct of clinical trials, marketing authorization, pricing and reimbursement vary widely from country to country. At present, companies may apply for foreign marketing authorizations at a national level. However, within the EU, registration procedures are available to companies wishing to market a product in more than one EU member state. Typically, if the regulatory authority is satisfied that a company has presented adequate evidence of safety, quality and efficacy, then the regulatory authority will grant a marketing authorization. This foreign regulatory approval process, however, involves risks similar or identical to the risks associated with FDA approval discussed above, and therefore we cannot guarantee that we will be able to obtain the appropriate marketing authorization for any product in any particular country.

Failure to comply with applicable federal, state and foreign laws and regulations would likely have a material adverse effect on our business. In addition, federal, state and foreign laws and regulations regarding the manufacture and sale of new drugs are subject to future changes. We cannot predict the likelihood, nature, effect or extent of adverse governmental regulation that might arise from future legislative or administrative action, either in the United States or abroad.

Pharmaceutical Coverage, Pricing and Reimbursement

Sales of our products will depend, in part, on the extent to which our products will be covered by third-party payors, such as government health programs, commercial insurance and managed healthcare organizations. In the United States, no uniform policy of coverage and reimbursement for drug products exists. Accordingly, decisions regarding the extent of coverage and amount of reimbursement to be provided for any of our products will be made on a payor-by-payor basis. As a result, the coverage determination process is often a time consuming and costly process that will require us to provide scientific and clinical support for the use of our product candidates to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained.

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Third party payors are increasingly challenging the price and examining the medical necessity and cost effectiveness of medical products and services, in addition to their safety and efficacy. In order to obtain coverage and reimbursement for any product that might be approved, we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost effectiveness of any products, in addition to the costs required to obtain regulatory approvals. Our product candidates may not be considered medically necessary or cost effective. If third-party payors do not consider a product to be cost effective compared to other available therapies, they may not cover the product after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow a company to sell its products at a profit.

The U.S. government and state legislatures have shown significant interest in implementing cost containment programs to limit the growth of government paid health care costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for brand named prescription drugs. For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the ACA, contains provisions that may reduce the profitability of drug products, including, for example, increased rebates for drugs reimbursed by Medicaid programs, extension of Medicaid rebates to Medicaid managed care plans, mandatory discounts for certain Medicare Part D beneficiaries and annual fees based on pharmaceutical companies’ share of sales to federal health care programs. Adoption of government controls and measures, and tightening of restrictive policies in jurisdictions with existing controls and measures, could limit payments for pharmaceuticals.

As noted above, even if we are able to secure regulatory approval, sales of any of our products may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement. An increasing emphasis on cost containment measures in the United States has increased, and we expect this sentiment will continue to increase the pressure on drug pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

Other Healthcare Laws and Compliance Requirements

Manufacturing, sales, promotion and other activities following product approval are also subject to regulation by numerous regulatory authorities in addition to the FDA, including the Centers for Medicare & Medicaid Services, other divisions of the Department of Health and Human Services, the U.S. Department of Justice, the Consumer Product Safety Commission, the Federal Trade Commission, the Occupational Safety & Health Administration, the Environmental Protection Agency and state and local governments.

We also are subject to various federal and state laws targeting fraud and abuse in the healthcare industry. These laws may impact, among other things, our proposed sales, marketing and educational programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:

• The federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either (1) the referral of an individual to a person for furnishing any item or service for which payment is available under a federal health care program, or (2) the purchase, lease, order or recommendation thereof of any good, facility, service or item for which payment is available under a federal health care program;

• The False Claims Act and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment from the federal government or making or using, or causing to be made or used, a false record or statement material to a false or fraudulent claim;

• The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program, obtaining money or property of the health care benefit program through false representations or knowingly and willingly falsifying, concealing or covering up a material fact, making false statements or using or making any false or fraudulent document in connection with the delivery of, or payment for, health care benefits or services;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;

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• The provision under the ACA commonly referred to as the Sunshine Act, which requires applicable manufacturers of covered drugs, devices, biologics and medical supplies to track and annually report to CMS payments and other transfers of value provided to physicians and teaching hospitals and certain ownership and investment interests held by physicians or their immediate family members in applicable manufacturers and group purchasing organizations; and

• State law equivalents of each of the above federal laws, such as the Anti-Kickback Statute and False Claims Act, and state laws concerning security and privacy of health care information, which may differ in substance and application from state to state thereby complicating compliance efforts.

The ACA broadened the reach of the fraud and abuse laws by, among other things, amending the intent requirement of the federal Anti-Kickback Statute and the applicable criminal healthcare fraud statutes contained within 42 U.S.C. Section 1320a 7b. Pursuant to the statutory amendment, a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. In addition, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act or the civil monetary penalties statute. Many states have adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services reimbursed by any source, not only the Medicare and Medicaid programs.

As noted above, the federal False Claims Act prohibits anyone from, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment from federal programs, including Medicare and Medicaid. Although we would not submit claims directly to payors, manufacturers can be held liable under these laws if they are deemed to “cause” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers. In addition, our future activities relating to the reporting of wholesaler or estimated retail prices for our products, the reporting of prices used to calculate Medicaid rebate information and other information affecting federal, state, and third-party reimbursement for our products, and the sale and marketing of our products are subject to scrutiny under this law. For example, pharmaceutical companies have been prosecuted under the federal False Claims Act in connection with their off label promotion of drugs. Penalties for such violations could include three times the actual damages sustained by the government, mandatory civil penalties between $5,500 and $11,000 for each separate false claim, exclusion from participation in federal healthcare programs, and the potential implication of various federal criminal statutes. Private individuals also have the ability to bring actions under the federal False Claims Act, or qui tam actions, and certain states have enacted laws based on the federal False Claims Act.

RESEARCH AND DEVELOPMENT

Company sponsored research and development expenses totaled $37.7 million in 2017, $29.5 million in 2016 and $36.7 million in 2015. Research and development expenses consist primarily of salaries and related personnel costs (including stock-based compensation expense), fees paid to consultants and outside service providers for clinical and laboratory development, manufacturing, including inventory manufactured prior to regulatory approval of the product or the specific contract manufacturer, facilities-related and other expenses relating to the design, development, manufacture, testing, and enhancement of our drug candidates and technologies, as well as expenses related to in-licensing of new product candidates. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview.”

SEGMENT REPORTING

We conduct our operations in one business segment as further described in Note 14 – Business Segments to our consolidated financial statements.

EMPLOYEES

As of February 9, 2018, we had 210 full and part-time employees. None of our employees are represented by a collective bargaining agreement, and we have never experienced a work stoppage. We consider our relations with our employees to be good.

ITEM 1A. RISK FACTORS

You should carefully consider the following risks and uncertainties. If any of the following occurs, our business, financial condition and/or operating results could be materially harmed. These factors could cause the trading price of our common stock to decline, and you could lose all or part of your investment.

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Risks related to our business and industry

We rely on third parties to manufacture and analytically test our drug. If these third parties do not successfully manufacture and test our drug, our business will be harmed.

We have limited experience in manufacturing products for clinical or commercial purposes. We intend to continue, in whole or in part, to use third parties to manufacture and analytically test our drug for commercial distribution and use in clinical trials. We may not be able to enter into future contract agreements with these third-parties on terms acceptable to us, if at all.

Our ability to conduct clinical trials, manufacture and commercialize our drug will depend on the ability of such third parties to manufacture our drug on a large scale at a competitive cost and in accordance with the current good manufacturing practices, or cGMPs, and other regulatory requirements, including requirements from federal, state and local environmental and safety regulatory agencies and foreign regulatory requirements, if applicable. Significant scale-up of manufacturing may result in unanticipated technical challenges and will require validation studies that are subject to FDA inspection. Scale-up and technology transfer activities can be complex, and insufficient process knowledge can result in a poorly scaled up process with inadequate process control. A lack of process control can lead to increased deviations during the manufacturing process, out of specification test results, batch rejection and the possible distribution of drug products that do not conform to predetermined specifications. In addition, a variety of factors can affect a contract manufacturer’s qualifications to produce acceptable product, including deficiencies in the contractor’s quality unit, lack of training, a shortage of qualified personnel, capacity constraints and changes in the contractor’s commercial or quality related priorities. Any of these difficulties, if they occur, and are not overcome to the satisfaction of the FDA or other regulatory agency, could lead to an interruption in the supply of our drug to the market, particularly given that some of the third parties we intend to employ in the manufacturing process are single source providers. As a result of the large quantity of materials required for Auryxia production and the large quantities of Auryxia that is required for our commercial success, the commercial viability of Auryxia will also depend on adequate supply of starting materials that meet quality, quantity and cost standards and the ability of our contract manufacturers to continually produce the active pharmaceutical ingredient, or API, and finished drug product on a commercial scale. Failure to achieve and maintain these levels of supply can jeopardize and prevent the successful commercialization of the product. Moreover, issues that may arise in our scale-up and technology transfer of Auryxia and continued commercial scale manufacture of Auryxia may lead to significant delays in our development and commercial timelines and negatively impact our financial performance. For example, a production-related issue resulted in an interruption in the supply of Auryxia in the third and fourth quarters of 2016. This supply interruption negatively impacted our revenues in 2016. Although we have resolved this supply interruption and taken steps designed to prevent future interruptions in the supply of Auryxia, any additional supply interruptions would negatively and materially impact our reputation and financial condition.

We currently have multiple suppliers of Auryxia’s API and one supplier with two approved sites for the supply of Auryxia drug product. We are currently working with our drug product supplier to have a third site approved. If any of our suppliers were to limit or terminate production, or otherwise fail to meet the quality or delivery requirements needed to supply Auryxia at adequate levels, we could experience losses of revenue, which could materially and adversely impact our results of operations.

Our third-party manufacturers may not perform as required under the terms of our supply agreement or quality agreement, or may not remain in the contract manufacturing business for the time required by us to successfully manufacture and distribute our drug. In addition, our contract manufacturers will be subject to ongoing periodic and unannounced inspections by the FDA and corresponding foreign governmental agencies to ensure strict compliance with cGMPs, as well as other governmental regulations and corresponding foreign standards. While we periodically audit our contractors for adherence to regulatory requirements, and are ultimately held responsible for their regulatory compliance, we cannot assure you that unforeseen changes at these contractors will not occur that could change their regulatory standing. The same issues apply to contract analytical services which we use for quality, impurity and release testing of our drug. We are required by law to establish adequate oversight and control over raw materials, components and finished products furnished by our third-party manufacturers, which we establish by contract, supplier qualification and periodic audits, but unforeseen circumstances could affect our third-party manufacturers’ compliance with applicable regulations and standards. As we continue to scale up production, we continue to develop analytical tools for Auryxia drug substance and drug product testing. Failure to develop effective analytical tools could result in regulatory or technical delay or could jeopardize our ability to obtain and maintain FDA approval. Moreover, even with effective analytical methods available, there is no assurance that we will be able to analyze all the raw materials and qualify all impurities to the satisfaction of the FDA, possibly requiring additional analytical studies, analytical method development, or preclinical studies, which could significantly delay our ability to receive regulatory approvals for our drug. Additionally, changes in the analytical specifications required by the FDA or other regulatory authority, such as United States Pharmacopeial Convention standards, from time to time, could delay our ability to receive regulatory approvals for our drug or our commercial efforts.

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In addition, switching or engaging multiple third-party contractors to produce our drug substance or drug product may be difficult and time consuming because the number of potential manufacturers may be limited and the process by which multiple manufacturers make the drug substance or drug product must meet established specifications at each manufacturing facility. It may be difficult and time consuming for us to find and engage replacement or multiple manufacturers quickly and on terms acceptable to us, if at all. For Auryxia, the loss of any of our drug substance or drug product manufacturers would result in significant additional costs and delays in our development program and as demonstrated by our recent interruption in the supply of Auryxia, negatively impact our sales of Auryxia.

If we do not establish or maintain manufacturing, drug development and marketing arrangements with third parties, we may be unable to commercialize our products.

We do not possess all of the capabilities to fully commercialize our product on our own. From time to time, we may need to contract with additional third parties, or renew or revise contracts with existing third parties, to:

• manufacture our drug;

• assist us in developing, testing and obtaining regulatory approval for and commercializing our compound and technologies; and

• market and distribute our drug.

We can provide no assurance that we will be able to successfully enter into agreements with such third parties on terms that are acceptable to us, if at all. If we are unable to successfully contract with third parties for these services when needed, or if existing arrangements for these services are terminated, whether or not through our actions, or if such third parties do not fully perform under these arrangements, we may have to delay, scale back or end one or more of our drug development programs or seek to develop or commercialize our product independently, which could result in significant delays. Furthermore, such failure could result in the termination of license rights to our product. If these manufacturing, development or marketing agreements take the form of a partnership or strategic alliance, such arrangements may provide our collaborators with significant discretion in determining the efforts and resources that they will apply to the development and commercialization of our product. We cannot predict the form or scope that any such collaboration might take, and we may pursue other strategic alternatives if terms or proposed collaborations are not attractive. To the extent that we rely on third parties to research, develop or commercialize our product, we are unable to control whether such product will be scientifically or commercially successful. Additionally, if these third parties fail to perform their obligations under our agreements with them or fail to perform their work in a satisfactory manner, in spite of our efforts to monitor and ensure the quality of such work, we may face decreased sales and/or delays in achieving the business or regulatory milestones required for additional commercialization of our current drug and any future drug candidate.

We have a limited operating history as a commercial-stage company and have incurred substantial operating losses since our inception. We expect to continue to incur losses in the future and may never become profitable.

We have a limited operating history as a commercial-stage company. You should consider our prospects in light of the risks and difficulties frequently encountered by early stage companies. In addition, we have incurred substantial operating losses since our inception and expect to continue to incur operating losses for the foreseeable future and may never become profitable. As of December 31, 2017, we had an accumulated deficit of $998.5 million. As we continue our research and development and commercial efforts, we may incur increasing losses. We may continue to incur substantial operating losses even after we begin to generate meaningful revenues from our drug, Auryxia. Our ability to achieve profitability depends on a number of factors, including our ability to complete our development efforts, obtain any additional regulatory approvals that we may seek for our drug, successfully complete any post-approval regulatory obligations and successfully manufacture and commercialize our drug.

We are highly dependent on the commercial success of Auryxia in the United States for the foreseeable future and as a result we may be unable to attain profitability and positive cash flow from operations.

In September 2014, the U.S. Food and Drug Administration, or FDA, approved Auryxia for the control of serum phosphorus levels in patients with chronic kidney disease, or CKD, on dialysis and in November 2017, the FDA approved Auryxia for the treatment of iron deficiency anemia in adults with CKD, not on dialysis. The commercial success of Auryxia will depend on a number of factors, including:

• the effectiveness of Auryxia as a treatment for adult patients with CKD on dialysis and for iron deficiency anemia in adults with CKD, not on dialysis;

• the adoption of Auryxia by physicians, which depends on whether physicians view it as a safe and effective treatment for their patients;

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• our ability to successfully launch and then effectively continue to commercialize Auryxia in the newly approved indication of iron deficiency anemia in adults with CKD, not on dialysis;

• the effectiveness of the sales, managed markets and marketing efforts by us and our competitors;

• our ability to continue to supply Auryxia to the market without interruption;

• our ability to identify reliable suppliers and successfully manufacture Auryxia;

• our ability to continue to grow Auryxia product sales following the resupply of Auryxia to the market following the recent interruption in its supply;

• the size of the treatable patient population;

• our ability to both secure and maintain adequate reimbursement for, and optimize patient access to Auryxia by providing third-party payers with a strong value proposition and the benefits of Auryxia to patients;

• our mix of business between private commercial payers and government-sponsored plans;

• the occurrence of any side effects, adverse reactions or misuse, or any unfavorable publicity in these areas, associated with Auryxia;

• our ability to obtain and maintain strong intellectual property protection for Auryxia; and

• the development or commercialization of competing products.

Our revenues from the commercialization of Auryxia are subject to these and other factors, and therefore may be unpredictable from quarter-to-quarter. Ultimately, we may never generate sufficient revenues from Auryxia to reach or maintain profitability or sustain our anticipated levels of operations.

We have limited experience as a company in sales and marketing, and with respect to pricing and obtaining adequate third-party reimbursement and as a result we may be unable to effectively market our product and retain market access.

We currently have limited experience as a company in sales and marketing and with respect to pricing and obtaining adequate third-party reimbursement for drugs. In order to market Auryxia, including in the newly approved indication of iron deficiency anemia in adults with CKD, not on dialysis, we intend to continue to expand our marketing organization and hire additional sales representatives, which will require substantial effort and significant management and financial resources. We will need to devote significant effort, in particular, to recruiting individuals with experience in the sales and marketing of pharmaceutical products. Competition for personnel with these skills is intense and may be particularly difficult for us as no oral drug has previously been specifically marketed for the treatment of iron deficiency anemia in patients with CKD, not on dialysis.

Approval of Fexeric (ferric citrate coordination complex) in the European Union does not ensure successful commercialization and reimbursement.

On September 23, 2015, the European Commission, or EC, approved Fexeric (ferric citrate coordination complex) for the control of elevated serum phosphorus levels, or hyperphosphatemia, in adult patients with CKD, including pre-dialysis and dialysis patients. The EC also considered ferric citrate coordination complex as a New Active Substance, or NAS, which provides 10 years of data and marketing exclusivity in the European Union, or EU.

We are not currently marketing Fexeric in the EU, however, we are seeking potential partners to commercialize Fexeric in the EU. We cannot assure you that we will be able to find a commercialization partner in the EU or that we will be able to agree to acceptable terms with any partner to launch and commercialize Fexeric in the EU. If we do not begin to market Fexeric in the EU by September 23, 2018, the EC may withdraw its approval of Fexeric.

The commercial success of Fexeric is subject to the same risks we face with commercializing Auryxia in the United States. In addition, in European countries, pricing and payment of prescription pharmaceuticals is subject to more extensive governmental control than in the United States. Pricing negotiations with European governmental authorities can take six to 12 months or longer after the receipt of regulatory approval and product launch. If reimbursement for Fexeric is unavailable in any country in which reimbursement is sought, limited in scope or amount, or if pricing is set at or reduced to unsatisfactory levels, our ability or any potential partner’s ability to successfully commercialize Fexeric in such a country would be impacted negatively.  Furthermore, if these measures prevent us or any potential partner from selling Fexeric on a profitable basis in a particular country, they could prevent the commercial launch or continued sale of Fexeric in that country.

Our potential revenues from the commercialization of Fexeric in the EU are subject to these and other factors, and therefore we may never reach or maintain profitability in the EU.

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Auryxia may cause undesirable side effects or have other properties that could limit its commercial potential.

The most commonly reported adverse reactions in the clinical trials that supported the approval of Auryxia for CKD on dialysis in the United States included diarrhea (21%), discolored feces (19%), nausea (11%), constipation (8%), vomiting (7%), and cough (6%). Gastrointestinal adverse reactions were the most common reason for discontinuing Auryxia (14%) in clinical trials for that indication. The most commonly reported adverse reactions in the clinical trials that supported the approval of Auryxia in the United States for iron deficiency anemia in adults with CKD, not on dialysis included discolored feces (22%), diarrhea (21%), constipation (18%), nausea (10%), abdominal pain (5%) and hyperkalemia (5%). Diarrhea was the most common reason for discontinuing Auryxia (2.6%) in clinical trials for the iron deficiency anemia in adults with CKD, not on dialysis indication. If we or others identify previously unknown side effects, if known side effects are more frequent or severe than in the past, if we or others detect unexpected safety signals for Auryxia or any products perceived to be similar to Auryxia, or if any of the foregoing are perceived to have occurred, then:

• sales of Auryxia may be impaired;

• regulatory approvals for Auryxia may be restricted or withdrawn;

• we may decide to, or be required to, send drug warnings or safety alerts to physicians, pharmacists and hospitals, or we may decide to conduct a product recall;

• reformulation of the product, additional nonclinical or clinical studies, changes in labeling or changes to or re-approvals of manufacturing facilities may be required;

• we may be precluded from pursuing additional development opportunities to enhance the clinical profile of Auryxia within its indicated populations, as well as be precluded from studying Auryxia in additional indications and populations or in new formulations; and

• government investigations or lawsuits, including class action suits, may be brought against us. 

Any of the above occurrences would harm or prevent sales of Auryxia, likely increase our expenses and impair our ability to successfully commercialize Auryxia.

Furthermore, as we explore development opportunities to enhance the clinical profile of Auryxia, any clinical trials conducted, if successful, may expand the patient populations treated with Auryxia within or outside of its current indications or patient populations, which could result in the identification of previously unknown side effects, increased frequency or severity of known side effects, or detection of unexpected safety signals.  In addition, as Auryxia is commercialized, we expect it will be used in wider populations and in less rigorously controlled environments than in clinical studies. As a result, regulatory authorities, healthcare practitioners, third-party payers or patients may perceive or conclude that the use of Auryxia is associated with serious adverse effects, undermining our commercialization efforts.

We will incur significant liability if it is determined that we are promoting any “off-label” use of Auryxia.

Physicians are permitted to prescribe drug products for uses that are not described in the product’s labeling and that differ from those approved by the FDA or other applicable regulatory agencies. Such “off-label” uses are common across medical specialties. Although the FDA and other regulatory agencies do not regulate a physician’s choice of treatments, the FDA and other regulatory agencies do restrict communications on the subject of off-label use. Companies are not permitted to promote drugs for off-label uses or promote drugs using marketing claims that are not otherwise consistent with the FDA-approved labeling, including comparative or superiority claims that are not consistent with the FDA-approved labeling or supported by substantial evidence. Accordingly, we may not promote Auryxia in the United States for use in any indications other than for the control of serum phosphorus levels in patients with CKD on dialysis and for the treatment of iron deficiency anemia in adults with CKD, not on dialysis, and all promotional claims must be consistent with the FDA-approved labeling for Auryxia. The FDA and other regulatory and enforcement authorities actively enforce laws and regulations prohibiting promotion of off-label uses and the promotion of products for which marketing approval has not been obtained as well as the false advertising or misleading promotion of drugs. A company that is found to have improperly promoted off-label uses or to have otherwise engaged in false or misleading promotion of drugs will be subject to significant liability, including civil and administrative remedies as well as criminal sanctions.

Notwithstanding the regulatory restrictions on off-label promotion, the FDA and other regulatory authorities allow companies to engage in truthful, non-misleading, and non-promotional scientific exchange concerning their products in certain circumstances. We intend to engage in medical education activities and communicate with healthcare providers in compliance with all applicable laws, regulatory guidance and industry best practices. Although we believe we have put in place a robust compliance program designed to ensure that all such activities are performed in a legal and compliant manner, Auryxia is our first commercial product, so our implementation of our compliance program in connection with commercialization activities is still relatively new.

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The status of reimbursement from third-party payers for newly approved health care drugs is uncertain and failure to obtain adequate reimbursement could limit our ability to generate revenue.

Our ability to commercialize pharmaceutical products may depend, in part, on the extent to which reimbursement for the products will be available from:

• government and health administration authorities;

• private health insurers;

• managed care programs; and

• other third-party payers.

Significant uncertainty exists as to the coverage and reimbursement status of newly approved health care products, as well as the timing of coverage and reimbursement decisions by third-party payers. Third-party payers, including Medicare and Medicaid, are challenging the prices charged for medical products and services. Government and other third-party payers increasingly are attempting to contain health care costs by limiting both coverage and the level of reimbursement for new drugs and by refusing, in some cases, to provide coverage for uses of approved products for disease indications for which the FDA has not granted labeling approval. In 2003, Congress passed the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which for the first time established prescription drug coverage for Medicare beneficiaries, under Medicare Part D. Under this program, beneficiaries purchase insurance coverage from private insurance companies to cover the cost of their prescription drugs. Likewise, current and future legislative or regulatory efforts to control or reduce healthcare costs or reform government healthcare programs, such as the Patient Protection Affordable Care Act, or PPACA, and the Health Care and Education Reconciliation Act of 2010, could result in lower prices or rejection of coverage and reimbursement for our drug. In addition, third-party insurance coverage may not be available to patients for our product. If government and other third-party payers do not provide adequate coverage and reimbursement levels for our product, Auryxia’s market acceptance may be significantly reduced. In addition, the mix of our business that is reimbursed by different payers can negatively impact our net U.S. Auryxia product sales on a year-to-year and quarter-to-quarter basis with a larger mix of government payers generally increasing our adjustments to gross Auryxia sales in the particular period.

If we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.

As a manufacturer of pharmaceuticals, even though we do not (and do not expect in the future to) control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payers, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. We are subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states in which we conduct our business.  These regulations include:

• federal healthcare program anti-kickback laws, which prohibit, among other things, persons from soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

• federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payers that are false or fraudulent, and which may apply to entities like us which provide coding and billing advice to customers;

• the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which prohibits executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters and which also imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;

• the Federal Food, Drug, and Cosmetic Act, or FDCA, which among other things, strictly regulates drug product marketing, prohibits manufacturers from marketing drug products for off-label use and regulates the distribution of drug samples;

• state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by federal laws, thus complicating compliance efforts;

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• the federal Foreign Corrupt Practices Act which prohibits corporations and individuals from paying, offering to pay, or authorizing the payment of anything of value to any foreign government official, government staff member, political party, or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an official capacity; and

• the federal Physician Payments Sunshine Act, which was passed as part of the Patient Protection and Affordable Care Act of 2010, and similar state laws in certain states, that require pharmaceutical and medical device companies to monitor and report certain payments and transfers of value made to physicians and teaching hospitals.

If our operations are found to be in violation of any of the laws described above or any other laws, rules or regulations that apply to us, we will be subject to penalties, including civil and criminal penalties, damages, fines and the curtailment or restructuring of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results.

We have assembled an experienced compliance team and implemented a compliance program based on industry best practices designed to ensure our commercialization of Auryxia complies with all applicable laws, regulations and industry standards. We also hire, manage and incentivize our employees around a culture of compliance, trust, respect and ownership. Because our compliance program is relatively new and the requirements in this area are constantly evolving, we cannot be certain that our compliance program will eliminate all areas of potential exposure. Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business, as well as damage our business or reputation. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security, fraud and reporting laws may prove costly.

If our competitors develop and market products that are less expensive, have a reduced pill burden, more effective or safer than our drug product, or our drug product does not achieve market acceptance vis-à-vis existing treatments, our commercial opportunities may be reduced or eliminated.

The pharmaceutical industry is highly competitive. Our competitors include pharmaceutical companies and biotechnology companies, as well as universities and public and private research institutions. In addition, companies that are active in different but related fields represent substantial competition for us. Many of our competitors have significantly greater capital resources, larger research and development staffs and facilities and greater experience in drug development, regulation, manufacturing and marketing drugs than we do. These organizations also compete with us to recruit qualified personnel, attract partners for joint ventures or other collaborations, and license technologies that are competitive with ours. As a result, our competitors may be able to more easily develop technologies and products that could render our drug product obsolete or noncompetitive. To compete successfully in this industry, we must identify novel and unique drugs or methods of treatment and then acquire and/or complete the development of those drugs as treatments in advance of our competitors.

Auryxia is competing in the United States with other FDA-approved phosphate binders such as Renagel (sevelamer hydrochloride) and Renvela (sevelamer carbonate), both marketed by Genzyme Corporation (a wholly-owned subsidiary of Sanofi), PhosLo (calcium acetate), marketed by Fresenius Medical Care, Fosrenol (lanthanum carbonate), marketed by Shire Pharmaceuticals 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 options such as aluminum and magnesium. Our strategy to compete against these existing treatments depends in part on physicians and patients accepting that Auryxia is differentiated in the marketplace versus these FDA-approved phosphate binders. In addition, we may have to compete against existing treatments on price, which becomes more challenging as generic versions of these existing treatments come to market. There are several parties that have received approval of Abbreviated New Drug Applications, or ANDAs, for generic Renvela with the FDA and launched the generic form in the United States. A generic formulation of PhosLomanufactured by Roxane Laboratories, Inc. was launched in the United States in October 2008. In addition, upon the expiration of its core patents, generic formulations of Fosrenol may be launched. These generic formulations could have a further material effect on the pricing of phosphate binders.

Auryxia is also competing in the United States with other FDA-approved treatments for iron deficiency anemia, such as Venofer^® (iron sucrose) and Injactafer^® (ferric carboxymaltose), both marketed by American Regent (a registered trademark of Luitpold Pharmaceuticals, Inc., a member of the Daiichi Sankyo Group), Feraheme^® (ferumoxytol), marketed by AMAG Pharmaceuticals, Inc., Triferic^® (ferric pyrophosphate citrate), marketed by Rockwell Medical, Inc., over-the-counter iron supplement products, as well as Erythropoiesis-stimulating agents, or ESAs, including Procrit^® (epoetin alfa), marketed by Janssen Products, LP (a wholly-owned subsidiary of Johnson & Johnson) and Aranesp^® (darbepoetin alfa), marketed by Amgen Inc.

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Furthermore, our commercial opportunities may be reduced or eliminated if our competitors develop and market products that are less expensive, more effective or safer than our drug product. Other companies have drug candidates in various stages of pre-clinical or clinical development to treat diseases for which we are marketing our drug and also seeking to acquire and develop other drug products. Even if we are successful in developing effective drugs, our product(s) may not compete successfully with products produced by our competitors.

If we lose our key personnel or are unable to attract and retain additional personnel, our operations could be disrupted and our business could be harmed.

As of December 31, 2017, we had 211 full and part-time employees. To successfully develop and commercialize our drug and any drug candidates we may in-license or acquire, we must be able to attract and retain highly skilled personnel. Our limited resources may hinder our efforts to attract and retain highly skilled personnel. In addition, if we lose the services of our current personnel our ability to continue to execute on our business plan could be materially impaired.

Greg Madison has been our Chief Executive Officer since April 30, 2015. Previously, Mr. Madison was appointed to our Board of Directors in March 2015. Mr. Madison joined Keryx in February 2014 as Executive Vice President and Chief Operating Officer to transition Keryx from a development stage organization into a fully-integrated commercial entity and bring to Keryx a wealth of relevant expertise in both the phosphate binder and iron deficiency anemia markets.

In April 2015, we appointed John F. Neylan, M.D., as our Senior Vice President and Chief Medical Officer.

In July 2015, we appointed Scott Holmes as our Senior Vice President and Chief Financial Officer.

In January 2017, we appointed Christine Carberry as our Chief Operating Officer.

Although we have employment agreements with Greg Madison, John F. Neylan, M.D., Scott Holmes and Christine Carberry, these agreements do not prevent them from terminating their employment with us.

Risks associated with our product development efforts

If we are unable to successfully complete our clinical trial programs, or if such clinical trials take longer to complete than we project, our ability to execute our current business strategy will be adversely affected.

Although we are not currently conducting registration trials for Auryxia, we continue to conduct clinical trials and post-marketing testing of Auryxia and we may have to complete the development of any product candidate that we develop, in-license or acquire in the future. As a result, the continued marketing of Auryxia and the clinical development of any other product is subject to the risks associated with the pre-clinical and clinical development of pharmaceutical products.

Whether or not and how quickly we complete our clinical trials is dependent in part upon the rate at which we are able to engage clinical trial sites and, thereafter, the rate of enrollment of patients, and the rate we collect, clean, lock and analyze the clinical trial database. Patient enrollment is a function of many factors, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the study, the existence of competitive clinical trials, and whether existing or new drugs are approved for the indication we are studying. We are aware that other companies are currently conducting or planning clinical trials that seek to enroll patients with the same disease that we are studying. If we experience delays in identifying and contracting with sites and/or in-patient enrollment in our clinical trial programs, we may incur additional costs and delays in our development programs, and may not be able to complete our clinical trials in a cost-effective or timely manner or at all. In addition, conducting multi-national studies adds another level of complexity and risk. As a result, we may be subject to events affecting countries outside the United States.

Negative or inconclusive results from the clinical trials we conduct, or unanticipated adverse medical events could cause us to have to repeat or terminate the clinical trials. For example, in May 2012, we abandoned our development efforts and terminated our license for KRX-0401 (perifosine) following negative results from the Phase 3 trial for KRX-0401. We may also opt to change the delivery method, formulation or dosage which could affect efficacy results for the drug. Accordingly, we may not be able to complete our current or future clinical trials within an acceptable time frame, if at all.

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Pre-clinical testing and clinical development are long, expensive and uncertain processes.

Pre-clinical testing and clinical development are long, expensive and uncertain processes. Satisfaction of regulatory requirements typically depends on the nature, complexity and novelty of the product. It requires the expenditure of substantial resources. Data obtained from pre-clinical and clinical tests can be interpreted in different ways, which could delay, limit or prevent regulatory approval. The FDA may pose additional questions or request further toxicological, drug-drug interaction, pre-clinical or clinical data or substantiation. Negative, inconclusive, or insufficient results or medical events during a pre-clinical or clinical trial could cause us to delay or terminate our development efforts. Furthermore, interim results of pre-clinical or clinical studies do not necessarily predict their final results, and acceptable results in early studies might not be obtained in later studies.

Drug candidates in the later stages of clinical development may fail to show the desired traits of safety and efficacy despite positive results in earlier clinical testing. The risk also remains that a clinical program conducted by one of our partners may raise efficacy or safety concerns that may prevent approval of the drug. In addition, qualitative, quantitative and statistical interpretation of any of the prior pre-clinical and clinical safety and efficacy data of our drug may be viewed as flawed by the FDA. In addition, there can be no assurance that safety and/or efficacy concerns from the prior data were not overlooked or misinterpreted by us or our consultants, which in subsequent, larger studies might appear and prevent approval of such drug candidate.

Clinical trials have a high risk of failure. A number of companies in the pharmaceutical industry, including biotechnology companies, have suffered significant setbacks in advanced clinical trials, even after achieving what appeared to be promising results in earlier trials. We experienced such a setback with our Phase 3 KRX-0401 (perifosine) trial results in April 2012, and we can provide no assurance that we will not experience such setbacks with ferric citrate or any other drug candidate we develop or acquire. If we experience delays in the testing or approval process for any drug we may commercialize or develop or if we need to perform more or larger clinical trials than originally planned, our financial results and the commercial prospects for our drug may be materially impaired. In addition, we have limited experience in conducting and managing the clinical trials necessary to obtain regulatory approval. Accordingly, we may encounter unforeseen problems and delays in the approval process. Although we engage, from time to time, clinical research organizations, or CROs, with experience in conducting regulatory trials, errors in the conduct, monitoring, data capture and analysis, and/or auditing could potentially invalidate the results.

Because all of our proprietary technologies are licensed or sublicensed to us by third parties, termination of these license rights would prevent us from developing and further commercializing Auryxia.

We do not own our drug, Auryxia. We have licensed and sublicensed the rights, patent or otherwise, to Auryxia from a third-party, Panion & BF Biotech, Inc., or Panion, who in turn licenses certain rights to Auryxia from one of the inventors of Auryxia. The license agreement with Panion requires us to meet development milestones and imposes development and commercialization due diligence requirements on us. In addition, under the agreement, we must pay royalties based on a mid-single digit percentage of net sales of product resulting from the licensed technologies (including Auryxia) and pay the patent filing, prosecution and maintenance costs related to the license. If we do not meet our obligations in a timely manner or if we otherwise breach the terms of our license agreement (including upon certain insolvency events), Panion could terminate the agreement, and we would lose the rights to Auryxia. In addition, 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. From time to time, we may have disagreements with our licensors or collaborators, or they and/or we may have disagreements with the original inventors, regarding the terms of our agreements or ownership of proprietary rights, which could lead to delays in the research, development and commercialization of our current drug and any future drug candidate, could require or result in litigation or arbitration, which would be time-consuming and expensive, or could lead to the termination of a license, or force us to negotiate a revised or new license agreement on terms less favorable than the original. In addition, in the event that the owners and/or licensors of the rights we license were to enter into bankruptcy or similar proceedings, we could potentially lose our rights to our drug or drug candidates or our rights could otherwise be adversely affected, which could prevent us from developing or commercializing our drugs. Finally, our rights to develop and commercialize Auryxia, whether ourselves or with third parties, are subject to and limited by the terms and conditions of our licenses to Auryxia and the licenses and sublicenses we grant to others.

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Our reliance on third parties, such as CROs, may result in delays in completing, or a failure to complete, clinical trials if such CROs fail to perform under our agreements with them.

In the course of product development, we engage CROs and other vendors to conduct and manage clinical studies and to assist us in guiding our products through the FDA review and approval process. If the CROs or applicable vendors fail to perform their obligations under our agreements with them or fail to perform clinical trials in a satisfactory or timely manner, we may face significant delays in completing our clinical trials, submitting our regulatory filings, or approval, as well as the commercialization of one or more drug candidates. Furthermore, any loss or delay in obtaining contracts with such entities may also delay the completion of our clinical trials and the market approval of drug candidate(s).

Other risks related to our business

Any acquisitions we make may require a significant amount of our available cash, may dilute our stockholders and may not be scientifically or commercially successful.

As part of our business strategy, we may effect acquisitions to obtain additional businesses, products, technologies, capabilities and personnel. If we make one or more significant acquisitions in which the consideration includes cash, we may be required to use a substantial portion of our available cash. In addition, if we issue our equity securities as consideration in any acquisition, the ownership interests of our stockholders will be diluted.

Acquisitions involve a number of operational risks, including:

• difficulty and expense of assimilating the operations, technology and personnel of the acquired business;

• our inability to retain the management, key personnel and other employees of the acquired business;

• our inability to maintain the acquired company’s relationship with key third parties, such as alliance partners;

• exposure to legal claims for activities of the acquired business prior to the acquisition;

• the diversion of our management’s attention from our core business; and

• the potential impairment of goodwill and write-off of in-process research and development costs, adversely affecting our reported results of operations.

If we do not successfully integrate any acquisition into our business, our financial condition and operating results could be materially and negatively impacted.

Health care reform measures could adversely affect our business.

The business prospects and financial condition of pharmaceutical and biotechnology companies are affected by the efforts of governmental and third-party payers to contain or reduce the costs of health care. In the United States and in foreign jurisdictions there have been, and we expect that there will continue to be, a number of legislative and regulatory proposals aimed at changing the health care system, such as proposals relating to the pricing of healthcare products and services in the United States or internationally, the reimportation of drugs into the United States from other countries (where they are then sold at a lower price), and the amount of reimbursement available from governmental agencies or other third-party payers. For example, drug manufacturers are required to have a national rebate agreement with the Department of Health and Human Services, or HHS, in order to obtain state Medicaid coverage, which requires manufacturers to pay a rebate on drugs dispensed to Medicaid patients. On January 27, 2012, the Centers for Medicare and Medicaid Services, or CMS, issued a proposed regulation covering the calculation of Average Manufacturer Price, or AMP, which is the key variable in the calculation of these rebates.

Furthermore, in the United States, health care reform legislation titled the Patient Protection and Affordable Care Act, or PPACA, was signed into law in March 2010. The impact of this legislation on our business is inherently difficult to predict as many of the details regarding the implementation of this legislation have not been determined. In a decision issued on June 29, 2012, the United States Supreme Court upheld the majority of PPACA. The Court’s decision allows implementation of key provisions impacting drug and device manufacturers to go forward. This includes PPACA changes to the Medicare Part D Program (including closing the “donut hole”), Medicaid Drug Rebate Program (including the definition of AMP), and expansion of the 340B Drug Discount Program. The decision also allows the FDA and CMS to continue with implementation efforts, including related to the Biologics Price Competition and Innovation Act and the Physician Payments Sunshine Act, both of which were enacted as part of the PPACA. Regulations to implement PPACA could result in a decrease in our stock price or limit our ability to raise capital or to obtain strategic partnerships or licenses. Government-financed comparative efficacy research could also result in new practice guidelines, labeling or reimbursement policies that discourages use of our product.

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For example, in July 2010, CMS released its final rule to implement a bundled prospective payment system for end-stage renal disease facilities as required by the Medicare Improvements for Patients and Providers Act, or MIPPA. The final rule delayed the inclusion of oral medications without intravenous equivalents, such as phosphate binders, in the bundle until January 1, 2014; however, on January 3, 2013, the United States Congress passed legislation known as the American Taxpayer Relief Act of 2012, which, among other things, delayed by two years the implementation of oral-only end-stage renal disease related drugs, including phosphate binders, in the bundled ESRD prospective payment system, until January 1, 2016. In April 2014, the United States Congress passed legislation known as Protecting Access to Medicare Act of 2014, which, among other things, delays by eight years the implementation of oral-only ESRD related drugs, including phosphate binders, in the bundled ESRD prospective payment system, until January 1, 2025. If phosphate binders are included in the bundle beginning in 2025, or earlier, separate Medicare reimbursement will no longer be available for phosphate binders, as it is today under Medicare Part D. While it is too early to project the impact bundling may have on the phosphate binder industry, the impact could potentially cause dramatic price reductions for phosphate binders, which could significantly reduce the commercial potential of Auryxia.

On September 27, 2007, the Food and Drug Administration Amendments Act of 2007 was enacted, giving the FDA enhanced post-market authority, including the authority to require post-marketing studies and post-marketing clinical trials related to serious risks, labeling changes based on new safety information, and compliance with risk evaluation and mitigation strategies approved by the FDA. The FDA’s exercise of this authority may result in delays or increased costs during the period of product development, clinical trials and regulatory review and approval, which may also increase costs related to complying with new post-approval regulatory requirements, and increase potential FDA restrictions on the sale or distribution of approved products. On July 9, 2012, the Food and Drug Administration Safety and Innovation Act was enacted to, among other things, renew the drug user fee program, expand the FDA’s inspection records access and require manufacturers to establish appropriate oversight and controls over their suppliers and the supply chain, including raw material suppliers and contract manufacturers, as a part of cGMP compliance. On November 27, 2013, the Drug Quality and Security Act, which includes the Drug Supply Chain Security Act, was signed into law to, among other things, build an electronic, interoperable system to identify and trace certain prescription drugs as they are distributed in the United States. Requirements for the tracing of products through the pharmaceutical distribution supply chain took effect on January 1, 2015 for manufacturers and building internal systems to ensure compliance with this law will require dedication of resources. In addition, this law requires engaging in transactions only with authorized trading partners and could limit our pool of available trading partners.

We face product liability risks and may not be able to obtain adequate insurance.

The use of our drug commercially and in clinical trials exposes us to liability claims. In addition, the use of any other drug candidate we develop or acquire in clinical trials, the future sale of any other approved drug and the use of new technology will also expose us to liability claims. Although we are not aware of any historical or anticipated product liability claims against us, if we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to cease clinical trials of our drug product or limit commercialization of any approved product.

We have expanded our insurance coverage to include the commercial sale of Auryxia; however, insurance coverage is becoming increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost. We also may not be able to obtain additional insurance coverage that will be adequate to cover product liability risks that may arise. Regardless of merit or eventual outcome, product liability claims may result in:

• decreased demand for a product;

• injury to our reputation;

• our inability to continue to develop a drug candidate;

• withdrawal of clinical trial volunteers; and

• loss of revenues.

Consequently, a product liability claim or product recall may result in losses that could be material to our business.

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Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our suppliers and business partners, as well as personally identifiable information of Auryxia patients, clinical trial participants and employees. We also have outsourced elements of our information technology structure, and as a result, we are managing independent vendor relationships with third parties who may or could have access to our confidential information.  Similarly, our business partners and other third-party providers possess certain of our sensitive data. The secure maintenance of this information is critical to our operations and business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. We, our partners, vendors and other third-party providers could be susceptible to third-party attacks on our, and their, information security systems, which attacks are of ever increasing levels of sophistication and are made by groups and individuals with a wide range of motives and expertise, including criminal groups. Any such breach could compromise our, and their, networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, disrupt our operations, and damage our reputation, any of which could adversely affect our business.

Risks related to our financial condition

Our existing capital resources may not be adequate to finance our operating cash requirements for the length of time that we have estimated.

The actual amount of cash that we will need to operate our business is subject to many factors, including, but not limited to, the timing and expenditures associated with commercial activities related to Auryxia and the timing and magnitude of cash received from product sales, the timing and expenditures associated with the build-up of inventory and capacity expansion, and the timing, design and conduct of any further clinical trials for ferric citrate. As a result of these factors, we will need to seek additional financing to provide the cash necessary to execute our current operations, including beyond the continued commercialization of Auryxia, and to develop and commercialize any drugs or drug candidates we may in-license or acquire.

Our forecast of the period of time through which our existing capital resources will be adequate to support our current operations is a forward-looking statement that involves risks and uncertainties. The actual amount of funds we will need to operate is subject to many factors, some of which are beyond our control. These factors include, but are not limited to, the following:

• our ability to successfully market Auryxia as a drug for adults with CKD on dialysis and for the treatment of iron deficiency anemia in adults with CKD, not on dialysis;

• the timing and expenditures associated with commercial activities related to Auryxia and the timing and magnitude of cash received from product sales;

• the timing and expenditures associated with the build-up of inventory and capacity expansion;

• our ability to continue to supply Auryxia to the market without interruption;

• our ability to continue to grow Auryxia product sales following the resupply of Auryxia to the market following the recent interruption in its supply;

• the timing, design and conduct of, and results from, clinical trials that we may conduct;

• the timing of expenses associated with manufacturing and product development of Auryxia and those proprietary drug candidates that may be in-licensed, partnered or acquired;

• the timing of the in-licensing, partnering and acquisition of new product opportunities;

• the timing and expenditures associated with commercial activities related to launching Fexeric in Europe, through a commercialization partner or by us if we decide to commercialize in Europe on our own;

• the progress of the development efforts of parties with whom we have entered, or may enter, into research and development agreements;

• our ability to achieve our milestones under our licensing arrangement;

• the timing and expenses associated with capital expenditures to expand our manufacturing capabilities;

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• the timing and expenses associated with building our own commercial infrastructure to manufacture, market and sell our drug and those that may be in-licensed, partnered or acquired; and

• the costs involved in prosecuting and enforcing patent claims and other intellectual property rights, defending against post-grant proceedings initiated by third parties attempting to limit or cancel our intellectual property rights in the United States and elsewhere, such as U.S. inter partes review proceedings and/or European oppositions, or defending against claims of infringement initiated by third parties in respect of their intellectual property rights.

If our cash is insufficient to meet our future operating requirements, we will have to raise additional funds. If we are unable to obtain additional funds on terms favorable to us, or at all, we may be required to cease or reduce our operating activities or sell or license to third parties some or all of our intellectual property. If we raise additional funds by selling additional shares of our capital stock, including pursuant to our Controlled Equity Offering^SM Sales Agreement, or Sales Agreement, with Cantor Fitzgerald & Co., or Cantor Fitzgerald, the ownership interests of our stockholders will be diluted. If we need to raise additional funds through the sale or license of our intellectual property, we may be unable to do so on terms favorable to us, if at all.

Risks related to our intellectual property and third-party contracts

If we are unable to adequately protect our intellectual property, third parties may be able to use our intellectual property, which could adversely affect our ability to compete in the market.

Our commercial success will depend in part on our ability, and the ability of our licensors, to obtain and maintain patent protection 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 applications in the United States and certain foreign jurisdictions. The process for obtaining patent protection is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications in a cost effective or timely manner. In addition, we may fail to identify patentable subject matter before it is too late to obtain patent protection. Further, license agreements with third parties may not allow us to control the preparation, filing and prosecution of patent applications, or the maintenance or enforcement of patents. Such third parties may decide not to enforce such patents or enforce such patents without our involvement. Thus, these patent applications 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 applications may not issue as patents and may not issue in all countries in which we develop, manufacture or potentially sell our product(s) or in countries where others develop, manufacture and potentially sell products using our technologies. Moreover, our pending patent applications, if issued as patents, may not provide additional protection for our product.

The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions. No consistent policy regarding the breadth of claims allowed in biotechnology patents has emerged to date. Changes in the patent laws or the interpretation of the patent laws in the United States and other jurisdictions may diminish the value of our patents or narrow the scope of our patent protection. Accordingly, the patents we own or license may not be sufficiently broad to prevent others from practicing our technologies or from developing competing products. Furthermore, others may independently develop similar or alternative drug products or technologies or design around our patented drug product and technologies which may have an adverse effect on our business. If our competitors prepare and file patent applications in the United States that claim technology also claimed by us, we may have to participate in interference or derivation proceedings in front of the U.S. Patent and Trademark Office, or USPTO, to determine priority of invention, which could result in substantial cost, even if the eventual outcome is favorable to us. Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that any related patent may expire prior to, or remain in existence for only a short period following, commercialization, thus reducing any advantage of the patent. The patents we own or license may be challenged or invalidated or may fail to provide us with any competitive advantage. Since we have licensed or sublicensed many patents from third parties, we may not be able to enforce such licensed patents against third-party infringers without the cooperation of the patent owner and the licensor, which may not be forthcoming. In addition, we may not be successful or timely in obtaining any patents for which we submit applications.

Additionally, the laws of foreign countries may not protect our intellectual property rights to the same extent as do the laws of the United States. For example, claims in a patent application directed to methods of treatment of the human body are not patentable or are restricted in many non-U.S. countries. Further, we may not pursue or obtain patent protection in all major markets. In addition, in jurisdictions outside the United States where we own or license patent rights, we may be unable to prevent unlicensed parties from selling or importing products or technologies derived elsewhere using our proprietary technology.

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Generally, the first to file a patent application is entitled to the patent if all other requirements of patentability are met. However, prior to March 16, 2013, in the United States, the first to invent was entitled to the patent. Since publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all, we cannot know with certainty whether we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions. Moreover, the laws enacted by the Leahy-Smith America Invents Act of 2011, or the Act, which reformed certain patent laws in the United States, are still being interpreted and those laws introduce procedures that permit competitors to challenge our patents in the USPTO after grant, including inter partes review and post grant review. Similar laws exist outside of the United States. The laws of the European Patent Convention, for example, provide for post-grant opposition procedures that permit competitors to challenge our patents at the European Patent Office. We currently have two issued European patents involved in such post-grant opposition proceedings.

We may become involved in addressing patentability objections based on third-party submission of references, or we may become involved in defending our patent rights in oppositions, derivation proceedings, reexamination, inter partes review, post grant review, interference proceedings or other patent office proceedings or litigation, in the United States or elsewhere, challenging our patent rights or the patent rights of others. An adverse result in any such proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties 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 United States 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 parties from using or commercializing similar or identical products, or limit the duration of the patent protection for our products.

In addition, patents protecting our product candidate might expire before or shortly after such candidate is commercialized. Thus, our patent portfolio may not provide sufficient rights to exclude others from commercializing products similar or identical to ours.

We also rely on trade secrets and know-how to protect our intellectual property where we believe patent protection is not appropriate or obtainable. Trade secrets are difficult to protect. While we require our employees, licensees, collaborators and consultants to enter into confidentiality agreements, this may not be sufficient to adequately protect our trade secrets or other proprietary information. In addition, we share ownership and publication rights to data relating to our drug product and technologies with our research collaborators and scientific advisors. If we cannot maintain the confidentiality of this information, our ability to receive patent protection or protect our trade secrets or other proprietary information will be at risk.

The intellectual property that we own or have licensed relating to our drug, Auryxia, is limited, which could adversely affect our ability to compete in the market and adversely affect the value of Auryxia.

The patent rights that we own or have licensed relating to Auryxia are limited in ways that may affect our ability to exclude third parties from competing against us. For example, a third-party may design around our owned or licensed composition of matter patent claims or not market a product for methods of use covered by our owned or licensed patents.

Obtaining proof of direct infringement by a competitor for a method of use patent requires us to demonstrate that the competitors make and market a product for the patented use(s). Alternatively, we can prove that our competitors induce or contribute to others in engaging in direct infringement. Proving that a competitor contributes to, or induces, infringement of a patented method by another has additional proof requirements. For example, proving inducement of infringement requires proof of intent by the competitor. If we are required to defend ourselves against claims or to protect our own proprietary rights against others, it could result in substantial costs to us and the distraction of our management. An adverse ruling in any litigation or administrative proceeding could prevent us from marketing and selling Auryxia, increase the risk that a generic version of Auryxia could enter the market to compete with Auryxia, limit our development and commercialization of Auryxia, or otherwise harm our competitive position and result in additional significant costs. In addition, any successful claim of infringement asserted against us could subject us to monetary damages or injunction, which could prevent us from making or selling Auryxia. We also may be required to obtain licenses to use the relevant technology. Such licenses may not be available on commercially reasonable terms, if at all.

Moreover, physicians may prescribe a competitive identical product for indications other than the one for which the product has been approved, or “off-label” indications, that are covered by the applicable patents. Although such off-label prescriptions may directly infringe or contribute to or induce infringement of method of use patents, such infringement is difficult to prevent.

In addition, any limitations of our patent protection described above may adversely affect the value of our drug product and may inhibit our ability to obtain a corporate partner at terms acceptable to us, if at all.

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In addition to patent protection, we may utilize, if granted by the FDA, pediatric exclusivity or other provisions of the FDCA such as new chemical entity exclusivity, or NCE, or new formulation exclusivity, to provide market exclusivity for a drug candidate.

In the United States, the FDA has the authority to grant additional data protection for approved drugs where the sponsor conducts specified testing in pediatric or adolescent populations. If granted, this pediatric exclusivity may provide an additional six months which are added to the term of data protection as well as to the term of a relevant patent, to the extent these protections have not already expired.

The FDCA provides a five-year period of non-patent marketing exclusivity within the United States to the first applicant to gain approval of a new drug application, or NDA, for an NCE. A drug is an NCE if the FDA has not previously approved any other new drug containing the same active moiety, which consists of the molecule(s) or ion(s) responsible for the action of the drug substance. During the exclusivity period, the FDA may not accept for review an ANDA or a 505(b)(2) NDA submitted by another company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement. The FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval of the application (for example, for new indications, dosages, or strengths of an existing drug). This three-year exclusivity covers only the conditions associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the original active agent. Five-year and three-year exclusivity will not delay the submission or tentative approval of a full ANDA; however, an applicant submitting a full ANDA would be required to conduct sufficient studies to demonstrate that their generic product is bioequivalent to Auryxia.

We cannot assure that Auryxia or any drug candidates we may acquire or in-license, will obtain such pediatric exclusivity, NCE exclusivity or any other market exclusivity in the United States, EU or any other territory, or that we will be the first to receive the respective regulatory approval for such drugs so as to be eligible for any market exclusivity protection. We also cannot assure that Auryxia or any drug candidates we may acquire or in-license will obtain patent term extension.

Litigation or third-party claims could require us to spend substantial time and money defending such claims and adversely affect our ability to develop and commercialize our product.

We may be forced to initiate litigation to enforce our contractual and intellectual property rights, or we may be sued by third parties asserting claims based on contract, tort or intellectual property infringement. In addition, third parties may have or may obtain patents in the future and claim that Auryxia or any other technologies infringe their patents. If we are required to defend against suits brought by third parties, or if we sue third parties to protect our rights, we may be required to pay substantial litigation costs, and our management’s attention may be diverted from operating our business. In addition, any legal action against our licensor or us that seeks damages or an injunction of our commercial activities relating to Auryxia or other technologies could subject us to monetary liability, a temporary or permanent injunction preventing the development, marketing and sale of Auryxia or such technologies, and/or require our licensor or us to obtain a license to continue to use Auryxia or other technologies. We cannot predict whether our licensor or we would prevail in any of these types of actions or that any required license would be made available on commercially acceptable terms, if at all.

We may be subject to claims by third parties asserting that we or our employees have misappropriated their intellectual property, or claiming ownership of what we regard as our own intellectual property.

A number of our employees were previously employed at universities, or pharmaceutical or biotechnology companies, some of which may be a competitor or potential competitor. We try to ensure that our employees do not use the proprietary information or know-how of third parties in their work for us. Nonetheless, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee's former employer. As a result, litigation may be necessary to defend against these claims.

In addition, although we typically require our employees and contractors who may be involved in the development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own. Such assignment agreements may not be self-executing or may be breached, and we may be forced to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.

In the event that we fail in prosecuting or defending any such claims, we may need to pay monetary damages as well as lose valuable intellectual property rights or personnel. However, regardless of the success in prosecuting or defending against such claims, such litigation may result in substantial costs and distract management.

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Risks related to our common stock

The Baupost Group, L.L.C, or Baupost, our largest stockholder, may have significant influence over our company and may cause us to take actions that may not be, or refrain from taking actions that may be, in our best interest or the best interest of our other stockholders.

As of December 31, 2017, Baupost beneficially owns approximately 22% of our issued and outstanding common stock. If Baupost converts all of the convertible notes it holds into shares of our common stock, Baupost would beneficially own approximately 39% of our issued and outstanding common stock. Baupost, through its equity interests, may have significant influence over matters submitted to our stockholders for approval and other corporate actions, such as:

• election of directors;

• timing and manner in which we raise additional funds;

• timing and manner of dividend distributions;

• approval of contracts between us and Baupost or its respective affiliates, which could involve conflicts of interest;

• open market purchase programs or other purchases of our common shares;

• delay, defer or prevent a change in who controls us;

• discourage bids for our shares at a premium over the market price; and

• adversely affect the market price of our common shares.

Moreover, because large stockholders have potential power to direct or influence our corporate actions, we may be required to engage in transactions that may not be agreeable to our other stockholders or that may not be in the best interest of our other stockholders. In addition, Baupost has the right to appoint a director to our Board and also has the right to appoint an observer to our Board.

Future sales or other issuances of our common stock could depress the market for our common stock.

Sales of a substantial number of shares of our common stock, or the perception by the market that those sales could occur, could cause the market price of our common stock to decline or make it more difficult for us to raise funds through the sale of equity in the future.

In November 2016, we filed a registration statement on Form S-3 (No. 333-214513), which the SEC declared effective on December 6, 2016, which registered the issuance from time to time of up to $250 million of our securities. At that time, we also entered into the Sales Agreement with Cantor Fitzgerald, pursuant to which we were initially able to offer and sell, from time to time, through Cantor Fitzgerald, shares of our common stock having an aggregate offering price of up to $75.0 million. In July 2017, we filed a new prospectus supplement with the SEC relating to the Sales Agreement under which we may offer and sell, from time to time, through Cantor Fitzgerald, shares of our common stock having an additional aggregate offering price of up to $75.0 million. During the year ended December 31, 2017, we sold 11,937,174 shares under the Sales Agreement for aggregate net proceeds of $75.7 million, which included all of the initial $75.0 million shares issuable pursuant to the Sales Agreement. As of the date hereof, we may sell up to an additional $72.4 million under the Sales Agreement pursuant to the July 2017 prospectus supplement. The initial $75.0 million of common stock issued pursuant to the Sales Agreement and the additional $75.0 million of common stock issuable pursuant to the Sales Agreement are included as part of the $250 million registered on the registration statement referred to above.

In October 2015, we raised $125 million through the private placement of Convertible Senior Notes due 2020, with funds managed by Baupost. The zero-coupon notes will mature in October 2020 unless converted into shares of our common stock in accordance with their terms prior to such date. Keryx does not have the right to redeem the notes prior to maturity. The conversion price of the notes is equal to the $3.74 per share closing price of our common stock on the day prior to the issuance of the Notes in October 2015, subject to certain adjustments under the terms of the notes.

On January 21, 2015, we announced the pricing of an underwritten public offering in which we sold 10,541,667 shares of our common stock at a price of $12.00 per share for gross proceeds of approximately $126.5 million. Net proceeds from this offering were approximately $118.3 million, net of underwriting discounts and offering expenses of approximately $8.2 million. The shares were sold under registration statements (Nos. 333-201605 and 333-201639) on Form S-3 and Form S-3MEF, respectively, filed by us with the SEC.

We will need to seek additional financings to provide cash necessary to execute our current operations, including, but not limited to, beyond commercializing Auryxia, and to develop and commercialize any drugs or drug candidates we may in-license or acquire. Future issuances of common stock could depress the market for our common stock.

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If we make one or more significant acquisitions in which the consideration includes stock or other securities, our stockholders’ holdings may be significantly diluted. In addition, stockholders’ holdings may also be diluted if we enter into arrangements with third parties permitting us to issue shares of common stock in lieu of certain cash payments upon the achievement of milestones.

Our stock price can be volatile, which increases the risk of litigation, and may result in a significant decline in the value of your investment.

The trading price of our common stock is likely to be highly volatile and subject to wide fluctuations in price in response to various factors, many of which are beyond our control. These factors include:

• actual or anticipated variations in quarterly or annual operating results, including, in particular with respect to net U.S. Auryxia product sales;

• announcements of technological innovations by us or our competitors;

• introductions or announcements of new products by us or our competitors;

• announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments involving us or our competitors;

• changes in financial estimates by securities analysts;

• developments relating to the marketing, safety and efficacy of our drug product, and regulatory filing and approvals for us or our competitors;

• expectations regarding our financial condition;

• expiration or termination of licenses, research contracts or other collaboration agreements;

• expectations or investor speculation regarding the strength of our intellectual property position, or the availability of other forms of regulatory exclusivity;

• conditions or trends in the regulatory climate and the biotechnology and pharmaceutical industries;

• changes in the market valuations of similar companies;

• negative comments and sentiment in the media; and

• additions or departures of key personnel.

In addition, equity markets in general, and the market for biotechnology and life sciences companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies traded in those markets. These broad market and industry factors may materially affect the market price of our common stock, regardless of our development and operating performance. In the past, following periods of volatility in the market price of a company’s securities, securities class-action litigation has often been instituted against that company. For example, following our August 1, 2016 announcement of the supply interruption of Auryxia, four purported class action lawsuits were filed against us and certain of our current and former executive officers alleging false and/or misleading statements concerning the company and its business operations and future prospects, and two stockholder derivative complaints were filed against certain of our current and former executive officers and members of our board of directors. These litigations and any other litigation instituted against us could cause us to incur substantial costs to defend such claims and divert management’s attention and resources, which could seriously harm our business.

Certain anti-takeover provisions in our charter documents and Delaware law could make a third-party acquisition of us difficult. This could limit the price investors might be willing to pay in the future for our common stock.

Provisions in our amended and restated certificate of incorporation and bylaws could have the effect of making it more difficult for a third-party to acquire, or of discouraging a third-party from attempting to acquire, or control us. These factors could limit the price that certain investors might be willing to pay in the future for shares of our common stock. For example, our amended and restated bylaws have provisions specifying how and when stockholders may propose director nominations and other business to be brought before meetings of our stockholders and also provide that only certain parties may call a special meeting of stockholders, which could make it more difficult for stockholders to effect certain corporate actions. Any of these provisions could also have the effect of delaying or preventing a change in control.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

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ITEM 2. PROPERTIES.

Our corporate office is located in Boston, Massachusetts. In April 2015, we signed a lease agreement for approximately 27,300 square feet in Boston, Massachusetts, for a 94-month term that commenced on May 1, 2015 for new office space to serve as our corporate headquarters.

ITEM 3. LEGAL PROCEEDINGS.

For a description of our legal proceedings, see Note 13 – Commitments and Contingencies to our condensed consolidated financial statements included in this report, which is incorporated into this item by reference.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

Our common stock is listed on the Nasdaq Capital Market and trades under the symbol “KERX.”

The following table sets forth the high and low closing sale prices of our common stock for the periods indicated.

	High		Low
Fiscal Year Ended December 31, 2017
Fourth Quarter	$	7.95	$	4.39
Third Quarter	$	8.25	$	6.35
Second Quarter	$	7.23	$	5.55
First Quarter	$	6.40	$	4.59

	High		Low
Fiscal Year Ended December 31, 2016
Fourth Quarter	$	6.41	$	4.16
Third Quarter	$	7.53	$	4.10
Second Quarter	$	6.76	$	4.54
First Quarter	$	5.38	$	3.17

Holders

The number of record holders of our common stock as of February 9, 2018 was 45.

Dividends

We have never declared or paid any cash dividends on our common stock and do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors. Further, in accordance with the Indenture, as defined in Note 8 – Debt to the consolidated financial statements included in this report, we are restricted from making payments of cash dividends.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information as of December 31, 2017, regarding the securities authorized for issuance under our equity compensation plans, consisting of the 1999 Stock Option Plan, as amended, 2004 Long-Term Incentive Plan, 2007 Incentive Plan, 2009 CEO Incentive Plan and 2013 Incentive Plan, as amended.

	Equity Compensation Plan Information
Plan Category	Number of securities to be issued upon exercise of outstanding options	Weighted-average exercise price of outstanding options		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation plans	11,967,815	$	6.73	2,026,423

For information about all of our equity compensation plans, see Note 9 – Stockholders' (Deficit) Equity to the consolidated financial statements included in this report.

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Issuer's Purchase of Equity Securities

As part of our equity compensation program, we sometimes allow, with the approval of our Compensation Committee, recipients of restricted stock awards the opportunity to sell their shares to us at the time of vesting to satisfy tax withholding obligations in connection with such vesting. The following table provides information concerning shares of our common stock purchased by us in connection with the forfeiture of shares to satisfy the employees’ obligations with respect to withholding taxes in connection with the vesting of certain shares of restricted stock during the three months ended December 31, 2017. Upon purchase, these shares are immediately retired.

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs
October 1 - 31, 2017	—	$	—	—	$	—
November 1 - 30, 2017	58,813	5.15		58,813	—
December 1 - 31, 2017	258	4.53		258	—
Total	59,071	$	5.15	59,071	$	—

COMMON STOCK PERFORMANCE GRAPH

The following graph compares the cumulative total stockholder return on our common stock for the period from December 31, 2012 through December 31, 2017, with the cumulative total return over such period on (i) the U.S. Index of The Nasdaq Stock Market and (ii) the Biotechnology Index of the Nasdaq Stock Market. The graph assumes an investment of $100 on December 31, 2012, in our common stock (at the closing market price) and in each of the indices listed above, and assumes the reinvestment of all dividends. Measurement points are December 31 of each year.

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ITEM 6. SELECTED FINANCIAL DATA.

The following Statement of Operations Data for the years ended December 31, 2017, 2016, 2015, 2014 and 2013, and Balance Sheet Data as of December 31, 2017, 2016, 2015, 2014 and 2013, as set forth below are derived from our audited consolidated financial statements. This financial data should be read in conjunction with “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 8. Financial Statements and Supplementary Data” contained elsewhere in this annual report on Form 10-K.

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	Years ended December 31,
	2017			2016			2015			2014			2013
	(in thousands, except per share data)
Statement of Operations Data:
Net U.S. Auryxia product sales	$	55,514		$	27,173		$	10,141		$	—		$	—
License revenue	5,127			4,810			3,539			10,825			7,000
Total revenues	60,641			31,983			13,680			10,825			7,000
Costs and expenses:
Cost of goods sold	21,955			37,803			4,520			—			—
License expense	3,076			2,886			2,124			495			—
Research and development	37,679			29,504			36,694			51,502			34,734
Selling, general and administrative	99,622			84,553			81,410			70,057			19,349
Total costs and expenses:	162,332			154,746			124,748			122,054			54,083
Operating loss	(101,691		)	(122,763		)	(111,068		)	(111,229		)	(47,083		)
Other (expense) income:
Amortization of debt discount	(62,965		)	(34,227		)	(11,357		)	—			—
Other (expense) income, net	981			(4,025		)	(630		)	411			351
Total other (expense) income	(61,984		)	(38,252		)	(11,987		)	411			351
Loss before income taxes	(163,675		)	(161,015		)	(123,055		)	(110,818		)	(46,732		)
Income tax (benefit) expense	(235		)	80			90			700			—
Net loss	(163,440		)	(161,095		)	(123,145		)	(111,518		)	(46,732		)
Basic and diluted net loss per common share	$	(1.43	)	$	(1.52	)	$	(1.19	)	$	(1.23	)	$	(0.58	)

	As of December 31,
(in thousands)	2017			2016			2015		2014		2013
Balance Sheet Data:
Cash and cash equivalents, interest receivable and short-term investment securities	$	93,526		$	111,810		$	200,290	$	85,840	$	55,696
Working capital	$	96,146		$	111,346		$	171,688	$	69,285	$	41,600
Total assets	$	158,872		$	141,427		$	258,685	$	103,628	$	60,766
Convertible senior notes	$	125,000		$	125,000		$	90,773	$	—	$	—
Total liabilities	$	172,967		$	149,723		$	171,751	$	30,144	$	15,366
Total stockholders’ (deficit) equity	$	(14,095	)	$	(8,296	)	$	86,934	$	73,484	$	45,400

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis contains forward-looking statements about our plans and expectations of what may happen in the future. Forward-looking statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, and our results could differ materially from the results anticipated by our forward-looking statements as a result of many known or unknown factors, including, but not limited to, those factors discussed in this report under the heading “Item 1A. Risk Factors.” See also the “Special Cautionary Notice Regarding Forward-Looking Statements” set forth at the beginning of this report.

You should read the following discussion and analysis in conjunction with “Item 6. Selected Financial Data,” “Item 8. Financial Statements and Supplementary Data,” and our consolidated financial statements beginning on page F-1 of this report.

OVERVIEW

We are a commercial stage biopharmaceutical company focused on bringing innovative medicines to people with kidney disease. Our long-term vision is to build a multi-product kidney care company. Our marketed product, Auryxia (ferric citrate) tablets, is an orally available, absorbable, iron-based medicine. Auryxia is approved by the U.S. Food and Drug Administration, or FDA, for two indications. Auryxia was originally approved in September 2014 for the control of serum phosphorus levels in patients with chronic kidney disease, or CKD, on dialysis. Additionally, in November 2017, the FDA approved Auryxia for the treatment of iron deficiency anemia in adults with CKD, not on dialysis. With two FDA-approved indications, we will leverage our U.S. clinical and commercial infrastructure to make Auryxia available to millions of people with CKD and either iron deficiency anemia or elevated levels of serum phosphorus, which is referred to as hyperphosphatemia. Ferric citrate is also approved in Japan under the trade name Riona and marketed by our Japanese partner, Japan Tobacco, Inc., or JT, and its subsidiary, Torii Pharmaceutical Co., Ltd., or Torii, and approved in Europe as Fexeric. We use the brand name Auryxia when we refer to ferric citrate for use in the approved indications in the United States. We refer to the product as ferric citrate when referring to its investigational use. Our vision of building a multi-product kidney care company includes expansion of our product portfolio with other medicines that can help patients with kidney disease.

OUR STRATEGY

Our business is focused on creating long-term stockholder value by bringing differentiated medicines to the market for the treatment of people with kidney disease that provide meaningful benefits to patients and their healthcare providers. The three pathways to our strategy are:

Maximize Auryxia's Potential

Auryxia is approved for two indications in the United States. We developed and subsequently launched Auryxia in the United States in late December 2014 following the FDA's approval of Auryxia for the control of serum phosphorus levels in adult patients with CKD on dialysis. In November 2017, the FDA approved Auryxia for the treatment of iron deficiency anemia in adult patients with CKD, not on dialysis. Auryxia is a non-calcium, non-chewable, orally-administered phosphate binder. Auryxia is the first FDA-approved oral iron medication that was specifically developed to treat iron deficiency anemia in CKD patients, not on dialysis. In the United States, there are approximately 450,000 adult patients with CKD requiring dialysis (referred to as End Stage Renal Disease, or ESRD), including approximately 350,000 adults currently taking a phosphate binder. We estimate that in the United States, approximately 1.7 million adults under the care of a nephrologist for CKD have iron deficiency anemia, not on dialysis, including approximately 650,000 adults currently being treated by nephrologists for iron deficiency anemia. Iron deficiency anemia is common in the non-dialysis population and the prevalence and severity increases as CKD advances. Iron deficiency anemia is symptomatic and can significantly impact quality of life. Auryxia is being marketed in the United States to nephrologists and renal care teams through our specialty salesforce and commercial infrastructure. Our field-based organization is aligned to 95 territories calling on target nephrologists and their associated dialysis centers. These target nephrologists treat CKD patients on dialysis and those not on dialysis. We believe strong fundamentals are in place to drive commercial adoption of Auryxia in the dialysis setting and maximize the potential of Auryxia as a treatment of iron deficiency anemia in adults with CKD, not on dialysis.

Expand Our Portfolio

We will evaluate opportunities to expand our product portfolio with other medicines that can help patients with kidney disease. Our business development activities include evaluating clinical-stage drug candidates, as well as commercially available medicines to in-license or acquire to add to our portfolio and provide us with new commercial opportunities. We will seek to add assets that leverage the infrastructure we have built to support our foundational medicine, Auryxia, including our clinical development and commercial teams. We believe these efforts have the potential to provide additional revenues to us in the future.

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Manage Growth and Talent

We are committed to creating a culture of success and continue to engage a workforce of high-quality and talented people to support our potential growth.

Financial Performance Overview

Revenues

Product revenue is currently derived from sales of our sole commercial product, Auryxia, in the United States. License revenue relates to our license agreement with JT and Torii and includes license fees, milestone payments and royalties on net product sales.

Even though our trials demonstrated that Auryxia is effective in the control of serum phosphorus levels in patients with CKD on dialysis and for the treatment of iron deficiency anemia in patients with CKD, not on dialysis, there is no guarantee that we will be able to record meaningful commercial sales of Auryxia in the future or become profitable. In addition, we expect losses to continue as we continue to fund the development and commercialization of Auryxia, including, but not limited to, building of inventory, commercial activities, ongoing and additional clinical trials, and the potential acquisition and development of additional drug candidates in the future. As we continue our development efforts, we may enter into additional third-party collaborative agreements and may incur additional expenses, such as licensing fees and milestone payments. As a result, our quarterly results may fluctuate, and a quarter-by-quarter comparison of our operating results may not be a meaningful indication of our future performance.

Operating Expenses

Our research and development expenses consist primarily of salaries and related personnel costs, including stock-based compensation, fees paid to consultants and outside service providers for clinical and laboratory development, manufacturing, including inventory manufactured prior to regulatory approval of a product or a new contract manufacturer, regulatory, facilities-related and other expenses relating to the design, development, manufacture, testing, and enhancement of our drug candidates and technologies, as well as expenses related to in-licensing of new product candidates. We expense our research and development costs as they are incurred. Research and development expenses for the years ended December 31, 2017, 2016 and 2015 were $37.7 million, $29.5 million and $36.7 million, respectively.

The following table sets forth the research and development expenses per project, for the periods presented.

	Years ended December 31,
(in thousands)	2017		2016		2015
Auryxia (ferric citrate)	$	35,046	$	26,692	$	32,911
Other	—		—		264
Stock-based compensation expense	2,633		2,812		3,519
Total	$	37,679	$	29,504	$	36,694

Our selling, general and administrative expenses consist primarily of salaries and related expenses, including stock-based compensation, for executive, finance, legal, sales, pharmacovigilance, marketing and other administrative personnel, recruitment expenses, professional fees and other corporate expenses, including investor relations, legal activities, pre-commercial/commercial activities and facilities-related expenses.

Our results of operations include stock-based compensation expense as a result of the grants of stock options and restricted stock awards. Stock-based compensation expense for awards of options and restricted stock granted to employees and directors represents the fair value of the award recorded over the respective vesting periods of the individual awards. See “Critical Accounting Policies” below for a discussion of our recognition of stock-based compensation expense. The expense is classified by expense categories in the consolidated statements of operations. We expect to continue to incur significant stock-based compensation expenses.

RESULTS OF OPERATIONS

Years Ended December 31, 2017 and 2016

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Net U.S. Auryxia Product Sales. For the year ended December 31, 2017, we recognized $55.5 million in product sales of Auryxia, net of allowances, discounts, incentives, rebates and chargebacks, as compared with $27.2 million for the year ended December 31, 2016. In November 2017, we received FDA approval to market Auryxia for the treatment of iron deficiency anemia in adults with CKD, not on dialysis. We expect our revenues to be favorably impacted by the FDA approval of Auryxia in a second indication.

(in thousands)	2017		Percent of gross Auryxia product sales	2016		Percent of gross Auryxia product sales
Gross Auryxia product sales	$	111,845		$	44,557
Less provision for product sales allowances and accruals
Trade allowances	13,093		12%	5,157		12%
Rebates and chargebacks	40,482		36%	10,703		24%
Product returns	1,362		1%	879		2%
Other incentives (1)	1,394		1%	645		1%
Total	56,331		50%	17,384		39%
Net U.S. Auryxia product sales	$	55,514		$	27,173

⁽¹⁾  Includes co-pay assistance and voucher rebates.

We sell product to a limited number of major wholesalers, which we refer to as our Distributors, as well as certain pharmacies, which we refer to collectively as our Customers. Our Distributors resell the product to retail pharmacies for purposes of filling patient prescriptions. In the fourth quarter of 2016, we began to recognize revenue under the pull-through (ex-factory) method based on sales to our Customers as a result of our ability to reasonably estimate product returns. Prior to the fourth quarter of 2016, we recognized revenue based on the resale of Auryxia for the purposes of filling patient prescriptions, and not based on initial sales from us to our Customers as we did not have sufficient history such that we could reliably estimate returns based on sales to our Customers.

Gross Auryxia product sales increased for the year ended December 31, 2017 as compared to the same period in 2016 primarily as a result of an increase in patient prescriptions and related units sold, partially offset by a higher gross-to-net adjustment. Provisions for product sales allowances and accruals as a percentage of gross Auryxia product sales for the year ended December 31, 2017 as compared to the same period in 2016 increased primarily as a result of a higher percentage of sales through government (Medicare Part D) contracts that generally receive a larger rebate. Our gross-to-net adjustments may increase depending on our mix of business between Medicare Part D and commercial payers as well as the portion of our business coming from the use of Auryxia as a treatment for hyperphosphatemia as compared to the portion of our business coming from the use of Auryxia as a treatment for iron deficiency anemia.

The following table sets forth customers which represented 10% or more of our total revenues for 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Fresenius Medical Care Rx	29	%	22	%
McKesson Corporation	19	%	31	%
DaVita Rx	18	%	10	%
Cardinal Health, Inc.	15	%	11	%
AmerisourceBergen Drug Corporation	15	%	23	%

License Revenue. For the year ended December 31, 2017, we recognized $5.1 million in license revenue on royalty payments from sales of Riona in Japan as compared to $4.8 million for the year ended December 31, 2016. This increase was directly attributable to increased sales of Riona in Japan.

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Cost of Goods Sold. Cost of goods sold decreased by $15.8 million, or 42%, to $22.0 million for the year ended December 31, 2017, as compared to $37.8 million for the year ended December 31, 2016. The decrease is primarily a result of approximately $3.5 million in write-offs of inventory that were determined to be no longer suitable for commercial manufacture in 2017, as compared to $28.0 million in 2016. Cost of goods sold in 2016 also includes $2.6 million related to manufacturing charges incurred as a result of not fully utilizing planned production capacity at certain of our third-party manufacturers.

License Expense. For the year ended December 31, 2017, we recognized $3.1 million in license expense related to royalties due to the licensor of Auryxia relating to sales of Riona in Japan as compared to $2.9 million for the year ended December 31, 2016. This increase was due to an increase in sales of Riona in Japan in 2017 as compared to 2016.

Research and Development Expenses. Research and development expenses increased by $8.2 million, or 28%, to $37.7 million for the year ended December 31, 2017, as compared to $29.5 million for the year ended December 31, 2016. The increase in research and development expenses was primarily due to an increase in process development-related manufacturing costs as we seek to increase our manufacturing capabilities, as well as an increase in clinical trial costs. Research and development expenses included $2.6 million and $2.8 million in non-cash stock-based compensation expense for the years ended December 31, 2017 and 2016, respectively. We expect research and development expenses in 2018 to remain relatively consistent as compared to 2017.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $15.1 million, or 18%, to $99.6 million for the year ended December 31, 2017, as compared to $84.6 million for the year ended December 31, 2016. The increase was due to an increase in non-cash stock-based compensation expense recorded in 2017 related to the achievement of performance conditions tied to the vesting of equity awards of $4.6 million, as well as personnel costs attributable to the continued commercialization of Auryxia and costs associated with preparing for the approval and launch of Auryxia for the treatment of iron deficiency anemia in adults with CKD, not on dialysis. Selling, general and administrative expenses included $15.6 million and $11.2 million in non-cash stock-based compensation expense for the years ended December 31, 2017 and 2016, respectively. We expect selling, general and administrative expenses in 2018 to remain relatively consistent as compared to 2017.

Other (expense) income, net. Other (expense) income, net for the year ended December 31, 2017 was $62.0 million (expense) compared to $38.3 million (expense) for the year ended December 31, 2016. The increase was primarily due to an increase in the amortization of the debt discount of $29.0 million offset by a change in the fair value adjustment to the derivative liability related to our convertible senior notes of $5.0 million.

Income Tax (Benefit) Expense. Income tax (benefit) expense for the year ended December 31, 2017 was $0.2 million (benefit) compared to $0.1 million expense for the year ended December 31, 2016. The net income tax benefit recognized in 2017 relates to a tax benefit recorded in connection with the new corporate tax rate that was signed into law at the end of 2017, which was partially offset by the income tax expense recorded in each period related to the recording of a deferred tax liability associated with capitalized goodwill, an indefinite-lived intangible asset that is being amortized for tax purposes.

Years Ended December 31, 2016 and 2015

Net U.S. Auryxia Product Sales. For the year ended December 31, 2016, we recognized $27.2 million in product sales of Auryxia, net of allowances, discounts, incentives, rebates and chargebacks as compared with $10.1 million for the year ended December 31, 2015.

(in thousands)	2016		Percent of gross Auryxia product sales	2015		Percent of gross Auryxia product sales
Gross Auryxia product sales	$	44,557		$	16,295
Less provision for product sales allowances and accruals
Trade allowances	5,157		12%	1,897		12%
Rebates and chargebacks	10,703		24%	2,418		15%
Product returns	879		2%	—		—%
Other incentives (1)	645		1%	1,839		11%
Total	17,384		39%	6,154		38%
Net U.S. Auryxia product sales	$	27,173		$	10,141

(1) Includes co-pay assistanceand voucher rebates.

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Gross Auryxia product sales increased for the year ended December 31, 2016 as compared to the same period in 2015 primarily as a result of an increase in patient prescriptions and related units sold. Provisions for product sales allowances and accruals as a percentage of gross Auryxia product sales for the year ended December 31, 2016 as compared to the same period in 2015 increased primarily as a result of additional rebates and discounts given to our third-party payors. The transition to the ex-factory revenue recognition method resulted in the need to establish an accrual for product returns, which increased the provisions for product sales allowances and accruals as a percentage of gross Auryxia product sales. Further, our sales of Auryxia in 2016 were negatively impacted by the interruption in the supply of Auryxia during portions of the third and fourth quarters of 2016 due to a production-related issue in converting API to finished drug product at our contract manufacturer. In November 2016, the FDA approved a second manufacturer to produce finished Auryxia drug product, after which we made Auryxia available for sale again.

As a result of the change in revenue recognition method during the fourth quarter of 2016, we did not have any deferred revenue at December 31, 2016, as compared to $3.5 million at December 31, 2015, which represents Auryxia product shipped to our Customers, but not yet resold to fill patient prescriptions, net of applicable allowances, discounts, incentives, rebates and chargebacks.

The following table sets forth customers or partners who represented 10% or more of our total revenues for 2016 and 2015:

(in thousands)	December 31, 2016		December 31, 2015
McKesson Corporation	31	%	23	%
AmerisourceBergen Drug Corporation	23	%	17	%
Fresenius Medical Care Rx	22	%	15	%
Cardinal Health, Inc.	11	%	24	%
DaVita Rx	10	%	19	%

License Revenue. For the year ended December 31, 2016, we recognized $4.8 million in license revenue on royalty payments from sales of Riona in Japan as compared to $3.5 million for the year ended December 31, 2015. This increase was directly attributable to increased sales of Riona in Japan.

Cost of Goods Sold. For the year ended December 31, 2016, we recognized $37.8 million in cost of goods sold as compared to $4.5 million for the year ended December 31, 2015. Cost of goods sold in 2016 includes approximately $25.6 million in write-offs of work-in-process inventory that was determined to be no longer suitable for commercial manufacture. Cost of goods sold during each of 2015 and 2016 also includes $2.6 million related to manufacturing charges incurred as a result of not fully utilizing planned production capacity at certain of our third-party manufacturers.

License Expense. For the year ended December 31, 2016, we recognized $2.9 million in license expense related to royalties due to the licensor of Auryxia relating to sales of Riona in Japan as compared to $2.1 million for the year ended December 31, 2015. This increase was due to an increase in sales of Riona in Japan.

Research and Development Expenses. Research and development expenses decreased by $7.2 million, or 20%, to $29.5 million for the year ended December 31, 2016, as compared to $36.7 million for the year ended December 31, 2015. The decrease in research and development expenses was primarily due to a $3.0 million decrease in expenses related to clinical trial activity following the completion of our Phase 3 clinical trial of ferric citrate in IDA, NDD-CKD, in early 2016, as well as a decrease of $2.5 million in manufacturing-related expenses that were expensed to research & development as a result of a decrease in development work and fees due to our licensor related to lower API production. Regulatory consulting expenses also decreased by approximately $1.4 million after the completion of our European filing for Fexeric in 2015.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $3.1 million, or 4%, to $84.6 million for the year ended December 31, 2016, as compared to $81.4 million for the year ended December 31, 2015. The increase was primarily due to a $16.2 million increase in selling expense related to the commercialization of Auryxia, including an increased sales force for a full year in 2016 versus a partial year in 2015. This was partially offset by decreases in personnel costs as a result of severance payments and related costs incurred in 2015.

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Other (expense) income, net. Other (expense) income, net for the year ended December 31, 2016 was $38.3 million (expense) compared to $12.0 million (expense) for the year ended December 31, 2015. This increase in expense was primarily the result of $34.2 million of expense recorded related to the amortization of the debt discount recognized in connection with the issuance of the Convertible Senior Notes, due 2020, or the Notes, in October 2015, as compared to $11.4 million recorded in 2015. Additionally, we recorded $4.7 million of expense in 2016 related to the increase in fair value of the derivative liability associated with the Notes, as compared to $1.1 million in 2015. This derivative liability was recorded in connection with the issuance of the Notes in October 2015 and represents the portion of the Notes that is required to be accounted for separately. See Note 8 – Debt for additional details.

Income Taxes. For the years ended December 31, 2016 and December 31, 2015, we recognized $0.1 million in income tax expense related to the recording of a deferred tax liability associated with capitalized goodwill, an indefinite-lived intangible asset that is being amortized for tax purposes. Indefinite-lived intangibles are non-monetary assets which are not amortized under generally accepted accounting principles in the United States, or GAAP, since there is no foreseeable limit to the cash flows provided by them. Our lack of earnings history and the uncertainty surrounding our ability to generate taxable income prior to the reversal or expiration of such deferred tax liability were the primary factors considered by management when recording the valuation allowance against our deferred tax assets. We continue to maintain a full valuation allowance against our net deferred tax assets.

LIQUIDITY AND CAPITAL RESOURCES

Our major sources of cash have been proceeds from various public offerings of our common stock, the issuance of convertible notes, the upfront, royalty and milestone payments from our agreement with JT and Torii, sales of Auryxia, option and warrant exercises, interest income, and miscellaneous payments from our other prior licensing activities. The commercial launch of our product, Auryxia, occurred in late December 2014 and we began to recognize revenue from the sales of Auryxia in 2015. Even if we successfully commercialize Auryxia, we may not become profitable. Our ability to achieve profitability depends on a number of factors, including our ability to successfully manufacture and commercialize our drug alone or in partnership, as well as successfully complete any post-approval regulatory obligations. We may continue to incur substantial operating losses even after we begin to generate meaningful revenues from Auryxia.

In November 2016, we filed a registration statement on Form S-3 (No. 333-214513), which the SEC declared effective on December 6, 2016, which registered the issuance from time to time of up to $250.0 million of our securities. At that time, we also entered into a Controlled Equity Offering^SM Sales Agreement, or the Sales Agreement, with Cantor Fitzgerald & Co., as sales agent, or Cantor Fitzgerald, pursuant to which we were initially able to offer and sell, from time to time, through Cantor Fitzgerald, shares of our common stock having an aggregate offering price of up to $75.0 million. In July 2017, we filed a new prospectus supplement with the SEC relating to the Sales Agreement under which we may offer and sell, from time to time, through Cantor Fitzgerald, shares of our common stock having an additional aggregate offering price of up to $75.0 million. During the year ended December 31, 2017, we sold 11,937,174 shares under the Sales Agreement for aggregate net proceeds of $75.7 million, which included all of the initial $75.0 million shares issuable pursuant to the Sales Agreement. As of the date hereof, we may sell up to an additional $72.4 million under the Sales Agreement pursuant to the July 2017 prospectus supplement. The initial $75.0 million of common stock issued pursuant to the Sales Agreement and the additional $75.0 million of common stock issuable pursuant to the Sales Agreement are included as part of the $250 million registered on the registration statement referred to above.

In October 2015, we completed the sale of $125 million of Convertible Senior Notes due 2020, or the Notes, to funds managed by The Baupost Group, L.L.C, or Baupost. The Notes may be converted into shares of our common stock at the discretion of Baupost at a conversion price of $3.74, subject to adjustment based on the occurrence of certain events. We also entered into a Registration Rights Agreement with the purchasers of the Notes, or the Registration Rights Agreement, pursuant to which we agreed to (i) file a registration statement with the SEC covering the resale of the Notes and the underlying common stock which the Notes are convertible into upon the written request of Baupost, and (ii) use commercially reasonable efforts, subject to receipt of necessary information from all the purchasers of the Notes, to cause the SEC to declare such resale registration statement effective. Further, the Registration Rights Agreement permits Baupost to demand from time to time that we file a shelf Registration Statement pursuant to Rule 415 of the Securities Act from which any number of shelf takedowns may be conducted upon written request from Baupost. In addition, the Registration Rights Agreement provides Baupost certain piggyback registration rights.

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In January 2014, our Japanese partner, JT and Torii, received manufacturing and marketing approval of Riona from the Japanese Ministry of Health, Labour and Welfare. We receive royalty payments based on a tiered double-digit percentage of net sales of Riona in Japan escalating up to the mid-teens, as well as up to an additional $55.0 million upon the achievement of certain annual net sales milestones. We owe royalties at a mid-single digit percentage of net sales to the licensor of Auryxia associated with net sales of Riona in Japan.

As of December 31, 2017, we had $93.5 million in cash and cash equivalents, as compared to $111.8 million in cash and cash equivalents at December 31, 2016, representing a decrease of $18.3 million. This decrease was primarily a result of cash used in operations, partially offset by net proceeds from the sale of common stock.

We believe that our existing cash and cash equivalents will be sufficient to fund our current and planned operations for at least the next twelve months. The actual amount of cash that we will need to execute our current business objectives is subject to many factors, including, but not limited to, the timing and magnitude of cash received from product sales, the timing and expenditures associated with commercial activities related to Auryxia, the timing and expenditures associated with the build-up of inventory and capacity expansion, and the timing, design and conduct of any further clinical trials for ferric citrate. As a result of these factors, we may need to seek additional financing to provide the cash necessary to execute our current operations, including working capital needs. Our capital raising activities may include, but may not be limited to, one or more of the following: the issuance of common stock or other securities via private placement or public offerings, including the potential future sales of our common stock under the Sales Agreement; the issuance of debt, including potential working capital lines of credit; or possible business combinations. While we may seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, and our negotiating position in capital-raising efforts may worsen as existing resources are used. Additional equity financings may be dilutive to our stockholders; and debt financing, if available may involve significant cash payment obligations and covenants that restrict our ability to operate as a business. For a detailed discussion regarding the risks and uncertainties related to our liquidity and capital resources, please refer to our Risk Factor, “Our existing capital resources may not be adequate to finance our operating cash requirements for the length of time that we have estimated.”

Net cash used in operating activities for the year ended December 31, 2017 was $93.5 million, primarily attributable to our net loss of $163.4 million, adjusted for non-cash stock-based compensation expense and amortization of the debt discount recognized in connection with the Notes, as well as changes in operating assets and liabilities, principally the increase of inventory and other assets related to prepayments for manufacturing services, and corresponding increase of accrued expenses as compared to December 31, 2016. Net cash used in operating activities for the year ended December 31, 2016 was $86.6 million, primarily attributable to our net loss of $161.1 million, adjusted for non-cash stock-based compensation expense and amortization of the debt discount recognized in connection with the issuance of the Notes, as well as changes in operating assets and liabilities, principally the decrease of deferred revenue and accrued expenses from December 31, 2015.

Net cash used in investing activities for the year ended December 31, 2017 was $1.3 million as compared to $2.1 million for the year ended December 31, 2016, all of which was attributable to capital expenditures.

Net cash provided by financing activities for the year ended December 31, 2017 was $76.5 million, attributable to the net proceeds from the issuance of common stock under the Sales Agreement and exercise of stock options. Net cash provided by financing activities for the year ended December 31, 2016 was $0.2 million, attributable to proceeds from the exercise of stock options.

OFF-BALANCE SHEET ARRANGEMENTS

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support, or engages in leasing, hedging, or research and development services on our behalf.

OBLIGATIONS AND COMMITMENTS

Our contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. These include commitments related to our facility lease, purchases of inventory and other purchases related to our product, debt obligations, consulting services and subscription fees, among others.

The following table summarizes our contractual obligations as of December 31, 2017.

(in thousands)	Payment due by period
Contractual obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Convertible senior notes	$	125,000	$	—	$	125,000	$	—	$	—
Facility lease	8,703		1,628		3,338		3,447		290
Purchase commitments	206,581		58,263		72,994		75,324		—
Total	$	340,284	$	59,891	$	201,332	$	78,771	$	290

Convertible Senior Notes

The debt obligation of $125 million in the table above reflects our obligations under the Notes to make a principal payment for the par value of the Notes at maturity. Any future conversion or settlement of the Notes could impact the timing and amount of our potential cash payments under the Notes (see Note 8 – Debt).

Facility Lease

In April 2015, we signed a lease agreement for approximately 27,300 square feet in Boston, Massachusetts, for a 94-month term that commenced on May 1, 2015 and will expire in February 2022, for office space to serve as our corporate headquarters.

Purchase Commitments

Purchase commitments in the table above relate to agreements with certain contract manufacturers, for which we are not contractually able to terminate for convenience and avoid any and all future obligations. These amounts do not represent our entire anticipated purchases in the future, but generally represent our estimate of those items for which we have a contractual commitment to pay, including minimum purchase quantities of product. Such obligations also include inventory purchase orders based on our current manufacturing needs and require significant lead times to be fulfilled by our vendors. Purchase commitments exclude agreements that are cancelable without penalty, including open purchase orders that represent authorizations to purchase rather than legally binding agreements.

Contingent Milestone Payments

Under one of our existing manufacturing agreements, we may be required to pay up to $10.0 million in contingent manufacturing milestone payments to a contract manufacturer related to certain construction related matters if such activities are achieved by the contract manufacturer within a pre-specified time frame. These milestones will be capitalized, if achieved, as a deferred cost on our balance sheet until such time that we begin to receive product from the new facility being constructed by our contract manufacturer. As of December 31, 2017, one such milestone in the amount of $5.0 million was achieved. This amount is recorded on our balance sheet as an accrued expense and deferred cost in other long-term assets as of December 31, 2017. As the achievement of the remaining milestones was not considered probable as of December 31, 2017, such contingencies have not been recorded in our consolidated financial statements. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain manufacturing milestones.

Legal Proceedings

For a discussion of our legal proceedings as of December 31, 2017, see Note 13 – Commitments and Contingencies, to our consolidated financial statements included in this report.

CRITICAL ACCOUNTING POLICIES

The preparation of our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, equity revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, judgments and assumptions.  We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances. These estimates are subject to an inherent degree of uncertainty, and as a result, actual results may differ from these estimates under different assumptions or conditions.

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Revenue Recognition and Related Sales Allowances and Accruals

Our commercial launch of Auryxia occurred in December 2014. We sell product to a limited number of major wholesalers, our Distributors, as well as certain pharmacies, or collectively our Customers. Our Distributors resell the product to retail pharmacies for purposes of filling patient prescriptions. In accordance with current GAAP, our revenue recognition policy requires that: (i) there is persuasive evidence that an arrangement exists between us and the Customer, (ii) delivery has occurred, (iii) collectibility is reasonably assured, and (iv) the price is fixed or determinable. In the fourth quarter of 2016, we began to recognize revenue under the pull-through (ex-factory) method based on sales to our Customers as a result of our ability to reasonably estimate product returns.

Prior to the fourth quarter of 2016, we recognized revenue based on the resale of Auryxia for the purposes of filling patient prescriptions, and not based on initial sales from us to our Customers as we did not have sufficient history such that we could reliably estimate returns based on sales to our Customers. As a result, prior to the fourth quarter of 2016, we deferred Auryxia revenue recognition until the earlier of the product being resold for purposes of filling patient prescriptions and the expiration of the right of return (twelve months after the expiration date of the product). The deferred revenue was recorded net of discounts, rebates, and chargebacks.

We have written contracts with our Customers and delivery occurs when a Customer receives Auryxia. We evaluate the creditworthiness of each of our Customers to determine whether revenues can be recognized upon delivery, subject to satisfaction of the other requirements, or whether recognition is required to be deferred until receipt of payment. In order to conclude that the price is fixed or determinable, we must be able to (i) calculate our gross product sales from the sales to Customers and (ii) reasonably estimate our related sales allowances. We calculate gross product sales based on the wholesale acquisition cost that we charge our Customers for Auryxia. We estimate our net product sales by deducting reserve estimates from our gross product sales related to (a) trade allowances, such as invoice discounts for prompt payment and distributor fees, (b) government and private payor rebates, chargebacks and discounts, such as Medicaid reimbursements, (c) expected product returns and (d) costs of incentives offered to certain indirect customers, including patients.

Trade Allowances: We generally provide discounts on Auryxia sales to our Customers in the form of a discount for prompt payment of invoices or a discount directly off the invoice amount. The prompt-pay discount is generally given for payment made within 35 days. Based on our judgment and industry experience, we expect our Customers to earn these discounts. We deduct the full amount of these discounts from our gross product sales and accounts receivable at the time such revenues are recognized. We also pay fees to our Distributors for distribution services which are generally based on a contractual percentage of total purchases made by each Distributor during the period. These fees are also deducted from our gross product sales at the time such revenues are recognized.

Rebates and Chargebacks: We contract with various commercial and Medicare Part D private insurance providers, Medicaid and other government agencies, or collectively, our Third-party Payors, so that Auryxia will be eligible for partial or full reimbursement from such Third-party Payors. We estimate the rebates and chargebacks we will provide to Third-party Payors and deduct these estimated amounts from our gross product sales at the time the revenues are recognized. We estimate the rebates and chargebacks that we will provide to Third-Party Payors based upon (i) our contracts with these Third-Party Payors, (ii) the government-mandated discounts applicable to government-funded programs, and (iii) information obtained from our Customers and other third parties regarding the payor mix for Auryxia.

Product Returns: Consistent with industry practice, we generally offer our Customers a limited right to return our Auryxia based on the product’s expiration date. Our Customers have the right to return Auryxia during the 18-month period beginning six months prior to the labeled expiration date and ending twelve months after the labeled expiration date. Currently the expiration date for Auryxia is eighteen months after it has been converted into tablet form, which is the last step in the manufacturing process for Auryxia and generally occurs within a few months before Auryxia is delivered to Customers. We estimate product returns based on the historical return patterns and we track actual returns by individual manufacturing lots. We expect that Distributors and pharmacies will not stock significant inventory due to the cost of the product, the expense to store the product and the fact that the product is readily available for distribution. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as it becomes available. As of December 31, 2017, we have experienced a relatively limited number of product returns; however, our returns experience may change over time. As we continue to gain more historical experience with actual returns, we may be required to make a future adjustment to our product returns estimate, which would result in a corresponding change to our net product sales in the period of adjustment and could be significant.

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Other Incentives: Other incentives that we offer to indirect customers include co-pay assistance rebates provided by us to commercially insured patients who have coverage for Auryxia and who reside in states that permit co-pay assistance programs, and vouchers for a small supply of Auryxia at no patient cost. Our co-pay assistance program is intended to reduce each participating patient’s portion of the financial responsibility for Auryxia’s purchase price to a specified dollar amount. Based upon the terms of the program and data obtained from the third parties which administer the program, we estimate the co-pay assistance amounts and the percentage of patients that we expect to participate in the program in order to establish our accruals for co-pay assistance rebates. We deduct these estimated amounts from our gross product sales at the time the revenues are recognized.

We recognize license revenue in accordance with Accounting Standards Codification 605, Revenue Recognition. We analyze each element of our licensing agreement to determine the appropriate revenue recognition. The terms of the license agreement may include payment to us of non-refundable up-front license fees, milestone payments if specified objectives are achieved, and/or royalties on net product sales. We recognize revenue from upfront payments over the period of significant involvement under the related agreements unless the fee is in exchange for products delivered or services rendered that represent the culmination of a separate earnings process and no further performance obligation exists under the contract. We recognize milestone payments as revenue upon the achievement of specified milestones only if (1) the milestone payment is non-refundable, (2) substantive effort is involved in achieving the milestone, (3) the amount of the milestone is reasonable in relation to the effort expended or the risk associated with achievement of the milestone, and (4) the milestone is at risk for both parties. If any of these conditions are not met, we defer the milestone payment and recognize it as revenue over the estimated period of performance under the contract.

For arrangements for which royalty revenue information becomes available and collectibility is reasonably assured, we recognize revenue during the applicable period earned. When collectibility is reasonably assured but a reasonable estimate of royalty revenue cannot be made, the royalty revenue is recognized in the quarter that the licensee provides the written report and related information to us.

Stock-Based Compensation

We grant stock options and restricted stock awards to employees, directors and consultants. We estimate an expected forfeiture rate and only recognize expense for those equity awards that are expected to vest. Forfeitures are estimated based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes model has several inputs, including the volatility in the price of our stock, the risk-free interest rate, the expected term of the option, the closing market price of our stock on the grant date and the exercise price. We base our estimates of our stock price volatility on the historical volatility of our common stock; however, these estimates are neither predictive nor indicative of the future performance of our stock. For purposes of the fair value calculation, we assume that no dividends will be paid during the life of the stock options. The aggregate fair value of awards calculated using the Black-Scholes option pricing model is generally expensed on a straight‑line basis over the requisite service period. The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management judgment.

The aggregate fair value of restricted stock granted to our employees and directors is determined based upon the quoted closing market price per share on the date of grant, adjusted for estimated forfeitures. This aggregate fair value is generally expensed on a straight‑line basis over the requisite service period.

The total stock-based compensation recorded in a given period is dependent upon the assumptions utilized. As a result, if other assumptions had been used, our recorded stock-based compensation expense could have been materially different from that reported. In addition, because some of the stock options issued to employees, consultants and other third-parties vest upon the achievement of certain performance conditions or milestones, the total expense is uncertain.

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Research and Development Costs

Research and development costs are expensed as incurred. Inventory expenditures prior to regulatory approval of the product candidate or prior to regulatory approval of the contract manufacturing site, if required, are recorded as research and development expense as incurred. The capitalization of inventory for our product candidates commences when management determines that the realization of future economic benefit is probable. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered or the related services are performed, subject to an assessment of recoverability. We make estimates of costs incurred in relation to external clinical research organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period. We review and accrue CRO expenses and clinical trial expenses based on work performed and rely upon estimates of those costs applicable to the stage of completion of a trial. Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these contracts may be uneven and depend on factors such as the achievement of certain events, the successful recruitment of patients, and the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of expenses in our consolidated financial statements to the actual services received and efforts expended. As such, expenses related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific clinical trial contract.

Inventory

Inventory is stated at the lower of cost or estimated realizable value. We determine the cost of our inventory, which includes amounts related to materials, third-party contract manufacturing and packaging services, and manufacturing overhead, on a first-in, first-out basis. We capitalize inventory costs at our suppliers when, based on management’s judgment, the realization of future economic benefit is probable at each given supplier. We received FDA approval for Auryxia on September 5, 2014, and on that date began capitalizing inventory purchases of saleable product from certain suppliers. Prior to FDA approval, all saleable product purchased from such suppliers was included in research and development expense. For an approved product that requires additional regulatory approval for a new manufacturing process or at a new contract manufacturing site, we include costs of product purchases from such suppliers in research and development expense until such time that process or contract manufacturing site is approved.

Accounts Receivable, Net

We extend credit to our customers for product sales resulting in accounts receivable. Customer accounts are monitored for past due amounts. Past due accounts receivable, determined to be uncollectible, are written off against the allowance for doubtful accounts. Allowances for doubtful accounts, if necessary, are estimated based upon past due amounts, historical losses and existing economic factors, and are adjusted periodically. We offer cash discounts to certain of our customers, generally 2% of the sales price, as an incentive for prompt payment. The estimate of cash discounts is recorded at the time of sale. We account for the cash discounts by reducing revenue and accounts receivable by the amount of the discounts we expect our customers to take. The accounts receivable are reported in the consolidated balance sheets, net of the allowances for doubtful accounts, cash discounts and chargebacks. There was no allowance for doubtful accounts at December 31, 2017 and 2016.

Accounting Related to Goodwill

Goodwill is reviewed for impairment annually, as of December 31, or when events arise that could indicate that an impairment exists. In 2017, we early adopted a new accounting pronouncement related to the testing of goodwill impairment; refer to Note 2 – Basis of Presentation and Summary of Significant Accounting Policies to the consolidated financial statements included in this report. Under the new guidance, we test for goodwill impairment by comparing the fair value of the reporting unit with the unit’s carrying value, including goodwill. When the carrying value of the reporting unit is greater than fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value.

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Accounting for Income Taxes

In preparing our consolidated financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. This process involves management estimation of our actual current tax exposure and assessment of temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the consolidated statement of operations. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets.

For the years ended December 31, 2017, 2016 and 2015, we recognized $(0.2) million, $0.1 million and $0.1 million, respectively, in income tax (benefit) expense related to the recording of a deferred tax liability associated with capitalized goodwill, an indefinite-lived intangible asset that is being amortized for tax purposes. Indefinite-lived intangibles are non-monetary assets which are not amortized for book purposes since there is no foreseeable limit to the cash flows provided by them. Our lack of earnings history and the uncertainty surrounding our ability to generate taxable income prior to the reversal or expiration of such deferred tax liability were the primary factors considered by management when recording the valuation allowance against our deferred tax assets.

RECENTLY ISSUED ACCOUNTING STANDARDS

For a discussion of new accounting standards, see Note 2 – Basis of Presentation and Summary of Significant Accounting Policies to our consolidated financial statements included in this report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Risk

The primary objective of our investment activities is to preserve capital while maximizing our income from investments and minimizing our market risk. As of December 31, 2017, our portfolio of financial instruments consisted of cash equivalents. Due to the short-term nature of these financial instruments, we believe there is no material exposure to interest rate risk, and/or credit risk, arising from our portfolio of financial instruments.

Equity Price Risk

Our Convertible Notes include conversion provisions that are based on the price of our common stock at conversion or at maturity of the notes. The fair values of our Convertible Notes are dependent on the price and volatility of our common stock and will generally increase or decrease as the market price of our common stock changes.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Our consolidated financial statements and the notes thereto, included in Part IV, Item 15, Part 1, are incorporated by reference into this Item 8.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. As of December 31, 2017, management carried out, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our disclosure controls and procedures are designed to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2017, our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) or Rule 15d-15(f) under the Exchange Act). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, in Internal Control-Integrated Framework (2013). Our management has concluded that, as of December 31, 2017, our internal control over financial reporting was effective based on these criteria. UHY LLP, our independent registered public accounting firm, has audited the accompanying consolidated balance sheets as of December 31, 2017 and 2016, and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for each of the years in the three-year period ended December 31, 2017, included in this annual report on page F-2. UHY LLP has issued an attestation report on our internal control over financial reporting as of December 31, 2017, which is found below.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended December 31, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls. Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Keryx Biopharmaceuticals, Inc.

Opinion on Internal Control over Financial Reporting

We have audited Keryx Biopharmaceuticals, Inc.’s (the "Company") internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows of the Company, and our report dated February 21, 2018, expressed an unqualified opinion.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Annual Report. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities 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 effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ UHY LLP

New York, New York

February 21, 2018

ITEM 9B. OTHER INFORMATION.

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2018 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION.

The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2018 Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2018 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2018 Annual Meeting of Stockholders.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2018 Annual Meeting of Stockholders.

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PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

1. Consolidated Financial Statements

The following financial statements of Keryx Biopharmaceuticals, Inc. are filed as part of this report.

Contents	Page
Report of Independent Registered Public Accounting Firm	F- 2
Consolidated Balance Sheets as of December 31, 2017 and 2016	F- 3
Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016 and 2015	F- 4
Consolidated Statements of Stockholders’ (Deficit) Equity for the Years Ended December 31, 2017, 2016 and 2015	F- 5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015	F- 6
Notes to Consolidated Financial Statements	F- 7

2. Consolidated Financial Statement Schedules

All schedules are omitted as the information required is inapplicable or the information is presented in the consolidated financial statements or the related notes.

ITEM 16. FORM 10-K SUMMARY.

None.

3. Exhibits

The following is a list of exhibits filed as part of this Annual Report on Form 10-K.

Exhibit Number	Exhibit Description
3.1	Amended and Restated Certificate of Incorporation of Keryx Biopharmaceuticals, Inc., dated December 17, 2003, and the Amendment thereto, dated June 18, 2004, filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, filed on August 12, 2004 (File No. 000-30929), and incorporated herein by reference.
3.2	Amendment to Amended and Restated Certificate of Incorporation of Keryx Biopharmaceuticals, Inc., dated July 24, 2007, filed as Exhibit 3.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, filed on August 9, 2007 (File No. 000-30929), and incorporated herein by reference.
3.3	Amendment to Amended and Restated Certificate of Incorporation of Keryx Biopharmaceuticals, Inc., dated June 18, 2013, filed as Exhibit 3.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, filed on August 2, 2013 (File No. 000-30929), and incorporated herein by reference.
3.4	Amendment to Amended and Restated Certificate of Incorporation of Keryx Biopharmaceuticals, Inc., dated May 25, 2016, filed as Exhibit 3.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed on August 5, 2016 (File No. 000-30929), and incorporated herein by reference.
3.5	Certificate of Validation of the filing and effectiveness of the Amendment to Amended and Restated Certificate of Incorporation of Keryx Biopharmaceuticals, Inc., dated June 13, 2017, filed as Exhibit 3.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed on July 27, 2017 (File No. 000-30929), and incorporated herein by reference.

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3.6	Amendment to Amended and Restated Certificate of Incorporation of Keryx Biopharmaceuticals, Inc., dated June 13, 2017, filed as Exhibit 3.6 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed on July 27, 2017 (File No. 000-30929), and incorporated herein by reference.
3.7	Amended and Restated Bylaws of Keryx Biopharmaceuticals, Inc., adopted on December 13, 2017, filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed on December 19, 2017 (File No. 000-30929), and incorporated herein by reference.
4.1	Specimen Common Stock Certificate, filed as Exhibit 4.1 to the Registrant’s First Amendment to the Registration Statement on Form S-1 filed on June 30, 2000 (File No. 333-37402), and incorporated herein by reference.
4.2	Indenture dated as of October 15, 2015, between Keryx Biopharmaceuticals, Inc. and The Bank of New York Mellon Trust Company, N.A., filed as Exhibit 10.2 to the Registrant's Current Report on Form 8-K, filed on October 19, 2015 (File No. 000-30929), and incorporated herein by reference.
4.3	First Supplemental Indenture, dated as of April 10, 2017, by and among Keryx Biopharmaceuticals, Inc., The Bank of New York Mellon Trust Company, N.A. and the note holder signatory thereto, to the Indenture, dated as of October 15, 2015, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on April 10, 2017 (File No. 000-30929), and incorporated herein by reference.
10.1†	Keryx Biopharmaceuticals, Inc. 1999 Stock Option Plan, as amended, filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, filed on May 15, 2003 (File No. 000-30929), and incorporated herein by reference.
10.2†	Keryx Biopharmaceuticals, Inc. 2004 Long-Term Incentive Plan, filed with the Registrant’s Definitive Proxy Statement for the Annual Meeting of Stockholders on June 10, 2004, filed on April 29, 2004 (File No. 000-30929), and incorporated herein by reference.
10.3†	Amendment to the Keryx Biopharmaceuticals, Inc. 2004 Long-Term Incentive Plan dated April 11, 2006, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, filed on August 9, 2006 (File No. 000-30929), and incorporated herein by reference.
10.4†	2007 Incentive Plan, filed as Annex D to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on April 30, 2007 (File No. 000-30929), and incorporated herein by reference.
10.5†	Keryx Biopharmaceuticals, Inc. Amended and Restated 2013 Incentive Plan, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on May 27, 2016 (File No. 000-30929), and incorporated herein by reference.
10.6†	Keryx Biopharmaceuticals, Inc. Fourth Amended and Restated Directors Equity Compensation Plan, filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed on May 27, 2016 (File No. 000-30929), and incorporated herein by reference.
10.7!	Amended and Restated License Agreement by and between Panion & BF Biotech, Inc. and Keryx Biopharmaceuticals, Inc. dated March 17, 2008, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, filed on May 12, 2008 (File No. 000-30929), and incorporated herein by reference.
10.8!	First Amendment to Amended and Restated License Agreement by and between Panion & BF Biotech, Inc. and Keryx Biopharmaceuticals, Inc. dated March 17, 2008, filed as Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008, filed on March 31, 2009 (File No. 000-30929), and incorporated herein by reference.
10.9!	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 Biopharmaceuticals, Inc., Japan Tobacco, Inc. and Torii Pharmaceutical Co., Ltd, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 7, 2017 (File No. 000-30929), and incorporated herein by reference.
10.10!	Master Manufacturing Services Agreement by and between Keryx Biopharmaceuticals, 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, filed as Exhibit 10.12 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 1, 2017 (File No. 000-30929), and incorporated herein by reference.

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10.11!	Product Agreement, dated August 29, 2017, by and between Keryx Biopharmaceuticals, Inc. and Patheon Inc. (an affiliate of Patheon Manufacturing Services LLC) related to the Master Manufacturing Services Agreement by and between Keryx Biopharmaceuticals, Inc. and Patheon Manufacturing Services LLC and certain of its affiliates dated November 12, 2016, filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 7, 2017 (File No. 000-30929), and incorporated herein by reference.
10.12!	Product Manufacture and Supply and Facility Construction Agreement, dated December 11, 2017, by and between Keryx Biopharmaceuticals, Inc. and BioVectra Inc.
10.13!	Master Manufacturing Services and Supply Agreement, dated December 20, 2017, by and between Keryx Biopharmaceuticals, Inc. and Siegfried Evionnaz SA.
10.14†	Employment Agreement with Gregory P. Madison dated March 10, 2015.
10.15†	First Amendment to Employment Agreement with Gregory P. Madison dated October 15, 2015, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed on October 29, 2015 (File No. 000-30929), and incorporated herein by reference.
10.16†	Employment Agreement with Brian Adams dated April 8, 2014, filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 4, 2015 (File No. 000-30929), and incorporated herein by reference.
10.17†	First Amendment to Employment Agreement with Brian Adams dated October 15, 2015, filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed on October 29, 2015 (File No. 000-30929), and incorporated herein by reference.
10.18†	Second Amendment to Employment Agreement with Brian Adams dated December 15, 2016, filed as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 1, 2017 (File No. 000-30929), and incorporated herein by reference.
10.19†	Employment Agreement with John F. Neylan, M.D. dated April 22, 2015, filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 4, 2015 (File No. 000-30929), and incorporated herein by reference.
10.20†	First Amendment to Employment Agreement with John F. Neylan, M.D. dated October 15, 2015, filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed on October 29, 2015 (File No. 000-30929), and incorporated herein by reference.
10.21†	Second Amendment to Employment Agreement with John F. Neylan, M.D. dated January 6, 2017, filed as Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 1, 2017 (File No. 000-30929), and incorporated herein by reference.
10.22†	Employment Agreement with Scott Holmes dated June 26, 2015, filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed on July 27, 2015 (File No. 000-30929), and incorporated herein by reference.
10.23†	First Amendment to Employment Agreement with Scott Holmes dated October 15, 2015, filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed on October 29, 2015 (File No. 000-30929), and incorporated herein by reference.
10.24†	Second Amendment to Employment Agreement with Scott Holmes dated January 6, 2017, filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 1, 2017 (File No. 000-30929), and incorporated herein by reference.
10.25†	Employment Agreement with Christine A. Carberry dated January 6, 2017, filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on January 9, 2017 (File No. 000-30929), and incorporated herein by reference.
10.26†	Form of Indemnification Agreement between Keryx Biopharmaceuticals, Inc. and its directors and officers, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed on November 9, 2016 (File No. 000-30929), and incorporated herein by reference.
10.27	Notes Purchase Agreement dated as of October 14, 2015, between Keryx Biopharmaceuticals, Inc. and Baupost Group Securities, L.L.C, filed as Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed on October 19, 2015 (File No. 000-30929), and incorporated herein by reference.

58

10.28	Registration Rights Agreement dated as of October 15, 2015, between Keryx Biopharmaceuticals, Inc. and Baupost Group Securities, L.L.C., filed as Exhibit 10.3 to the Registrant's Current Report on Form 8-K, filed on October 19, 2015 (File No. 000-30929), and incorporated herein by reference.
10.29	Controlled Equity OfferingSM Sales Agreement dated November 9, 2016, by and between Keryx Biopharmaceuticals, Inc. and Cantor Fitzgerald & Co., filed as Exhibit 1.2 to the Registrant's Registration Statement on Form S-3, filed on November 9, 2016 (File No. 333-214513), and incorporated herein by reference.
10.30	One Marina Park Drive Office Lease dated April 29, 2015, by and between Keryx Biopharmaceuticals, Inc. and Fallon Cornerstone One MPD LLC, filed as Exhibit 10.29 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 1, 2017 (File No. 000-30929), and incorporated herein by reference.
21.1	List of Subsidiaries.
23.1	Consent of UHY LLP.
24.1	Power of Attorney of Director and Officers of Keryx Biopharmaceuticals, Inc. (included on the signature to this Annual Report on Form 10-K).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated February 21, 2018.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated February 21, 2018.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated February 21, 2018.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated February 21, 2018.
101	The following financial information from Keryx Biopharmaceuticals, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Stockholders’ (Deficit) Equity, (iv) Consolidated Statements of Cash Flows, (v) the Notes to Consolidated Financial Statements.

______________________________

!    Confidential treatment has been granted or is being sought with respect to the omitted portions of this exhibit.

†    Indicates management contract or compensatory plan or arrangement.

59

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 21, 2018

KERYX BIOPHARMACEUTICALS, INC.
By:	/s/ Gregory P. Madison
	Gregory P. Madison Chief Executive Officer and Director

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Gregory P. Madison and Brian Adams, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and his name, place and stead, in any and all capacities, to sign any or all amendments to this annual report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or any of his substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Form 10-K has been signed by the following persons on behalf of the Registrant on February 21, 2018, and in the capacities indicated:

Signatures	Title
/s/ Gregory P. Madison	Chief Executive Officer and Director
Gregory P. Madison	(principal executive officer)
/s/ Scott A. Holmes	Chief Financial Officer
Scott A. Holmes	(principal financial and accounting officer)
/s/ Michael Rogers	Chairman of the Board of Directors
Michael Rogers
/s/ Kevin J. Cameron	Director
Kevin J. Cameron
/s/ Daniel P. Regan	Director
Daniel P. Regan
/s/ Steven C. Gilman	Director
Steven C. Gilman
/s/ Michael T. Heffernan	Director
Michael T. Heffernan
/s/ Jodie Morrison	Director
Jodie Morrison
/s/ Mark J. Enyedy	Director
Mark J. Enyedy

Keryx Biopharmaceuticals, Inc.

Consolidated Financial Statements as of December 31, 2017

Contents	Page
Report of Independent Registered Public Accounting Firm	F- 2
Consolidated Balance Sheets as of December 31, 2017 and 2016	F- 3
Consolidated Statements of Operations for the Years Ended December 31, 2017, 2016 and 2015	F- 4
Consolidated Statements of Stockholders’ (Deficit) Equity for the Years Ended December 31, 2017, 2016 and 2015	F- 5
Consolidated Statements of Cash Flows for the Years Ended December 31, 2017, 2016 and 2015	F- 6
Notes to Consolidated Financial Statements	F- 7

F- 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Keryx Biopharmaceuticals, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Keryx Biopharmaceuticals, Inc. (the “Company”) as of December 31, 2017 and 2016, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated February 21, 2018, expressed an unqualified opinion.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities 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 consolidated 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 consolidated 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 consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ UHY LLP

We have served as the Company's auditor since 2009.

New York, New York

February 21, 2018

F- 2

Keryx Biopharmaceuticals, Inc.

Consolidated Balance Sheets as of December 31,

(in thousands, except share and per share amounts)

	2017			2016
Assets
Current assets:
Cash and cash equivalents	$	93,526		$	111,810
Inventory	28,695			12,681
Accounts receivable, net	8,146			5,236
Other current assets	11,199			3,170
Total current assets	141,566			132,897
Property, plant and equipment, net	4,521			4,211
Goodwill	3,208			3,208
Other assets, net	9,577			1,111
Total assets	$	158,872		$	141,427
Liabilities and stockholders’ (deficit) equity
Current liabilities:
Accounts payable and accrued expenses	$	45,031		$	21,190
Deferred lease incentive, current portion	244			244
Other current liabilities	145			117
Total current liabilities	45,420			21,551
Convertible senior notes	125,000			125,000
Deferred lease incentive, net of current portion	1,018			1,262
Deferred tax liability	635			870
Other liabilities	894			1,040
Total liabilities	172,967			149,723
Commitments and contingencies
Stockholders’ (deficit) equity:
Preferred stock, $0.001 par value per share (5,000,000 shares authorized, no shares issued and outstanding)	—			—
Common stock, $0.001 par value per share (230,000,000 and 180,000,000 shares authorized, 119,272,304 and 105,921,052 shares issued, 119,192,356 and 105,841,104 shares outstanding at December 31, 2017 and 2016, respectively)	119			106
Additional paid-in capital	984,681			827,053
Treasury stock, at cost, 79,948 shares at December 31, 2017 and 2016	(357		)	(357		)
Accumulated deficit	(998,538		)	(835,098		)
Total stockholders’ deficit	(14,095		)	(8,296		)
Total liabilities and stockholders’ deficit	$	158,872		$	141,427

The accompanying notes are an integral part of the consolidated financial statements.

F- 3

Keryx Biopharmaceuticals, Inc.

Consolidated Statements of Operations for the Years Ended December 31,

(in thousands, except share and per share amounts)

	2017			2016			2015
Revenues:
Net U.S. Auryxia product sales	$	55,514		$	27,173		$	10,141
License revenue	5,127			4,810			3,539
Total revenues	60,641			31,983			13,680
Costs and expenses:
Cost of goods sold	21,955			37,803			4,520
License expense	3,076			2,886			2,124
Research and development	37,679			29,504			36,694
Selling, general and administrative	99,622			84,553			81,410
Total costs and expenses	162,332			154,746			124,748
Operating loss	(101,691		)	(122,763		)	(111,068		)
Other (expense) income:
Amortization of debt discount	(62,965		)	(34,227		)	(11,357		)
Other (expense) income, net	981			(4,025		)	(630		)
Total other expense:	(61,984		)	(38,252		)	(11,987		)
Loss before income taxes	(163,675		)	(161,015		)	(123,055		)
Income tax (benefit) expense	(235		)	80			90
Net loss	$	(163,440	)	$	(161,095	)	$	(123,145	)
Basic and diluted net loss per common share	$	(1.43	)	$	(1.52	)	$	(1.19	)
Weighted average shares used in computing basic and diluted net loss per common share	114,507,668			105,845,121			103,898,399

The accompanying notes are an integral part of the consolidated financial statements.

F- 4

Keryx Biopharmaceuticals, Inc.

Consolidated Statements of Stockholders’ (Deficit) Equity

for the Years Ended December 31, 2017, 2016 and 2015

(in thousands, except share amounts)

	Common stock					Additional paid-in capital
									Treasury stock				Accumulated deficit
	Shares		Amount						Shares	Amount						Total
Balance at January 1, 2015	92,758,789		$	93		$	624,606		79,948	$	(357	)	$	(550,858	)	$	73,484
Issuance of common stock in public offering (net of offering costs of $8,216)	10,541,667		10			118,274			—	—			—			118,284
Issuance of restricted stock	1,247,250		1			—			—	—			—			1
Forfeiture of restricted stock	(330,102	)	—		*	—			—	—			—			—			*
Surrender of common stock for tax withholding	(1,625	)	—		*	(15		)								(15		)
Issuance of common stock in connection with the exercise of options	1,005,576		1			1,462			—	—			—			1,463
Stock-based compensation	—		—			16,862			—	—			—			16,862
Net loss	—		—			—			—	—			(123,145		)	(123,145		)
Balance at December 31, 2015	105,221,555		$	105		$	761,189		79,948	$	(357	)	$	(674,003	)	$	86,934
Issuance of restricted stock	974,325		1			—			—	—			—			1
Forfeiture of restricted stock	(341,603	)	—		*	—			—	—			—			—			*
Issuance of common stock in connection with the exercise of options	66,775		—			198										198
Reclassification of derivative liability to equity	—		—			51,404										51,404
Stock-based compensation	—		—			14,262			—	—			—			14,262
Net loss	—		—			—			—	—			(161,095		)	(161,095		)
Balance at December 31, 2016	105,921,052		$	106		$	827,053		79,948	$	(357	)	$	(835,098	)	$	(8,296	)
Issuance of restricted stock, net of tax withholdings	1,231,825		1			(303		)	—	—			—			(302		)
Forfeiture of restricted stock	(142,251	)	—			—			—	—			—			—			*
Retirement of restricted stock	(59,071	)	—			—			—	—			—			—
Issuance of common stock in connection with exercise of options	383,575		—		*	1,146			—	—			—			1,146
At-the-market issuance of common stock, net of $1,928 of issuance costs	11,937,174		12			75,607			—	—			—			75,619
Increase in value of conversion feature in connection with modification of convertible notes	—		—			5			—	—			—			5
Reclassification of derivative liability to equity	—		—			62,735			—	—			—			62,735
Stock-based compensation	—		—			18,438			—	—			—			18,438
Net loss	—		—			—			—	—			(163,440		)	(163,440		)
Balance at December 31, 2017	119,272,304		$	119		$	984,681		79,948	$	(357	)	$	(998,538	)	$	(14,095	)

*    Amount less than one thousand dollars.

The accompanying notes are an integral part of the consolidated financial statements.

F- 5

Keryx Biopharmaceuticals, Inc.

Consolidated Statements of Cash Flows for the Years Ended December 31,

(in thousands)

	2017			2016			2015
Cash flows from operating activities
Net loss	$	(163,440	)	$	(161,095	)	$	(123,145	)
Adjustments to reconcile loss to cash flows used in operating activities:
Stock-based compensation expense	18,272			13,989			16,500
Amortization of debt discount	62,965			34,227			11,357
Change in fair value of derivative liability	(225		)	4,718			1,102
Depreciation and amortization	937			1,005			596
Loss on disposal of fixed assets	10			54			507
Write-down of inventory to net realizable value	3,467			27,968			—
Cash received from landlord	—			637			1,276
Amortization of deferred lease incentive	(244		)	(244		)	(163		)
Deferred income taxes	(235		)	80			90
Changes in operating assets and liabilities:
Other current assets	(8,029		)	(340		)	1,262
Accounts receivable, net	(2,910		)	(1,580		)	(2,822		)
Accrued interest receivable	—			—			47
Inventory	(19,496		)	(2,300		)	(29,189		)
Other current liabilities	28			(238		)	—
Security deposits	—			—			(807		)
Other assets	(8,466		)	(11		)	355
Accounts payable and accrued expenses	24,023			88			(8,478		)
Deferred revenue	—			(3,526		)	3,112
Other liabilities	(146		)	(36		)	943
Net cash used in operating activities	(93,489		)	(86,604		)	(127,457		)
Cash flows from investing activities
Purchases of property, plant and equipment	(1,257		)	(2,074		)	(2,777		)
Investment in held-to-maturity short-term securities	—			—			—
Proceeds from maturity of held-to-maturity short-term securities	—			—			11,508
Net cash (used in) provided by investing activities	(1,257		)	(2,074		)	8,731
Cash flows from financing activities
Proceeds from issuance of common stock, net of commission	75,720			—			118,284
Proceeds from issuance of convertible senior notes	—			—			125,000
Payments for common stock issuance costs	(102		)	—			—
Proceeds from exercise of options	1,146			198			1,463
Payments for repurchase of common stock for employee tax withholding	(302		)	—			(15		)
Net cash provided by financing activities	76,462			198			244,732
Net (decrease) increase in cash and cash equivalents	(18,284		)	(88,480		)	126,006
Cash and cash equivalents at beginning of year	111,810			200,290			74,284
Cash and cash equivalents at end of year	$	93,526		$	111,810		$	200,290
Non-cash investing and financing activities
Reclassification of derivative liability to equity	62,735			51,404			—
Increase of receivable from landlord and deferred lease incentive	—			—			637

The accompanying notes are an integral part of the consolidated financial statements.

F- 6

Keryx Biopharmaceuticals, Inc.

Notes to the Consolidated Financial Statements

Unless the context requires otherwise, references in this report to “Keryx,” “Company,” “we,” “us” and “our” refer to Keryx Biopharmaceuticals, Inc. and our subsidiaries.

NOTE 1 – DESCRIPTION OF BUSINESS

OVERVIEW

We are a commercial stage biopharmaceutical company focused on bringing innovative medicines to people with kidney disease. Our long-term vision is to build a multi-product kidney care company. Our marketed product, Auryxia (ferric citrate) tablets, is an orally available, absorbable, iron-based medicine. Auryxia is approved by the U.S. Food and Drug Administration, or FDA, for two indications. Auryxia was originally approved in September 2014 for the control of serum phosphorus levels in patients with chronic kidney disease, or CKD, on dialysis. Additionally, in November 2017, the FDA approved Auryxia for the treatment of iron deficiency anemia in adults with CKD, not on dialysis. With two FDA-approved indications, we will leverage our U.S. clinical and commercial infrastructure to make Auryxia available to millions of people with CKD and either iron deficiency anemia or elevated levels of serum phosphorus, which is referred to as hyperphosphatemia. Ferric citrate is also approved in Japan under the trade name Riona and marketed by our Japanese partner, Japan Tobacco, Inc., or JT, and its subsidiary, Torii Pharmaceutical Co., Ltd., or Torii, and approved in Europe as Fexeric. We use the brand name Auryxia when we refer to ferric citrate for use in the approved indications in the United States. We refer to the product as ferric citrate when referring to its investigational use. Our vision of building a multi-product kidney care company includes expansion of our product portfolio with other medicines that can help patients with kidney disease.

OUR STRATEGY

Our business is focused on creating long-term stockholder value by bringing differentiated medicines to the market for the treatment of people with kidney disease that provide meaningful benefits to patients and their healthcare providers. The three pathways to our strategy are:

Maximize Auryxia's Potential

Auryxia is approved for two indications in the United States. We developed and subsequently launched Auryxia in the United States in late December 2014 following the FDA's approval of Auryxia for the control of serum phosphorus levels in adult patients with CKD on dialysis. In November 2017, the FDA approved Auryxia for the treatment of iron deficiency anemia in adult patients with CKD, not on dialysis. Auryxia is a non-calcium, non-chewable, orally-administered phosphate binder. Auryxia is the first FDA-approved oral iron medication that was specifically developed to treat iron deficiency anemia in CKD patients, not on dialysis. In the United States, there are approximately 450,000 adult patients with CKD requiring dialysis (referred to as End Stage Renal Disease, or ESRD), including approximately 350,000 adults currently taking a phosphate binder. We estimate that in the United States, approximately 1.7 million adults under the care of a nephrologist for CKD have iron deficiency anemia, not on dialysis, including approximately 650,000 adults currently being treated by nephrologists for iron deficiency anemia. Iron deficiency anemia is common in the non-dialysis population and the prevalence and severity increases as CKD advances. Iron deficiency anemia is symptomatic and can significantly impact quality of life. Auryxia is being marketed in the United States to nephrologists and renal care teams through our specialty salesforce and commercial infrastructure. Our field-based organization is aligned to 95 territories calling on target nephrologists and their associated dialysis centers. These target nephrologists treat CKD patients on dialysis and those not on dialysis. We believe strong fundamentals are in place to drive commercial adoption of Auryxia in the dialysis setting and maximize the potential of Auryxia as a treatment of iron deficiency anemia in adults with CKD, not on dialysis.

Expand Our Portfolio

We will evaluate opportunities to expand our product portfolio with other medicines that can help patients with kidney disease. Our business development activities include evaluating clinical-stage drug candidates, as well as commercially available medicines to in-license or acquire to add to our portfolio and provide us with new commercial opportunities. We will seek to add assets that leverage the infrastructure we have built to support our foundational medicine, Auryxia, including our clinical development and commercial teams. We believe these efforts have the potential to provide additional revenues to us in the future.

F- 7

Manage Growth and Talent

We are committed to creating a culture of success and continue to engage a workforce of high-quality and talented people to support our potential growth.

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RECENTLY ISSUED ACCOUNTING STANDARDS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we do not believe that the impact of recently issued standards that are not yet effective will have a material impact on our financial position or results of operations upon adoption.

In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606), a comprehensive new standard which amends revenue recognition principles and provides a single set of criteria for revenue recognition among all industries. The new standard provides a five-step framework whereby revenue is recognized when promised goods or services are transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires enhanced disclosures pertaining to revenue recognition in both interim and annual periods. The FASB issued several amendments to ASU No. 2014-09 which have the same effective date and transition date. These standards became effective for us on January 1, 2018 and will be adopted using the modified retrospective method. As of the date of this report, we have finalized our assessments over the impact that these new standards will have on our consolidated results of operations, financial position and disclosures, and have not identified any accounting changes that would materially impact the amount of reported revenues with respect to our product revenues. As of January 1, 2018, we expect to recognize an immaterial adjustment to retained earnings reflecting the cumulative impact for the accounting changes made upon adoption of these new standards.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. Under this standard, the measurement principle for inventory changed from lower of cost or market value to lower of cost and net realizable value. The standard defines net realizable value as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard is applicable to inventory that is accounted for under the first-in, first-out or average cost method and became effective for us on January 1, 2017. The adoption of this standard did not have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019 and must be applied using a modified retrospective transition approach which requires application of the new guidance for all periods presented. The adoption of this standard is expected to have a material impact on our financial position as it will increase the amount of our assets and liabilities. We do not expect this standard to have a material impact on our consolidated statement of operations.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This standard became effective for us on January 1, 2017. The adoptions of this standard did not have a material impact on our financial position, results of operations or statement of cash flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard became effective for us on January 1, 2018. This standard is not expected to have a material impact on our statement of cash flows upon adoption.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include our financial statements and those of our wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

F- 8

USE OF ESTIMATES

The preparation of our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, equity revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, judgments and assumptions.  We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances. These estimates are subject to an inherent degree of uncertainty, and as a result, actual results may differ from these estimates under different assumptions or conditions.

CASH AND CASH EQUIVALENTS

We consider liquid investments with original maturities of three months or less at the time of purchase to be cash and cash equivalents. At December 31, 2017, all of our cash and cash equivalents were held in commercial bank accounts.

INVENTORY

Inventory is stated at the lower of cost or estimated realizable value. We determine the cost of our inventory, which includes amounts related to materials, third-party contract manufacturing and packaging services, and manufacturing overhead, on a first-in, first-out basis. We capitalize inventory costs at our suppliers when, based on management’s judgment, the realization of future economic benefit is probable at each given supplier. We received FDA approval for Auryxia on September 5, 2014, and on that date began capitalizing inventory purchases of saleable product from certain suppliers. Prior to FDA approval, all saleable product purchased from such suppliers was included in research and development expense. For an approved product that requires additional regulatory approval for a new manufacturing process or at a new contract manufacturing site, we include costs of product purchases from such suppliers in research and development expense until such time that process or contract manufacturing site is approved.

ACCOUNTS RECEIVABLE, NET

We extend credit to our customers for product sales resulting in accounts receivable. Customer accounts are monitored for past due amounts. Past due accounts receivable determined to be uncollectible are written off against the allowance for doubtful accounts. Allowances for doubtful accounts, if necessary, are estimated based upon past due amounts, historical losses and existing economic factors, and are adjusted periodically. We offer cash discounts to certain of our customers, generally 2% of the sales price, as an incentive for prompt payment. The estimate of cash discounts is recorded at the time of sale. We account for the cash discounts by reducing revenue and accounts receivable by the amount of the discounts we expect our customers to take. The accounts receivable are reported in the consolidated balance sheets, net of the allowances for doubtful accounts, cash discounts and chargebacks. There was no allowance for doubtful accounts at December 31, 2017 and 2016.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets:

	Estimated useful life (years)
Office furniture and equipment	3-7
Computers, software and related equipment	3

Leasehold improvements are depreciated over the shorter of their useful life or the remaining term of the lease exclusive of renewal options.

F- 9

REVENUE RECOGNITION

Our commercial launch of Auryxia occurred in December 2014. We sell product to a limited number of major wholesalers, our Distributors, as well as certain pharmacies, or collectively, our Customers. Our Distributors resell the product to retail pharmacies for purposes of filling patient prescriptions. In accordance with current GAAP, our revenue recognition policy requires that: (i) there is persuasive evidence that an arrangement exists between us and the Customer, (ii) delivery has occurred, (iii) collectibility is reasonably assured, and (iv) the price is fixed or determinable. In the fourth quarter of 2016, we began to recognize revenue under the pull-through (ex-factory) method based on sales to our Customers as a result of our ability to reasonably estimate product returns.

Prior to the fourth quarter of 2016, we recognized revenue based on the resale of Auryxia for the purposes of filling patient prescriptions, and not based on initial sales from us to our Customers as we did not have sufficient history such that we could reliably estimate returns based on sales to our Customers. As a result, prior to the fourth quarter of 2016, we deferred Auryxia revenue recognition until the earlier of the product being resold for purposes of filling patient prescriptions and the expiration of the right of return (twelve months after the expiration date of the product). The deferred revenue was recorded net of discounts, rebates, and chargebacks.

We have written contracts with our Customers and delivery occurs when a Customer receives Auryxia. We evaluate the creditworthiness of each of our Customers to determine whether revenues can be recognized upon delivery, subject to satisfaction of the other requirements, or whether recognition is required to be deferred until receipt of payment. In order to conclude that the price is fixed or determinable, we must be able to (i) calculate our gross product sales from the sales to Customers and (ii) reasonably estimate our related sales allowances. We calculate gross product sales based on the wholesale acquisition cost that we charge our Customers for Auryxia. We estimate our net product sales by deducting reserve estimates from our gross product sales related to (a) trade allowances, such as invoice discounts for prompt payment and distributor fees, (b) government and private payor rebates, chargebacks and discounts, such as Medicaid reimbursements, (c) expected product returns and (d) costs of incentives offered to certain indirect customers, including patients.

Trade Allowances: We generally provide discounts on Auryxia sales to our Customers in the form of a discount for prompt payment of invoices or a discount directly off the invoice amount. The prompt-pay discount is generally given for payment made within 35 days. Based on our judgment and industry experience, we expect our Customers to earn these discounts. We deduct the full amount of these discounts from our gross product sales and accounts receivable at the time such revenues are recognized. We also pay fees to our Distributors for distribution services which are generally based on a contractual percentage of total purchases made by each Distributor during the period. These fees are also deducted from our gross product sales at the time such revenues are recognized.

Rebates and Chargebacks: We contract with various commercial and Medicare Part D private insurance providers, Medicaid and other government agencies, or collectively, our Third-party Payors, so that Auryxia will be eligible for partial or full reimbursement from such Third-party Payors. We estimate the rebates and chargebacks we will provide to Third-party Payors and deduct these estimated amounts from our gross product sales at the time the revenues are recognized. We estimate the rebates and chargebacks that we will provide to Third-Party Payors based upon (i) our contracts with these Third-Party Payors, (ii) the government-mandated discounts applicable to government-funded programs, and (iii) information obtained from our Customers and other third parties regarding the payor mix for Auryxia.

Product Returns: Consistent with industry practice, we generally offer our Customers a limited right to return our Auryxia based on the product’s expiration date. Our Customers have the right to return Auryxia during the 18-month period beginning six months prior to the labeled expiration date and ending twelve months after the labeled expiration date. Currently the expiration date for Auryxia is eighteen months after it has been converted into tablet form, which is the last step in the manufacturing process for Auryxia and generally occurs within a few months before Auryxia is delivered to Customers. We estimate product returns based on the historical return patterns and we track actual returns by individual manufacturing lots. We expect that Distributors and pharmacies will not stock significant inventory due to the cost of the product, the expense to store the product and the fact that the product is readily available for distribution. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as it becomes available. As of December 31, 2017, we have experienced a relatively limited number of product returns; however, our returns experience may change over time. As we continue to gain more historical experience with actual returns, we may be required to make a future adjustment to our product returns estimate, which would result in a corresponding change to our net product sales in the period of adjustment and could be significant.

F- 10

Other Incentives: Other incentives that we offer to indirect customers include co-pay assistance rebates provided by us to commercially insured patients who have coverage for Auryxia and who reside in states that permit co-pay assistance programs, and vouchers for a small supply of Auryxia at no patient cost. Our co-pay assistance program is intended to reduce each participating patient’s portion of the financial responsibility for Auryxia’s purchase price to a specified dollar amount. Based upon the terms of the program and data obtained from the third parties which administer the program, we estimate the co-pay assistance amounts and the percentage of patients that we expect to participate in the program in order to establish our accruals for co-pay assistance rebates. We deduct these estimated amounts from our gross product sales at the time the revenues are recognized.

Classification of product sales allowances and accruals

Allowances against receivable balances primarily relate to prompt-pay discounts, chargebacks and product returns and are recorded at the time of sale, resulting in a reduction in product sales revenue and the recording of product sales receivables net of allowances. Accruals related to Medicaid, Medicare Part D and other government and commercial rebates, as well as wholesaler fees, are recorded at the time of sale, resulting in a reduction in product sales and the recording of an increase in accrued expenses.

Our U.S. Auryxia product sales for the years ended December 31, 2017, 2016 and 2015 were offset by provisions for allowances and accruals as set forth in the tables below.

(in thousands)	2017		Percent of gross Auryxia product sales	2016		Percent of gross Auryxia product sales	2015		Percent of gross Auryxia product sales
Gross Auryxia product sales	$	111,845		$	44,557		$	16,295
Less provision for product sales allowances and accruals
Trade allowances	13,093		12%	5,157		12%	1,897		12%
Rebates and chargebacks	40,482		36%	10,703		24%	2,418		15%
Product returns	1,362		1%	879		2%	—		—%
Other incentives (1)	1,394		1%	645		1%	1,839		11%
Total	56,331		50%	17,384		39%	6,154		38%
Net U.S. Auryxia product sales	$	55,514		$	27,173		$	10,141

⁽¹⁾  Includes co-pay assistance and voucher rebates.

We recognize license revenue in accordance with Accounting Standards Codification 605, Revenue Recognition. We analyze each element of our licensing agreement to determine the appropriate revenue recognition. The terms of the license agreement may include payment to us of non-refundable up-front license fees, milestone payments if specified objectives are achieved, and/or royalties on net product sales. We recognize revenue from upfront payments over the period of significant involvement under the related agreements unless the fee is in exchange for products delivered or services rendered that represent the culmination of a separate earnings process and no further performance obligation exists under the contract. We recognize milestone payments as revenue upon the achievement of specified milestones only if (1) the milestone payment is non-refundable, (2) substantive effort is involved in achieving the milestone, (3) the amount of the milestone is reasonable in relation to the effort expended or the risk associated with achievement of the milestone, and (4) the milestone is at risk for both parties. If any of these conditions are not met, we defer the milestone payment and recognize it as revenue over the estimated period of performance under the contract.

For arrangements for which royalty revenue information becomes available and collectibility is reasonably assured, we recognize revenue during the applicable period earned. When collectibility is reasonably assured but a reasonable estimate of royalty revenue cannot be made, the royalty revenue is recognized in the quarter that the licensee provides the written report and related information to us.

F- 11

The following table sets forth customers or partners who represented 10% or more of our total revenues for 2017, 2016 and 2015:

	December 31, 2017		December 31, 2016		December 31, 2015
Fresenius Medical Care Rx	29	%	22	%	15	%
McKesson Corporation	19	%	31	%	23	%
DaVita Rx	18	%	10	%	19	%
Cardinal Health, Inc.	15	%	11	%	24	%
AmerisourceBergen Drug Corporation	15	%	23	%	17	%

COST OF GOODS SOLD

Cost of goods sold includes the cost of active pharmaceutical ingredient, or API, for Auryxia on which product sales were recognized during the period, as well as the associated costs for tableting, packaging, shipment, insurance and quality assurance, as well as any idle capacity charges we may incur at our contract manufacturers and write-offs of inventory that fails to meet specifications or is otherwise no longer suitable for commercial manufacture. Cost of goods sold also includes royalties due to the licensor of Auryxia related to the U.S. product sales recognized during the period, as well as a manufacturing fee related to API manufactured by us in the licensed territory through September 2017.

LICENSE EXPENSE

License expense include royalty and other expenses due to the licensor of Auryxia related to our sublicense agreement with JT and Torii. Royalty expenses are directly related to the net sales recognized by JT and Torii during the period and is recognized in the same period as the license revenue is recorded. Other expenses are recognized in the period they are incurred.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred. Inventory expenditures prior to regulatory approval of the product candidate or prior to regulatory approval of the contract manufacturing site, if required, are recorded as research and development expense as incurred. The capitalization of inventory for our product candidates commences when management determines that the realization of future economic benefit is probable. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered, or the related services are performed, subject to an assessment of recoverability. We make estimates of costs incurred in relation to external clinical research organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period. We review and accrue CRO expenses and clinical trial expenses based on work performed and rely upon estimates of those costs applicable to the stage of completion of a trial. Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these contracts may be uneven and depend on factors such as the achievement of certain events, the successful recruitment of patients, and the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of expenses in our consolidated financial statements to the actual services received and efforts expended. As such, expenses related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific clinical trial contract.

INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of our deferred tax assets will not be realized.

F- 12

We, and our subsidiaries, file income tax returns in the United States federal jurisdiction and in various states. Our subsidiary, Keryx Biopharma UK Ltd., files annual returns and accounts in the United Kingdom. We have tax net operating loss carryforwards that are subject to examination for a number of years beyond the year in which they were generated for tax purposes. Since a portion of these net operating loss carryforwards may be utilized in the future, many of these net operating loss carryforwards will remain subject to examination.

We recognize interest and penalties related to uncertain income tax positions in income tax expense.

Our lack of earnings history and the uncertainty surrounding our ability to generate taxable income prior to the reversal or expiration of such deferred tax liability were the primary factors considered by management when recording the valuation allowance against our deferred tax assets.

We are not aware of any unrecorded tax liabilities which would materially impact our financial position or our results of operations.

STOCK-BASED COMPENSATION

We grant stock options and restricted stock awards to employees, directors and consultants. We estimate an expected forfeiture rate and only recognize expense for those equity awards that are expected to vest. Forfeitures are estimated based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes model has several inputs, including the volatility in the price of our stock, the risk-free interest rate, the expected term of the option, the closing market price of our stock on the grant date and the exercise price. We base our estimates of our stock price volatility on the historical volatility of our common stock; however, these estimates are neither predictive nor indicative of the future performance of our stock. For purposes of the fair value calculation, we assume that no dividends will be paid during the life of the stock options. The aggregate fair value of awards calculated using the Black-Scholes option pricing model is generally expensed on a straight‑line basis over the requisite service period. The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management judgment.

The aggregate fair value of restricted stock granted to our employees and directors is determined based upon the quoted closing market price per share on the date of grant, adjusted for estimated forfeitures. This aggregate fair value is generally expensed on a straight‑line basis over the requisite service period.

The total stock-based compensation recorded in a given period is dependent upon the assumptions utilized. As a result, if other assumptions had been used, our recorded stock-based compensation expense could have been materially different from that reported. In addition, because some of the stock options issued to employees, consultants and other third-parties vest upon the achievement of certain performance conditions or milestones, the total expense is uncertain.

BASIC AND DILUTED NET LOSS PER COMMON SHARE

Basic net loss per share is computed by dividing the losses allocable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share does not reflect the effect of shares of common stock to be issued upon the exercise of stock options, as their inclusion would be anti-dilutive. The options outstanding as of December 31, 2017, 2016 and 2015, which are not included in the computation of net loss per share amounts, were 11,967,815, 8,677,998 and 5,411,557, respectively.

IMPAIRMENT

Long-lived assets are reviewed for an impairment loss when circumstances indicate that the carrying value of long-lived tangible and intangible assets with finite lives may not be recoverable. Management’s policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating performance criteria as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event, we make certain assumptions in determining the impairment amount. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset or used in its disposal. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized.

F- 13

In 2006, ADI, our wholly-owned subsidiary, completed the acquisition of Accumin™, a novel, patent protected, diagnostic for the direct measurement of total, intact urinary albumin, from AusAm Biotechnologies, Inc. We accounted for the ADI transaction as a purchase. The excess of the purchase price over the net assets acquired in the ADI transaction represented goodwill, which was allocated to our Products segment based on the proposed synergies with our then existing drug pipeline activities. In September 2008, we terminated our license agreement related to the ADI product.

Goodwill is reviewed for impairment annually, as of December 31, or when events arise that could indicate that an impairment exists. We test for goodwill impairment by comparing the fair value of the reporting unit with the unit’s carrying value, including goodwill. When the carrying value of the reporting unit is greater than fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. As of December 31, 2017, 2016 and 2015, management conducted its annual assessments of goodwill and concluded that there were no impairments. We will continue to perform impairment tests annually, at December 31, and whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable.

CONCENTRATIONS OF CREDIT RISK

We do not have significant off-balance-sheet risk or credit risk concentrations. We maintain our cash and cash equivalents with multiple financial institutions. See Note 3 – Fair Value Measurements.

Our accounts receivable, net at December 31, 2017 and 2016 represent amounts due to the Company from customers. We perform ongoing credit evaluations of our customers and generally do not require collateral. The following table sets forth customers who represented 10% or more of our total accounts receivable, net as of December 31, 2017 and 2016:

	December 31, 2017		December 31, 2016
Fresenius Medical Care Rx	43	%	22	%
Cardinal Health, Inc.	32	%	11	%
AmerisourceBergen Drug Corporation	26	%	23	%
McKesson Corporation	21	%	31	%
DaVita Rx	—	%	10	%

NOTE 3 – FAIR VALUE MEASUREMENTS

We measure certain financial assets and liabilities at fair value on a recurring basis in our statements using a fair value hierarchy. The hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

• Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities;

• Level 2—inputs other than Level 1 quoted prices that are directly or indirectly observable; and

• Level 3—unobservable inputs that are not corroborated by market data.

The following table provides the fair value measurements made on a recurring basis of applicable financial assets as of December 31, 2017 and 2016:

	Financial assets at fair value as of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3
Assets:
Cash equivalents (1)	$	1,895	$	—	$	—
Total assets	$	1,895	$	—	$	—

F- 14

	Financial assets at fair value as of December 31, 2016
(in thousands)	Level 1		Level 2		Level 3
Assets:
Cash equivalents (1)	$	107,084	$	—	$	—
Total assets	$	107,084	$	—	$	—

⁽¹⁾  Cash equivalents as of December 31, 2017 and 2016 consisted of institutional money market funds. The carrying value of our money market funds approximates fair value due to their short-term maturities.

Debt

In October 2015, we issued $125 million in Convertible Senior Notes due 2020, or the Notes, in a private financing to funds managed by The Baupost Group, L.L.C., or Baupost. As of December 31, 2017 and 2016 the fair value of our Notes was $155.4 million and $195.9 million, respectively, which differs from their carrying value. The fair value of our Notes is influenced by our stock price and stock price volatility. See Note 8 – Debt for additional information on our debt obligations.

NOTE 4 – INVENTORY

Inventory consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Raw materials	$	469	$	418
Work in process	25,160		11,430
Finished goods	3,066		833
Total inventory	$	28,695	$	12,681

During the years ended December 31, 2017 and 2016, we wrote off approximately $3.5 million and $28.0 million, respectively, of inventory that was determined to be no longer suitable for commercial manufacture, which was recorded to cost of goods sold. We did not have any write-offs of inventory during the year ended December 31, 2015.

Total inventory as of December 31, 2017 increased by $16.0 million as compared to December 31, 2016 primarily as a result of inventory build-up in connection with capacity expansion initiatives, partially offset by inventory sold to customers.

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT

(in thousands)	December 31, 2017			December 31, 2016
Leasehold improvements	$	4,353		$	3,916
Office furniture and equipment	1,544			747
Computers, software and related equipment	779			787
	6,676			5,450
Accumulated depreciation	(2,155		)	(1,239		)
Net book value	$	4,521		$	4,211

Depreciation expense for the years ended December 31, 2017, 2016 and 2015 was $0.9 million, $1.0 million and $0.6 million, respectively.

F- 15

NOTE 6 – OTHER ASSETS

Other current assets

Other current assets consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Prepaid manufacturing costs	$	7,646	$	289
Prepaid selling, general and administrative expenses	2,265		1,528
Prepaid research and development expenses	1,288		1,353
Total other current assets	$	11,199	$	3,170

Prepaid manufacturing costs as of December 31, 2017 primarily relate to upfront payments to our contract manufacturers related to 2018 production of inventory.

Other assets, net

Other assets, net consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Deferred manufacturing costs	$	7,338	$	—
Deposits	1,099		1,055
Long-term prepaid manufacturing costs	1,000		—
Deferred registration fees	140		56
Total other long-term assets	$	9,577	$	1,111

Deferred costs as of December 31, 2017 consisted of amounts paid or payable under contract manufacturing agreements, including a $5.0 million milestone related to a facility construction agreement and $2.3 million in product premiums payable by us to our contract manufacturer. We capitalize certain expenses as deferred costs related to agreements with a contract manufacturer in connection with the construction of an expanded manufacturing facility. These costs will be capitalized as incurred and will begin to be expensed at such time that we begin to receive product from the newly-constructed facility. These costs will be expensed ratably over the supply period based on anticipated product to be received from the new facility. At December 31, 2017, the amounts included in deferred costs were also recorded as an accrued expense on our consolidated balance sheet as they had not been paid prior to year-end.

NOTE 7 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Commercial rebates and fees	$	16,362	$	4,616
Accrued manufacturing expenses	9,434		804
Accrued compensation and related liabilities	7,504		8,190
Accounts payable	6,474		2,225
Professional, license, and other fees and expenses	5,257		5,355
Total accounts payable and accrued expenses	$	45,031	$	21,190

F- 16

NOTE 8 – DEBT

In October 2015, we completed the sale of $125 million of Notes due 2020, in a private placement, or the Private Placement, to funds managed by Baupost pursuant to a Notes Purchase Agreement dated October 14, 2015. The Notes were issued under an Indenture dated as of October 15, 2015, with The Bank of New York Mellon Trust Company, N.A. as trustee, or the Trustee. Under the terms of the Indenture, the Notes may be converted into shares of our common stock at the discretion of Baupost. The indenture subjects us to certain financial and business covenants and contains restrictions on the payments of cash dividends.

The Indenture contains customary terms and events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving us) occurs and is continuing, the Trustee by notice to us, or the holders of at least 25% in aggregate principal amount of the outstanding Notes by written notice to us and the Trustee, may declare 100% of the principal on all of the Notes to be due and payable. Upon such a declaration of acceleration, such principal will be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving us, 100% of the principal on all of the Notes will become due and payable automatically.

Further, in connection with the Private Placement, we entered into a Registration Rights Agreement with the purchasers of the Notes (the “Registration Rights Agreement”), pursuant to which we agreed to (i) file a registration statement (the “Resale Registration Statement”) with the SEC covering the resale of the Notes and the underlying common stock which the Notes are convertible into upon the written request of Baupost, and (ii) use commercially reasonable efforts, subject to receipt of necessary information from all the purchasers of the Notes, to cause the SEC to declare the Resale Registration Statement effective. Further, the Registration Rights Agreement permits Baupost to demand from time to time that we file a shelf Registration Statement pursuant to Rule 415 of the Securities Act from which any number of shelf takedowns may be conducted upon written request from Baupost. Finally, the Registration Rights Agreement affords Baupost certain piggyback registration rights.

The Notes are convertible at the option of Baupost at an initial conversion rate of 267.3797 shares of our common stock per $1,000 principal amount, equal to a conversion price of $3.74 per share, which represents the last reported sale price of our stock on October 14, 2015. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events. Further, upon the occurrence of certain fundamental changes involving us, Baupost may require us to repurchase for cash all or part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased.

Per the terms of the Notes, a portion of the Notes was contingently convertible into cash if our stockholders did not approve an increase in the number of authorized shares of our common stock by July 1, 2016. In accordance with accounting guidance for debt with a conversion option, we separated the conversion option from the debt instrument and accounted for it separately as a derivative liability, due to the Notes initially being partially convertible to cash at the option of Baupost. We allocated the proceeds between the debt component and the embedded conversion option (the derivative) by performing a valuation of the derivative as of the transaction date, which was determined based on the difference between the fair value of the Notes with the conversion option and the fair value of the Notes without the conversion option. The fair value of the derivative liability was recognized as a debt discount and the initial carrying amount of the convertible notes represented the difference between the proceeds from the issuance of the Notes and the fair value of the derivative liability on the date of issuance. The excess of the principal amount of the debt component over its carrying amount (“debt discount”) was amortized to interest expense using the effective interest method over the expected life of the debt.

We determined the expected life of the debt was equal to the period through July 1, 2016, as this represents the point at which a portion of the Notes was initially contingently convertible into cash. Accordingly, for the year ended December 31, 2016, $34.2 million of interest expense was recognized related to the Notes, all of which was attributable to the amortization of the debt discount.

F- 17

Following our 2016 Annual Meeting of Stockholders held on May 25, 2016, we filed a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of Delaware to increase the number of authorized shares of our common stock to allow for the full conversion of the Notes into our common stock. On April 10, 2017, we entered into the First Supplemental Indenture, or the First Supplement, to the Indenture. Under the terms of the First Supplement, the Notes issued under the Indenture were not convertible by the holders thereof until on or after June 8, 2017, except in connection with a “fundamental change” as defined in the Indenture. After June 8, 2017, the Notes are convertible entirely into shares of our common stock or cash depending upon the number of shares of our common stock authorized at the time of such conversion. At our 2017 Annual Meeting of Stockholders held on June 8, 2017, our stockholders ratified the filing and effectiveness of the certificate of amendment filed in May 2016. In addition, at the meeting our stockholders also approved a separate amendment to our certificate of incorporation to increase the number of authorized shares of our common stock to 230,000,000 shares. As a result, the full amount of the Notes is convertible into shares of our common stock. The holders of the Notes may, at their option, convert the Notes until the maturity date thereof.

In accordance with accounting guidance for debt modifications and exchanges, we assessed the terms of the First Supplement and determined that it resulted in a modification. During the three months ended June 30, 2017, we separated the conversion option from the debt instrument and accounted for it separately as a derivative liability, due to the Notes being contingently convertible to cash at the option of Baupost per the terms of the First Supplement. We allocated the proceeds between the debt component and the embedded conversion option (the derivative) by performing a valuation of the derivative as of the date of the First Supplement, which was determined based on the difference between the fair value of the Notes with the conversion option and the fair value of the Notes without the conversion option. The fair value of the derivative liability was recognized as a debt discount and the carrying amount of the convertible senior notes represented the difference between the principal amount of the Notes and the fair value of the derivative liability on the date of the First Supplement. The excess of the principal amount of the debt component over its carrying amount, or debt discount, was amortized to interest expense using the effective interest method over the expected life of the debt. We determined the expected life of the debt was equal to the period through June 8, 2017, as this represented the point at which the Notes was contingently convertible into cash.

For the year ended December 31, 2017, $63.0 million of interest expense was recognized related to the Notes. As of December 31, 2017 and 2016, the balance of the Notes and the carrying value of the Notes was $125 million, and the fair value of the Notes was $155.4 million and $195.9 million, respectively.

NOTE 9 – STOCKHOLDERS’ (DEFICIT) EQUITY

Preferred Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock, $0.001 par value, with rights senior to those of our common stock.

Common Stock

On January 21, 2015, we announced the pricing of an underwritten public offering in which we sold 10,541,667 shares of our common stock at a price of $12.00 per share for gross proceeds of approximately $126.5 million. Net proceeds from this offering were approximately $118.3 million, net of underwriting discounts and offering expenses of approximately $8.2 million. The shares were sold under Registration Statements (Nos. 333-201605 and 333-201639) on Form S-3 and Form S-3MEF, respectively, filed by us with the SEC.

Equity Incentive Plans

We have in effect the following stock option and incentive plans.

a. The 1999 Stock Option Plan was adopted in November 1999. Under the 1999 Stock Option Plan, our board of directors could grant stock-based awards to directors, consultants and employees. The plan authorizes grants to purchase up to 4,230,000 shares of authorized but unissued common stock. The plan limits the term of each option to no more than 10 years from the date of the grant. The plan permits the board of directors or a committee appointed by the board to administer the plan. The administrator has the authority, in its discretion, to determine the terms and conditions of any option granted to a service provider, including the vesting schedule. As of December 31, 2017, no additional shares of our common stock may be issued under the 1999 Stock Option Plan.

b. The 2004 Long-Term Incentive Plan was adopted in June 2004 by our stockholders. Under the 2004 Long-Term Incentive Plan, the compensation committee of our board of directors is authorized to grant stock-based awards to directors,

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consultants and employees. The 2004 plan authorizes grants to purchase up to 4,000,000 shares of authorized but unissued common stock. The plan limits the term of each option to no more than 10 years from the date of grant. As of December 31, 2017, no additional shares of our common stock may be issued under the 2004 Long-Term Incentive Plan.

c. The 2007 Incentive Plan was adopted in June 2007 by our stockholders. Under the 2007 Incentive Plan, the compensation committee of our board of directors is authorized to grant stock-based awards to directors, consultants, employees and officers. The 2007 Incentive Plan authorizes grants to purchase up to 6,000,000 shares of authorized but unissued common stock. The plan expires 10 years from adoption and limits the term of each option to no more than 10 years from the date of grant. As of December 31, 2017, up to an additional 45,754 shares may be issued under the 2007 Incentive Plan.

d. The 2009 CEO Incentive Plan was adopted in May 2009. Under the 2009 CEO Incentive Plan, our board of directors granted an option to Ron Bentsur, our former Chief Executive Officer, to purchase up to 600,000 shares of authorized but unissued common stock. The option has a term of 10 years from the date of grant. During the year ended December 31, 2015, the option was exercised in full.

e. The 2013 Incentive Plan was adopted in June 2013 by our stockholders at our 2013 Annual Meeting of Stockholders. The 2013 Incentive plan was amended by our stockholders at a special meeting of our stockholders in November 2014, which increased the number of authorized shares issuable thereunder from 3,500,000 to 9,500,000, and at our 2016 Annual Meeting of Stockholders held on May 25, 2016, which increased the number of authorized shares issuable thereunder from 9,500,000 to 18,000,000. Under the 2013 Incentive Plan, the Compensation Committee of the Company’s Board of Directors is authorized to grant stock-based awards to directors, officers, employees and consultants. The plan expires 10 years from adoption and limits the term of each option to no more than 10 years from the date of grant. As of December 31, 2017, up to an additional 1,980,669 shares may be issued under the 2013 Incentive Plan.

Total shares available for the issuance of stock options or other stock-based awards under our stock option and incentive plans were 2,026,423 shares at December 31, 2017.

Stock Options

The following table summarizes stock option activity for all plans for the year ended December 31, 2017:

	Number of shares		Weighted- average exercise price		Weighted- average remaining contractual term	Aggregate Intrinsic Value
Outstanding at December 31, 2016	8,677,998		$	7.28	8.12	$	8,840,412
Granted	4,669,150		5.46
Exercised	(383,575	)	2.99			$	1,767,281
Forfeited or Expired	(995,758	)	7.04
Outstanding at December 31, 2017	11,967,815		$	6.73	8.00	$	2,395,566
Vested and expected to vest at December 31, 2017	7,963,262		$	7.42	7.61	$	2,303,825
Exercisable at December 31, 2017	4,816,619		$	8.61	6.80	$	1,678,842

The weighted-average grant-date fair value of stock options granted during 2017, 2016 and 2015 was $3.91, $3.47, and $8.47, respectively. The aggregate intrinsic value of options exercised during 2017, 2016 and 2015, measured as of the exercise date, was approximately $1.8 million, $0.2 million, and $8.6 million, respectively.

Upon the exercise of stock options, we issue new shares of our common stock. As of December 31, 2017, 3,753,750 options issued to employees are unvested, milestone-based options.

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Restricted Stock

Certain employees, directors and consultants have been awarded restricted stock under our equity incentive plans. The time-vesting restricted stock grants vest primarily over a period of three to four years. The following table summarizes restricted stock activity for the year ended December 31, 2017:

	Number of Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at December 31, 2016	1,524,884		$	7.07	$	8,935,820
Granted	1,231,825		5.71
Vested	(671,090	)	6.49		$	4,157,589
Forfeited or Retired	(201,322	)	7.04
Outstanding at December 31, 2017	1,884,297		$	6.39	$	8,761,981

The weighted-average grant-date fair value of restricted stock granted during 2017, 2016 and 2015 was $5.71, $3.86, and $4.76, respectively. The total fair value of restricted stock that vested during 2017, 2016 and 2015 was $4.2 million, $2.4 million and $4.7 million, respectively.

As of December 31, 2017, 310,000 shares of restricted stock issued to employees are unvested, milestone-based shares.

Stock-Based Compensation

The following tables summarize stock-based compensation expense information about equity incentive grants for the years ended December 31, 2017, 2016 and 2015:

	For the years ended December 31,
(in thousands)	2017		2016		2015
Cost of goods sold	$	167	$	125	$	14
Research and development expenses	2,466		2,687		3,519
Selling, general and administrative expenses	15,639		11,177		12,967
	$	18,272	$	13,989	$	16,500

	For the years ended December 31,
(in thousands)	2017		2016		2015
Stock-based compensation expense associated with restricted stock	$	5,738	$	4,159	$	5,073
Stock-based compensation expense associated with stock options	12,534		9,830		11,427
	$	18,272	$	13,989	$	16,500

Stock-based compensation costs capitalized as part of inventory were immaterial for the years ended December 31, 2017, 2016 and 2015.

The fair value of stock options granted is estimated at the date of grant using the Black-Scholes pricing model. The expected term of options granted is derived from historical data and the expected vesting period. Expected volatility is based on the historical volatility of our common stock. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. We have assumed no expected dividend yield, as dividends have never been paid to stock or option holders and will not be paid for the foreseeable future.

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Black-Scholes Option Valuation Assumptions	2017		2016		2015
Risk-free interest rates	2.1	%	1.5	%	1.7	%
Dividend yield	—	%	—	%	—	%
Volatility	84.1	%	81.4	%	89.2	%
Weighted-average expected term	6.0 years		6.0 years		6.0 years

We used historical information to estimate forfeitures within the valuation model. As of December 31, 2017, there was $9.0 million and $5.5 million of total unrecognized compensation cost related to non-vested stock options and restricted stock, respectively, which is expected to be recognized over weighted-average periods of 1.9 years and 1.6 years, respectively. These amounts do not include, as of December 31, 2017, 3,753,750 options outstanding and 310,000 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones. Stock-based compensation will be measured and recorded if and when it is probable that the milestone will occur.

During the year ended December 31, 2017, we recognized $4.6 million of stock-based compensation expense related to milestone-based awards which vested in connection with certain corporate milestones.

Sales Agreement

On November 9, 2016, we entered into a Controlled Equity Offering^SM Sales Agreement, or the Sales Agreement, with Cantor Fitzgerald & Co., as sales agent, or Cantor Fitzgerald, pursuant to which we were initially able to offer and sell, from time to time, through Cantor Fitzgerald, shares of our common stock having an aggregate offering price of up to $75.0 million.

We are not obligated to sell any shares under the Sales Agreement. Subject to the terms and conditions of the Sales Agreement, Cantor Fitzgerald will use commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations and the rules of the Nasdaq Capital Market to sell shares from time to time based upon our instructions, including any price, time or size limits specified by us. Under the Sales Agreement, Cantor Fitzgerald may sell shares by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act. Cantor Fitzgerald’s obligations to sell shares under the Sales Agreement are subject to satisfaction of certain conditions. We will pay Cantor Fitzgerald a commission of up to 3.0% of the aggregate gross proceeds from each sale of shares and have agreed to provide Cantor Fitzgerald with customary indemnification and contribution rights. We have also agreed to reimburse Cantor Fitzgerald for the reasonable and documented fees and expenses of its outside legal counsel, not to exceed $50,000 in the aggregate, in connection with entering into the Sales Agreement.

We filed a registration statement on Form S-3 (No. 333-214513) which was declared effective by the SEC on December 6, 2016, which included a prospectus covering the sale of the $75.0 million shares which could be sold by Cantor Fitzgerald under the Sales Agreement. In July 2017, we filed a new prospectus supplement with the SEC relating to the Sales Agreement under which we may offer and sell, from time to time, through Cantor Fitzgerald, shares of our common stock having an additional aggregate offering price of up to $75.0 million. During the year ended December 31, 2017, we sold 11,937,174 shares under the Sales Agreement for aggregate net proceeds of $75.7 million, which included all of the initial $75.0 million shares issuable pursuant to the Sales Agreement. As of the date hereof, we may sell up to an additional $72.4 million under the Sales Agreement pursuant to the July 2017 prospectus supplement. The initial $75.0 million of common stock issued pursuant to the Sales Agreement and the additional $75.0 million of common stock issuable pursuant to the Sales Agreement are included as part of the $250 million of our securities we registered on the registration statement on Form S-3 (No. 333-214513) we filed in November 2016, which the SEC declared effective on December 6, 2016.

The offering of shares of our common stock pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. We and Cantor Fitzgerald may each terminate the Sales Agreement at any time upon ten days’ prior notice.

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NOTE 10 – LICENSE AGREEMENTS

In November 2005, we entered into a license agreement with Panion & BF Biotech, Inc. (“Panion”). Under the license agreement, we acquired the exclusive worldwide rights, excluding certain Asian-Pacific countries, for the development and marketing of ferric citrate. To date, we have paid an aggregate of $11.6 million of milestone payments to Panion, including $2.0 million paid upon European marketing approval in 2015. In addition, Panion is eligible to receive royalty payments based on a mid-single digit percentage of net sales of ferric citrate.

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 commercialization of ferric citrate in Japan, which is being marketed in the United States under the trade name Auryxia. JT and Torii are responsible for the future development and commercialization costs in Japan. Effective as of June 8, 2009, we entered into an Amended and Restated Sublicense Agreement with JT and Torii, which, among other things, provided for the elimination of all significant on-going obligations under the sublicense agreement.

In January 2013, JT and Torii filed its new drug application with the Japanese Ministry of Health, Labour and Welfare for marketing approval of ferric citrate in Japan for the treatment of hyperphosphatemia in patients with CKD.

In January 2014, JT and Torii received manufacturing and marketing approval of ferric citrate from the Japanese Ministry of Health, Labour and Welfare. Ferric citrate, launched in May 2014 and being marketed in Japan by JT’s subsidiary, Torii Pharmaceutical Co., Ltd., under the brand name Riona, is indicated as an oral treatment for the improvement of hyperphosphatemia in patients with CKD. Under the terms of the license agreement with JT and Torii, we received a non-refundable payment of $10.0 million in February 2014 for the achievement of the marketing approval milestone. As a result, we recorded license revenue of $10.0 million in accordance with our revenue recognition policy, which is included in the year ended December 31, 2014. We also receive royalty payments based on a tiered double-digit percentage of net sales of Riona in Japan escalating up to the mid-teens, as well as up to an additional $55.0 million upon the achievement of certain annual net sales milestones. In accordance with our revenue recognition policy, royalty revenues are recognized in the quarter that JT and Torii provide their written report and related information to us regarding sales of Riona, which generally will be one quarter following the quarter in which the underlying sales by JT and Torii occurred. For the years ended December 31, 2017 and 2016, we recorded $5.1 million and $4.8 million, respectively, in license revenue related to royalties earned on net sales of Riona in Japan. We record the associated mid-single digit percentage of net sales royalty expense due Panion, the licensor of ferric citrate, in the same period as the royalty revenue from JT and Torii is recorded. For the years ended December 31, 2017 and 2016, we recorded $3.1 million and $2.9 million, respectively, in license expense related to royalties due to the licensor of ferric citrate relating to sales of Riona in Japan.

NOTE 11 – INCOME TAXES

In December 2017, H.R.1, known as the Tax Cuts and Jobs Act, was signed into law. The Tax Cuts and Jobs Act, among other items, reduces the corporate income tax rate from 35% to 21%, effective January 1, 2018. As such, the Company has completed a revaluation of the Company's net deferred tax assets. The Company's deferred tax assets, net of deferred tax liabilities, represent expected corporate tax benefits anticipated to be realized in the future. The reduction in the federal corporate tax rate reduces these benefits.

The Company has evaluated the impact of the Tax Cuts and Jobs Act and has determined that this results in a reduction in the Company's deferred tax asset of $111.7 million in the fourth quarter of 2017. However, our lack of earnings history and the uncertainty surrounding our ability to generate taxable income prior to the utilization of the deferred tax assets is offset in full by a valuation allowance.

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. In determining the need for a valuation allowance, management reviews both positive and negative evidence, including current and historical results of operations, future income projections and the overall prospects of our business. Based upon management’s assessment of all available evidence, we believe that it is more-likely-than-not that the deferred tax assets will not be realizable; and therefore, a full valuation allowance is established. The valuation allowance for deferred tax assets was $216.0 million and $289.7 million as of December 31, 2017 and 2016, respectively, a decrease of $73.7 million.

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As of December 31, 2017, we have U.S. net operating loss (“NOL”) carryforwards of approximately $812.2 million. For income tax purposes, these NOLs will expire in the years 2019 through 2037. Due to our various equity transactions, the utilization of certain NOLs could be subject to annual limitations imposed by Internal Revenue Code Section 382 relating to the change of control provision and/or the separate return limitation year losses limitation.

For the years ended December 31, 2017, 2016 and 2015, we recognized $(0.2) million, $0.1 million and $0.1 million, respectively, in income tax (benefit) expense related to the recording of a deferred tax liability associated with capitalized goodwill, an indefinite-lived intangible asset that is being amortized for tax purposes. Indefinite-lived intangibles are non-monetary assets which are not amortized under GAAP since there is no foreseeable limit to the cash flows provided by them. Our lack of earnings history and the uncertainty surrounding our ability to generate taxable income prior to the reversal or expiration of such deferred tax liability were the primary factors considered by management when recording the valuation allowance against our deferred tax assets. However, with the reduction of the corporate income tax rate from 35% to 21%, effective January 1, 2018, the deferred tax liability associated with capitalized goodwill was reduced by $0.3 million generating current year income of $0.3 million.

The income tax provision consists of the following:

(in thousands)	December 31, 2017			December 31, 2016		December 31, 2015
Current:
Federal	$	—		$	—	$	—
State	—			—		—
Total current	—			—		—
Deferred:
Federal	(258		)	73		81
State	23			7		9
Total deferred	(235		)	80		90
Total income taxes	$	(235	)	$	80	$	90

Income tax expense differed from amounts computed by applying the U.S. federal income tax rate of 34% to pretax loss as follows:

	For the years ended December 31,
(in thousands)	2017			2016			2015
Loss before income taxes, as reported in the consolidated statements of operations	$	(163,675	)	$	(161,015	)	$	(123,055	)
Computed “expected” tax benefit	(55,650		)	(54,745		)	(41,838		)
Increase (decrease) in income taxes resulting from:
Expected (benefit) expense from state & local taxes	(5,307		)	(5,222		)	(3,991		)
Stock-based compensation expense	(360		)	(17		)	(2,328		)
Tax impact of derivative liability	23,450			—			16,977
Permanent differences	(305		)	3,087			1,445
Impact of state NOL carryforward change	111,681			—			—
Prior year true-up	(2		)	(58		)	2,191
Change in the balance of the valuation allowance for deferred tax assets allocated to income tax expense	(73,742		)	57,035			27,634
	$	(235	)	$	80		$	90

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The significant components of deferred income tax expense (benefit) attributable to loss from operations are as follows:

	For the years ended December 31,
(in thousands)	2017			2016			2015
Deferred tax expense (benefit)	$	50,057		$	(56,955	)	$	(44,521	)
Tax impact of derivative liability	23,450			—			16,977
Increase in the valuation allowance for deferred tax asset	(73,742		)	57,035			27,634
	$	(235	)	$	80		$	90

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are presented below.

(in thousands)	December 31, 2017			December 31, 2016
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	193,310		$	255,809
Stock-based compensation expense	14,315			16,735
Capitalized inventory	24			2,044
Inventory reserves	3,829			9,288
Research and development	2,242			2,087
Intangible assets due to different amortization methods	1,546			2,495
Tax-deductible goodwill	(635		)	(870		)
Other temporary differences	691			1,241
Net deferred tax asset, excluding valuation allowance	215,322			288,829
Less valuation allowance	(215,957		)	(289,699		)
Net deferred tax liabilities	$	(635	)	$	(870	)

We file income tax returns in the U.S federal and various state and local jurisdictions. For federal and state income tax purposes, the 2016, 2015 and 2014 tax years remain open for examination under the normal three-year statute of limitations. The statute of limitations for income tax audits in the United States will commence upon utilization of net operating losses and will expire three years from the filing of the tax return.

There was no accrual for uncertain tax positions or for interest and penalties related to uncertain tax positions for 2017, 2016 and 2015. We do not believe that there will be a material change in our unrecognized tax positions over the next twelve months. All of the unrecognized tax benefits, if recognized, would be offset by the valuation allowance.

NOTE 12 – OTHER (EXPENSE) INCOME

The components of other (expense) income are as follows:

	For the years ended December 31,
(in thousands)	2017			2016			2015
Interest income	$	707		$	698		$	472
Amortization of debt discount	(62,965		)	(34,227		)	(11,357		)
Other income (expense), net	274			(4,723		)	(1,102		)
	$	(61,984	)	$	(38,252	)	$	(11,987	)

NOTE 13 – COMMITMENTS AND CONTINGENCIES

Our contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. These include commitments related to our facility lease, purchases of inventory and other purchases related to our product, debt obligations, consulting services and subscription fees, among others.

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Facility Leases

In April 2015, we signed a lease agreement for approximately 27,300 square feet in Boston, Massachusetts, for a 94-month term that commenced on May 1, 2015. In order to make the space usable for our operations, substantial improvements were made. Our landlord agreed to pay for up to approximately $1.9 million of the improvements, and we bore all additional costs that were incurred. As such, we have determined that we are the owner of the improvements and account for tenant improvements paid by our landlord as a lease incentive. On May 1, 2015, in accordance with ASC 840-20, Operating Leases, we recorded a deferred lease incentive, and an associated receivable from our landlord, for the total amount to be paid by the landlord for improvements. The deferred lease incentive is being amortized as a partial offset to rent expense over the term of the lease, and the receivable was drawn down as cash was received from our landlord. We began occupying the space in November 2015. Improvements made to our leased space have been recorded as fixed assets and will be depreciated over the assets’ useful lives or the remaining lease term, whichever is shorter.

Future minimum payments under our non-cancelable facility lease as of December 31, 2017 are as follows (in thousands):

Period	Future Minimum Lease Payments
Year Ending December 31, 2018	$	1,628
Year Ending December 31, 2019	1,655
Year Ending December 31, 2020	1,683
Year Ending December 31, 2021	1,710
Year Ending December 31, 2022	1,737
Thereafter	291
Total	$	8,704

Total rental expense was approximately $1.2 million, $1.9 million and $2.2 million for the years ended December 31, 2017, 2016, and 2015, respectively.

Contingent Milestone Payments

We may be required to pay up to $10.0 million in contingent manufacturing milestone payments to a contract manufacturer related to certain construction related matters if such activities are achieved by the contract manufacturer within a pre-specified time frame. These milestones will be capitalized, if achieved, as a deferred cost on our balance sheet until such time that we begin to receive product from the new facility being constructed by our contract manufacturer. As of December 31, 2017, one such milestone in the amount of $5.0 million was achieved. This amount is recorded on our balance sheet as an accrued expense and a deferred cost in other assets, net as of December 31, 2017. As the achievement of the remaining milestones was not considered probable as of December 31, 2017, such contingencies have not been recorded in our consolidated financial statements. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain manufacturing milestones.

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Litigation

Four purported class action lawsuits have been filed against us and certain of our current and former officers (Gregory P. Madison, Scott A. Holmes, Ron Bentsur, and James Oliviero). Three of these actions were filed in the U.S. District Court for the Southern District of New York, captioned respectively Terrell Jackson v. Keryx Biopharmaceuticals, Inc., et al., No. 1:16-cv-06131, filed on August 2, 2016, Richard J. Erickson v. Keryx Biopharmaceuticals, Inc., et al. No. 1:16-cv-06218, filed on August 4, 2016, and Richard King v. Keryx Biopharmaceuticals, Inc., et al., No. 1:16-cv-06233, filed on August 5, 2016. The Jackson complaint purports to be brought on behalf of stockholders who purchased our common stock between February 25, 2016 and August 1, 2016, the Erickson complaint purports to be brought on behalf of stockholders who purchased our common stock between March 2, 2016 and July 29, 2016, and the King complaint purports to be brought on behalf of stockholders who purchased our common stock between February 25, 2016 and July 29, 2016. On August 26, 2016, the fourth complaint, captioned Tim Karth v. Keryx Biopharmaceuticals, Inc., et al., No. 1:16-cv-11745, was filed in the U.S. District Court for the District of Massachusetts, which complaint was subsequently amended. The Karth complaint purports to be brought on behalf of stockholders who purchased our common stock between May 8, 2013 and August 1, 2016. The Jackson, Erickson and King matters were transferred to the U.S. District Court for the District of Massachusetts on April 5, 2017 and subsequently consolidated with the Karth action. Each complaint generally alleges that we and certain of our current and former officers violated Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning us and our business operations and future prospects in light of the August 1, 2016 announcement of an interruption in our supply of Auryxia. We have moved to dismiss the consolidated action. Two stockholder derivative complaints were also filed on December 16, 2016 against us and certain of our current and former officers (Gregory P. Madison, Scott A. Holmes, Ron Bentsur and James Oliviero), certain of our current directors (Kevin J. Cameron, Daniel P. Regan, Steven C. Gilman, Michael Rogers and John P. Butler) and our former directors (Michael P. Tarnok, Joseph Feczko, Jack Kaye and Wyche Fowler, Jr.), in the Superior Court of Massachusetts, one captioned Venkat Vara Prasad Malledi v. Keryx Biopharmaceuticals, Inc., et al., No. 16-3865 and one captioned James Anderson v. Keryx Biopharmaceuticals, Inc., et al., No. 16-3866.  Each of these two complaints generally allege that the individual defendants breached their fiduciary duties owed to us, unjustly enriched themselves by their actions, abused their control positions with us, mismanaged us and wasted corporate assets since July 31, 2013 in light of our August 1, 2016 announcement by us of an interruption in the supply of our product Auryxia. On June 27, 2017, the Superior Court granted the parties' motion to consolidate and stay the derivative litigations. All of the complaints seek unspecified damages, interest, attorneys’ fees, and other costs. We deny any allegations of wrongdoing and intend to vigorously defend against these lawsuits. There is no assurance, however, that we or the other defendants will be successful in our defense of either of these lawsuits or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of these actions. Moreover, we are unable to predict the outcome or reasonably estimate a range of possible losses at this time. A resolution of these lawsuits adverse to us or the other defendants, however, could have a material effect on our financial position and results of operations in the period in which the particular lawsuit is resolved.

NOTE 14 – BUSINESS SEGMENTS

We have determined that we conduct our operations in one business segment: the manufacture, development and commercialization of products for use in treating human diseases. Long-lived assets consist entirely of property, plant and equipment and are located in the United States for all periods presented.

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NOTE 15 – QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)

	2017
	Mar. 31			June 30			Sept. 30			Dec. 31
	(in thousands, except per share data)
Revenues:
Net U.S. Auryxia product sales	$	10,505		$	14,116		$	13,597		$	17,296
License revenue	1,314			1,028			1,399			1,386
Total revenues	11,819			15,144			14,996			18,682
Costs and expenses:
Cost of goods sold	4,273			4,379			5,856			7,447
License expense	789			617			838			832
Research and development	6,764			9,012			9,275			12,628
Selling, general and administrative	23,103			24,986			22,746			28,787
Total costs and expenses	34,929			38,994			38,715			49,694
Operating loss	(23,110		)	(23,850		)	(23,719		)	(31,012		)
Other (expense) income:
Amortization of debt discount	—			(62,965		)	—			—
Other (expense) income, net	114			338			241			288
Total other (expense) income:	114			(62,627		)	241			288
Loss before income taxes	(22,996		)	(86,477		)	(23,478		)	(30,724		)
Income tax expense (benefit)	20			20			20			(295		)
Net loss	$	(23,016	)	$	(86,497	)	$	(23,498	)	$	(30,429	)
Basic and diluted net loss per common share*	$	(0.21	)	$	(0.77	)	$	(0.20	)	$	(0.26	)

	2016
	Mar. 31			June 30			Sept. 30			Dec. 31
	(in thousands, except per share data)
Revenues:
Product revenue, net	$	5,616		$	8,279		$	5,050		$	8,228
License revenue	1,209			1,009			1,287			$	1,305
Total revenues	6,825			9,288			6,337			9,533
Operating expenses:
Cost of goods sold	1,071			5,099			18,196			13,437
License expense:	726			605			772			783
Research and development	7,616			7,029			8,674			6,185
Selling, general and administrative	20,809			20,188			20,521			23,035
Total operating expenses	30,222			32,921			48,163			43,440
Operating loss	(23,397		)	(23,633		)	(41,826		)	(33,907		)
Other (expense) income:
Amortization of debt discount	(15,748		)	(18,479		)	—			—
Other (expense) income, net	(1,799		)	(2,519		)	150			143
Total other (expense) income:	(17,547		)	(20,998		)	150			143
Loss before income taxes	(40,944		)	(44,631		)	(41,676		)	(33,764		)
Income taxes	20			20			20			20
Net loss	$	(40,964	)	$	(44,651	)	$	(41,696	)	$	(33,784	)
Basic and diluted net loss per common share*	$	(0.39	)	$	(0.42	)	$	(0.39	)	$	(0.32	)

* The aggregate of quarterly computed basic and diluted net loss per common share may not agree with the annual amount due to rounding.

F- 27

EX-10.12

Exhibit 10.12

PRODUCT MANUFACTURE AND SUPPLY AND FACILITY CONSTRUCTION AGREEMENT

Between

BIOVECTRA INC.

And

KERYX BIOPHARMACEUTICALS, INC.

This product manufacture and supply and facility construction agreement (“Agreement”) is made and entered into on the date of last signature by and between BioVectra Inc., with its registered offices at 11 Aviation Avenue, Charlottetown, PEI, C1E 0A1, Canada (“BioVectra”) and Keryx Biopharmaceuticals, Inc., with its offices at One Marina Park Drive, 12^th floor, Boston, Massachusetts, USA, 02210 (“Keryx”).

WHEREAS, BioVectra has the capability to manufacture and in the past has manufactured GMP-grade quantities of Keryx’s proprietary active pharmaceutical ingredient, ferric citrate drug substance, at BioVectra’s API Facility, pursuant to the Manufacture and Supply Agreement (as defined herein below);

AND WHEREAS, Keryx desires to purchase certain quantities of Product (as defined herein below) from BioVectra over a defined period of time and BioVectra is willing to construct a facility for the manufacture of Product and to supply Product to Keryx on the terms and conditions provided herein.

NOW THEREFORE, in consideration of the mutual covenants hereafter set forth, the Parties hereto mutually agree as follows:

1. Definitions. Unless this Agreement expressly provides to the contrary, the following terms, whether used in the singular or plural, have the respective meanings set forth below

a. Affiliate means, with respect to either Party, any other corporation or business entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, the term “control” means direct or indirect ownership of more than fifty percent (50%) of the securities or other ownership interests representing the equity voting stock or general partnership or membership interest of such entity or the power to direct or cause the direction of the management or policies of such entity, whether through the ownership of voting securities, by contract, or otherwise.

b. API Facility means [***].

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

c. Applicable Law means all applicable ordinances, rules, regulations, laws, guidelines, guidances, requirements and court orders of any kind whatsoever of any Authority, as amended from time to time, including GMP.

d. Authority means any government regulatory authority responsible for granting approvals for the performance of the Parties’ obligations under this Agreement or for issuing regulations pertaining to the manufacture and/or use of Product in the intended country of use, including the U.S. Food & Drug Administration (“FDA”).

e. Batch means a specific quantity of Product that is intended to be of uniform character and quality, within specified limits, and is produced during the same cycle of manufacture as defined by the applicable Batch record.

f. BioVectra Technology means the Technology of BioVectra (i) existing prior to the Effective Date; or (ii) developed or obtained by or on behalf of BioVectra independent of this Agreement and without reliance upon the Confidential Information of Keryx.

g. Business Day means all days excluding Saturdays and Sundays and any other public holiday in either Canada or the US.

h. Certificate of Analysis means a document signed by an authorized representative of BioVectra, describing Specifications for, and testing methods applied to, Product, and the results of testing.

i. Certificate of Compliance means a document signed by an authorized representative of BioVectra, certifying that a particular Batch was manufactured in accordance with GMP, all other Applicable Law, the Manufacturing Procedure, and the Specifications.

j. CMC shall mean the chemistry, manufacturing, and controls section(s) and data in any Health Registration(s) that covers the chemical composition of a given Product and its components and the control and Manufacturing Procedure for any Products and their components, as may be amended or supplemented from time to time.

k. Effective Date is date of set forth in the opening paragraph.

l. Equipment means all major process equipment used in the manufacture of Product as defined in the Conceptual Design.

m. Facility has the meaning set forth in Section 2.a.

n. Facility Reimbursement Payment means the amount of the Facility Construction Cost to be reimbursed by Keryx in accordance with Section 2.o. and is calculated as follows: Facility Construction Cost:

[***]

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

[***] minus ten million US dollars ($10,000,000), which represents the total amount potentially achieved by BioVectra upon timely completion of milestones pursuant to Section 2.l.

Additionally, if the Facility Construction Cost is more than [***] over the Estimated Facility Cost, the Facility Reimbursement Payment shall be further reduced by half of the amount that is more than [***] of the Estimated Facility Cost in accordance with Sections 2.e. and 2.m.

o. Facility Reimbursement Fee means [***].

p. GMP means current Good Manufacturing Practices, which are requirements for the quality system under which Products will be manufactured. Those practices are laid down in guidelines and regulations including [***].

i. Health Registration shall mean the technical, medical and scientific licenses, registrations, authorizations and/or approvals of a Product that are required by any national, supra-national (e.g., the European Commission or the Council of the European Union), regional, state or local Authority or other governmental entity, for the manufacture, use or sale of the subject Product.

q. Improvements means all Technology and discoveries, inventions, developments, modifications, innovations, updates, enhancements, improvements, writings or rights (whether or not protectable under patent, trademark, copyright or similar laws) that are conceived, discovered, invented, developed, created, made or reduced to practice in the performance under this Agreement.

r. Keryx Supplied Materials means those materials and equipment, if any, supplied by, or on behalf of, Keryx to BioVectra for use in the manufacture of Product hereunder (including any raw materials). Keryx Supplied Materials shall at all times remain the property of Keryx (and BioVectra shall ensure that no pledges, liens, restrictions, claims, charges, security interests or other encumbrance are placed on such Keryx Supplied Materials).

s. Keryx Technology means (i) Keryx Supplied Materials and any intermediates, components, or derivatives thereof; (ii) Product and any intermediates, components, or derivatives of Product; (iii) Specifications; and (iv) the Technology of Keryx (A) existing prior to the Effective Date, or (B) developed or obtained by or on behalf of Keryx independent of this Agreement and without reliance upon the Confidential Information of BioVectra.

t. Manufacture and Manufacturing (whether or not capitalized) means any steps, processes and activities necessary to produce Product including the manufacturing, processing, packaging, labeling, quality control testing, stability testing, release, storage, shipping or supply of Product.

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

u. Manufacture and Supply Agreement means the Manufacture and Supply Agreement, as amended, between BioVectra and Keryx dated May 26, 2017.

v. Manufacturing Procedure means the agreed upon manufacturing process as detailed in mutually approved batch production records and Batch Documentation including the testing plan, used by BioVectra to manufacture the Product.

w. Metric Tons orMT means one thousand kilograms.

x. Party or Parties means one or both Keryx and BioVectra, as the context indicates.

y. Product(s) means GMP-grade quantities of Keryx’s proprietary active pharmaceutical ingredient, ferric citrate drug substance, manufactured by BioVectra in the Facility and supplied to Keryx pursuant to the terms of this Agreement.

z. Quality Agreement means the Quality Agreement executed by the Parties, and attached hereto as Appendix 3, and as amended and updated by mutual approval from time to time.

aa. Records are all records (including reports, accounts, notes, raw data, and records of all information and results obtained from performance of BioVectra’s activities under this Agreement) of all work done by BioVectra under this Agreement, in form and substance as specified in the applicable purchase order, the Quality Agreement, and this Agreement.

bb. Reprocess and Reprocessing means introducing a Product back into, and repeating appropriate manipulation steps that are part of, the established Manufacturing Procedure. Continuation of a process step after an in-process control test shows the process to be incomplete is not considered reprocessing.

cc. Rework and Reworking means subjecting a Product to one or more processing steps that are different from the established Manufacturing Procedure.

dd. Specification(s) shall mean the specifications for Product as attached hereto in Appendix 2, as may be amended from time to time by the mutual agreement of both Parties.

ee. Substantial Completion means the Facility is complete and the Equipment meets installation and operation qualification for commercial production of Product as evidenced by a certified engineer mutually agreed upon by both Parties.

ff. Supply Term means the period during which Keryx is ordering Product from BioVectra, BioVectra is manufacturing Product for Keryx, and BioVectra is delivering Product to Keryx. The Supply Committee will provide the Parties with [***] notice prior to the expected start of the Supply Term, which will commence

4

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

after Substantial Completion on manufacture of Product for validation and, at the Effective Date, is estimated to begin in [***], and run until expiration of the Term (as defined in Section 10.a), or earlier termination thereof as provided herein.

gg. Supporting Documentation means authorizations, certificates, methodologies, raw material specifications, SOPs, standard test methods, and other documentation in the possession or under the control of BioVectra relating to the development and/or manufacture of Product (or any intermediate or component of Product).

hh. Technology means all methods, techniques, trade secrets, copyrights, know-how, data, documentation, regulatory submissions, specifications and other intellectual property of any kind (whether or not protectable under patent, trademark, copyright or similar laws).

ii. Working Capacity means the net Product output of the Facility at a maximum annual operational time of [***] and will be no less than [***] per calendar year.

2. Construction of Facility

a. BioVectra will construct a production facility in Charlottetown, Prince Edward Island, Canada with the Working Capacity and designed for an expanded working capacity of [***] per year (the “Facility”) for manufacturing of Product in accordance with all Applicable Law of the Territory. The Facility, which will be an expansion of the site where the API Facility is located, will be approximately [***] square feet in area, to be confirmed after completion of conceptual engineering design work. A site plan thereof will be mutually approved by the Parties in writing, within [***] days of being published. BioVectra will use its best efforts to complete the construction of the Facility in accordance with the timelines in the Conceptual Design and, later, the Final Design. Keryx acknowledges that the projected timeline is BioVectra’s good faith best estimate and is subject to review after completion of conceptual engineering design work. Keryx will review the output of the conceptual engineering design work submitted by BioVectra and provide comments within [***] days of receipt. BioVectra will give due consideration to any comments provided by Keryx regarding such matters.

b. The output of the conceptual engineering design work (the “Conceptual Design”) will include a final timeline (the “Timeline”) for and be the basis of the construction of the Facility, and such Conceptual Design will be approved, within [***] days of delivery to Keryx, by both Parties, in writing. BioVectra acknowledges that time is of the essence in its performance of this Agreement.

c. The Conceptual Design will serve as the basis for the initiation of construction and preparation of final design work. BioVectra will create, from the Conceptual Design, the final design plan (“Final Design”). The Supply Committee will review on a rolling basis outputs from the Final Design work submitted by BioVectra. The Supply

5

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Committee will approve outputs of the Final Design Work within a reasonable time, not to exceed [***] days.

d. The Final Design shall include where applicable, without limitation, the plans, drawings, Facility construction specifications, manuals and related materials, and all addenda, changes and modifications thereto, required for procuring or constructing the Facility and rendering the Facility fully operational. The Final Design shall describe with specificity all elements, details, components, materials, and other information necessary for the sourcing, fabrication, installation and integration of the Facility such that, upon completion, the Facility: (a) is fully operational for the intended purposes; (b) conforms to the conceptual engineering design work, Final Design, photographs, plans, designs, drawings, Facility construction specifications, reports, and other documents relating thereto (collectively, the “Design Documents”); (c) meets all Facility construction specifications; and (d) has received all regulatory approvals of all applicable Authorities required to render the Facility functionally and legally usable for its intended purposes. The Final Design shall be accurate, coordinated, and acceptable for the sourcing of Equipment, materials, and components and for construction of the Facility and shall be in conformity and compliance with all Applicable Law.

e. BioVectra will be responsible for constructing the Facility, which includes but is not limited to all work related to the procurement, design, project management, installation, assembly, commissioning, and validation of the Facility and all Equipment, and for financing all costs associated with constructing the Facility (“Facility Construction Cost”). As of the Effective Date it is estimated that the Facility Construction Cost will be approximately [***]) (“Estimated Facility Cost”), which may be revised in a duly-executed amendment to this Agreement pursuant to Section 11.l. hereof. BioVectra will confirm the Estimated Facility Cost upon completion and mutual approval of the Conceptual Design pursuant to Section 2.b. During the course of construction, BioVectra will notify Keryx in writing of potential cost variances which may increase or decrease the Facility Construction Cost by [***] of the Estimated Facility Cost within [***] days of its awareness of the foregoing and will work together in good faith to resolve, to the extent possible, the cost increases. Any cost savings will bring the Facility Construction Cost below the Estimated Facility Cost, thereby decreasing the Facility Reimbursement Payment accordingly. The Parties will share equally all cost increases that bring the Facility Construction Cost more than [***] over the Estimated Facility Cost; however, BioVectra will not be responsible to share in cost increases which result from the decision by Keryx to deviate from the approved Conceptual Design. Any true-ups will happen in accordance with Section 2.o. below.

f. Within [***] of Substantial Completion, the Parties will engage a mutually-agreed independent regulatory expert (a “Regulatory Expert”) of recognized standing in the industry to perform a mock FDA audit of the Facility. If the audit of the Facility determines that due to BioVectra’s failures, the Facility is not prepared for

6

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

commercial manufacture and deficiencies identified cannot be cured in [***] of the last date of the audit, the Facility Reimbursement Payment will be reduced by [***] in the next true-up period pursuant to Section 2.o. Consent to the appointment of such Regulatory Expert will not be unreasonably withheld or delayed by either Party. Both Parties shall cooperate with the Regulatory Expert’s reasonable requests for assistance in connection with its evaluation hereunder. Both Parties shall be entitled to observe and obtain copies of all results of the Regulatory Expert’s evaluation. The findings of the Regulatory Expert shall be binding on the Parties, absent fraud or manifest error. The Parties shall split evenly the cost of the Regulatory Expert.

g. With respect to all Equipment, BioVectra shall provide engineering project management and process validation, qualification support, installation and commissioning services. BioVectra shall manage the installation, commissioning and validation activities of such Equipment.

h. BioVectra shall disclose to Keryx in writing within a reasonable time after Keryx’s written request: (i) all persons and entities proposed by BioVectra to produce, construct, fabricate or supply any component part of the Facility, including all Equipment; (ii) the location(s) where each component of the Facility, including all Equipment, will be produced, constructed or fabricated or from which such component shall be sourced; and (iii) any other information relating to sourcing and/or construction and assembly of the Facility which is reasonably requested by Keryx. BioVectra shall promptly pay to each Vendor the amount due for such Vendor's work, provided BioVectra shall have the right to withhold payment to any of its Vendors who have furnished defective, substandard, and/or incorrect materials, workmanship, or deliverables. Keryx shall have no obligation to pay, or cause the payment of, any money to any Vendor or any other party acting through, under or on behalf of BioVectra.

i. BioVectra shall build, construct and assemble the Facility in strict accordance with the Design Documents, as may be updated, amended, or modified and otherwise in accordance this Agreement and all Applicable Law. Any material update, amendment or modification being either approved in writing by the Supply Committee within a reasonable time from receipt, not to exceed [***] days, or escalated for approval pursuant to Section 2.e.

j. Not in limitation of any other provision of this Agreement, Keryx shall have the right of access to any of BioVectra’s and/or its Vendor’s plants (including the Facility) as may be necessary to allow Keryx to: (i) review BioVectra’s progress; (ii) verify that the Facility is being built, constructed and assembled so as to conform to the Design Documents, the Timeline, and this Agreement; and/or (iii) verify that a progress payment contingency has been completed. Payments to BioVectra under this Agreement shall not constitute acceptance or impede Keryx’s right to subsequently inspect the Facility or pursue remedies available to it.

7

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

k. The Parties shall provide their commercially reasonable efforts to minimize the costs of procurement, installation and commissioning of the Equipment. BioVectra shall provide Keryx with quotes and copies of all applicable invoices from Vendors, for the costs of procurement, transportation, installation, and commissioning of the Equipment.

l. Over the course of the construction of the Facility Keryx will make payments to BioVectra within [***] days of receipt of an undisputed invoice at accountspayable@keryx.com. BioVectra will issue such invoices upon reaching the following milestones:

i. Five million US dollars ($5,000,000 USD) on [***] by December 31, 2017;

ii. [***]

iii. [***].

If BioVectra does not complete a milestone by the corresponding date specified above, Keryx will not make the associated milestone payment, and BioVectra will forego such amount. Notwithstanding the foregoing, if there are delays that would affect the timing of the above milestone dates due to changes in the Conceptual Design, the Parties agree to postpone the milestone deadlines, without penalty to BioVectra, by a mutually agreeable timeframe. Further, Keryx will not unreasonably withhold authorizations required to progress construction at site.

m. BioVectra will notify Keryx in writing of the Facility Construction Cost actually incurred by BioVectra and any details of the Facility Construction Cost reasonably requested by Keryx within [***] days following Substantial Completion of the Facility. While Keryx shall have no liability or obligation to finance the Facility Construction Cost, which shall be for the sole account of BioVectra, the Parties anticipate that BioVectra will recoup those costs through the combination of the premiums paid by Keryx on purchase of volumes of product under the [***], the milestone payments set out in Section 2.l; and the Facility Reimbursement Payment due under this Agreement. Any cost savings will bring the Facility Construction Cost below the Estimated Facility Cost, thereby decreasing the Facility Reimbursement Payment accordingly. The Parties will share equally all cost increases that bring the Facility Construction Cost more than [***] over the Estimated Facility Cost; however, BioVectra will not be responsible to share in cost increases which result from the decision by Keryx to deviate from the approved Conceptual Design.

n. The Facility Reimbursement Payment will be reconciled by the Parties (for example due to a variance in the Facility Construction Cost from the Estimated Facility Cost, not achieving milestones or variance in purchases of product under the [***]), prior to commencement of Supply Term through an increase or decrease in the Facility Reimbursement Fee, an extension of the Pay Back Period, or alternate arrangement mutually agreed to in writing by both Parties. This Agreement will be amended to reflect any modification to the Facility Reimbursement Payment (and consequently

8

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Facility Reimbursement Fee), Pay Back Period, or other arrangement agreed to in writing by both Parties.

o. Keryx will pay the Facility Reimbursement Payment over volumes of Product purchased over the [***] of the Supply Term (“Pay Back Period”). The Facility Reimbursement Payment will be prorated over [***] MT of Product forecasted by Keryx to be purchased during the Pay Back Period, prorated annually. The price of Product is set out in Appendix 1 which, for the Pay Back Period, has an associated Facility Reimbursement Fee. BioVectra will true-up, within [***] of months [***] (estimated to be [***]), [***] (estimated to be [***]) and [***] of the Pay Back Period (estimated to be [***]), for any underpayment or overpayment by Keryx due to the forecasted quantity of Product being more or less than quantities of Product actually purchased or for any overpayment by Keryx due to, for example: (i) the forecasted quantity of Product, or product, being less than quantities of Product, or product, actually purchased under this Agreement or the [***], respectively, or (ii) cost savings realized against the Estimated Facility Cost. BioVectra shall perform such true-up by sending to Keryx at accountspayable@keryx.com an associated invoice (for underpayments) or credit (for overpayments).

p. To secure the expanded working capacity of the Facility, Keryx will notify BioVectra in writing of its intention to move forward with the expansion of the Facility to [***] working capacity within [***], or some other time frame as agreed in writing between the Parties. Once written notification from Keryx is received by BioVectra, the Parties will enter into negotiation on terms for capital investment and, as appropriate, extension of this Agreement. If such notification is not made within the agreed time frame, or Parties are not able to agree on terms for expansion within [***] of Keryx’s notification to BioVectra, BioVectra will have the right to use the expanded working capacity thereafter, as long as any use of the expanded working capacity does not interfere with Keryx’s quality and regulatory requirements for Product.

q. Keryx will have, upon reasonable notice to BioVectra, the right to monitor, review and inspect the construction site for the Facility and the Facility under construction, including without limitation all equipment therein, any time during that construction and on and after the Substantial Completion of the Facility. BioVectra shall give due consideration to any comments provided by Keryx resulting from the monitoring, review and inspection of the construction site, Facility and equipment.

r. After Substantial Completion, Parties will commence validation of the process as per the approved protocol. Product resulting from validation runs will be priced according to Appendix 1. BioVectra will deliver and the Parties will both sign a process validation report to mark the successful completion of validation and Facility readiness for commercial supply. Validation is based on the manufacturing procedure for product purchased under the Manufacture and Supply Agreement and the Specifications attached hereto in Appendix 2, unless otherwise agreed in writing by the Parties. Any changes to the Manufacturing Procedure or Specifications, will

9

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

need to be reviewed for impact to the validation process including, manufacturing schedule, release requirements or quality requirements and associated impact(s), including impacts to validation timing and costs, prior to implementation. The Parties will enter into separate written change order agreements for any changes to the Manufacturing Procedure or Specifications which impact validation timing and costs.

3. Management

a. Within [***] days after the Effective Date, Keryx and BioVectra shall establish a supply committee to facilitate regular and efficient communication between the Parties regarding their activities and issues relating to the design and construction of the Facility and the manufacture and supply of Product under this Agreement (“Supply Committee”). Keryx and BioVectra each shall designate [***] representatives with appropriate expertise to serve as members of the Supply Committee, which membership may change during the course of the various activities under this Agreement (i.e. during the design and construction phases of the Facility vs. the Product manufacture and supply activities thereafter). Each Party shall select [***] person appointed by it to the Supply Committee to serve as co-chair. Either Party may designate substitutes for its Supply Committee representatives to participate if one or more of such Party’s designated representatives are unable to be present at a meeting. A Party may replace its representatives serving on the Supply Committee from time to time by written notice to the other Party specifying the prior representative(s) to be replaced and the replacement(s) therefor. The co-chairpersons of the Supply Committee shall be responsible for calling meetings, preparing and circulating an agenda in advance of each meeting. One of BioVectra’s Supply Committee representatives shall be responsible for preparing and issuing minutes of each meeting within [***] thereafter. Such minutes shall not be finalized until Keryx reviews and confirms with BioVectra the accuracy of such minutes in writing within [***] [***] after Keryx receives such minutes. If BioVectra does not receive any written comments on such minutes from Keryx within such [***] period, then such minutes shall be deemed to be approved by Keryx.

b. The Supply Committee shall meet at least [***] until successful completion and validation of the Facility and the Manufacturing Procedure and thereafter once every [***], and more frequently as the Parties deem appropriate, on such dates, and at such places and times as the Parties shall agree. Both Parties may agree in writing to cancel one or more Supply Committee meetings. Meetings of the Supply Committee may be held by audio or video teleconference with the consent of each Party. Meetings of the Supply Committee that are held in person shall occur at such place as the Supply Committee may determine based on the agenda proposed for the meeting and the place of convenience as relating to the agenda items. The members of the Supply Committee also may be polled or consulted from time to time by means of electronic mail or correspondence, as deemed necessary or

10

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

appropriate. With the consent of each co-chair, other representatives of each Party or of third parties involved in the design and construction of the Facility and manufacture and supply of Product may attend meetings of the Supply Committee as non-voting participants.

c. The Supply Committee shall operate by consensus. With respect to matters to be discussed by the Supply Committee, the representatives of each Party shall present a unified position on behalf of such Party. In the absence of consensus of Supply Committee members with respect to any matter before the Supply Committee, such matter shall be deemed not to have been approved by the Supply Committee and the matter shall be escalated to each Party’s senior management for review and consideration.

d. In addition to its overall responsibility for overseeing the Parties’ activities with respect to design and construction of the Facility and manufacture and supply of Product under this Agreement, the Supply Committee shall in particular:

(a)Review and update during design of Facility;

(b)Review and update during construction of Facility;

(c)Review qualification, engineering and validation of Facility, Product

and methods;

(d) Oversee manufacture and quality of Product, including labeling, packaging, logistics;

(e)Discuss any changes to Manufacturing Procedure or Specifications;

(f) Provide notification of expected commencement of Supply Term to the Parties per Section 1.ff.;

(g)Oversee and coordinate regulatory activities;

(h)Discuss changes to forecasts and supply schedule;

(i) Oversee and discuss variances to the Estimated Facility Cost which amount to less than [***] variance, and notify and escalate to appropriate Keryx individuals of variances over [***] per Section 2.e.;

(j) Oversee and agree Process Development Work and any resulting cost-sharing arrangements following cost reductions to the Manufacturing Procedure;

(k) Oversee and agree certain aspects of termination of the Agreement pursuant to Section 10.b;

(l) Oversee and address issues that may affect the Timeline;

(m) Oversee any other aspects expressly contemplated by this Agreement or otherwise mutually agreed by the Parties in writing; and

(n) Establish such working groups or sub-committees as it may choose from time to time to accomplish its purposes.

e. The Supply Committee shall have only those powers set forth herein, and, without limiting the generality of the foregoing, shall not have any power to amend, modify or waive compliance with this Agreement.

11

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

4. Product Supply

a. During the Term of this Agreement, BioVectra will manufacture Product, utilizing drying technology BioVectra considers proprietary (the “BV Drying Technology”), exclusively for Keryx for the US, Europe and any other market in which Keryx has license to sell (“Territory”). Without limiting Keryx’s purchase obligations below, nothing herein shall limit or prohibit Keryx from purchasing Product from any third party.

b. BioVectra will, at its sole cost and expense, purchase all materials used in the Manufacture of Product (“Materials”). Keryx understands and acknowledges that BioVectra will rely on Keryx’s purchase orders and forecasts in ordering the Materials required to meet the purchase orders. In addition, Keryx understands that to ensure an orderly supply of Materials, BioVectra may want to purchase Materials in sufficient volumes to meet the production requirements for Products during part or all of the forecast or to meet the production requirements of any longer period agreed to by BioVectra and Keryx. Accordingly, Keryx authorizes BioVectra to purchase Materials for the first [***] contemplated in the most recent forecast to satisfy the Product supply requirements hereunder. BioVectra may make other purchases of Materials for longer periods, if agreed to in writing by the Parties, to satisfy the Product supply requirements hereunder.

c. For the initial [***] months of the Supply Term, Keryx will submit a purchase order for a minimum of [***] of Product and for each [***] month period of the Supply Term thereafter (each a “Supply Period” and which are estimated to be [***] and, thereafter, calendar years [***]), Keryx to submit a purchase order for a minimum of [***] of Product (“Minimum Order Quantity”). If Keryx fails to submit a purchase order for the Minimum Order Quantity in any Supply Period, during the Supply Term, within [***] of the end of the Supply Period, BioVectra will perform a true-up and invoice Keryx for the difference between the Minimum Order Quantity and the actual quantity of Product purchased in that Supply Period multiplied by the price of Product. In the event that Keryx is unable to purchase the Minimum Order Quantity in any Supply Period due to BioVectra’s failure to perform its obligations under this Agreement, including BioVectra’s inability to manufacture Product on a commercial scale, supply Product from the Facility at the Working Capacity level or achieve timely delivery of Product, or due to force majeure, no amounts will be due to BioVectra hereunder regarding any such shortfall.

d. The price of Product is set out in Appendix 1 and, for the Pay Back Period, has an associated Facility Reimbursement Fee.

e. Keryx will provide BioVectra with a rolling [***] forecast (non-binding) of its annual volume requirements. Keryx will commence providing such rolling forecast at least [***] prior to Substantial Completion, following written notification from Supply Committee that such forecasting should commence, and update such forecast every

12

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

[***] thereafter. [***] prior to start of a Supply Period (with Supply Committee giving Keryx prior written notice of commencement of the Supply Term pursuant to Section 1.ff.), Keryx will provide BioVectra with forecasted quarterly delivery requirements for that year bearing in mind the quarterly Manufacturing capacity of the Facility [***].

f. Purchase and shipment of Product will be in response to binding written purchase orders submitted by Keryx according to process set out herein. Keryx will place a binding purchase order for all its quarterly requirements of Product at least [***] prior to the commencement of the quarter (with Supply Committee providing Keryx prior written notice of commencement of the Supply Term pursuant to Section 1.ff.). Keryx will place such purchase orders hereunder, intending, to the extent practicable, for the Product quantity requirements not to substantially differ from quarter to quarter.

g. Purchase orders will be be confirmed by BioVectra for acceptance and delivery timing and BioVectra shall not reject any Keryx purchase orders for Product that fall within the [***] Working Capacity of this Agreement.

h. If, after the first [***] batches manufactured in the Facility, BioVectra delivers less than [***] of the volume of Product ordered by Keryx in any quarter (to a maximum of the quarterly Working Capacity), BioVectra shall issue a credit to Keryx in the amount of [***] of the price of the quantities of Product not delivered by BioVectra in the given quarter, at a price of [***]. Keryx will notify BioVectra of such failure to deliver and BioVectra will post the credit to Keryx’s account within [***] days of Keryx’s notification. If there is a dispute as to the quantity delivered, the Parties will work in good faith towards prompt resolution.

i. If, from [***] BioVectra delivers less than [***] of the volume of Product ordered by Keryx in a Supply Term (to a maximum of the current Working Capacity), BioVectra shall issue a credit to Keryx in the amount of [***] of the price of quantities of Product not delivered by BioVectra in the Supply Term at a price of [***]. Keryx will notify BioVectra of such failure to deliver and BioVectra will post the credit to Keryx’s account within [***] days of Keryx’s notification. If there is a dispute as to the quantity delivered, the Parties will work in good faith towards prompt resolution.

j. Keryx shall submit to BioVectra a purchase order for each delivery of a given Product, and BioVectra shall fulfill such purchase order in accordance with this Agreement. Each purchase order shall be on such form of purchase order or document as agreed between the Parties from time-to-time in writingand shall include (a) the quantities of Product and (b) shipping instructions and destination(s) (and for clarity, Keryx may designate a designee to receive shipments (e.g., a distributor)). BioVectra shall be obligated to manufacture and supply such quantities of Product as are set forth

13

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

in each purchase order and deliver such quantities in accordance with the mutually agreed upon delivery schedule. For the purposes of this Agreement, “delivery” of Product means release of Product and provision of documentation by BioVectra pursuant to Section 5.b.. BioVectra shall, within [***] of receipt of a purchase order, confirm in writing that the purchase order has been accepted and the mutually agreed upon delivery date(s) for the Product on such purchase order. BioVectra shall be required to accept the purchase orders (or portions thereof, as applicable) which are provided to BioVectra in accordance with the terms and conditions of this Agreement. In the event that the terms of any purchase order or purchase order acceptance are not consistent with this Agreement, the terms of this Agreement shall prevail.

k. Process Development.

i. Whether initiated by Keryx, BioVectra, or a joint effort of the two Parties, BioVectra may, at Keryx’s cost, from time to time and with the prior written agreement of Keryx, engage in Process Development Work. “Process Development Work” means the conduct by BioVectra of activities to develop, confirm and/or refine processes for producing the Product and/or activities to develop, optimize and/or scale-up a manufacturing process suitable for GMP Manufacture of the Product. A Party wanting to initiate Process Development Work will bring a proposed plan to the Supply Committee for consideration, approval, and further development. The Supply Committee will receive regular updates regarding the Process Development Work and generally oversee its progress. Any Improvements to the Manufacturing Procedure will be the sole and exclusive property of Keryx.

ii. Following completion of any Process Development Work, BioVectra shall within the timeline approved by the Supply Committee provide Keryx with a final written report on the development work completed, including, if called for in the written project plan agreed by the Supply Committee for the Process Development Work, the impact of any such Process Development Work on the costs to Manufacture Product.

iii. If called for in the written project plan agreed by the Supply Committee for the Process Development Work, BioVectra shall perform one or more process development runs and Manufacture non-GMP process development batches of Product in accordance with the project plan. BioVectra will provide the services to perform such process development runs and produce such process development batches in accordance with the project plan. BioVectra shall provide Keryx with all process development batches requested by Keryx that result from any partial or completed process development runs. While there will be no final specifications for acceptance of process development batches, the Parties will mutually agree on certain target quality attributes, to be set forth in the applicable project plan. BioVectra shall provide analytical testing of the batch as agreed by the Parties

14

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

in each project plan and will report the results to Keryx. Keryx shall have the right to make whatever further use of such process development batches as it shall determine, provided that such use does not violate any Applicable Law.

iv. If, as a result of any Process Development Work, the cost to Manufacture Product is reduced (including a situation in which the yield is increased or cycle time is reduced), the Parties agree to share, [***], the resulting reduction in cost, subject to Keryx consenting to, and the implementation by BioVectra of, the process development improvements resulting from the Process Development Work. Notwithstanding the foregoing, before any cost benefits are shared [***] between the Parties, Keryx will recoup the amounts paid to BioVectra to cover the Process Development Work costs via a mutually agreed Price reduction arrangement.

v. The Parties shall mutually agree on the proposed plan for Keryx’s reimbursement and the data supporting the proposed reduction in cost. If the Parties disagree, they shall submit such dispute to an independent pharmaceutical manufacturing expert agreed by the Parties (an “Expert”) for evaluation, provided that both Parties shall be entitled to observe and obtain copies of all results of such evaluation. The Expert must be of recognized standing in the industry, and consent to the appointment of such Expert will not be unreasonably withheld or delayed by either Party. The Expert will determine the resulting cost reduction. Both Parties shall cooperate with the Expert’s reasonable requests for assistance in connection with its evaluation hereunder. The findings of the Expert shall be binding on the Parties, absent fraud or manifest error. The Parties shall split evenly the cost of the Expert.

l. Non-Compete and Non-Use. Other than its pre-existing commitments to [***], during the Term and for [***] after expiry of Term (unless terminated by Keryx pursuant to Section 10.b.ii, 10.b.iii and for termination by BioVectra under Section 10.c.) BioVectra agrees that it will not, directly or with or on behalf of a third party, develop, market, advertise, promote, manufacture, supply, distribute, offer to sell or sell: (i) any Product (or any other product containing a bulk drug substance and/or final drug product which is the same as, or substantially similar to, the Product) or (ii) any products that are competitive with a Product for the control of serum phosphorus levels and/or iron deficiency in chronic kidney disease or that have the same mechanism of action (as reasonably determined by Keryx) for any other person or entity (other than for Keryx pursuant to this Agreement) without Keryx’s prior written consent. In all cases, under no circumstances will BioVectra (or any of its Affiliates) use any Keryx Technology, Improvements or Confidential Information of Keryx to manufacture, for itself or for any other person or entity other than for Keryx pursuant to this Agreement any product at any time, or for any other purpose other than for the manufacture of Product for Keryx hereunder, and such obligation

15

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

not to use any Keryx Technology, Improvements or Confidential Information of Keryx shall survive the expiration or termination of this Agreement.

5. Product Quality, Disposition

a. BioVectra will manufacture Product according to GMPs, Manufacturing Procedure, Specifications and quality requirements set forth in the Quality Agreement as well as in accordance with all Applicable Law (collectively, all the forgoing the “Manufacturing Requirements”). The Quality Agreement contains and governs all quality related matters and set forth the responsibility of the Parties with respect to certain tasks including change control, deviations, stability, complaints, records, sampling, testing, retaining of samples, release, as well as tasks related to regulatory reporting, investigations, and recalls. Each Batch of Product will be sampled and tested by BioVectra against the Specifications, and the quality assurance department of BioVectra will review the documentation relating to the manufacture of the Batch and will assess if the manufacture has taken place in compliance with the Manufacturing Requirements.

b. In addition to any release requirements set forth in the Quality Agreement, BioVectra will release Product, against agreed upon Specifications and provision to Keryx of a Certificate of Conformance, Certificate of Analysis, certificate of origin (including a BSE / TSE statement), and copies of Batch deviations (collectively “Batch Documentation”) for each Batch of Product will be delivered to Keryx by electronic mail in the form of a PDF. BioVectra will provide to Keryx following the release of each batch, a PDF scan of the executed Batch records. Upon request, and at Keryx’s cost, BioVectra will also deliver to Keryx all Records and Supporting Documentation in the possession or under the control of BioVectra relating to the manufacture of each Batch of Product (or any intermediate or component of Product). Any scope changes to the manufacturing schedule, release requirements or quality requirements and associated impact(s), including impacts to costs, will be reviewed and assessed prior to implementation, and in all cases subject to the prior mutual agreement of both Parties.

c. In addition to Section 5.a. above, as required by GMP, at release Product will be absent of any foreign particulate matter. Safety screening will be implemented by BioVectra as part of the Manufacturing Procedure to aid in the identification of foreign particulate matter. Absence of foreign particulate matter for the purposes of this Agreement shall be the absence of glass, metal, biological or polymeric material. Because Product contacts the glass, metal, and polymeric materials of the manufacturing surfaces as a condition of production, it is expected and understood that these surfaces can and will shed particles into Product at levels that are consistent with GMP (including 21CFR parts 210 & 211); equipment having been designed, fabricated and qualified to perform to pre-determined standards and materials of construction.

16

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

d. If particles larger than what would normally shed into Product are observed, Parties will investigate and evaluate risk of Product, and determine disposition. Any disputes between the Parties regarding whether Product conforms to GMP or the other requirements of the Agreement will be submitted to a neutral expert/laboratory for binding resolution pursuant to the procedures set forth below in Section 4.

e. During each [***] period, one lot of Product will be placed on [***] [***] stability program which shall provide data necessary to support the annual product quality review (APQR). Any additional lots for stability will be considered outside of the scope of this Agreement and a separate quotation will be provided for costs of any additional lots requested.

f. Facility Status. BioVectra shall, at its own cost and expense, ensure that at all times during the Term of this Agreement, the Facility is in a qualified and validated state appropriate for inclusion as a manufacturing site for Product as required by the applicable Authorities, Applicable Law, the Specifications and any Health Registrations and shall ensure that at all times there is sufficient capacity to manufacture Product ordered hereunder.

g. Location of Manufacturing Activities. Notwithstanding anything to the contrary contained herein, all manufacturing activities shall occur at the Facility and BioVectra may not change to a different facility (for all or any portion of the manufacture of Product hereunder) unless consented to by Keryx in writing (in its sole discretion); provided, that in all cases no change of Facility shall relieve BioVectra of any of its obligations under this Agreement. BioVectra shall provide to Keryx supporting data in order to permit Keryx to amend its (and its Affiliate’s and designee’s, as applicable) regulatory filings to reflect any such change and shall otherwise cooperate in good faith with Keryx to comply with all regulatory obligations arising out of such changes (and BioVectra shall reimburse Keryx for all costs incurred in connection therewith).

h. Person in Plant. At all times during the Term of this Agreement, Keryx shall be allowed to have [***] Representatives (“Keryx On Site Representatives”) on site at the Facility (including adequate temporary desk space and other reasonable resources available to these representatives during the periods they are at the Facility) and access to all applicable portions of the Facility (including the Manufacturing train), and all Records, for the purpose of observing, reporting on, and consulting as to the activities hereunder. The Keryx On Site Representatives shall be appropriately trained by Keryx (e.g., GMP training) and shall observe at all times BioVectra’s policies and procedures as they pertain to the facility, and comply with all reasonable directions of BioVectra in relation to the same. BioVectra may refuse or limit in its sole discretion at any time admission to the Facility, by any Keryx On Site Representative who fails to observe policies or comply with reasonable directions.

17

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

i. Quality Agreement. In the event of any discrepancy or inconsistency between the tasks listed in such Quality Agreement and the terms of this Agreement, the terms of the Quality Agreement will govern with respect to quality matters and other similar matters, and the terms of this Agreement shall govern with respect to all other matters; provided, that the Quality Agreement may not be interpreted or construed by either Party as amending or modifying in any way any terms of this Agreement except those terms specifically governed by the Quality Agreement. The Quality Agreement may be modified or amended by the Parties, in writing; provided, that such modification or amendment shall not be deemed to modify or amend the terms of this Agreement.

j. Batch Failure. BioVectra agrees to notify Keryx within [***] of discovery after any Batch failure which could result in BioVectra’s inability to meet the agreed upon delivery dates, or of learning of any failure of any Batch of Product to meet Specifications or the Manufacturing Requirements or if BioVectra has any other safety or efficacy concerns with respect to a Batch of Product. BioVectra agrees not to Reprocess or Rework any Batch of Product, or any intermediate in the manufacture of Product, without the prior written approval of Keryx in writing (in its sole discretion). Should Keryx provide such approval, BioVectra will Reprocess or Rework the affected Batch(es) or intermediate(s) in the manufacture of Product at its own cost. BioVectra will schedule any Reprocess or Rework as determined by BioVectra, according to its most efficient manufacturing schedule.

k. Sarbanes-Oxley Compliance.Without limiting the foregoing, if and to the extent reasonably necessary to ensure Keryx’s continuing compliance with the requirements of the Sarbanes-Oxley Act of 2002 (as determined by Keryx in its sole discretion), BioVectra shall, at Keryx’s request, provide the appropriate report(s) as established by the Statement on Standards for Attestation Engagements No. 16 (SSAE 16) (or its successor standard), and other report(s) as requested by Keryx covering the manufacturing services provided by BioVectra to Keryx. The audit will be performed at BioVectra’s expense and audit findings shall be provided to Keryx on an annual basis consistent with SSAE 16 (or its successor standard) and with the requirements of the Keryx. The report should be prepared by a public accounting firm that is reasonably acceptable to Keryx (preferably one of the Big Four – Deloitte, Ernst & Young, KPMG or PricewaterhouseCoopers). Any material weaknesses in BioVectra’s internal controls revealed by the audit will be promptly remedied by BioVectra.

l. Filing and Maintenance of the Health Registrations. As between the Parties, Keryx shall have the sole right to prepare and file for the Health Registrations, including the CMC, with the applicable Authorities, and, for clarity, BioVectra shall have no right to do so and shall not communicate with any Authorities in connection with any Health Registration. If determined by Keryx (in its sole discretion), Keryx shall have the right to include a designation of BioVectra and the Facility as a manufacturer and manufacturing site of Product in the applicable Health Registrations.

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

m. CMC Information. Keryx, in its discretion, may provide BioVectra with CMC information applicable to BioVectra for BioVectra to manufacture Product in accordance with this Agreement and the Health Registrations, and BioVectra shall comply with all such CMC information in performing its activities hereunder. Any changes to CMC section after the effective date of this Agreement, will need to be reviewed for scope changes to the manufacturing schedule, release requirements or quality requirements and associated impact(s), including impacts to costs prior to implementation. For clarity, all CMC information shall be considered Confidential Information of Keryx hereunder.

n. Regulatory Support for Maintaining Filings. For filings that occur after the Facility has been approved by the FDA, BioVectra shall perform, at Keryx’s cost at BioVectra’s FTE hourly rate, [***], (BioVectra’s FTE rate will be updated and posted to Keryx every [***]), the activities (including tests and also including at Keryx’s request, preparing documents to support CMC modules for filing or filing related support for the Health Registrations) in connection with the receipt and maintenance of the Health Registrations as requested in writing by Keryx from time to time, which activities shall be performed by BioVectra in compliance with all Applicable Law. In all cases, BioVectra shall be prepared for any and all inspections, including pre-approval inspections, by Authorities. Without limitation of the foregoing, BioVectra shall provide Keryx with such information and assistance as Keryx may reasonably request, at Keryx’s cost, for purposes of applying for and maintaining all relevant Health Registrations for Product including providing Keryx with all reports, authorizations, certificates, methodologies, specifications and other documentation in the possession or under the control of BioVectra (or any of its Affiliates) relating to the pharmaceutical/technical development and/or manufacture of Product or any component thereof. BioVectra hereby grants Keryx an irrevocable, perpetual, worldwide, fully paid-up license, with the right to grant sublicenses (through multiple tiers) to use such information, data and other BioVectra Technology reflected in such documentation for the purpose of obtaining and maintaining the Health Registrations for Product as well as a right of reference to any regulatory approvals of BioVectra for use in connection with Product.

o. Communications by Keryx. For purposes of clarity, nothing in this Agreement, including the provisions of this Section 5, shall restrict the right of Keryx (or its Affiliates or other designees) from taking an action that it deems to be appropriate or required by Applicable Law with respect to Product, including making a timely report to a given Authority with respect to Product.

6. Shipment, Payment, Recalls

a. BioVectra will invoice Keryx for Product upon Product [***] delivery by BioVectra. Keryx will pay for invoices less any holdback for disputed amounts, within [***] of invoice receipt. Transfer of ownership and, for the purposes of this Agreement

19

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

“delivery” of Product, shall occur upon completion of the following: [***]. All invoices shall be submitted electronically toaccountspayable@keryx.comand addressed toKeryx Biopharmaceuticals, Inc., Attn: Accounts Payable, One Marina Park Drive, 12^th Floor, Boston, MA 02210 USA.

b. Keryx will be responsible for the shipping costs, customs, duties, clearances and fees for the shipment of Product from the Facility to Keryx's assigned destination. Keryx will also be responsible for the costs to insure Product while in storage at BioVectra if Keryx has requested that BioVectra store the Product rather than ship it after release. After Product delivery, Keryx will review the documentation received pursuant to Section 5.b. and, within [***] calendar days, either (i) provide a written authorization to ship, or (ii) reject Product in accordance with Section 6.d. Once BioVectra has received a written authorization to ship from Keryx, BioVectra shall promptly comply with Keryx’s shipping instructions. For the avoidance of doubt, BioVectra shall not ship Product from the Facility until either it has received Keryx’s written authorization to ship or more than [***] calendar days have passed since Product delivery. If so requested by Keryx, BioVectra shall store Product on site at the Facility for up to [***] days post delivery free of charge. Whether or not Product has shipped from the Facility, Keryx does not waive its right to reject the Product under Section 6.d. by not providing such rejection within the aforementioned [***] period.

c. Any services requested that are beyond the activities related to design and construction of the Facility, manufacture of Product or the ordinary support of the obligations of this Agreement, including changes to Products as specified for reasons other than to uphold compliance to the Quality Agreement, will be considered ad hoc services. BioVectra will charge Keryx according to at BioVectra’s FTE hourly rate, [***], (BioVectra’s FTE rate will be updated and posted to Keryx every [***]) for any such ad hoc services.

d. Keryx shall have [***] days from date of delivery to inspect Product for conformance to agreed upon Specifications and Manufacturing Requirements. Keryx will review the Batch Documentation for each Batch of Product and may test samples of the Batch of Product against the Specifications. During this review period, the Parties agree to respond promptly, but in any event within [***], to any reasonable inquiry or request for a correction or change by the other Party with respect to such Batch Documentation. Keryx has no obligation to accept a Batch if such Batch does not comply with the Manufacturing Requirements. If Keryx rejects a Batch of Product or a portion thereof pursuant to this section for failure to meet Specifications or other Manufacturing Requirements, Keryx will inform BioVectra of the reason in writing. If BioVectra confirms that the Product(s) shall be rejected for failure to meet the Specifications or otherwise fail to conform with the Manufacturing Requirements or the independent testing lab or GMP consultant determines their has been a failure to meet the Specifications or conform with the Manufacturing Requirements, then BioVectra will, at Keryx’s sole option (i) expeditiously replace the Product, at

20

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

BioVectra’s sole cost and expense, including the cost of any Keryx Supplied Materials, according to a schedule to be agreed upon between the Parties; (ii) Rework or Reprocess the Non-conforming Product, at BioVectra’s cost and expense, so that the Batch can be deemed to have been manufactured in compliance with the Manufacturing Requirements; or (iii) refund in full the fees and expenses paid by Keryx for such Batch, including the cost of any Keryx Supplied Materials. Moreover, the Parties will meet to discuss, evaluate and analyze the reasons for and implications of the failure to comply with the Manufacturing Requirements.

e. If BioVectra does not agree with Keryx’s rejection of the Products, the difference of opinion shall be first negotiated in good faith by the Parties through their quality assurance representatives, who will attempt in good faith to resolve any such disagreement and Keryx and BioVectra will follow their respective SOPs to determine the conformity of the Product to the Manufacturing Requirements. If such dispute is not resolved within [***] days after BioVectra’s receipt of Keryx’s written notice of its disagreement, the Parties shall submit such dispute to a mutually acceptable independent third party laboratory for such laboratory’s determination as to whether Product meets or fails to meet Specifications and/or mutually acceptable independent GMP consultant in the case of an alleged failure to comply with GMP or any of the other Manufacturing Requirements, as appropriate. The laboratory and consultant, as applicable, must be of recognized standing in the industry, and consent to the appointment of such laboratory and consultant will not be unreasonably withheld or delayed by either Party. Such laboratory will use the test methods contained in the applicable Specifications. The determination by the third party laboratory will be final binding on the Parties absent manifest error on the laboratory’s part, in which event the laboratory will again run the test or the Parties will promptly select another third party laboratory meeting the criteria above to run the test. The Party determined to have incorrectly assessed the Product’s compliance with the Specifications or other Manufacturing Requirements shall bear all of the costs and expenses of the laboratory and/or consultant, as applicable, incurred in making such determination will be paid by the Party against whom the determination is made. The ultimate disposition of non-conforming Product will be the responsibility of Keryx’s quality assurance department.

f. Keryx will have the responsibility for handling customer returns of the Products. BioVectra will give Keryx any assistance that Keryx may reasonably require to handle the returns.

g. If a Recall or return results from, or arises out of, a failure by BioVectra to provide Product that conforms to the Specifications or other Manufacturing Requirements, in addition to the amounts payable under this Agreement, BioVectra will also be responsible for the documented out-of-pocket expenses of the Recall or return. If the Parties disagree about whether Product conforms to the Specifications or other Manufacturing Requirements, then they shall be submitted to a neutral expert/

21

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

laboratory for binding resolution pursuant to the procedures set forth in Section 6.e. above.

h. If Product is recalled because the Product manufactured and released by BioVectra deviates from the Specifications or otherwise does not meet the Manufacturing Requirements, Keryx shall have the right to avail itself of the remedies set forth in Section 6.d. above.

7. Warranties, Indemnifications

a. BioVectra warrants and represents that:

i. BioVectra is a corporation duly organized, validly existing and in good standing under the laws of the Prince Edward Island, Canada;

ii. BioVectra has full right, power and authority to enter into this Agreement, and that the execution and performance of this Agreement shall not constitute a violation of any material covenant of restriction, or breach of any obligation under any other agreement, contract, commitment, rule, or regulation to which BioVectra is a party or by which BioVectra is bound;

iii. the Products supplied to Keryx shall meet all the Manufacturing Requirements;

iv. when delivered, Keryx will have good and marketable title, free and clear of any liability, pledge, lien, restriction, claim, charge, security interest and/or other encumbrance, to all Product;

v. the work hereunder will be performed with requisite care, skill and diligence, by individuals who are appropriately trained and qualified and in facilities suited for such work;

vi. the conduct and the provision of the work hereunder, including use of any BioVectra Technology, will not violate any patent, trade secret or other proprietary or intellectual property rights of any third party and BioVectra will promptly notify Keryx in writing should BioVectra become aware of any claims asserting such violation; and

vii. BioVectra and its officers and directors and any person or entity engaged by BioVectra in connection with the manufacture of Product or performance of any other obligations under this Agreement: (i) have not been debarred and are not subject to a pending debarment pursuant to section 306 of the United States Food, Drug and Cosmetic Act, 21 U.S.C. § 335a; (ii) are not ineligible to participate in any federal and/or state healthcare programs or federal procurement or non-procurement programs (as that term is defined in 42 U.S.C. § 1320a-7b(f)); (iii) are not disqualified by any government or regulatory authorities from performing specific services, and are not subject to a pending disqualification proceeding; and (iv) have not been convicted of a criminal offense related to the provision of healthcare items or services and are not subject to any such pending action. BioVectra will notify Keryx immediately if BioVectra and its officers and directors and any person or entity engaged by BioVectra in connection with the manufacture of Product

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

or performance of any other obligations under this Agreement is subject to the foregoing, or if any action, suit, claim, investigation, or proceeding relating to the foregoing is pending, or to the best of BioVectra’s knowledge, is threatened

b. Keryx warrants and represents that:

i. Keryx is duly organized validly existing and in good standing under the laws of Delaware, USA;

ii. Keryx has full right, power and authority to enter into this Agreement, and that the execution and performance of this agreement shall not constitute a violation of any material covenant or restriction, or breach of any obligation under any other agreement, contract, commitment, rule, or regulation to which Keryx is a party or by which Keryx is bound;

iii. To the knowledge of Keryx, the provision of and use of any Keryx Technology will not violate any patent, trade secret or other proprietary or intellectual property rights of any third party and Keryx will promptly notify BioVectra in writing should Keryx become aware of any claims asserting such violation; and

iv. Keryx has or will maintain all the necessary qualified personnel, equipment, materials, quality systems recall procedures, facilities and support to maintain performance hereunder.

c. Indemnity. BioVectra will defend, indemnify, and hold Keryx and its directors, officers, employees, agents and Affiliates (all the foregoing “Keryx Indemnitees”), harmless from any and all losses, liabilities, judgments, fines, penalties, damages and reasonable out-of-pocket expenses, including reasonable attorney’s fees and costs (all the foregoing “Losses”), arising from or related to any and all third-party related claims, actions, suits or proceedings (all the foregoing “Third-Party Claims”) arising as a result of the negligent design and/or negligent construction of the Facility, negligent manufacturing of the Product(s), breach of this Agreement, including any representations or warranties, or negligence or willful misconduct by any BioVectra Indemnitee, except to the extent that such Losses result from negligence or willful misconduct of a Keryx Indemnitee. Keryx will defend, indemnify, and hold BioVectra and its directors, officers, employees, agents and Affiliates (all the foregoing “BioVectra Indemnitees”), harmless from any and all Losses arising from or related to any and all Third-Party Claims arising as a result of (i) the marketing, distribution and sale of the final drug product incorporating the Product(s) by Keryx, (ii) Keryx breach of this Agreement, including any representations or warranties and, (iii) the storage and handling of Product by Keryx, except to the extent that such Losses from negligence or willful misconduct of any BioVectra Indemnitee or the failure of any BioVectra Indemnitee to abide by the terms of this Agreement. In the event a person or entity seeks indemnification under this Section 7.c. (each an “Indemnitee”), it shall: (i) inform the other Party (the “Indemnifying Party”) of a Third-Party Claim as soon as reasonably practicable (and in any event within 30 days) after it receives notice of the Third-Party Claim; (ii) shall permit the

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Indemnifying Party to assume direction and control of the defense of the Third-Party Claim (including the right to settle the claim solely for monetary consideration with no admission of fault and using legal counsel of its choice) at the Indemnifying Party’s expense; and (iii) shall cooperate as reasonably requested (at the expense of the Indemnifying Party) in the defense of the claim; provided, however, no Indemnitee, as applicable, shall be required to admit fault or responsibility in connection with any settlement. An Indemnitee’s failure to perform any obligations under this Section shall not relieve the Indemnifying Party of its obligations under this Section 7 except to the extent that the Indemnifying Party can demonstrate that it has been materially prejudiced as a result of such failure. An Indemnitee shall have the right participate in and observe the proceedings through its own separate legal counsel at its own expense.

d. Disclaimer. Except as otherwise set forth above, neither Party makes any warranties, express or implied, with respect to the products, including, without limitation, any warranties of merchantability or fitness for a particular purpose. No representation or statement not expressly contained in this Agreement shall be binding upon a Party as a warranty or otherwise. The stated warranty is exclusive and in lieu of all other warranties provided by law.

8. Insurance.

a. BioVectra and Keryx will maintain comprehensive general liability insurance (which may be in the form of primary insurance and umbrella coverage), including product liability insurance against claims regarding the Products under this Agreement (at a minimum of [***] per occurrence and in the aggregate). Each Party shall maintain such insurance during the Term of this Agreement and, thereafter, for so long as it customarily maintains insurance for itself for similar products and activities, but in no event less than [***] years. Each Party shall cause the other Party to be named as an additional insured under such insurance and shall provide the other Party proof of such insurance upon request.    If requested each Party will give the other a certificate of insurance evidencing the above and showing the name of the issuing company, the policy number, the effective date, the expiration date, and the limits of liability. The insurance certificate will further provide for a minimum of [***]’ written notice to the insured of a cancellation of, or material change in, the insurance.

9. Confidential Information; Intellectual Property

a. Each of the Parties shall protect all information (“Confidential Information”) supplied or revealed to it by the other Party pursuant to this Agreement, and shall not directly or indirectly, disclose to any third party the other Party’s Confidential Information without the prior written consent of the such other Party or use such information except in the case of BioVectra to perform its obligations pursuant to this Agreement and in the case of Keryx to exercise its rights under this Agreement. Confidential Information shall include any and all non-public scientific, technical,

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

financial regulatory or business information, or data or trade secrets in whatever form (written, oral or visual) that is furnished or made available by the disclosing Party to the other Party, as the receiving Party whether marked in writing, or communicated in visual or oral form. Confidential Information of Keryx includes (i) Manufacturing Procedure, Keryx Supplied Materials, Keryx Technology and Improvements; (ii) development and marketing plans, regulatory and business strategies, financial information, and forecasts of Keryx; (iii) information regarding the Facility design and construction; and (iv) all information of third parties that Keryx has an obligation to keep confidential. Confidential Information of BioVectra includes (i) BioVectra Technology; (ii) capabilities, regulatory and business strategies, financial information; and (iii) all information of third parties that BioVectra has an obligation to keep confidential. Each Party shall take such steps as are reasonably required (including without limitation such steps as such Party takes to protect its own proprietary information) to protect the other Party’s Confidential Information from unauthorized disclosure or use. Product, Records and other reports and information provided by, or on behalf of, BioVectra to Keryx shall be deemed Confidential Information of Keryx, as to which Keryx shall be deemed the disclosing Party for purposes of this Agreement. The Parties acknowledge and agree that BioVectra and its employees shall have access to Confidential Information of Keryx (which may include information from its Affiliates, its licensors and third party business partners). For purposes of this Agreement, the terms of this Agreement shall be deemed to be Confidential Information of both Parties. Confidential Information also includes third-party confidential information supplied by receiving Party to disclosing Party hereunder.

b. Nothing in this Section 9 shall be construed to impose a confidentiality obligation on a Party in connection with any Confidential Information to the extent such information can be shown by clear and convincing evidence: (i) is at the time of disclosure already known to the receiving Party (as clearly established by such Party’s prior written records); (ii) is at the time of disclosure or subsequently becomes part of the public domain through no fault, act or omission of the receiving Party; (iii) is subsequently disclosed to the receiving Party by a third party whose receipt and disclosure of such Confidential Information does not, constitute a violation of any confidentiality obligation; or (iv) is independently developed by the receiving Party by employees having no access to or knowledge of Confidential Information received. Further, a receiving Party shall be entitled to disclose the disclosing Party’s Confidential Information that is required by a court or government agency to be disclosed; provided that the receiving Party shall promptly provide the disclosing Party notice in writing of any proposed disclosure under this subsection and an opportunity to object to the disclosure or seek confidential treatment thereof. If so requested, the receiving Party shall provide reasonable assistance in opposing such disclosure or seeking a protective order or other limitations on disclosure. If, after providing such notice and assistance as required herein, the receiving Party remains legally required to disclose any Confidential Information, the receiving Party shall disclose no more than that portion of the Confidential Information which, on the

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

advice of the receiving Party’s legal counsel, is require to be disclosed and, upon the disclosing Party’s request, shall use commercially reasonable efforts to obtain assurances from the applicable court or agency that such Confidential Information will be afforded confidential treatment. Receiving Party may provide disclosing Party’s Confidential Information to its Affiliates, and to its and their directors, employees, consultants, contractors and agents; provided, however, that (i) any such Affiliates, directors, employees, consultants, contractors and agents are bound by written obligations of confidentiality with respect to the disclosing Party’s Confidential Information that are at least as restrictive as those set forth in this Agreement; (ii) receiving Party remains liable for the compliance of such Affiliates, employees, consultants, contractors and agents with such obligations; and (iii) in the case of BioVectra as the receiving Party, such disclosure is only to the extent necessary for BioVectra to carry out its obligations under this Agreement. Furthermore, during the Term, Keryx may disclose Confidential Information of BioVectra relating to the development and/or manufacture of Product to entities with whom Keryx a has (or may have) a marketing and/or development collaboration or to bona fide actual or prospective underwriters, investors, lenders or other financing sources or to potential acquirers of the business to which this Agreement relates, and who in each case have a specific need to know such Confidential Information and who are bound by a like obligation of confidentiality and restrictions on use.

c. Keryx Technology. All rights to and interests in Keryx Technology (including all intellectual property rights therein) will remain solely with Keryx and no right or interest therein is transferred or granted to BioVectra under this Agreement. BioVectra acknowledges and agrees that it does not acquire a license or any other right to Keryx Technology except for the limited purpose of carrying out its duties and obligations under this Agreement and that such limited, non-exclusive, license will expire upon the completion of such duties and obligations or the termination or expiration of this Agreement, whichever is the first to occur.

d. BioVectra Technology. All rights to and interests in BioVectra Technology will remain solely in BioVectra and, except as otherwise set forth in this Agreement, no right or interest therein is transferred or granted to Keryx under this Agreement. [***] BioVectra hereby grants to Keryx [***] right and license to Keryx and its Affiliates to use and modify BioVectra Technology, including the BV Drying Technology, to research, develop, manufacture, have manufactured, distribute, offer for sale, sell, market, and otherwise dispose of Product.

e. Improvements. BioVectra agrees (i) to promptly disclose to Keryx all Improvements related to Keryx Technology; (ii) that all Improvements related to Keryx Technology (and all intellectual property rights related thereto) will be the sole and exclusive property of Keryx; and (iii) that BioVectra will assign and does assign all Improvements related to Keryx Technology (and all intellectual property rights related thereto) to Keryx (or its designee) without additional compensation to BioVectra. BioVectra will take such steps as Keryx may reasonably request (at

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Keryx’s expense) to vest in Keryx (or its designee) ownership of the Improvements related to Keryx Technology (and all intellectual property rights related thereto). In furtherance of the foregoing, BioVectra shall, upon request by Keryx, promptly undertake and perform (and/or cause its Affiliates and its and their respective employees and/or contractors to promptly undertake and perform, as applicable) such further actions as are reasonably necessary for Keryx to perfect its right, title and interest in and to any such Improvements (and all intellectual property rights associated therewith), including by causing the execution of any assignments or other legal documentation, and/or providing Keryx or its patent counsel with reasonable access to any employees or contractors who may be inventors of such Improvements (and any intellectual property rights associated therewith).

f. Non-Exclusive License. [***] BioVectra agrees to grant to Keryx [***] [***] license, to use Improvements made solely by BioVectra personnel and that relate solely to BioVectra Technology, including the BV Drying Technology or the Confidential Information of BioVectra to research, develop, manufacture, have manufactured, distribute, offer for sale, sell, market, and otherwise dispose of Product.

g. Patent Filings. Keryx will have the exclusive right and option, but not the obligation, to prepare, file, prosecute, maintain and defend, at its sole expense, any patents that claim or cover the Improvements (and any intellectual property rights associated therewith).

h. Technology Transfer. If, during the Term, Keryx elects to manufacture Product, or to have Product manufactured by a third party (including but limited to in the event of termination of this Agreement), then BioVectra will provide to Keryx or its designee, all manufacturing information, including documentation, technical assistance, materials and cooperation, as Keryx or its designee may reasonably require in order to manufacture Product. Except for termination by Keryx under Sections 10.c or 11.g, Keryx will compensate BioVectra for such assistance at BioVectra’s FTE hourly rate, [***], (BioVectra’s FTE rate will be updated and posted to Keryx every [***]).

i. Trademarks and Trade Names. Keryx and BioVectra hereby acknowledge that neither Party has, nor shall either Party acquire by reason of this Agreement, any interest or rights of use in any of the other Party’s trademarks, trade names, designs or logos unless otherwise expressly agreed in writing by the Parties. Notwithstanding the foregoing, Keryx shall have the right to use BioVectra’s trademarks, trade names, designs or logos, as may be required by Applicable Law (or as may otherwise be reasonably necessary) in connection with obtaining and maintaining Health Registrations for the Products or in connection with marketing and sale of Product (e.g., listing BioVectra as the manufacturer of product on the packaging, if applicable).

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

j. No Rights/Remedies. All Keryx Confidential Information which BioVectra or its personnel shall obtain or be given access pursuant to or in connection with this Agreement shall be and remain the sole property of Keryx, and BioVectra shall have no rights or interests (except as expressly provided herein) to or in such Confidential Information. The Parties recognize and agree that an action for damages may be inadequate to enforce the restrictions and rights set forth in this Section 9. BioVectra’s breach or threaten breach of this Section 9 may cause immediate and irreparable harm and unascertainable damages to Keryx. The Parties agree that in the event of any breach or threatened breach of this Section 9, Keryx shall be entitled, in addition to any other right or remedy it may have at law or in equity, to seek and obtain injunctive relief, without the need to post bond or other security or show monetary damages.

10. Term and Termination

a. The Agreement will commence on the Effective Date and end on the later of [***], or [***], as such is notified by Supply Committee as described herein, unless terminated earlier as provided herein (“Initial Term”). This Agreement will automatically renew after the Initial Term for successive terms of [***] unless either Party gives written notice to the other Party of its intention to terminate this agreement at least [***] prior to the end of the then current term (collectively, the Initial Term and any extensions thereof, the “Term”).

b. Keryx may terminate the Agreement for the reasons set out below in this Section 10.b.:

i. Due to loss of, or inability of Keryx to obtain, Health Registrations to market the Product in the United States by giving BioVectra sixty (60) days’ prior written notice (or such shorter period if required pursuant to the related Authority action); or

ii. At any time by giving BioVectra sixty (60) days’ prior written notice (or such shorter period if required pursuant to the following Authority action) in the event that any Authority causes the permanent withdrawal of the Product from the United States or takes any action or raises any objection, that prevents Keryx from developing, importing, exporting, purchasing, selling or otherwise commercializing the Product; or

iii. Within [***] days of its awareness, Keryx will notify BioVectra if a party has filed an abbreviated new drug application (“ANDA”) with a Paragraph IV certification, certifying against current or future Orange Book-listed patents related to Keryx’s final drug product. Keryx will provide BioVectra immediate notice, after Keryx’s awareness, if the FDA has approved a drug product pursuant to an ANDA for a version of Auryxia, in any dosage form, that is identified

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

in FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations as therapeutically equivalent (i.e., that is identified with an “A” therapeutic equivalence rating) (“Generic Entry”). After [***], the Parties may proceed to the following market erosion mitigation plan. After [***] from receipt of notice of Generic Entry (or from [***] if Generic Entry has already occurred), the Parties will evaluate the market share of Auryxia and, if the market share of Auryxia has eroded by greater than [***], BioVectra will reduce Minimum Order Quantity obligation by [***], and reduce the price of Product by [***]. Thereafter on Keryx providing [***]’ notice with verification that the market share has eroded by greater than [***], BioVectra will reduce Minimum Order Quantity obligation by [***] of the original Minimum Order Quantity with price of Product remaining at the [***] reduced price. Thereafter, Keryx may terminate the Agreement by providing [***]’ notice with verification that the market share has eroded by greater than [***]. Notwithstanding the above, at any point after [***], Keryx may terminate the Agreement on ninety days’ notice with verification that the market share of Auryxia has eroded by greater than [***]. Once notification of Generic Entry has been given, BioVectra will have the ability to manage manufacturing schedule, to efficiently meet decreasing Product demands. In addition, after notification of Generic Entry, BioVectra has the right to use the Facility as long as any use of the Facility does not interfere with Keryx’s quality and regulatory requirements for Product.

iv. Keryx will notify BioVectra in writing as soon as practicable, in the event of a sale of all or substantially all the assets of Keryx, any merger, consolidation or acquisition of Keryx with, by or into another corporation, entity or person, or any change in the ownership of more than fifty percent (50%) of the voting capital stock of Keryx in one or more related transactions. After notice of any such change of control, the Parties, through the Supply Committee, will meet with representatives of the new entity to ensure continued obligations under this Agreement. Thereafter, but not before [***], Keryx may terminate this Agreement by giving BioVectra twelve (12) months’ prior written notice. Thereafter, but not before [***], BioVectra may terminate this Agreement by giving Keryx, thirty-six (36) months’ notice.

c. Either Party may terminate this Agreement:

i. For breach by the other Party of any of its material obligations under this Agreement: (A) upon ninety (90) days’ prior written notice to the other, if such default occurs prior to Substantial Completion and during such ninety

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

(90) day notice period the default is not corrected to the reasonable satisfaction of the non-defaulting Party; or (B) upon sixty (60) days’ prior written notice to the other, if such default occurs on or after Substantial Completion and during such sixty (60) day notice period the default is not corrected to the reasonable satisfaction of the non-defaulting Party;

ii. If a Party has entered into or committed any act of liquidation, bankruptcy, insolvency, receivership, or assignment for the benefit of creditors, to the extent such act is permitted by law.

d. Upon termination of this Agreement prior to Substantial Completion, the following shall apply:

i. BioVectra will, as promptly as practicable, cease work on the Facility construction and make available for collection by Keryx, FCA: Charlottetown, PE [***], all results and information resulting from the Facility construction and any other (whether in written or electronic form) that are then in BioVectra’s possession and that are the property of Keryx in accordance with this Agreement;

ii. Except for termination by Keryx under Sections 10.c or 11.g, Keryx will, as promptly as practicable, pay all earned but unpaid fees and charges on Facility construction performed as of the date of termination;

iii. Except for termination by Keryx under Sections 10.c or 11.g, Keryx will, as promptly as practicable, pay to BioVectra actual incurred costs for the Equipment including, if applicable, installation and delivery costs; and

iv. Except for termination by Keryx under Sections 10.c or 11.g Keryx will, as promptly as practicable, pay to BioVectra the following costs (“Construction Termination Costs”): (i) all actual reasonable costs incurred by BioVectra to complete activities associated with the completion, expiry or termination including, without limitation, reasonable contractor or third party cancellation fees or penalties, disposal fees that may be payable for any materials and supplies, and if applicable, employee termination expenses; and (ii) all and any non-cancellable obligations to third parties that were previously authorized by Keryx in writing. Employee termination expenses shall only apply to staff at least [***] FTE dedicated to manufacturing the Product that cannot be deployed elsewhere. Keryx will not cover or reimburse costs for contingent offers or recruitment fees.

v. BioVectra will use commercially reasonable efforts to mitigate the costs in Sections 10.d.ii., iii. and iv. BioVectra will further provide Keryx with all documentation Keryx shall require to substantiate these costs. Prior to any amounts being due and payable to BioVectra under this Section, BioVectra shall provide to Keryx a detailed summary of these costs, payable as to undisputed amount by Keryx to BioVectra within [***] days of Keryx’s receipt of such detailed summary.

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vi. If the sum of the monetary amounts associated with each of Sections 10.d ii., iii. and iv. is less than the sum of the amounts paid by Keryx via the price premiums under the [***] and any amounts paid by Keryx under this Agreement up to the termination date, then BioVectra will, as promptly as practicable, pay the difference back to Keryx.

e. Upon expiration or termination of this Agreement at or after Substantial Completion, the following shall apply:

i. Except for termination by Keryx under Sections 10.b.i., 10.b.ii., 10.c or 11.g, Keryx will, as promptly as practicable, pay to BioVectra the unpaid portion, if any, of the [***]. For termination by Keryx under Sections 10.b.i., 10.b.ii., 10.c or 11.g, Keryx will, as promptly as practicable, pay to BioVectra the Facility Reimbursement Fee multiplied by the quantity of Product that has been delivered and invoiced (but not yet paid for by Keryx) up to the effective termination date, at the current rate on the termination notification date.

ii. For termination by Keryx under Section 10.b.iv. and for termination by BioVectra under Section 10.c., Keryx will pay BioVectra [***].

iii. Except for termination by Keryx under Sections 10.c or 11.g, Keryx will pay amounts for Product manufactured pursuant to existing purchase orders, amounts for work in progress, materials and supplies inventory (to the extent the costs can’t be recovered through returns/resale), reasonable wind-down expenses (including employee termination expenses for staff at least [***] FTE dedicated to manufacturing the Product that cannot be deployed elsewhere and not including contingent offers or recruitment fees), and non-cancellable obligations to third parties that were previously authorized by Keryx in writing. If the foregoing wind-down expenses and non-cancellable obligations are covered by Keryx’s payment of the Facility Reimbursement Fee or Facility Reimbursement Payment under Section 10.e.i., no additional payments therefor will be due by Keryx. BioVectra will use commercially reasonable efforts to mitigate the foregoing expenses. BioVectra shall invoice Keryx for all such expenses incurred under this Section, along with supporting documentation for such expenses, within [***] days of the termination date. Prior to any amounts being due and payable to BioVectra under this Section, BioVectra shall provide to Keryx a detailed summary of such, payable as to undisputed amount by Keryx to BioVectra within [***] of Keryx’s receipt of such detailed summary. Keryx shall pay such amounts within [***] days of receipt of a proper invoice and conforming documentation.

iv. Except termination by Keryx pursuant to Section 10.b.iii. and for termination by BioVectra under Section 10.c., Keryx shall have the option (in its discretion) to either: (A) cancel all outstanding purchase orders; or (B) require BioVectra to continue to supply Product in accordance with purchase

31

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

orders submitted prior to the termination or expiration of this Agreement (which supply shall be in accordance with the terms and conditions of this Agreement). For termination under Section 10.b.iv. BioVectra will continue to supply Product to Keryx during the notice period referred to in Section 10.b.iv. and Keryx will be accountable for Minimum Order Quantities during such notice period.

v. Except termination by Keryx pursuant to Sections 10.b.ii and 10.b.iii and for termination by BioVectra under Section 10.c., at the election of Keryx, BioVectra shall continue to supply Product to Keryx on the terms and conditions set forth herein until the earlier of: (i) such time as Keryx notifies BioVectra that Keryx has achieved alternative manufacturing arrangements which are presently capable of manufacturing the applicable Products, or (ii) six (6) months.

vi. Except termination by Keryx pursuant to Sections 10.b.ii and 10.b.iii and for termination by BioVectra under Section 10.c and upon written request from Keryx to BioVectra, pursuant to Section 9.h. above BioVectra shall transfer to Keryx and/or its designee any and all Keryx Technology and Improvements in BioVectra’s possession and shall provide to Keryx and/or its designee BioVectra Technology (but excluding the BV Drying Technology) so as to permit Keryx and/or its designee(s) to produce/manufacture Products with such technical assistance being provided in accordance with a plan provided to BioVectra by Keryx at BioVectra’s FTE hourly rate, [***], (BioVectra’s FTE rate will be updated and posted to Keryx every [***]). To the extent transferable, BioVectra shall also transfer any license(s) obtained specifically for the production/manufacture of Products under this Agreement. BioVectra hereby grants to Keryx a [***] license, [***] any and all BioVectra Technology [***] to make, have made, use, offer for sale, sell, and import Products, which license shall survive termination of this Agreement.

vii. BioVectra shall thereafter not use in any manner whatsoever any trademarks, service marks, names, logos, designs or trade dress of Keryx or any of its Affiliates, or any other Keryx Technology or any Confidential Information of Keryx.

viii. Except in order to fulfill its obligations to manufacture and supply Products to Keryx following expiration or termination of this Agreement as expressly set forth in this Section, BioVectra shall immediately cease the manufacture of any Product(s) as of the date of the notice of termination.

ix. Upon the written request of Keryx, BioVectra shall return to Keryx (or its designee), or destroy, all remaining Keryx Supplied Materials, as requested by Keryx. BioVectra shall perform any such destruction (if destruction was requested by Keryx) in compliance with all Applicable Law.

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

f. Return of Keryx Supplied Materials and other Information. Upon termination or expiration of this Agreement, or at any time during the Term, in each case upon Keryx’s written request, BioVectra shall promptly deliver to Keryx, at Keryx’s expense: (a) all unused Keryx Supplied Materials in BioVectra’s (or any of its Affiliate’s) possession or control; (b) all documentation and all copies thereof in whatever form or medium in BioVectra’s (or any of its Affiliate’s) possession or control relating to the Product, CMCs, Specifications, or Keryx Technology or Improvements other than any documentation which BioVectra must retain for such period of time as required by Applicable Law (as to which copies shall be provided to Keryx); and (c) all other Confidential Information of Keryx and any and all other Records, documents and materials (and all copies thereof) in BioVectra’s (or any of its Affiliate’s) possession or control relating to Product and/or containing any Confidential Information of Keryx other than any Confidential Information which BioVectra must retain for such period of time as required by Applicable Law (as to which copies shall be provided to Keryx); provided, however, that the provisions of this Agreement relating to such Confidential Information shall apply to such Confidential Information for so long as it is so retained notwithstanding the expiration or termination of this Agreement.

g. Inventories. Upon expiration or termination of this Agreement, Keryx at its discretion (i) may obtain from BioVectra any existing inventories of Product ordered under this Agreement that conforms to the Specifications and the other Manufacturing Requirements, at the price for such Product set forth in the Agreement; and (ii) may either (A) purchase any such Product in process held by BioVectra as of the date of the termination, at a price to be mutually agreed (it being understood that such price will reflect, on a pro rata basis, work performed and non-cancelable out-of-pocket expenses actually incurred by BioVectra with respect to the manufacture of such in-process Product); or (B) direct BioVectra to dispose of such material at Keryx’s cost.

11. General Provisions

a. Governing Law; Exclusive Jurisdiction/Venue. The rights and obligations of the Parties under this Agreement, and any disputes arising out of or relating to this Agreement, shall be governed by and interpreted in accordance with the laws of the state of [***], without regard to application of any conflicts of laws provisions that would otherwise apply the substantive law of any other jurisdiction. The Parties expressly reject any application to this Agreement of (a) the United Nations Convention on Contracts for the International Sale of Goods; and (b) the 1974 Convention on the Limitation Period in the International Sale of Goods, as amended by that certain Protocol, done at Vienna on April 11, 1980.Any legal action or proceeding concerning the validity, interpretation and enforcement of this Agreement, matters arising out of or related to this Agreement or its making, performance or breach, or related matters will be brought exclusively in the state and federal courts located in the [***]. The Parties consent to the exclusive

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Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

jurisdiction of those courts and waive any objection to the propriety or convenience of such venues.

b. Relationship of Parties. The relationship of BioVectra to Keryx under this Agreement is intended to be that of independent contractor. Nothing contained in this Agreement is intended or is to be construed so as to constitute BioVectra and Keryx as employer/employee or principal/agent, or the employees or the agents of any Party hereto as employees or agents of the other Party hereto. Neither Party hereto has any express or implied right or authority under this Agreement to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement, or undertaking with any third party, other than the successors and permitted assigns of the respective Parties hereto.

c. Assignment. This Agreement may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party; provided, however, that either Party may, without such consent, but with notice to the other Party, assign this Agreement, in whole or in part, (i) in connection with the transfer or sale of all or substantially all of its assets or the line of business or Product to which this Agreement relates; (ii) to a successor entity or acquirer in the event of a merger, consolidation or change of control; or (iii) to any Affiliate. Any purported assignment in violation of the preceding sentence will be void. Any permitted assignee will assume the rights and obligations of its assignor under this Agreement. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective permitted successors and assigns. No transfer or assignment will relieve the transferor or assignor of any liability or obligations hereunder. BioVectra may not subcontract with any third party, including any Affiliate of BioVectra, to perform any of its obligations under this Agreement or the Quality Agreement without the prior written consent of Keryx. BioVectra will be solely responsible for the performance of any permitted subcontractor, and for costs, expenses, damages, or losses of any nature arising out of such performance as if such performance had been provided by BioVectra itself under this Agreement. BioVectra will cause any such permitted subcontractor to be bound by, and to comply with, the terms of this Agreement, as applicable, including all confidentiality, quality assurance, regulatory and other obligations and requirements of BioVectra set forth in this Agreement.

d. Severability. In the event any provision of this Agreement shall be invalid, void, illegal, or unenforceable, the remaining provisions hereof nevertheless will continue in full force and effect without being impaired or invalidated in any way. Each provision in this Agreement is independent and severable from the others, and no provision will be rendered unenforceable because any other provision is found by a proper authority to be invalid or unenforceable in whole or in part. If any provision of this Agreement is found by such an authority to be invalid or unenforceable in whole or in part, such provision will be changed and interpreted so as to best accomplish the objectives of such unenforceable or invalid provision and the intent of the Parties, within the limits of Applicable Law.

34

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

e. Survival. Expiration or termination of this Agreement for any reason will not relieve either Party of any obligation accruing prior to such expiration or termination. Unless expressly specified to the contrary in this Agreement, no remedy referred to in this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other remedy referred to in this Agreement or otherwise available under law or at equity. The rights and obligations of the Parties set forth herein which, either explicitly state they survive or by their nature should survive termination or expiration of this Agreement, will survive any such termination or expiration, including without limitation those respecting confidentiality, intellectual property, indemnification, warranties, governing law and jurisdiction and notices.

f. Notices. All notices under this Agreement shall be in writing and, other than purchase orders and invoices, which may be sent by email, shall be deemed given if sent by certified or registered first class mail, postage prepaid, or commercial express courier (return receipt or confirmation of delivery requested), or by personal delivery to the Party to receive such notices or other communications called for by this Agreement at the following addresses for a Party as shall be specified by such Party by like notice:

If to BioVectra:

BioVectra Inc.

11 Aviation Avenue

Charlottetown, PE C1E 0A1

Canada    

Email: orders@biovectra.com (for purchase orders and invoices only)

Attention: Legal Department

If to Keryx:

Keryx Biopharmaceuticals, Inc.

Attention: CEO

Address: One Marina Park Drive, 12^th Floor

Boston, MA 02210 USA

One Marina Park Drive, 12^th Floor, Boston, MA 02210

Email: purchasing@keryx.com(for purchase orders only) and accountspayable@keryx.com (for invoices only)

With a cc. at the above address to attention General Counsel

g. Force majeure.     Either Party shall be excused from the performance of its obligations hereunder, or such performance may be delayed, by force majeure causes beyond its reasonable control, including without limitation, acts of God, war, riot, epidemic, fire, flood, insurrection, military authorities, or failure of transportation or communication (“force majeure”), provided that if such nonperformance continues for more than [***] days, the other Party may terminate the Agreement upon written

35

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

notice. The Party affected by any force majeure will promptly notify the other Party, explaining the nature, details and expected duration of the force majeure. Such Party will also notify the other Party from time to time as to when the affected Party reasonably expects to resume performance in whole or in part of its obligations under this Agreement, and to notify the other Party of the cessation of any such force majeure. A Party affected by force majeure will use its reasonable efforts to remedy, remove, or mitigate such force majeure and the effects of it with all reasonable dispatch. If a Party anticipates that force majeure may occur, such Party will notify the other Party of the nature, details and expected duration of the force majeure. Upon termination of the force majeure, the performance of any suspended obligation or duty will promptly recommence.

h. Limited Liability. Except in the case of a Party’s indemnification obligations hereunder, breach of the confidentiality or intellectual property provisions of this Agreement, or gross negligence or willful misconduct (all the foregoing, the “Exceptions”), in no event shall either Party be liable to the other Party for lost profits, loss of goodwill, or any special, indirect, consequential or incidental damages, however caused and on any theory of liability, arising in any way out of the Agreement. This limitation shall apply even if a Party has been advised of the possibility of such damages, and notwithstanding any failure of essential purpose of any limited remedy. Except for cases of Exceptions, a Party’s total liability under this Agreement shall not exceed the greater of (i) [***], which represents [***], or (ii) the amounts paid and payable by Keryx under this Agreement in the full [***] period preceding the date when the liability in question first arose. The limitations set forth herein shall not apply to claims for (i) death or personal injury caused by a Party’s negligence; or (ii) a Party’s fraud or fraudulent misrepresentation.

i. Third Party Beneficiaries. Other than Indemnitees with regard to indemnification under Section 7.c., nothing in this Agreement, express or implied, is intended to confer upon any third party any rights, remedies, obligations or liabilities.

j. Further Actions. BioVectra agrees to execute, acknowledge and deliver such further instruments, and to do all such other acts, requested by Keryx as may be necessary or appropriate in order to carry out the purposes and intent of this Agreement.

k. Public Statements. Except to the extent required by applicable law or regulation or the rules of any stock exchange or listing agency, BioVectra will not make any public statement or release concerning this Agreement or the transactions contemplated by this Agreement, or use Keryx’s name or the name of any Affiliate of Keryx in any form of advertising, promotion or publicity, without obtaining the prior written consent of Keryx.

l. Entire Agreement, Modification, Waivers. This Agreement, which includes the Appendices and Exhibits attached hereto (including the Quality Agreement) that are incorporated herein by reference, and any purchase orders issued by Keryx and

36

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

accepted by BioVectra constitute the full and entire understanding and agreement of the Parties hereto with regard to the subject matter hereof, and supersede all prior agreements and understandings, written or oral, between the Parties with respect to the such subject matter. For the avoidance of doubt, nothing herein shall be deemed to modify or revise the Manufacture and Supply Agreement, which remains in full force and effect in accordance with its terms. This Agreement may not be amended except by a written instrument signed by the Parties hereto. Any delay in enforcing a Party’s rights under this Agreement, or any waiver as to a particular default or other matter, will not constitute a waiver of such Party’s rights to the future enforcement of its rights under this Agreement, except with respect to an express written waiver relating to a particular matter for a particular period of time signed by an authorized representative of the waiving Party, as applicable. The section headings are included solely for convenience of reference and will not control or affect the meaning or interpretation of any of the provisions of this Agreement.

m. Counterparts; Facsimile/PDF Signatures. This Agreement may be executed in counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. Executed signatures pages to this Agreement may be delivered by facsimile or a portable document format (PDF) copy sent by e-mail and such facsimiles or PDFs shall be deemed as if actual signature pages had been delivered.

37

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

Signed on behalf of	Signed on behalf of
BioVectra Inc	Keryx Biopharmaceuticals, Inc.
By:    /s/ [***]	By:     /s/ Gregory P. Madison
Name:    [***]	Name:    Gregory P. Madison
Date:    December 8, 2017	Date:    December 11, 2017
	By:     /s/ Scott A. Holmes
	Name:    Scott A. Holmes
	Date:    December 11, 2017

38

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

APPENDIX 1

Product and Price Schedule

Annual Stacked Tiered Pricing Schedule:

	Price (USD)
Validation Product	[***]
Post Validation Pricing	[***]
	[***]
	[***]
	[***]
Facility Reimbursement Fee	[***]

If BioVectra can demonstrate that its cost of manufacture has increased by more than [***] due to price increases in raw materials or utilities, then it shall bring such evidence to the Supply Committee for review and a decision on how to proceed. The Facility Reimbursement Fee is not subject to any price increase.

*For Product on purchase orders submitted during the Pay Back Period ([***]), the Facility Reimbursement Fee will be added to the per kilogram price of Product. For Product on purchase orders submitted after the Pay Back Period ([***]), the Facility Reimbursement Fee will not apply.

39

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

APPENDIX 2 SPECIFICATIONS

[***]

40

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

APPENDIX 3 – QUALITY AGREEMENT

[***]

75728805v.1

41

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EX-10.13

Exhibit 10.13

MASTER MANUFACTURING SERVICES AND SUPPLY AGREEMENT

This Master Manufacturing Services and Supply Agreement (this “Agreement”) is entered into as of the date of last signature(the “Agreement Date”), by and between Siegfried Evionnaz SA (together with its Affiliates and subsidiaries, “Vendor”), with principal offices located at Route du Simplon 1, 36, 1902 Evionnaz, Switzerland, and Keryx Biopharmaceuticals, Inc. (together with its Affiliates and subsidiaries, “Keryx”), with principal offices located at One Marina Park Drive, 12^th Floor, Boston, MA 02210, USA.

WHEREAS, the Parties hereto desire that Vendor provide Keryx with certain services and create certain deliverables, from time to time in accordance with the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the agreements and the mutual covenants contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

1.    DEFINITIONS

Unless otherwise defined in this Agreement, each of the capitalized terms used in this Agreement (other than the headings of the Articles and Sections) shall have the meanings indicated below. Such meanings shall apply equally to all forms of such terms, including singular and plural forms, unless otherwise clearly indicated.

Affiliate shall mean with respect to any Party any person or entity controlling, controlled by, or under common control with a Party at any time during the term of this Agreement. For purposes of this definition, the term control shall mean the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting stock, by contract or otherwise. In the case of a corporation, the term control shall mean the direct or indirect ownership of at least fifty per cent (50%) of the outstanding voting stock.

Applicable Law shall mean all applicable laws, rules, and regulations and shall include cGMP Regulations.

Application(s) for Marketing Authorization shall mean the formal documentation filed with a Regulatory Authority for registration and/or approval necessary for the marketing and sale of the Product in the respective country(ies) of the Territory.

Batch shall mean a specific quantity of Product that is intended to be of uniform character and quality, within specified limits, and is produced during the same cycle of manufacture as defined by the applicable Batch record.

Certificate of Analysis means a document signed by an authorized representative of Vendor, describing Specifications for, and testing methods applied to, Product, and the results of testing.

Certificate of Compliance means a document signed by an authorized representative of Vendor, certifying that a particular Batch meets the Specifications (defined below).

cGMP Regulations shall mean the regulations defining and regulating current Good Manufacturing Practice guidelines and in particular the latest edition of the GMP guideline of the Pharmaceutical Inspection

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Convention (PIC/S) and further guidelines issued by the FDA, EMA, PIC/S, the International Conference on Harmonization (ICH) or any relevant Regulatory Authority as may be applicable.

CMC shall mean the chemistry, manufacturing, and controls section(s) and data in any Application for Marketing Authorization that covers the chemical composition of a given Product and its components and the control and manufacturing process for any Products and their components, as may be amended or supplemented from time to time.

EMA shall mean the European Medicines Agency or any successors to its responsibilities with respect to pharmaceutical products such as the Product.

FDA shall mean the US Food and Drug Administration or any successors to its responsibilities with respect to pharmaceutical products such as the Product.

Hidden Defects shall mean any instance where Deliverable fails to conform to the Specifications, such failure not being discoverable upon reasonable physical inspection or standard testing upon receipt of Deliverable.

Manufacturing Facility shall mean Vendor’s manufacturing facility, [***] Pennsville, NJ 08070, USA or [***] Saint, Saint Vulbas, France.

Manufacturing Procedure shall mean the agreed upon manufacturing process as detailed in mutually approved batch production records and Batch Documentation including the testing plan, used by Vendor to manufacture the Products.

Operational Capacity shall mean the maximum manufacturing capacity that each Facility shall achieve per calendar year as defined in Attachment A.

Order shall mean an order issued by Keryx for a certain quantity of Product.

Party(ies) shall mean shall mean either Keryx or Vendor, or both, as the context may require.

Product shall mean ferric citrate manufactured at a Manufacturing Facility in accordance with the Manufacturing Procedure and Specifications (defined below) and constitutes a Keryx Deliverable (defined below).

Product Price shall mean, [***].

Quality Agreement shall mean the agreement between Vendor and Keryx which defines the responsibilities of each Party (Delineation of Pharmaceutical Responsibility) with respect to the practices to be followed to ensure Deliverable quality and compliance with cGMP Regulations, substantially in the form attached hereto as Attachment C, or as mutually amended by the Parties after the Agreement Date.

Regulatory Authority shall mean shall mean the EMA, the FDA and any other national or supranational authorities who are responsible for approving the conduct of clinical trials, marketing and sale of pharmaceutical products in the intended country of use.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Specifications shall mean the detailed description of technical requirements the Product has to conform with, as set out in detail in Attachment D, which specifications may be amended from time to time in accordance with this Agreement.

Territory shall mean the [***] and other territories agreed by the Parties in writing from time to time.

2.    PERFORMANCE OFSERVICES AND COMPLIANCE WITH LAWS

2.1    Vendor shall, directly or through its relevant local Affiliate, perform certain expansion services in both of its Manufacturing Facilities (the “Manufacturing Expansion Services”), as further set forth in Attachment A, in order to achieve its Operational Capacity obligations hereunder.

2.2    As long as the Forecast (as such term is defined below) in any calendar year reaches the Operational Capacity, Vendor shall not use the equipment dedicated to the Product for the manufacture of any products other than the Product. In all other calendar years, Vendor shall be free to use the equipment for the manufacture of other products; however, Keryx is granted a right of priority for the use of the equipment.

2.3    Vendor shall perform certain manufacturing services (the “Services”), and create certain Deliverables (as defined below), for Keryx, as specified in one or more mutually agreed upon statements of work or project schedules (each a “Statement of Work” and together the “Statements of Work,” with a template incorporated as Attachment E hereto), attached to this Agreement and numbered in sequential order. The terms of each Statement of Work are incorporated into this Agreement by reference and shall be binding upon the parties hereto. In the event of a conflict or ambiguity between any term of this Agreement and a Statement of Work that is not expressly contemplated by this Agreement, the terms of this Agreement shall govern. Notwithstanding the foregoing, with respect to Product specifically, the act of Keryx issuing an Order that Vendor accepted in writing, such Vendor writing containing the items specified in Section 3.8 below, shall constitute a valid Statement of Work hereunder where such Order is not otherwise issued pursuant to the terms of an outstanding Statement of Work, in which case such Order shall be deemed to be part of such pre-existing Statement of Work.

2.4    In providing the Services, Vendor agrees that it shall comply with all laws and regulations applicable to the performance by the Vendor of its obligations hereunder in the country of the relevant Manufacturing Facility and the Territory and at the time of performance of such obligations and cGMP Regulations.

2.5    To the extent applicable, each Party shall inform itself of and comply with applicable anti-corruption legislation, including legislation enacted pursuant to the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (the “OECD Convention”), and the Foreign Corrupt Practices Act of 1977, as amended (15 U.S.C. §§78dd-1, et. seq.) (the “FCPA”). If applicable to the Services provided hereunder, each Party declares that it understands the provisions of the OECD Convention and the FCPA, and agrees not to breach any such legislation or to cause the other Party to breach any such legislation. Each Party further agrees that, if applicable, it will educate its directors, officers and employees engaged in performing obligations hereunder in relation to such legislation.

2.6    Each Party shall use its best efforts to ensure that its directors, officers and employees comply with all of the terms and provisions of this Agreement and such Party shall be held liable for all acts and omissions of its directors, officers and employees in the performance of this Agreement.

3.    PURCHASING AND PAYMENT

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

3.1    For the Manufacturing Expansion Services by Vendor in both of its Manufacturing Facilities, Keryx shall pay to Vendor a total lump-sum fee of [***] (“Service Fee”), which, for the avoidance of doubt, shall include taxes and fees as well as the actual costs of equipment procurement, commissioning, and validation. It is hereby acknowledged and agreed between the Parties that the Service Fee is a fixed lump sum fee and Keryx shall have no obligation to pay any amounts above the Service Fee for the Manufacturing Expansion Services. Any amounts required to finance the foregoing above and beyond the Service Fee shall be for the sole account of Vendor.

3.2    Keryx shall issue to Vendor on the Agreement Date a [***] purchase order for the Manufacturing Expansion Services (the “Support PO”), upon receipt of which Vendor shall invoice to Keryx the Service Fee, payable in accordance with Section 3.11.

3.3    Purchase and shipment of Services and Deliverables will be in response to written purchase orders submitted by Keryx.

3.4    Keryx will purchase Product at the Product Price in agreed upon volumes as follows by way of issuing anon-cancellable Order to Vendor or its relevant Affiliate:

3.4.1    [***], upon receipt of which Vendor shall within [***] business days confirm its acceptance in writing and provide a delivery schedule mutually acceptable for both Parties that sets out delivery dates for specified quantities of Product. Vendor shall ensure that within [***] days of the last payment made by Keryx under the [***].

3.4.2    on the [***], for [***], upon receipt of which Vendor shall within [***] business days confirm its acceptance in writing and provide a delivery schedule mutually acceptable for both Parties that sets out delivery dates for specified quantities of Product. Vendor shall ensure that within [***] days of the last payment made by Keryx under the [***].

3.4.3    no later than [***], for [***], upon receipt of which Vendor shall within [***] business days confirm its acceptance in writing and, in accordance with Section 3.8, provide a delivery schedule mutually acceptable for both Parties that sets out delivery dates for specified quantities of Product. Vendor shall ensure that within [***] days of the last payment made by Keryx under the [***].

The Parties acknowledge that the [***] sums were paid by Keryx to Vendor, or Vendor’s Affiliates as designated by Vendor, prior to the Agreement Date for the reservation of 2018 manufacturing capacity and the provision of certain engineering, plant set-up and other preparatory services related thereto at the [***] and the [***], respectively, because the Parties were not in a position to execute this Agreement when Vendor began planning its 2018 manufacturing schedule.

3.5    Keryx will have the obligation to purchase (i) for delivery in 2019, a minimum of [***], and (ii) for delivery in 2020 and for the remainder of the Agreement, a minimum [***].

3.6    From [***], both Parties will have the ability to transition the [***] to the [***], upon provision of twelve (12) months’ notice to the other Party ([***]).

3.7    Keryx will provide, for the first time no later than [***], and then at [***], the total projected yearly volume (as well as the projected monthly breakdown) as a rolling non-binding forecast for the subsequent [***] during the Term (defined below) to Vendor in writing, it being specified that such Forecast shall at all times consider the [***] and not exceed the Operational Capacity per Manufacturing Facility set forth in

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Attachment A (the “Forecast”). Based on such Forecast Vendor will plan the following [***] production and will share such plan (the “Manufacturing Plan”) for each Manufacturing Facility with Keryx by [***]. The plan for 2018 shall be agreed by the Parties within ten (10) business days from the date of issuance of the [***]. Keryx acknowledges that Vendor will rely on the accuracy of Keryx’s Forecasts in planning its acquisitions of raw materials, [***].

3.8    Keryx shall submit to Vendor [***] a binding Order per Manufacturing Facility, if applicable, for the delivery of Product for the [***], respectively, from such Manufacturing Facility, and Vendor shall, once confirmed in accordance with the provisions below, fulfill such Order in accordance with this Agreement (including the time periods set forth in such initial Order). Each Order shall be on such form of Order or document as agreed between the Parties from time-to-time in writing and shall include (a) the quantities and types of Service, or Product or other Deliverable, (b) shipping instructions and destination(s) (and for clarity, Keryx may designate a designee to receive shipments (e.g., a distributor)), and (c) the requested date(s) of delivery. Vendor shall, within [***] business days of receipt of an Order, (i) confirm in writing that an Order has been accepted, (ii) specify the dates for delivery of the Product (each, a “Delivery Date”) and (iii) submit to Keryx [***]. It is however acknowledged and agreed that, for the [***], Vendor shall confirm in writing that an Order has been accepted and specify the Delivery Date within [***] business days of receipt of such orders. Vendor shall be required to accept the Orders for Product which are placed with Vendor that do not exceed the Operational Capacity. In the event that the terms of any Order or Order acceptance are not consistent with the Agreement, the terms of this Agreement shall prevail. [***]

3.9    During the Term (defined below) and for [***] thereafter, Vendor agrees that it (and its Affiliates) will not, directly or with or on behalf of a third party, develop, market, advertise, promote, manufacture, supply, distribute, offer to sell or sell any product or any other product containing a bulk drug substance which is the same as, or similar to, the Product for any other person or entity (other than for Keryx pursuant to this Agreement) without Keryx’s prior written consent. In all cases, under no circumstances will Vendor (or any of its Affiliates) use any Keryx Deliverable, Keryx Intellectual Property or Confidential Information of Keryx to manufacture, for itself or for any other person or entity other than for Keryx pursuant to this Agreement any product at any time, or for any other purpose other than for the provision of Services, including the manufacture of Product, for Keryx hereunder, and such obligation not to use any Keryx Deliverable, Keryx Intellectual Property or Confidential Information of Keryx shall survive the expiration or termination of this Agreement

3.10Except as provided in Sections 3.11 and 6.1.14,Vendor shall invoice Keryx for Product upon delivery to Keryx, which occurs following [***]. Transfer of ownership shall occur upon delivery to Keryx, and Keryx assumes all responsibilities and liability arising out of the transport, storage, handling and use of the Product after delivery by Vendor to Keryx.

3.11    Unless provided otherwise in a Statement of Work, Keryx shall pay the undisputed amounts payable to Vendor hereunder within [***] days of receipt of invoices submitted by Vendor, except for the Support PO, under which the Parties agreed on the following specific payment terms: [***]. In the event of any good faith dispute with regard to a portion of an invoice, the undisputed portion shall be paid as provided herein.

3.12    In addition to the compensation for the Services or Deliverables set forth in a Statement of Work, if so provided in the applicable Statement of Work, Keryx agrees to reimburse Vendor for all documented, reasonable out-of-pocket expenses necessarily incurred by Vendor in its performance of the Services or creation of Deliverables, including travel, lodging and meal expenses relating directly to the provision of the Services (“Out-of-Pocket Expenses”); provided, however, that Vendor may not charge an internal premium for or mark up such Out-of-Pocket Expenses. Any individual Out-of-Pocket Expenses in excess

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

of [***], and all expenses for travel, shall be subject to prior review and approval by Keryx and will be reimbursed pursuant to Keryx’s corporate policies for such expenses (which require, among other things, the submission of original, itemized receipts for any expense of [***] or more). Vendor shall detail all such Out-of-Pocket Expenses in its invoices and shall provide documentation of such expenses. All invoices shall be submitted electronically toaccountspayable@keryx.comand addressed toKeryx Biopharmaceuticals, Inc., Attn: Accounts Payable, One Marina Park Drive, 12^th Floor, Boston, MA 02210. Keryx will make reimbursement payments within [***] days of Keryx’s receipt of such invoice.

3.13    In addition to the compensation set forth in the applicable Statement of Work, Keryx shall pay for all applicable taxes in connection in any way with this Agreement,or an instrument or agreement required hereunder, and all interest, penalties, or similar liabilities with respect thereto, including, but not limited to, sales, use, excise, value-added, goods and services, consumption and other similar taxes or duties. Each Party shall be responsible for taxes based on its own net income, employment taxes of its own employees, and for taxes on any property it owns or leases.

3.14    If, from [***] (assuming all payments under the [***] have been made), Keryx wishes to have Product from the [***] invoiced in US Dollars (USD), the following shall apply:

3.14.1    The USD Product Price for Product manufactured in and delivered from the [***] in [***] (assuming all payments under the [***] have been made) shall be based on the average of the exchange rate between the US Dollar (USD) and the EURO (EUR), as defined by the European Central Bank, over the [***] (the “Base Rate”).

3.14.2    In the event of an exchange rate fluctuation during the term of this Agreement, but for the first time in [***] and on each following [***] period thereafter, the Parties agree to adjust the USD Product Price for Product manufactured in and delivered from the [***] for the following [***] as follows: [***]. A currency exchange rate that is more or less than [***] in comparison to the Base Rate, or the Latest Rate on which the latest Product Price adjustment was based, as applicable, will result in a Product Price adjustment up or down equal to the percentage increase or decrease, respectively.

3.15    In the event that Vendor knows or has reason to believe that the costs for Services or Out-of-Pocket Expenses will, or are likely to, exceed the agreed upon amounts set forth on any Statement of Work, Vendor shall promptly notify Keryx in writing of such fact or expectation as well as the anticipated amount in excess and the reason(s) therefore. Keryx shall not be responsible for any such excess costs unless expressly authorized in advance and in writing by Keryx.

3.16    Keryx reserves the right to request and receive from Vendor additional documentation, such as receipts or other verification, for any taxes or Out-of-Pocket Expenses which Vendor claims Keryx is obligated to pay.

4.    RIGHTS IN DELIVERABLES

4.1    As used in this Agreement, the term “Keryx Deliverables” shall mean any and all work product (including the Product), including, but not limited to, reports, documents, templates, studies, strategies, operating models, abstracts and summaries thereof, inventions, discoveries, know-how and improvements, and any other intellectual property of any kind prepared or commissioned work and patentable and non-patentable substances, devices, processes and the like, that are created, invented or conceived of by Vendor

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

(or jointly by Vendor and one or more employees or agents of Keryx) in the performance of its Services for Keryx hereunder.

4.2    As used in this Agreement, the term “Vendor-Owned Deliverables” shall mean any and all standard pre-existing products, reports, newsletters, materials, research, inventions, discoveries, know-how and improvements and other work product produced by Vendor for Keryx under this Agreement that do not incorporate, rely on or require the use of (and are severable from) any Confidential Information of Keryx (Confidential Information defined below), or any Intellectual Property owned by, licensed to, or otherwise controlled by Keryx. For the avoidance of doubt, any work product produced by Vendor for Keryx under this Agreement that are not Vendor-Owned Deliverables shall be Keryx Deliverables.

4.3    Keryx Deliverables, together with Vendor-Owned Deliverables (if any), shall be collectively referred to herein as the “Deliverables.” To the extent possible, the specific Deliverables that Vendor will create and deliver to Keryx shall be enumerated in the applicable Statement of Work(s) and/or any proposals attached thereto. Notwithstanding the failure of the Parties to delineate specific Deliverables in a Statement of Work (including any attached proposal incorporated therein by reference), any deliverables or work product created by Vendor under this Agreement or any Statement of Work hereto shall be considered Deliverables hereunder.

4.4    All intellectual property rights, including, without limitation, copyrights, trade secrets, inventions, whether patentable or not, technology, know-how, results and data (collectively, “Intellectual Property”), embodied in or necessary to Keryx Deliverables (“Keryx Intellectual Property”) shall be owned by Keryx, and Keryx shall have an unrestricted free right to use all such Keryx Intellectual Property as it wishes. Moreover, the Parties agree that the Keryx Deliverables shall be considered Confidential Information of Keryx, and Vendor shall protect the foregoing in accordance with Section 5 of this Agreement. Vendor hereby irrevocably assigns to Keryx all of Vendor’s rights, title and interest, if any, in and to such Keryx Intellectual Property. Vendor agrees to promptly notify Keryx of the creation or existence of any such Keryx Intellectual Property, with reference to this Agreement, and to provide such information and assistance as Keryx may reasonably request from time to time to enable Keryx to exercise its rights hereunder with respect to the Keryx Intellectual Property. Except as needed to perform Vendor’s obligations hereunder, nothing in this Agreement shall be deemed to grant to Vendor any rights or licenses under any patent applications or patents or to any know-how, technology or inventions of Keryx relating to Keryx Intellectual Property or other intellectual property of any kind owned by, licensed to, or otherwise controlled by Keryx.

4.5    Vendor acknowledges that each Keryx Deliverable is a specially prepared or commissioned work (such as, but not limited to, instructional texts, audiovisual aids and translations), and shall be a “work made for hire” by an independent contractor as defined under the United States Copyright laws (17 U.S.C. Sections 101 et seq.). Notwithstanding the above sentence, in the event that any Keryx Deliverable prepared by Vendor in performance of the Services hereunder is determined by a court of competent jurisdiction not to be a “work made for hire” by an independent contractor as defined under the United States Copyright laws (17 U.S.C. Sections 101 et seq.), this Agreement shall operate as an irrevocable assignment by Vendor to Keryx of all copyrights in the Keryx Deliverables, including related derivative works.

4.6    Notwithstanding the foregoing, each Party will retain all of its rights in any materials, ideas, products, concepts, methodologies, processes, techniques, templates, reports, information, inventions, concepts, data, know-how and other works, and all intellectual property rights therein owned or controlled by such Party prior to the date of this Agreement, or acquired or developed after the date of this Agreement, but unrelated to this Agreement and developed without reference to or use of the Intellectual Property or Confidential Information of the other Party.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

4.7    Vendor shall retain all ownership rights, including rights in its pre-existing Intellectual Property, in all Vendor-Owned Deliverables. Vendor hereby grants Keryx [***] license in Vendor-Owned Deliverables to the extent necessary to allow Keryx to manufacture, sell, commercialize or make any other use of the Product, which may include without limitation having the Product manufactured by a third-party supplier, subject to the confidentiality obligations applicable to the related Vendor’s Confidential Information. Such license shall, among other uses, permit Keryx to (i) internally use, distribute, print, copy or maintain in electronic or hard copy format such Vendor-Owned Deliverables, and (ii) externally use, distribute, print, copy or maintain in electronic or hard copy format extracts from the Vendor-Owned Deliverables; provided, that Vendor’s standard copyright notice and attribution is prominently included.

4.8    All materials, compounds, documents, records, drawings and other tangible property, whether or not pertaining to Keryx Confidential Information (as defined below), furnished to Vendor by Keryx in connection with this Agreement or otherwise (“Keryx Property”), shall be and remain the sole property of Keryx.

5.    CONFIDENTIALITY

5.1    Each Party (the “Receiving Party”) agrees to treat as the confidential and exclusive property of the disclosing Party (the “Disclosing Party”) (i) all information that is disclosed by or on behalf of the Disclosing Party in connection with or by reason of the Services, including, but not limited to, Intellectual Property and all information and data relating to the Disclosing Party and its products, business affairs, marketing and promotion plans or other operations, (ii) any confidential or proprietary information that is generated or created by either Party in the course of performing their obligations under this Agreement, and (iii) the results of the Services (collectively, “Confidential Information”). The Receiving Party agrees to use any Confidential Information solely for purposes of performing their obligations, and in the case of Keryx as the Receiving Party, subject to the limitations set out in Sections 5.2 and 5.5 hereof, to exercise its rights and utilize the Services and Deliverables, under this Agreement and for no other purpose without the prior written consent of the Disclosing Party. For the avoidance of doubt and notwithstanding the foregoing, the Manufacturing Records, to the extent that they refer solely to the Product (including the Manufacturing Procedure and the raw materials, intermediates, and components used therein), and Keryx Deliverables (which include the results of the Services and all Keryx Intellectual Property), even though first disclosed by Vendor, constitute Confidential Information of Keryx, as to which Keryx shall be deemed the Disclosing Party for purposes of this Section 5.

5.2    The Receiving Party agrees not to disclose any Confidential Information to any third party for any purpose without obtaining the prior written consent of the Disclosing Party, except (i) to the extent required by law; provided, that the Receiving Party takes all reasonable steps to (a) provide the Disclosing Party with notice of and an opportunity to comment on such required disclosure, (b) limit the scope of such disclosure, and (c) secure the confidential treatment of such disclosure by the recipient(s) thereof consistent with the terms and conditions of this Agreement, and (ii) as expressly set forth herein. The Receiving Party may disclose Confidential Information to its consultants, advisors and collaborators, but only to the extent necessary to perform its obligations hereunder and in the case of Keryx as the Receiving Party to exercise its rights and utilize the Services and Deliverables, subject to the limitations set out in Sections 5.2 and 5.5 hereof. The Receiving Party agrees that any such directors, officers, employees, consultants, advisors, subcontractors, and collaborators (the “Representatives”) to whom Confidential Information is disclosed shall be advised of Receiving Party’s obligations under this Agreement and shall be bound by the terms at least as restrictive as the terms hereof to protect the confidentiality of the Confidential Information pursuant to (x) a written agreement with Receiving Party, or (y) the rules and standards of professional conduct to which such Representative is bound.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

5.3    Confidential Information shall not include information concerning Disclosing Party that Receiving Party is able to demonstrate (i) was rightfully in its possession prior to receipt from Disclosing Party, as evidenced by Receiving Party’s prior written records, (ii) is now, or hereafter becomes, part of the public domain through no act or failure to act on the part of Receiving Party or its Representatives, (iii) becomes known to Receiving Party through disclosure by a third party lawfully having possession of such information and lawfully empowered to disclose such information, or (iv) was independently developed by Receiving Party without the aid, application, use or benefit of Confidential Information disclosed under this Agreement, as evidenced by Receiving Party’s prior written records.

5.4    Except as otherwise required by Applicable Law, Receiving Party shall not publish any articles, make any presentations or otherwise publicly disclose any information relating to the details of this Agreement, or referring to data, information or materials generated as part of the Agreement, in whole or in part, without the prior written consent of the Disclosing Party.

5.5    Receiving Party agrees that, upon the earlier to occur of (i) Disclosing Party’s request or (ii) termination or expiration of this Agreement, Receiving Party shall (a) return to Disclosing Party any or all parts of the Confidential Information and Intellectual Property provided to Receiving Party in documentary or other tangible form, including all copies and other tangible embodiments thereof made by Receiving Party or Receiving Party’s Representatives, and (b) destroy any and all Confidential Information and Intellectual Property in Receiving Party’s possession and stored in then-accessible electronic or other media, provided however, that both Parties may keep original documents, copies and samples as required by law or for archival purposes, and Keryx shall have the right to retain all Vendor-owned Deliverables to which it has rights under Section 4.7 above and all Manufacturing Records to the extent that they refer solely to the Product (including the Manufacturing Procedure and the raw materials, intermediates, and components used therein), and Keryx Deliverables. In no event shall Vendor dispose of any materials or data or other information obtained or generated in the course of performing their obligations hereunder or under any Statement of Work hereto without giving Keryx [***] days’ prior written notice of Party’s intent to do so.

6.    PRODUCT QUALITY AND RECALLS

6.1.1    Vendor shall institute effective procedures to ensure that the manufacture of Product is and remains fully compliant with the Quality Agreement (Attachment C) and all regulatory requirements.

6.1.2    Vendor will manufacture Product according to cGMP Regulations, Manufacturing Procedure, Specifications and the provisions of the Quality Agreement as well as in accordance with all applicable law and the other requirements of this Agreement (collectively, all the foregoing the “Manufacturing Requirements”). The Quality Agreement contains and governs all quality related matters and set forth the responsibility of the Parties with respect to certain tasks including, but not limited to, change control, deviations, stability, complaints, records, sampling, testing, retaining of samples, release, as well as tasks related to regulatory reporting, investigations, and recalls. Each Batch of Product will be sampled and tested by Vendor against the Specifications, and the quality assurance department of Vendor will review the documentation relating to the manufacture of the Batch and will assess if the manufacture has taken place in compliance with the Manufacturing Requirements.

6.1.3For each Batch, Vendor will release Product against agreed upon Specifications (set out in Attachment D) and provision to Keryx of a Certificate of Conformance, Certificate of Analysis, and certificate of origin (including a BSE / TSE statement). Keryx will respond promptly to Vendor (but in no case more than [***]) after notice of Vendor Product release and provision of the requisite documentation with either

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

(i) an authorization to ship form or (ii) notification of rejection for non-compliance with the Specifications. For the first X number of Batches of Product (where, for a calendar year, [***], Vendor will also provide to Keryx, concurrently with the foregoing documentation, a complete and accurate copy of the Batch records, including applicable quality control and quality assurance release of raw materials (for raw materials, Certificates of Analysis) and components (collectively, the “Batch Documentation”), by electronic mail in the form of a PDF. If Keryx has determined that the Batch does not comply with the Specifications, the Parties shall proceed according to Sections 6.1.23 and 6.1.24. Upon request, Vendor will also deliver to Keryx all Records, Batch Documentation, and other supporting Documentation in the possession or under the control of Vendor relating to the manufacture of each Batch of Product (or any intermediate or component of Product). If Vendor has provided the requisite documentation specified in this Section 6.1.3 and Keryx [***], the Batch shall be deemed authorized to ship by Keryx, provided that Keryx still retains its rights of rejection as specified in Section 6.1.22. Any scope changes to the release requirements or quality requirements and associated impact(s), including impacts to costs, will be reviewed and assessed prior to implementation, and in all cases subject to the prior written approval of Keryx.

6.1.4If particles larger than what would normally shed into Product are observed, Parties will investigate and evaluate risk of Product, and determine disposition. Any disputes between the Parties regarding whether Product conforms to cGMP Regulations or the other requirements of the Agreement will be submitted to a neutral expert/laboratory for binding resolution pursuant to the procedures set forth below in Section 6.1.24.

6.1.5One lot of Product per [***] be placed on [***] stability program if manufactured in that year, which shall provide data necessary to support the annual product quality review. Notwithstanding the foregoing, Vendor shall place for-cause lots on such a stability program if reasonably requested by Keryx, at Keryx’s cost and expense.

6.1.6Vendor shall, at its own cost and expense, ensure that at all times during the Term of this Agreement, the relevant Manufacturing Facility is in a qualified and validated state appropriate for inclusion as a manufacturing site for Product as required by the applicable Regulatory Authorities of the Territory, applicable law and the Specifications. Vendor agrees, at its expense, to operate and maintain the facilities and all equipment used, directly or indirectly, to manufacture Product in accordance with the Specifications and all Applicable Law, and to maintain the facilities and equipment in an acceptable state of repair and operating efficiency so as to meet the Specifications and all Applicable Law. Vendor shall be responsible for validating the equipment (including conducting installation, operational and performance qualification), and the production, cleaning and, to the extent applicable, packaging processes, as well as all other appropriate steps performed at the facilities. All validation procedures must: (i) meet Applicable Law and the requirements of the Quality Agreement; and (ii) be found acceptable by Regulatory Authority inspectors, if applicable. If any Regulatory Authority finds Vendor’s validation procedures to be unacceptable or Vendor does not otherwise comply with clause (i) above, then all validation must be repeated until the validation procedures otherwise meet the requirements of clause (i) above and to receive all Regulatory Authority approvals. Any costs or expenses related to bringing a facility or any equipment needed to manufacture Product into compliance with any applicable regulatory requirements at any time shall be borne exclusively by Vendor.

6.1.7Location of Manufacturing Activities. Notwithstanding anything to the contrary contained herein, all manufacturing activities shall occur at the relevant Manufacturing Facility and Vendor may not change to a different facility (for all or any portion of the manufacture of Product hereunder) unless consented to by Keryx in writing (in its sole discretion); provided, that in all cases no change of Manufacturing Facility shall relieve Vendor of any of its obligations under this Agreement. Vendor shall provide to Keryx supporting

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

data in order to permit Keryx to amend its (and its Affiliates’ and designees’, as applicable) regulatory filings to reflect any such change and shall otherwise cooperate in good faith with Keryx to comply with all regulatory obligations arising out of such changes (and Vendor shall reimburse Keryx for all costs incurred in connection therewith).

6.1.8Person in Plant. At all times during the Term of this Agreement, Keryx shall be allowed, during reasonable times while manufacturing activities are occurring, subject to safety and access hours constraints, to have representatives on site at the Manufacturing Facility and access to all applicable portions of the Manufacturing Facility (including the manufacturing train), and all associated records, for the purpose of observing, reporting on, and consulting as to any manufacturing activities hereunder. Vendor shall use commercially reasonable efforts to provide Keryx personnel adequate temporary desk space and other reasonable resources available during the periods they are at the Manufacturing Facility.

6.1.9Quality Agreement. In the event of any discrepancy or inconsistency between the tasks listed in such Quality Agreement and the terms of this Agreement, the terms of Quality Agreement will govern with respect to (i) the delineation of responsibilities pursuant to cGMP Regulations, (ii) the Product Specifications or the Manufacture Procedure and (iii) audits, and the terms of this Agreement shall govern with respect to all other matters; provided, that the Quality Agreement may not be interpreted or construed by either Party as amending or modifying in any way any terms of this Agreement except those terms specifically governed by the Quality Agreement. The Quality Agreement may be modified or amended by the Parties, in writing; provided, that such modification or amendment shall not be deemed to modify or amend the non-quality terms of this Agreement.

6.1.10Quality Systems. Vendor shall maintain systems of operation and quality assurance that are consistent with Applicable Law and as otherwise may be required by applicable Authorities. Such systems shall include written policies and procedures that address, at a minimum, the following: (a) quality systems; (b) facilities and equipment systems; (c) raw materials systems; (d) production systems; (e) packaging and labeling systems; and (f) laboratory control systems.

6.1.11Batch Failure. Vendor agrees to notify Keryx promptly (but in no event more than [***]) of discovery after any Batch failure which could result in Vendor’s inability to meet Keryx’s requested delivery dates, or of learning of any failure of any Batch of Product to meet Specifications or the manufacturing requirements or if Vendor has any other safety or efficacy concerns with respect to a Batch of Product. Vendor agrees not to reprocess or rework any Batch of Product, or any intermediate in the manufacture of Product, without the prior written approval of Keryx in writing (in its sole discretion). Vendor shall notify Keryx promptly (but in no event more than [***]) after any failure of a released Batch during stability testing.

6.1.12Manufacturing Records. In connection with the manufacture of Product, Vendor shall maintain all records necessary to comply with Applicable Law and the provisions of the Quality Agreement. In addition, Vendor shall prepare and adhere to Batch documentation in accordance with its normal procedures, including creating and maintaining quality control records and all raw data relating to each Batch processed. Specifically, but without limitation, Vendor shall maintain complete and accurate Manufacturing Records (defined below) with respect to: (i) Products (including all yield data, Batch records, supporting documentation, validation data, stability testing data, quality control, laboratory testing, as well as any other data and records required under cGMP Regulations or the Quality Agreement to be retained with respect to Product); and (ii) any other records reasonably necessary to support cGMP Regulations and other applicable regulatory requirements (collectively, “Manufacturing Records”). All documentation provided to Keryx for review and/or approval shall be provided in the English language or as an accurate translation into English.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Vendor shall make Manufacturing Records available for inspection, audit and copying by Keryx and its representatives and agents, including Keryx’s auditors, at no cost to Keryx, upon reasonable request during normal business hours. Vendor shall maintain and preserve all Manufacturing Records for the longest period as may be required by applicable law and otherwise in accordance with the Quality Agreement. Vendor shall provide Keryx on a periodic basis, and at least annually, or as otherwise requested by Keryx from time to time, such information concerning Product, production batches, yields and quality status as is specified in the Quality Agreement. Notwithstanding anything in Section 5 to the contrary, Keryx shall have the right to use and disclose Manufacturing Records for any lawful purpose.

6.1.13Materials. In the manufacture of Product, Vendor shall only use [***].

6.1.14Preparing and Submissions of Application for Marketing Authorization. As between the Parties, Keryx shall have the sole right and responsibility to prepare and file an Application for Marketing Authorization, including the CMC, with the applicable Regulatory Authorities, and, for clarity, including responding to any questions and inquires of the Regulatory Authority subsequent to filing. If determined by Keryx (in its sole discretion), Keryx shall have the right to include a designation of Vendor and the Manufacturing Facility as a manufacturer and manufacturing site of Product in the applicable health registrations. Notwithstanding the foregoing, prior to filing with the applicable Regulatory Authorities, Keryx will provide to Vendor a redacted copy of the Product portion of such Application for Marketing Authorization and supporting documents. This disclosure will permit Vendor to verify that the Application for Marketing Authorization accurately describes the Manufacturing Procedure that Vendor will perform under this Agreement. Vendor requires [***] to perform this review, but the Parties may agree a shorter time for the review as needed.

6.1.15CMC Information. Keryx, in its discretion, may provide Vendor with CMC information applicable to Vendor for Vendor to manufacture Product in accordance with this Agreement and the Health Registrations, and Vendor shall comply with all such CMC information in performing its activities hereunder. For clarity, all CMC information shall be considered Confidential Information of Keryx hereunder.

6.1.16Regulatory Support for Preparing and Submitting Application for Marketing Authorizations. If set out in any particular Statement of Work, Vendor shall perform the activities (including tests and documents to support CMC modules for preparing and submitting Applications for Marketing Authorization) in connection with the preparing, completing, and submitting Applications for Marketing Authorization, which activities shall be performed by Vendor in compliance with all Applicable Law. If set out in any particular Statement of Work, and in any case at Keryx’ sole costs and expenses, Vendor shall be prepared for reasonable inspections, including pre-approval inspections, by Regulatory Authorities. If set out in any particular Statement of Work, and in any case at Keryx’ sole costs and expenses, Vendor shall provide Keryx with such information and assistance as Keryx may reasonably request for purposes of preparing and submitting Applications for Marketing Authorization for Product including providing Keryx with all reports, certificates, where applicable, methodologies, specifications and other documentation in the possession or under the control of Vendor (or any of its Affiliates) relating to the pharmaceutical/technical development and/or manufacture of Product or any component thereof.

6.1.17Vendor Approvals. Except as otherwise specifically set forth herein, Vendor shall be responsible for obtaining and maintaining (and throughout the Term, Vendor shall maintain in full force and effect) all permits and approvals from all Regulatory Authorities in the Territory or as otherwise may be required under Applicable Law, in each case, to operate the Manufacturing Facility and/or which may be otherwise required in connection with the performance of its obligations hereunder, including all permits.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

For clarity, as set forth above Vendor shall have no rights with respect to any Application for Marketing Authorization.

6.1.18Communication with Regulatory Authorities. As between the Parties, Keryxshall have the sole right to communicate with the appropriate Regulatory Authorities relating to Product, and Vendor shall have no right to do so. Vendor shall at Keryx’s costs and expenses provide Keryx or its Affiliate, promptly, all information in Vendor’s (or its Affiliate’s) possession or control concerning Product which is reasonably requested by Keryx (or its Affiliate) and which is reasonably necessary to meet Keryx’s regulatory obligations. Vendor shall, to the extent such notice is not prohibited by Applicable Law, notify Keryx within [***] of any Regulatory Authority request for samples of Product or Batch records or any other information related to Product and, to the extent permissible by applicable laws, will not provide such material, records or information until such notification is made to Keryx.

6.1.19Notification of Governmental Authority Visit, Inspection or Inquiry. Vendor shall, to the extent permissible by Applicable Law, advise Keryx immediately (but in no event more than [***] hours after Vendor awareness of scheduled visits or inspections and no more than [***] hours after Vendor awareness of unscheduled visits or inspections) of any Regulatory Authority visit or inspection that relates to Product, raw materials, or the Manufacturing Facility, or any written or oral inquiries by such Regulatory Authority concerning Product (including safety and efficacy claims), raw materials, or any Manufacturing Facility. If such visit or inspection or inquiry is related to Product, raw materials, or the Manufacturing Facility, Vendor shall to the extent permissible by Applicable Law ensure that one representative of Keryx is allowed to be present on site, if requested by Keryx. Again to the extent permissible by Applicable Law, Vendor shall promptly (and in no event later than [***] of its own receipt) furnish Keryx available summaries of all reports, documents and correspondence with respect to any Regulatory Authority inquiries, visits or inspections of the Manufacturing Facility or otherwise related to Product or raw materials as well as, to the extent permissible by Applicable Law, a copy of each report, document and correspondence issued by or provided to any Regulatory Authority in connection with such request, visit or inquiry. To the extent permissible by Applicable Law, Vendor and Keryx shall consult with one another in an effort to arrive at a mutually acceptable response to the extent related to Product. Without limiting the foregoing, Vendor shall furnish to Keryx, to the extent permissible by Applicable Law, (a) within [***] after receipt, any report or correspondence issued by the Regulatory Authority in connection with such visit, inspection or inquiry, including if applicable any FDA Form 483, Establishment Inspection Report, or warning letter, and (b) copies of any and all proposed responses or explanations to any Authority relating to items set forth above prior to the submission of such responses or explanations to any Regulatory Authority by Vendor and will consult with, and require approval from, Keryx before responding to each such communication, provided that the documents specified in (a) and (b) of this Section 6.1.19 may be redacted to remove the confidential information of Vendor’s other customers. Vendor will provide Keryx with a copy of its final responses within [***] after submission.

6.1.20Communications by Keryx. For purposes of clarity, nothing in this Agreement, including the provisions of this Section 6, shall restrict the right of Keryx (or its Affiliates or other designees) from taking an action that it deems to be appropriate or required by applicable law with respect to Product, including making a timely report to a given Regulatory Authority with respect to Product.

6.1.21Storage of Materials and Product. Vendor shall ensure that all raw materials and components that are in Vendor’s control and are to be used in the manufacture of Product, as well as all Manufacturing Procedure intermediates and Product in Vendor’s control, are stored in accordance with the terms and conditions of Vendor’s procedures (based on information provided by Keryx), as approved by Keryx in writing, that describe the methods of packaging, preserving, monitoring and storing any and all Keryx

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

property, including the Product and the Manufacturing Procedure, or as otherwise mutually agreed to by Vendor and Keryx and/or as recommended in writing by third party suppliers of any such raw materials and components.

6.1.22[***]Upon receipt of Product at Keryx’s facilities, Keryx shall examine the Product within [***] days in order to determine compliance with the Specifications, the Quality Agreement, cGMP Regulations, the Manufacturing Procedure and the other requirements of this Agreement, including Applicable Law. If, in Keryx’s opinion, the Product delivered does not comply with any of the foregoing, Keryx shall notify Vendor promptly in writing thereof. If Keryx does not notify Vendor accordingly within the specified time set forth above the Product is deemed accepted, provided that Keryx retains the right to reject the Product for an [***] period from delivery in case of Hidden Defects, in which case Keryx shall inform Vendor in writing within [***] business days of discovery thereof. Any claims by Keryx regarding Product delivered shall specify in reasonable detail the nature and basis for the claim and cite Vendor’s relevant Batch numbers or other information to enable specific identification of the Product involved. Vendor agrees to review any written claim made by Keryx regarding the quality of the Product and to provide Keryx with the results of such review within [***] days. If such review and testing by Vendor confirms that a certain quantity of Product did not meet the Specifications, Keryx shall have the right to reject such Batch of Product. In this case the Parties shall proceed according to Section 6.1.23. Keryx shall, at Vendor’s expense, dispose of or deliver such quantity involved to such destination as Vendor shall direct in writing, provided that such directions are in compliance with applicable environmental laws and regulations. Keryx shall not dispose of any Product supplied by Vendor and found not to be in line with the Specifications without Vendor’s prior written consent; provided, however, if such consent is not received by Keryx within [***] business days of request by Keryx for such consent, Keryx may dispose of such Product at Keryx’s discretion.

6.1.23The Parties may confer and agree in writing that Vendor will, as Keryx may elect, expeditiously (1) replace the Product, at Vendor’s sole cost and expense, including the costs of any Keryx-supplied material (if applicable), according to a schedule to be agreed between the Parties, (2) refund in full the fees and expenses paid by Keryx for such Batch, including the costs of any Keryx-supplied material (if applicable), or (3) rework such rejected Product. In the event that a rework procedure is recommended by Vendor to remedy rejected Product and Keryx approves the rework procedure, all records documenting the rework must be maintained by Vendor with the Product Batch’s original production record, and all identification must relate to the original Batch number identification on Product and packaging. Vendor shall be responsible for costs associated with rework or reprocessing of Batches of Product due to physical contamination, equipment failure or rejected Product not fully meeting Specifications or any of the other requirements set forth above. Except in the case of Vendor’s [***] or willful misconduct, but without prejudice to Keryx’s rights and remedies pursuant to Section 8.1, such replacement, refund, or rework shall be the only remedy available to Keryx in case of Deliverable not conforming to the Specifications.

6.1.24If the Parties hereto fail to agree as to whether a delivered quantity of Product complies with the Specifications, the Parties shall cause the Batch in dispute to be tested and further analyzed by an independent testing laboratory mutually selected by the Parties. The independent laboratory must meet the requirements of cGMP Regulations, be of recognized standing in the industry, and consent to the appointment of such independent laboratory will not be unreasonably withheld or delayed by either Party. The independent laboratory will use the test methods contained in the Quality Agreement, or if not contained therein, the reference standards provided by Keryx. The decision of the independent testing laboratory shall be deemed final as to any dispute over Product quality absent manifest error. Should the laboratory’s testing determine that delivered Product does not comply with the Specifications, then Vendor shall bear all costs for the independent laboratory testing and Keryx shall have the right to reject such batch of Product. In this case the Parties shall proceed according to Section 6.1.23. However, if said quantity of Product is determined by the independent laboratory to have met the Specifications, then Keryx shall bear all costs of the independent

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

laboratory testing and compensate Vendor for the batch in question as set out in this Agreement. Upon execution of this Agreement, and thereafter during the term hereof, each Party shall disclose and deliver to the other Party such information on the technical or medicinal aspects of the Product which it has not already provided to the other Party under an earlier agreement and which it determines may assist the other Party in performing its obligations hereunder, including material correspondence from applicable Regulatory Authorities relating to the Product.

7    REPRESENTATIONS ANDWARRANTIES

7.1    Vendor represents and warrants that (i) the Services (including all Product delivered hereunder) will be performed in accordance with the Agreement, including the Specifications, Quality Agreement, Manufacturing Procedure and applicable Statement of Work, and (ii) its performance of the Services and related creation of Deliverables (including all Product delivered hereunder) will be in compliance with all Applicable Laws applicable in the Territory and at the time of manufacture of the Products or performance of the Services.

7.2    Vendor warrants that Deliverables shall conform to the Specifications and that Keryx will have good and marketable title (i.e. full ownership), free and clear of any liability, lien, restriction, claim, charge, security interest and/or other encumbrance to all Products and other Deliverables upon delivery.

7.3    Keryx warrants that except as set out otherwise in any particular Statement of Work, none of the processes, procedures, substances or materials, supplied by Keryx or its designee and used by Vendor in the performance of the Services or the manufacture of Deliverable infringes or misappropriates or will infringe or misappropriate the intellectual property rights of any third party.

7.4    Vendor warrants that, except as set out otherwise in any particular Statement of Work or unless resulting from processes, procedures, substances or materials, supplied by Keryx or its designee, none of the Services performed or Deliverables provided infringes or misappropriates or will infringe or misappropriate the intellectual property rights of any third party.

7.5    THE PRECEDING SECTIONS 7.1, 7.2 AND 7.4 ARE VENDOR’S ONLY EXPRESS WARRANTIES CONCERNING THE SERVICES AND DELIVERABLES, AND ARE MADE EXPRESSLY IN LIEU OF ALL OTHER WARRANTIES AND REPRESENTATIONS, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY, INFORMATIONAL CONTENT, SYSTEMS INTEGRATION, NON-INFRINGEMENT, INTERFERENCE WITH ENJOYMENT OR OTHERWISE. WITH THE EXCEPTION OF THE EXCEPTIONS AS DEFINED IN SECTION 15.1 BELOW, EITHER PARTY’S LIABILITY UNDER THIS AGREEMENT SHALL BE STRICTLY LIMITED TO THE REMEDIES PROVIDED FOR UNDER THIS AGREEMENT.

8.    INDEMNIFICATION

8.1    Subject to the terms and conditions of this Agreement, Vendor shall protect, defend, indemnify and hold harmless Keryx and its present and former Affiliates, directors, officers, employees successors and assigns from and against any loss, liability or expense incurred in connection with a claim, demand, action, suit or proceeding brought by a third party (a “Claim”), arising from or related to (i) any breach by Vendor of any of its obligations, representations or warranties under this Agreement, (ii) the negligence or willful misconduct of Vendor (or any of its Representatives) in performing its obligations under this Agreement, or (iii) any claim related to Vendor’s warranty in Section 7.4; provided, however, that Vendor shall have no

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

such obligation with respect to any Claim to the extent that such Claim arises from the negligence or willful misconduct of Keryx (or its Representatives), or the breach by Keryx of any of its obligations under this Agreement.

8.2    Subject to the terms and conditions of this Agreement, Keryx shall protect, defend, indemnify and hold harmless Vendor and its present and former Affiliates, directors, officers, employees successors and assigns from and against any loss, liability or expense incurred in connection with a Claim, arising from or related to (i) any breach by Keryx of any of its obligations, representations or warranties under this Agreement, (ii) any information provided by Keryx to Vendor prior to Vendor’s performance, provision, or manufacture of the Services or Product under this Agreement, (iii) side effects, characteristics or defects of Product not attributable to Vendor, or (iv) the use, marketing, distribution by Keryx of Product or any pharmaceutical product containing the Product provided, however that Keryx shall have no such obligation with respect to any Claim to the extent that such Claim arises from the negligence or willful misconduct of Vendor (or its Representatives), or the breach by Vendor of any of its obligations under this Agreement.

8.3    The indemnification obligations of each Party are subject to the following conditions:

(i)    The party seeking to be indemnified (the “Indemnified Party”) shall have provided prompt written notice of a Claim or events likely to give rise to a Claim to the party with the obligation to indemnify (the “Indemnifying Party”) (in any event within sufficient time so as not to prejudice the defense of such Claim); and

(ii)     The Indemnifying Party shall be given the opportunity at all times to control the defense of the Claim, with the cooperation and assistance of the Indemnified Party; provided, however, that the Indemnifying Party shall not settle any Claim with an admission of liability or wrongdoing by the Indemnified Party without such party’s prior written consent, such consent not to be unreasonably withheld or delayed.

9.    STANDARDS OF VENDOR PERSONNEL

9.1    Vendor represents and warrants that Vendor and each Representative of Vendor assigned by it to perform the Services (“Personnel”), will (i) as applicable, demonstrate compliance with Federal, state and local laws governing residency or registry for employment eligibility (e.g., submission of proper documentation confirming US citizenship or legal alien status and/or INS Form I-9), (ii) not have been convicted of any crime that reflects on the qualifications of the individual to perform the job assignment for Keryx, and (iii) to the extent applicable to the Services provided by the Vendor, have not have been excluded, suspended or debarred from participation in a federal health care program or, to the Vendor’s knowledge, be currently subject to any pending debarment or similar proceedings.

10.    OTHER CLIENTS

10.1    Vendor represents to Keryx that its execution of and performance of the Services under this Agreement and the Statement of Work(s) hereto do not and will not conflict with any other agreement to which Vendor is a party, such that Vendor’s performance of the Services hereunder will be hampered by, diminished or affected in any way by its representation of other clients.

11.    INDEPENDENT CONTRACTOR

11.1    In connection with this Agreement, each Party is an independent contractor. This Agreement shall not create any relationship of employment, agency or partnership between the parties and shall not give

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

either party any authority to bind or commit the other party. Neither Vendor nor any of its Personnel shall be entitled to any benefits provided by Keryx to its employees. Vendor shall be solely responsible for payment of all employment-related and compensation-related charges and taxes associated with Vendor’s performance of Services hereunder.

12.    INSURANCE

12.1    Vendor and Keryx will maintain comprehensive general liability insurance (which may be in the form of primary insurance and umbrella coverage), including product liability insurance against claims regarding the Product under this Agreement at a minimum of [***] per occurrence and in the aggregate. Each Party shall maintain such insurance during the Term of this Agreement and, thereafter, for so long as it customarily maintains insurance for itself for similar products and activities, but in no event less than [***]. Each Party shall provide the other party proof of such insurance upon request.     If requested each Party will give the other a certificate of insurance evidencing the above and showing the name of the issuing company, the policy number, the effective date, the expiration date, and the limits of liability. The insurance certificate will further provide for a minimum of thirty (30) days’ written notice to the insured of a cancellation of, or material change in, the insurance.

13.    AUDIT; MAINTENANCE OF RECORDS

13.1    Subject to the provisions of the Quality Agreement, Vendor shall maintain records related to each Statement of Work, including, but not limited to, the Services under the Statement of Work, accounting records, time sheets, written policies and procedures, test results, reports, correspondence, memoranda and any other documentation relating to the performance of its obligations under this Agreement. Vendor shall, during normal working hours, and with [***]’ advance notice, permit Keryx or its authorized agents to carry out financial, compliance and cGMP Regulations audits on the site of performance of the Services or manufacture of the Deliverables during the Term and for [***] after the termination or expiration of this Agreement. Vendor shall make appropriate Personnel or other Representatives available to Keryx and its agents to discuss such records and to resolve any questions. Keryx shall comply with all of Vendor’s policies regarding, safety, health, data protection, confidentiality and the like which Vendor, in its sole discretion, deems relevant. Such audits shall not be conducted more frequently than once every [***]. For the avoidance of doubt, the foregoing notice and frequency parameters do not apply to for-cause audits. Subject to the provisions of the Quality Agreement, Vendor shall preserve all records relating to the Services (including but not limited to Manufacturing Records) for a period of [***] (or longer period if required by Applicable Law) following the completion of all work under the applicable Statement of Work, and shall provide Keryx with at least [***] prior written notice of its intent to destroy or otherwise dispose of such records. In the event that Vendor provides such notice, Keryx shall have the right to assume control of such records, at Keryx’s expense, prior to their destruction.

13.2     Sarbanes-Oxley Compliance.Without limiting the foregoing, if and to the extent reasonably necessary to ensure Keryx’s continuing compliance with the requirements of the Sarbanes-Oxley Act of 2002, Vendor shall, at Keryx’s request, provide the appropriate report(s) as established by the Statement on Standards for Attestation Engagements No. 16 (SSAE 16) (or its successor standard), and other report(s) as requested by Keryx covering the manufacturing services provided by Vendor to Keryx. The audit will be performed at Keryx’s sole costs and expense and audit findings shall be provided to Keryx when reasonably available. The report should be prepared by a public accounting firm that is reasonably acceptable to Keryx (preferably one of the Big Four – Deloitte, Ernst & Young, KPMG or PricewaterhouseCoopers). In case of any material weaknesses in Vendor’s internal controls revealed by the audit, the Parties shall meet and discuss in good faith to identify mutually acceptable solutions.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

13.3    Audit Reports and Other Information. Vendor acknowledges that Regulatory Authorities may, in conducting an inspection of Keryx, request copies of reports of Keryx audits of its suppliers. For clarity, in response to such a request, Keryx shall not have the right to provide to the Regulatory Authority any report of any compliance audit conducted hereunder (including as may be conducted in accordance with the Quality Agreement) and any other information in connection with the activities hereunder without the prior written consent of Vendor, which shall not be unreasonably withheld.

14.    ADVERSE EVENT, PRODUCT COMPLAINT REPORTING AND RECALLS

14.1    Keryx shall be responsible for the reporting of all adverse events of the Product required by Regulatory Authorities, unless applicable laws and regulations would require a third party to be responsible for such reporting. Keryx shall inform Vendor promptly of any such adverse drug experiences to the extent such adverse drug experiences are potentially related to Vendor’s performance of any of the Services or manufacturing of the Deliverables under this Agreement.

14.2    Vendor shall promptly forward to Keryx all complaints associated with Product, including without limitation, any serious or unexpected adverse reactions reported to Vendor resulting from the use of Product, at the contacts and within the time frame specified in Section 14.3. Keryx shall be responsible for handling or responding to all Product complaints, including those associated with manufacturing. Vendor shall cooperate in the investigation of the Product complaints involving the manufacture thereof.

14.3    During the Term if Vendor becomes aware of an adverse event or product quality complaint associated with use of Product (whether or not expected or labeled), Vendor shall report the adverse event to Keryx within [***]. Information reported shall include: patient identifiers, reporter (including reporter name and contact information), the suspect product information (drug, dose, route, date of administration), and details regarding the adverse event or product quality complaint.

14.4    In the event either Party believes it may be necessary to conduct a recall or other similar action with respect to Product (each a “Recall”), the Parties shall consult with each other as to how best to proceed. Each Party shall keep the other Party fully informed of any notification, or other information of which it has actual knowledge, which might result in a Recall or other enforcement action relating to the Product. If Vendor independently believes that a Recall or field corrective action may be necessary or appropriate, Vendor shall so notify Keryx of Vendor’s conclusion within [***] and the Parties shall cooperate with each other to ascertain the necessity and nature of such action. If Vendor asks for a Recall and Keryx declines to act accordingly, Vendor shall not be liable for any consequences or damages thereafter which are a direct result of the refusal of Keryx to make such requested Recall, unless Vendor [***] or willfully withholds any available material information relevant to the Recall. Notwithstanding anything to the contrary in the foregoing provisions, Keryx shall make the final decision whether Deliverable is or should be Recalled or withdrawn. Under no circumstances shall Vendor be prohibited hereunder from taking any action that it is required to take by applicable law. Whenever Keryx notifies a Regulatory Authority of a Recall, Keryx shall so notify Vendor as soon as possible and, to the extent related to Vendor’s supply of Deliverable pursuant to this Agreement and to the extent practicable, within [***]. Vendor shall assist Keryx, at Vendor’s reasonable request, in its investigation to determine the cause and extent of the problem which caused the Recall.

14.5    Subject to the provisions of the Quality Agreement, if (i) any Regulatory Authority issues a directive, order or, following the issuance of a safety warning or alert about a Product, a written request that any Product be Recalled, (ii) a court of competent jurisdiction orders a Recall, or (iii) Keryx determines for valid reasons

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

that any Product should be Recalled or that a "Dear Doctor" letter is required relating the restrictions on the use of any Product, Vendor will co-operate as reasonably required by Keryx in this respect, having regard to all applicable law.

14.6    Keryx will have the responsibility for handling customer returns of the Product. Vendor will give Keryx any assistance that Keryx may reasonably require to handle the returns.

14.6    Subject to the provisions of Section 15 below, if a Recall or return directly results from, or arises out of, a fault by Vendor to provide Product that conforms to the Specifications or that has not been manufactured in accordance with the Manufacturing Requirements or any other requirements set forth in this Agreement (and the applicable Statement of Work), in addition to the amounts payable under this Agreement, Vendor will also be responsible for the reasonable and direct documented out-of-pocket expenses of the Recall or return.In all other cases, Keryx shall bear the costs of the recall.

14.7    If Product is recalled because the Product manufactured and released by Vendor deviates from the Specifications or otherwise does not meet the Manufacturing Requirements, Keryx shall have the right to avail itself of the remedies set forth in Section 6.1.23 above.

15.    LIMITATION OF LIABILITY

15.1    Except for (i) breaches of Sections 4.4, 5, 7.3 or 7.4, of this Agreement, or (ii) [***] or willful misconduct (all the foregoing, the “Exceptions”), in no event shall either Party be liable to the other Party for any consequential, incidental, indirect (except with respect to the indemnification against claims of third parties under Sections 8.1 or 8.2), special or punitive damage, loss or expenses (including but not limited to business interruption, lost business, lost profits, or lost savings), even if that Party has been advised of their possible existence.

15.2    Except for cases of Exceptions, either Party's maximum liability under this Agreement shall be limited, [***]. The foregoing limitation of liability shall not apply to claims for (i) death or personal injury caused by its negligence; or (ii) fraud or fraudulent misrepresentation.

16.    TERM AND TERMINATION

16.1    The term of this Agreement (the “Term”) shall commence as of the Agreement Date and, subject to earlier termination in accordance with the provisions of this Section 16, shall end on December 31, 2021. Unless terminated by one of the Parties with at least [***] prior written notice to the other Party before the end of the original or renewal term then in effect, this Agreement shall automatically renew for subsequent terms of one (1) year.

16.2    Either Party (the “Terminating Party”) may terminate this Agreement or any Statement of Work in the event of a material breach or default of this Agreement or any Statement of Work by the other party (the “Breaching Party”); provided, that the Terminating Party provides written notice to the Breaching Party of such material breach and provides the Breaching Party with an opportunity to cure the breach. If such breach is not cured to the satisfaction of the Terminating Party within sixty (60) days of the Breaching Party’s receipt of notice of the breach, the Agreement or the relevant Statement of Work shall terminate effective immediately. A material breach by Vendor shall include late delivery of Product, which has not been cured in[***]within any 12-month period, but for the first time in [***].

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

(i)    In the event of a termination by Keryx under this Section 16.2, Keryx shall pay Vendor the full amount due to Vendor, in accordance with the applicable Statement of Work(s), for all Services rendered in accordance with this Agreement and reimbursable expenses actually and reasonably incurred prior to the date of the commencement of Vendor’s breach, but shall not be liable for any amounts thereafter.

(ii)    In the event of a termination by Vendor under this Section 16.2, Keryx shall remain liable to Vendor for the full amount due to Vendor, in accordance with the applicable Statement of Work(s), for all Services rendered in accordance with this Agreement and reimbursable expenses actually and reasonably incurred by Vendor prior to the date of such termination.

16.3    In the event that either Party (hereinafter, a “Bankrupt Party”) shall have become bankrupt or made an assignment for the benefit of creditors, or there shall have been appointed a trustee or for all or substantially all of the Bankrupt Party’s property, or any case or proceeding shall have been commenced or other action taken by or against the Bankrupt Party in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition or readjustment of its debts or any other relief under any bankruptcy, insolvency or reorganization or other similar act of law of any jurisdiction now or hereafter in effect (any such event or proceeding, a “Bankruptcy”), the other party shall have the right to terminate this Agreement and/or any Statement of Work hereto then in effect upon thirty (30) days’ prior written notice to the Bankrupt Party, provided, however, that both parties shall continue to comply with all of their respective obligations under this Agreement and/or any Statement of Work then in effect until the effective date of termination.

16.4    Either Party may terminate the Agreement immediately by providing written notice to the other Party upon the cessation of all or substantially all of the other Party’s business operations.

16.5 In addition, Keryx shall have the right to terminate the Agreement:

16.5.1    at any time due to loss of marketing authorization which permanently prevents to market the Product in the United States by giving Vendor sixty (60) days’ prior written notice (or such shorter period if required pursuant to the following regulatory authority action), or

16.5.2    at any time by giving Vendor sixty (60) days’ prior written notice (or such shorter period if required pursuant to the following regulatory authority action) in the event that any regulatory authority causes the permanent withdrawal of the Product from the United States or takes any action or raises any objection, that permanently prevents Keryx from developing, importing, exporting, purchasing, selling or otherwise commercializing the Product in the United States.

16.6 In both of the termination events referenced in Section 16.5, Keryx shall purchase the following from Vendor:    

Finished Product on stock and Product that is “work-in-progress” shall be purchased by Keryx at the applicable Product Prices; any unused raw materials and other inventory that Vendor demonstrates cannot be used elsewhere shall be invoiced to Keryx at [***].

16.7    The provisions contained in Sections 2, 4, 5, 6, 7, 8, 13, 15, 16, 21, 22, 23 and 27 of this Agreement shall survive the expiration or termination of this Agreement.

17.    CONTINUOUS IMPROVEMENT

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

17.1    Vendor shall use commercially reasonable endeavors to identify and target potential areas of cost reduction and/or improvements to environmental sustainability relating to the performance of its obligations under this Agreement, including but not limited to: improvements in quality and technology; reductions of waste associated with the manufacture of Product; reductions in all costs associated with the performance of the Vendor’s obligations under this Agreement; improvements in quality of service and supply chain efficiency; process development that reduces labor or enhances productivity (including increased yield or reduction in cycle time) and any other objectives agreed by the Parties from time to time. Any reduction in costs that is achieved will be shared between the Parties, with the savings percentage allocated to each Party to be determined by negotiation in good faith.

17.2    Notwithstanding Section 17.1 above, the Parties acknowledge and agree that the Product Prices under the [***].

18.    ASSIGNMENT

18.1    Neither Party may assign or otherwise transfer any right or delegate any obligation under this Agreement or any Statement of Work without the prior written consent of the other Party, except that Keryx may transfer its rights and obligations to (i) a successor in interest or transferee of all or substantially all of its assets and business to which the subject matter of this Agreement relates, or (ii) to any of its Affiliates.

19.    SEVERABILITY AND TERMINABILITY

19.1    If a court of competent jurisdiction holds that any term of this Agreement or any Statement of Work is unenforceable, illegal or void, such term shall be enforced only to the extent that it is otherwise enforceable or is not in violation of such law, and all other terms of this Agreement or such Statement of Work shall remain in full force and effect. If Keryx is required to terminate this Agreement or any Statement of Work by a legal or regulatory authority, this Agreement or such Statement of Work may be terminated by Keryx effective immediately upon written notice to Vendor of such circumstances.

20.    TIME IS OF THE ESSENCE

20.1    With respect to the Services provided by Vendor, time of performance is of the essence in this Agreement and a substantial and material term hereof. Vendor must perform Services promptly and all time commitments must be met, except to the extent delays are caused by Keryx or pursuant to Section 26.1.

20.2    In case Vendor is unable to meet the agreed time lines (whether such agreed time lines are referred to herein as “delivery dates,” “Delivery Dates” or otherwise) regarding the delivery of the Deliverable, Vendor shall (i) use all commercially reasonable efforts to deliver the delayed Deliverable as soon as possible at no additional cost to Keryx and (ii) from [***], if Vendor delivers less than [***] of the volume of Product scheduled to be delivered to Keryx in any month, Vendor shall issue a credit[***] Keryx will notify Vendor of such failure to deliver and Vendor will post the credit to Keryx’s account within [***] of Keryx’s notification.

21.    REMEDIES

21.1    Each Party acknowledges that disclosure of Confidential Information contrary to the terms of this Agreement may cause irreparable harm and significant injury to Disclosing Party for which damages at law may not be an adequate remedy, and agrees that Disclosing Party shall have, in addition to any other rights or remedies available to it at law or in equity, the right to seek (i) injunctive relief to enjoin any breach or

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

violation or (ii) specific performance of the provisions of this Agreement prohibiting disclosure and use of the Confidential Information. Notwithstanding, but not in limitation of the foregoing, Receiving Party shall be responsible to Disclosing Party for any damages arising from unauthorized disclosure of Confidential Information under this Agreement.

22.    NOTICES

22.1    The term “notice” as used throughout this Agreement shall mean written notice, except where specifically provided herein to the contrary. Notice shall be delivered to the following addresses by (i) certified mail, return receipt requested (or the equivalent), (ii) hand delivery with receipt acknowledged, or (iii) overnight or express internationally recognized courier service (such as FedEx, UPS, DHL) that provides a delivery receipt.

If to Keryx:	If to Vendor:
Keryx Biopharmaceuticals, Inc.One Marina Park Drive, 12th Floor Boston, MA 02210	[***]
ATTN: CEO	[***]
With a copy to:
Keryx Biopharmaceuticals, Inc. One Marina Park Drive, 12th Floor Boston, MA 02210	Siegfried AG Legal Department Untere Bruehlstrasse 4,4800 Zofingen, Switzerland
ATTN: General Counsel Fax: 617-466-3501	Email: legal@siegfried.ch

22.2    A Party hereto may change its address for the receipt of notices hereunder by notifying the other Party in writing of its new address in accordance with Section 22.1.

23.    COMPLETE AGREEMENT

23.1    This Agreement, including all attachments hereto, such as the Quality Agreement, and all Statements of Work and Orders, sets forth the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements, arrangements and communications, whether oral or written, with respect to the subject matter hereof, including, for the avoidance of doubt, the [***].

23.2    Each Statement of Work shall be a complete statement of the relevant project terms and shall supplement the terms and conditions of this Agreement solely for the purposes of such Statement of Work. The terms of a Statement of Work may not modify or expand the terms of this Agreement.

24.    AMENDMENT

24.1    Neither this Agreement nor any Statement of Work may be modified or amended except by the mutual written agreement of the Parties.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

25.    WAIVER

25.1    The delay or failure by either Party to exercise or enforce any of its rights under this Agreement or any Statement of Work shall not constitute or be deemed a waiver of that Party’s right thereafter to enforce those rights, nor shall any single or partial exercise of any such rights preclude any other or further exercise thereof or the exercise of any other right. No waiver of any provision of this Agreement or any Statement of Work shall be effective unless it is in writing and signed by the Party against which it is sought to be enforced.

26.    FORCE MAJEURE

26.1    Either Party shall be excused from performing its obligations under this Agreement if such performance is delayed or hindered in by reasons of civil strike, riots, lockouts, labor troubles, inability to procure materials, energy shortages, failure of power or restrictive government or judicial orders or decrees, riots, insurrection, war, terrorism, acts of God, fire, explosion, disease, inclement weather or any similar reason or cause beyond the Party’s reasonable control (“Force Majeure Event”). Performance shall be excused only to the extent of and during the reasonable continuance of such disability. Any deadline or time for performance specified in Schedules of this Agreement that falls due during or subsequent to the occurrence of any of the disabilities referred to herein shall be automatically extended for a period of time equal to the period of such disability. Notice of the start of any such Force Majeure Event shall be immediately be provided in writing to the other Party if, by reason of any of the disabilities referred to herein, one Party is unable to meet any deadline or time for performance specified in this Agreement. In the event that any Force Majeure Event cannot be removed or overcome within [***] days (or such other period as the Parties jointly shall determine) from the date the Party affected first became affected, then both Parties may, at any time after the expiration of such period, and for so long as such Force Majeure Event continues to exist, by written notice to the other Party, suspend or terminate this Agreement.

27.    GOVERNING LAW

27.1    This Agreement shall be governed by and construed and enforced in accordance with the laws of the [***] without reference to principles of conflicts of laws. The Parties further agree that the exclusive venue for any action, injunctive application or dispute determinable by a court of law arising out of this Agreement (including any Statement of Work or Order) shall be [***], and that the federal and state courts located in [***] in [***] therein shall have exclusive jurisdiction over the subject matter and the Parties.

28.    MISCELLANEOUS

28.1    This Agreement shall not be deemed to be an exclusive contract, and Keryx shall be free to utilize other vendors to perform obligations similar to or the equivalent of those obligations required of Vendor under this Agreement.

28.2    The headings assigned to the sections and subsections of this Agreement are for convenience only and shall not limit the scope and applicability of the sections and subsections.

28.3    Each Party to this Agreement agrees to execute such further papers, agreements, documents, instruments and the like as may be necessary or desirable to effect the purpose of this Agreement and to carry out its provisions.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

28.4    This Agreement and any Statement of Work hereto (i) may be executed in counterparts, each of which shall be deemed to be an original and all of which, taken together, shall constitute a single agreement binding on both Parties, and (ii) will be considered executed by a Party when the signature of such Party is delivered physically or by email or facsimile transmission to the other Party or Parties, as appropriate. The Parties agree that any signature delivered by email or facsimile transmission shall have the same force and effect as an original signature.

Remainder of Page Intentionally Left Blank. Signature Page Follows.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the Agreement Date.

KERYX BIOPHARMACEUTICALS, INC. By: /s/ Greg Madison Signature    December 18, 2017 Date Name: Greg Madison Title: Chief Executive Officer	SIEGFRIED EVIONNAZ SA By: [***] Signature    December 19, 2017 Date Name: [***] Title: [***]
By: /s/ Scott Holmes Signature    December 20, 2017 Date Name: Scott Holmes Title: Chief Financial Officer	SIEGFRIED EVIONNAZ SA By: [***] Signature    December 19, 2017 Date Name:[***] Title: [***]

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Attachment A – Expansion Services and Operational Capacity

[***]

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Attachment B – Product Price

[***]	[***]
[***]	[***]	[***]	[***]	[***]
	[***]	[***]	[***]	[***]
[***]
[***]	[***]
[***]	[***]	[***]	[***]
	[***]	[***]	[***]
[***]

[***]

If Vendor can demonstrate that its raw material costs have increased by more than [***], then it shall bring such evidence to Keryx for review and the price shall be adjusted accordingly.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Attachment C – Quality Agreement

[***]

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Attachment D: Specifications

[***]

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

Attachment E – SOW Template

STATEMENT OF WORK NO. __

This Statement of Work/Project Schedule (“Statement of Work”), dated as of the date of last signature (the “Effective Date”), is subject to that certain Master Services Agreement, dated as of ___________ ____, 20__ (the “Agreement”), by and between Siegfried Evionnaz SA(“Vendor”) and Keryx Biopharmaceuticals, Inc. (“Keryx”). The terms and provisions of the Agreement are incorporated by reference into this SOW/Schedule and Vendor agrees to be bound by all terms and provisions of the Agreement applicable hereto. Capitalized terms used in this SOW/Schedule and not defined shall have the meanings ascribed to them in the Agreement.

I. SERVICES; SCOPE OF WORK AND FEES

1.1    Vendor shall provide certain services (the “Services”), and produce certain deliverables (the “Deliverables”), for Keryx, as further detailed in that certain proposal dated _____________,__, 20__, and titled (Insert title, if applicable) prepared by Vendor and accepted by Keryx, a copy of which is attached hereto as Exhibit A (the “Proposal”). The terms and conditions of the Proposal are incorporated by reference into this SOW/Schedule and the Parties agree to be bound thereby.

1.2    Deliverables produced under this SOW/Schedule shall constitute “Keryx Deliverables” as defined under the Agreement.

1.3    All fees paid under this SOW/Schedule and the Proposal shall not exceed [INSERT MAX FEES] unless otherwise agreed to in writing by the Parties.

II. CONFLICTING LANGUAGE

2.1    TO THE EXTENT THAT ANY TERMS OF THIS SOW/SCHEDULE (INCLUDING THE PROPOSAL) ARE INCONSISTENT OR EXPRESSLY CONFLICT WITH ANY OF THE TERMS OF THE AGREEMENT, THE TERMS OF THE AGREEMENT SHALL PREVAIL AND THE INCONSISTENT OR CONFLICTING TERMS OF THIS SOW/SCHEDULE (INCLUDING THE PROPOSAL) SHALL HAVE NO FORCE OR EFFECT.

III.    TERM OF SOW/SCHEDULE

3.1    Unless otherwise terminated pursuant to the terms of the Agreement, the term of this SOW/Schedule shall commence on the Effective Date and shall expire on [INSERT DATE]. The term may be extended upon mutual written Agreement of the Parties.

Remainder of Page Intentionally Left Blank. Signature Page Follows.

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

UPON SIGNATURE by the authorized representatives of the Parties, this SOW/Schedule shall be incorporated and made part of the Agreement as of the Effective Date.

ACKNOWLEDGED, ACCEPTED AND AGREED TO:

KERYX BIOPHARMACEUTICALS, INC. By: Signature Date Name: ____________________________ Title: ____________________________       SIEGFRIED EVIONNAZ SA By: Signature Date Name: ____________________________ Title: ____________________________

75728368v.1

Portions of the exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Securities and Exchange Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

EX-10.14

Exhibit 10.14

EMPLOYMENT AGREEMENT

BETWEEN

GREGORY P. MADISON

AND

KERYX BIOPHARMACEUTICALS, INC.

EMPLOYMENT AGREEMENT

TABLE OF CONTENTS

1.Effective Date    1

2.Employment    1

3.Employment Period    1

4.Extent of Service    2

5.Compensation and Benefits    2

6.Termination of Employment    4

7.Obligations of the Company upon Termination    7

8.Change in Control    10

9.Non-exclusivity of Rights    11

10.No Mitigation    12

11.Mandatory Reduction of Payments in Certain Events    12

12.Restrictions on Conduct of Executive    13

13.Invention Assignment    16

14.Return of Materials    17

15.Successors and Assigns    17

16.Cooperation    17

17.Code Section 409A    18

18.Miscellaneous    19

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into this 10th day of March, 2015 by and between Keryx Biopharmaceuticals, Inc., a Delaware corporation (the “Company”), and Gregory P. Madison (“Executive”), to be effective as of the Effective Date, as defined in Section 1.

BACKGROUND

WHEREAS, the Company currently employs Executive as its President and Chief Operating Officer; and

WHEREAS, the Company desires to engage Executive as President and Chief Executive Officer of the Company in accordance with the terms of this Agreement. Executive is willing to serve as such in accordance with the terms and conditions of this Agreement.

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Effective Date. The effective date of this Agreement (the “Effective Date”) shall be the date first written above.

2.Employment.

(a)Executive shall be employed as the President and Chief Executive Officer of the Company commencing by no later than May 20, 2015 (for purposes of this Agreement, the date on which Executive actually is appointed Chief Executive Officer shall be the “Start Date”). In his capacity as President and Chief Executive Officer, Executive shall have the duties, responsibilities and authority commensurate with such position and as are typically performed by a President and Chief Executive Officer of a corporation, together with such additional duties, commensurate with Executive’s position as President and Chief Executive Officer of the Company that may be assigned to Executive from time to time by the Board of Directors of the Company (the “Board”). In his capacity as President and Chief Executive Officer, Executive shall report directly to the Board. The principal location of Executive’s employment shall be at the Company’s offices in Boston, Massachusetts. The Executive understands and agrees that he may be required to travel from time to time for business reasons, including travel to/from the Company’s offices in New York, New York.

3.Employment Period. Unless earlier terminated herein in accordance with Section 6 hereof, Executive’s employment shall be for a term beginning on the Start Date and ending on March 9, 2018. The initial and any renewal period during which Executive is employed pursuant to this Agreement shall be referred to as the “Employment Period.” The Employment Period shall be automatically renewed for consecutive periods of one (1) year unless either party provides at least sixty (60) days’ advance written notice, consistent with Section 18(d) of this Agreement, of its intent not to renew the employment relationship as of the end of the initial or any renewal period. In the case of any such renewal and extension of the Employment Period, the terms and conditions of this Agreement shall continue to govern unless otherwise agreed to in writing by the parties.

4.Extent of Service. During the Employment Period, Executive agrees to devote his full business time, attention, energy and best efforts to the business and affairs of the Company and to use Executive’s reasonable best efforts to perform faithfully and efficiently the responsibilities assigned to Executive hereunder. During the Employment Period, it shall not be a violation of this Agreement for Executive to (A) manage personal investments, or (B) devote time to charitable and community activities or, with the approval of the Board, industry or professional activities including service on the board of directors of another corporation, so long as such activities do not interfere or conflict with the performance of Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

5.Compensation and Benefits.

(a)Base Salary. Beginning on the Effective Date and during the Employment Period, the Company shall pay to Executive a base salary at the rate of five hundred twenty five thousand dollars (U.S. $525,000) per year (“Base Salary”), less normal withholdings, payable in approximately equal bi-weekly or other installments as are or become customary under the Company’s payroll practices for its employees from time to time. On the first regularly scheduled pay date following the Effective Date, the Company shall pay Executive an amount equal to the difference between: (i) the salary paid to Executive between January 11, 2015 and the Effective Date, and (ii) the Base Salary that would have been paid to Executive between January 11, 2015 and the Effective Date had Executive been earning the Base Salary, subject to normal withholdings and the related terms described herein. The Compensation Committee of the Board shall review Executive’s Base Salary annually and, in its sole discretion, may increase Executive’s Base Salary from year to year. Such adjusted salary then shall become Executive’s Base Salary for purposes of this Agreement. In no event shall Executive’s Base Salary be reduced during the Employment Period unless such reduction is in connection with a proportionate reduction of compensation applicable to all other executive officers. The annual review of Executive’s Base Salary by the Board shall consider, among other things, Executive’s own performance and the Company’s performance.

(b)Incentive, Savings and Retirement Plans. During the Employment Period, Executive shall be entitled to participate in all incentive, savings and retirement plans, practices, policies and programs available to other senior executive officers of the Company (“Peer Executives”), and on the same basis as such Peer Executives. Without limiting the foregoing, the following shall apply:

(i)Annual Performance Bonus. For each year during the Employment Period, Executive shall be eligible to receive an annual performance bonus of up to sixty percent (60%) of his Base Salary (such 60 percent target referred to herein as the “Target Annual Bonus,” and the actual annual bonus paid referred to herein as the “Annual Bonus”). The Compensation Committee, in its sole discretion, shall establish performance goals and objectives from year to year on which the Annual Bonus shall be based, and the Compensation Committee likewise reserves the sole discretion to modify such goals and objectives, or the final amount of the Annual Bonus, based upon events occurring during the related year or its assessment of the Company’s or Executive’s performance in general. The Compensation Committee shall provide Executive with such goals and objectives and any modifications it may make. Unless otherwise provided herein, no Annual Bonus shall be deemed to have been earned by Executive for any year in which Executive is not actively employed by the Company on the last day of the fiscal year to which the bonus relates. The Company shall pay the Annual Bonus no later than two and a half months after the end of the fiscal year to which the applicable bonus relates.

(ii)Equity Grants. Subject to the approval of the Compensation Committee, on the Start Date the Company shall grant to Executive five hundred fifty thousand (550,000) shares of restricted common stock under the Company’s 2013 Incentive Plan (the “Plan”), subject to the lapsing forfeiture rights set forth below and the terms and conditions of the Company’s standard restricted stock agreement (the “Restricted Stock Agreement”):

1.Two hundred seventy five thousand (275,000) shares of restricted stock shall vest and become non-forfeitable if Auryxia is number 1 in market share for the phosphate binder in dialysis market for two (2) consecutive calendar quarters between the Start Date and ^December 31, 2021, with such market share standing to be determined by exclusive reference to the Company’s consolidated market share data which includes physician-level script numbers from IMS National Prescription Audit Data, DaVita Rx and Fresenius Rx (the “Market Share Milestone”), provided that Executive is providing services to the Company as an employee or consultant on the date the Market Share Milestone is achieved, subject to any acceleration upon certain events as may be set forth in the Plan, the Restricted Stock Agreement, or Section 7 below.

2.Twenty five thousand (25,000) shares of restricted stock shall vest and become non-forfeitable if the Company exceeds $55,000,000 in net sales for calendar year 2015 (the “2015 Net Sales Milestone”), provided that Executive is providing services to the Company as an employee or consultant on the date the 2015 Net Sales Milestone is achieved, subject to any acceleration upon certain events as may be set forth in the Plan, the Restricted Stock Agreement, or Section 7 below.

3.One hundred twenty five thousand (125,000) shares of restricted stock shall vest and become non-forfeitable if the Company exceeds $160,000,000 in net sales for calendar year 2016 (the “2016 Net Sales Milestone”), provided that Executive is providing services to the Company as an employee or consultant on the date the 2016 Net Sales Milestone is achieved, subject to any acceleration upon certain events as may be set forth in the Plan, the Restricted Stock Agreement, or Section 7 below.

4.One hundred twenty five thousand (125,000) shares of restricted stock shall vest and become non-forfeitable upon the FDA approval of Auryxia (or, if applicable, an approved trade name utilized for Ferric Citrate related to the below-described trial) in the treatment of iron deficiency anemia in patients with stages 3 – 5 non-dialysis dependent CKD resulting from the phase 3 clinical study initiated in September 2014 (the “Approval Milestone”), provided that Executive is providing services to the Company as an employee or consultant on the date the Approval Milestone is achieved, and subject to any acceleration upon certain events as may be set forth in the Plan, the Restricted Stock Agreement, or Section 7 below.

The above-referenced milestones shall be referred to collectively as the “Performance Milestones.” The determination of whether any Performance Milestone has been achieved (and whether the lapsing forfeiture right applicable to the restricted stock subject to such Performance Milestone shall lapse) shall be made by the Compensation Committee in its sole discretion, upon written certification. Should any Performance Milestone remain unmet as of the end of the last day of the time period in which such Performance Milestone must be achieved, then the restricted stock subject to such Performance Milestone shall be forfeited to the Company without consideration. The parties acknowledge and agree that the above-described grants of restricted stock are in addition to, and not in lieu of, the Company’s prior equity grants to Executive, which grants shall remain subject to their respective applicable governing plan document(s) and equity agreement(s).

During the Employment Period, Executive may be eligible for additional stock-based awards under the Company’s long-term incentive plans, as determined by the Compensation Committee from time to time. Nothing herein requires the Board or the Compensation Committee to make additional equity grants in any year.

(c)Welfare Benefit Plans. During the Employment Period, Executive and Executive’s eligible dependents shall be eligible for participation in, and shall receive all benefits under, the welfare benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription drug, dental, disability, and employee life insurance plans and programs) (“Welfare Plans”) to the extent available to other Peer Executives.

(d)Expenses. During the Employment Period, Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by Executive in the course of performing his duties and responsibilities under this Agreement, including without limitation reasonable expenses relating to Executive’s travel to/from the Company’s offices in New York, New York on an as-needed basis, in accordance with the policies, practices and procedures of the Company with respect to travel, entertainment and other business expenses.

(e)Vacation. During the Employment Period, Executive shall be entitled to four (4) weeks of paid vacation per calendar year, otherwise subject to and in accordance with the Company’s vacation and paid time off policies.

6.Termination of Employment.

(a)Death. Executive’s employment shall terminate automatically upon Executive’s death during the Employment Period.

(b)Disability. If the Company determines in good faith that Executive has become Disabled (as defined below) during the Employment Period, it may give to Executive written notice of its intention to terminate Executive’s employment. In such event, Executive’s employment with the Company shall terminate effective on the 30th day after receipt of such written notice by Executive (the “Disability Effective Date”), provided that, within the 30 days after such receipt, Executive shall not have returned to full-time performance of Executive’s duties. For purposes of this Agreement, Executive shall be Disabled if either of the following conditions is met, as determined by the Board in good faith:

(i)Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for one or more periods totaling one hundred and twenty (120) days in any twelve (12) month period; or

(ii)Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for one or more periods totaling one hundred and twenty (120) days in any twelve (12) month period, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Company.

(c)Termination by the Company. The Company may terminate Executive’s employment during the Employment Period with or without Cause. For purposes of this Agreement, a termination shall be considered to be for “Cause” if it occurs in conjunction with a determination by the Board that any of the following has occurred:

(i)Executive’s conviction of, pleading guilty to, or confession to a felony or any crime involving any act of dishonesty, fraud, misappropriation or embezzlement;

(ii)Executive’s misconduct or gross negligence in connection with the performance of his duties hereunder, including a violation of the Company’s written policies or Code of Conduct and Ethics;

(iii)Executive’s engaging in any fraudulent, disloyal or unprofessional conduct which is, or is likely to be, injurious to the Company, its financial condition, or its reputation;

(iv)Executive’s failure to perform his duties with the Company (other than any such failure resulting from Executive’s Disability);

(v)Executive’s failure to meet performance standards which may be agreed upon by Executive and the Company in writing from time to time (with the understanding that failure to meet the performance criteria established with respect to an Annual Bonus alone shall not constitute Cause for purposes of this Agreement); or

(vi)Executive’s breach of the covenants set forth in Section 12 of this Agreement, or material breach of any other provisions of this Agreement.

If the Company determines that it has grounds to terminate Executive’s employment for Cause pursuant to the provisions of clauses (iv), (v), or (vi) of this subsection (c), then it shall first deliver to Executive a written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate his employment for Cause, and Executive shall have 30 days after the receipt of such written notice to cease such actions or otherwise correct any such failure or breach. If Executive does not cease such actions or otherwise correct such failure or breach within such 30-day period, or having once received such written notice and ceased such actions or corrected such failure or breach, Executive at any time thereafter again so acts, fails, or breaches, the Company may terminate his employment for Cause immediately. The Company may terminate Executive’s employment without Cause, or for Cause pursuant to the provisions of clauses (i), (ii), or (iii) of this subsection (c), immediately.

(d)Termination by Executive. Executive’s employment may be terminated by Executive with or without Good Reason. Executive’s termination without Good Reason shall require 30 days’ prior written notice to the Company. Executive’s termination for Good Reason must occur within a period of 90 days after the occurrence of an event of Good Reason. For purposes of this Agreement, “Good Reason” shall mean any of the following, without Executive’s consent:

(i)a material diminution in Executive’s Base Salary, which for purposes of this Agreement shall mean a reduction of more than 15% in the aggregate;

(ii)a material diminution in Executive’s title, position, authority, duties, or responsibilities;

(iii)a material change in the geographic location of Executive’s principal place of business, which for purposes of this Agreement shall mean a location more than 35 miles from the Company’s offices in Boston, Massachusetts at which Executive was principally employed except for required travel on the Company’s business; or

(iv)any other action or inaction that constitutes a material breach by the Company of this Agreement.

A termination by Executive shall not constitute termination for Good Reason unless Executive shall first have delivered to the Company a written notice setting forth with specificity the occurrence deemed to give rise to a right to terminate for Good Reason (which notice must be given no later than 60 days after the initial occurrence of such event), and there shall have passed a reasonable time (not less than 30 days) within which the Company may take action to correct, rescind or otherwise substantially reverse the occurrence supporting termination for Good Reason as identified by Executive. Good Reason shall not include Executive’s death or Disability. The parties intend, believe and take the position that a resignation by Executive for Good Reason as defined above effectively constitutes an involuntary separation from service within the meaning of Section 409A of the Code and Treas. Reg. §1.409A-1(n)(2).

(e)Notice of Termination. Any termination by the Company or Executive shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 18(d) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date. The failure by the Company or Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or Executive hereunder or preclude the Company or Executive from asserting such fact or circumstance in enforcing its rights hereunder.

(f)Date of Termination. “Date of Termination” means (i) if Executive’s employment is terminated other than by reason of death or Disability, the date of receipt of the Notice of Termination or any later date specified therein, or (ii) if Executive’s employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of Executive or the Disability Effective Date, as the case may be.

7.Obligations of the Company upon Termination.

(a)Termination by Executive for Good Reason; Termination by the Company without Cause. If, during the Employment Period, the Company shall terminate Executive’s employment without Cause, or Executive shall terminate his employment for Good Reason, then and, with respect to the payments and benefits described in clause (iii), (iv), (v), (vi), (vii) and (viii) below, only if Executive shall have executed and not revoked a release of claims in a form satisfactory to the Company:

(i)the Company shall pay to Executive in a lump sum in cash within 60 days after the Date of Termination, the exact payment date to be determined by the Company (or such later date as may be required pursuant to Section 17 hereof), the sum of (1) Executive’s Base Salary through the Date of Termination to the extent not theretofore paid, (2) the Annual Bonus, pro-rated as necessary, earned by Executive for the fiscal year immediately prior to the year in which the Date of Termination occurs, if any, to the extent not theretofore paid, and (3) any accrued but unused vacation pay to the extent not theretofore paid (the sum of the amounts described in clauses (1), (2) and (3) shall be hereinafter referred to as the “Accrued Obligations”); and

(ii)to the extent not theretofore paid or provided, the Company shall timely pay or provide to Executive any other amounts or benefits required to be paid or provided or which Executive is entitled to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (such other amounts and benefits shall be hereinafter referred to as the “Other Benefits”); and

(iii)the Company shall pay to Executive twelve (12) months of severance pay based on Executive’s Base Salary as of the Date of Termination (the “Severance Pay”). The foregoing Severance Pay shall be paid in equal installments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred to above may no longer be revoked (or such later date as may be required pursuant to Section 17); and

(iv)the Company shall pay to Executive a severance bonus in an amount equal to a portion of the Target Annual Bonus, pro-rated based on the period of Executive’s employment in the terminal year of employment through the Date of Termination; and

(v)for a period of up to twelve (12) months following Executive’s Date of Termination, Executive and where applicable, Executive’s spouse and eligible dependents, shall continue to be eligible to receive health and medical coverage under the Company’s health and medical plans in accordance with the terms of the applicable plan documents; provided, that in order to receive such continued coverage at such rates, Executive shall be required to pay the applicable premiums to the plan provider, and the Company shall reimburse Executive, within sixty (60) days following the date such monthly premium payment is due, an amount equal to the monthly COBRA (or, as applicable, other) premium payment, less tax withholdings (“COBRA Benefits”). Notwithstanding the above, if the Company determines in its sole discretion that it cannot provide the foregoing COBRA benefits without potentially violating applicable law, the Company in lieu thereof shall provide to Executive a taxable lump sum payment in an amount equal to the monthly (or then remaining) COBRA premium that Executive would be required to pay to continue his group health and medical coverage on the Date of Termination (which amount shall be based on the premium for the first month of COBRA coverage); and

(vi)any vested portion of stock options granted to Executive by the Company shall remain exercisable by Executive for a period of one (1) year following the Date of Termination (or, if earlier, the normal expiration date of such stock options), and any unvested portion of stock options and any shares of restricted stock and other equity incentives outstanding (other than shares of restricted stock subject to the Market Share Milestone or Approval Milestone, as described in subsections (vii) and (viii) below) as of the Date of Termination shall immediately lapse and be forfeited without consideration as of the Date of Termination; and

(vii)any shares of restricted stock subject to the Market Share Milestone described in Section 5(b)(ii) shall remain outstanding for a period of twelve (12) months following the Date of Termination, and to the extent that the Market Share Milestone is achieved during such twelve-month period, the shares of restricted stock subject to the Market Share Milestone shall vest and become non-forfeitable pursuant to the terms set forth in Section 5(b)(ii), the Plan, and the applicable Restricted Stock Agreement; and

(viii)any shares of restricted stock subject to the Approval Milestone described in Section 5(b)(ii) shall remain outstanding for a period of three (3) months following the Date of Termination, and to the extent that the Approval Milestone is achieved during such three-month period, the shares of restricted stock subject to the Approval Milestone shall vest and become non-forfeitable pursuant to the terms set forth in Section 5(b)(ii), the Plan, and the applicable Restricted Stock Agreement.

(b)Death or Disability. If Executive’s employment is terminated by reason of Executive’s death or Disability during the Employment Period, this Agreement shall terminate without further obligations to Executive or Executive’s legal representatives under this Agreement, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to Executive or Executive’s estate or beneficiaries, as applicable, in a lump sum in cash within 60 days after the Date of Termination. With respect to the provision of Other Benefits, the term “Other Benefits” as used in this Section 7(b) shall include without limitation, and Executive or Executive’s estate and/or beneficiaries shall be entitled to receive, benefits under such plans, programs, practices and policies relating to death, disability or retirement benefits, if any, as are applicable to Executive on the Date of Termination. In addition, in the event of such a termination, and provided that Executive or his estate or beneficiaries, if applicable, executes and does not revoke a release of claims in a form acceptable to the Company:

(i)any vested portion of stock options granted to Executive by the Company shall remain exercisable by Executive and/or his estate or beneficiaries for a period of one (1) year following the Date of Termination (or, if earlier, the normal expiration date of such stock options), and any unvested portion of stock options and any shares of restricted stock and other equity incentives outstanding as of the Date of Termination shall immediately lapse and be forfeited without consideration as of the Date of Termination; and

(ii)if Executive’s employment terminates due to death, the Compensation Committee of the Board shall determine the extent to which any of the performance goals and objectives established pursuant to Section 5(b)(i) above were met as of the time Executive’s death. If, based on that determination, the Compensation Committee of the Board determines that a bonus is due, the Company shall pay Executive’s estate an amount equal to such bonus, pro-rated for the portion of the fiscal year elapsed as of the time of Executive’s death.

(c)Termination by the Company for Cause; Resignation by Executive Other than for Good Reason. If Executive’s employment shall be terminated for Cause during the Employment Period, or Executive shall resign other than for Good Reason during the Employment Period, this Agreement shall terminate without further obligations to Executive, other than for payment by the Company to Executive of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to Executive in a lump sum in cash within 60 days after the Date of Termination. In addition, in the event of such a termination, any unvested equity awards shall lapse and be forfeited without consideration on the Date of Termination.

(d)Expiration of Employment Period. If Executive’s employment shall be terminated by the Company or by Executive upon the normal expiration of the Employment Period as provided for in Section 3 hereof, this Agreement shall terminate without further obligations to Executive, other than for payment of Accrued Obligations and the timely payment or provision of Other Benefits. Accrued Obligations shall be paid to Executive in a lump sum in cash within 60 days after the Date of Termination. In addition, in the event of such a termination, and provided that Executive or his estate or beneficiaries, if applicable, executes and does not revoke a release of claims in a form acceptable to the Company, any vested portion of stock options shall remain exercisable by Executive and/or his estate or beneficiaries for a period of one (1) year following the Date of Termination (or, if earlier, the normal expiration date of such stock options), and any unvested portions of stock options and any shares of restricted and other equity incentives (other than shares of restricted stock subject to the Market Share Milestone or Approval Milestone, as described in subsections (i) and (ii) below) outstanding as of the Date of Termination shall immediately lapse and be forfeited without consideration as of the Date of Termination. In addition, in the event of such a termination, and provided that Executive or his estate or beneficiaries, if applicable, executes a release of claims in a form acceptable to the Company, (i) any shares of restricted stock subject to the Market Share Milestone described in Section 5(b)(ii) shall remain outstanding for a period of twelve (12) months following the Date of Termination, and to the extent that the Market Share Milestone is achieved during such twelve-month period, the shares of restricted stock subject to the Market Share Milestone shall vest and become non-forfeitable pursuant to the terms set forth in Section 5(b)(ii), the Plan, and the applicable Restricted Stock Agreement; and (ii) any shares of restricted stock subject to the Approval Milestone described in Section 5(b)(ii) shall remain outstanding for a period of three (3) months following the Date of Termination, and to the extent that the Approval Milestone is achieved during such three-month period, the shares of restricted stock subject to the Approval Milestone shall vest and become non-forfeitable pursuant to the terms set forth in Section 5(b)(ii), the Plan, and the applicable Restricted Stock Agreement.

8.Change in Control.

(a)Definition. For the purposes of this Agreement, a “Change in Control” shall mean:

(i)the acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act) of beneficial ownership of any capital stock of the Company if, after such acquisition, such individual, entity or group beneficially owns (within the meaning of Rule 13d-3 promulgated under the 1934 Act) 30% or more of either (x) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (y) the combined voting power of the then-outstanding securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company (excluding an acquisition pursuant to the exercise, conversion or exchange of any security exercisable for, convertible into or exchangeable for common stock or voting securities of the Company, unless the individual, entity or group exercising, converting or exchanging such security acquired such security directly from the Company or an underwriter or agent of the Company), (B) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (C) any acquisition by any corporation pursuant to a Business Combination (as defined below) which complies with clauses (x) and (y) of subsection (iii) of this definition; or

(ii)such time as the Continuing Directors (as defined below) do not constitute a majority of the Board (or, if applicable, the Board of Directors of a successor corporation to the Company), where the term “Continuing Director’ means at any date a member of the Board (x) who was a member of the Board on the Start Date of this Agreement or (y) who was nominated or elected subsequent to such date by at least a majority of the directors who were Continuing Directors at the time of such nomination or election or whose election to the Board was recommended or endorsed by at least a majority of the directors who were Continuing Directors at the time of such nomination or election; provided, however, that there shall be excluded from this clause (y) any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board; or

(iii)the consummation of a merger, consolidation, reorganization, recapitalization or share exchange involving the Company or a sale or other disposition of all or substantially all of the assets of the Company (a “Business Combination”), unless, immediately following such Business Combination, each of the following two conditions is satisfied: (x) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors, respectively, of the resulting or acquiring corporation in such Business Combination (which shall include, without limitation, a corporation which as a result of such transaction owns the Company or substantially all of the Company’s assets either directly or through one or more subsidiaries) (such resulting or acquiring corporation is referred to herein as the “Acquiring Corporation”) in substantially the same proportions as their ownership of the Outstanding Company Common Stock and Outstanding Company Voting Securities, respectively, immediately prior to such Business Combination and (y) no Person (excluding the Acquiring Corporation or any employee benefit plan (or related trust) maintained or sponsored by the Company or by the Acquiring Corporation) beneficially owns, directly or indirectly, 30% or more of the then-outstanding shares of common stock of the Acquiring Corporation, or of the combined voting power of the then-outstanding securities of such corporation entitled to vote generally in the election of directors (except to the extent that such ownership existed prior to the Business Combination).

(b)Severance Benefits. Upon the occurrence of a Change in Control, if, within one (1) year after the effective date of the Change in Control, Executive’s employment is terminated by the Company or the successor corporation to the Company without Cause, or Executive resigns for Good Reason (as defined above in section 6(d)), then in addition to payment of the Accrued Obligations and Other Benefits, and provided that Executive shall have executed and not revoked a general release of claims in a form satisfactory to the Company: (i) Executive shall receive a cash payment equal to the sum of (A) 200% of Executive’s annual Base Salary as of the Date of Termination or, if higher, at the rate in effect immediately prior to a Change in Control, and (B) 200% of the Annual Bonus earned by Executive for the fiscal year immediately prior to the year in which the Date of Termination occurs, if any, payable in a lump sum within sixty (60) days following the Date of Termination; and (ii) Executive shall receive a cash payment equal to the total monthly premium payment (both the Company’s portion and Executive’s portion of such premium) under the Company’s group healthcare plan as in effect on the Date of Termination multiplied by twenty-four (24), payable in a lump sum within sixty (60) days following the Date of Termination. The foregoing shall be in lieu of and not in addition to any amounts that Executive would otherwise be entitled to receive under Section 7 hereof in the event of a termination without Cause or resignation for Good Reason.

(c)Equity Awards. Equity awards granted to Executive may be subject to modified treatment (e.g., accelerated vesting, lapsing of restrictions, etc.) upon the occurrence of a Change in Control, pursuant to the terms and conditions of the Plan.

9.Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit Executive’s continuing or future participation in any employee benefit plan, program, policy or practice provided by the Company or its affiliated companies and for which Executive may qualify, except as specifically provided herein. Amounts that are vested benefits or which Executive is otherwise entitled to receive under any plan, policy, practice or program of the Company or any of its affiliated companies at or subsequent to the Date of Termination shall be payable in accordance with such plan, policy, practice or program except as explicitly modified by this Agreement.

10.No Mitigation. In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the severance amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.

11.Mandatory Reduction of Payments in Certain Events.

(a)Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then, prior to the making of any Payment to Executive, a calculation shall be made comparing (i) the net benefit to Executive of the Payment after payment of the Excise Tax, to (ii) the net benefit to Executive if the Payment had been limited to the extent necessary to avoid being subject to the Excise Tax. If the amount calculated under (i) above is less than the amount calculated under (ii) above, then the Payment shall be limited to the extent necessary to avoid being subject to the Excise Tax (the “Reduced Amount”). The reduction of the Payments due hereunder, if applicable, shall be made in such a manner as to maximize the economic present value of all Payments actually made to Executive, determined by the Determination Firm (as defined in Section 11(b) below) as of the date of the Change in Control using the discount rate required by Section 280G(d)(4) of the Code.

(b)The determination of whether an Excise Tax would be imposed, the amount of such Excise Tax, and the calculation of the amounts referred to Section 12(a)(i) and (ii) above shall be made by an independent, nationally recognized accounting firm or compensation consulting firm mutually acceptable to the Company and Executive (the “Determination Firm”) which shall provide detailed supporting calculations. Any determination by the Determination Firm shall be binding upon the Company and Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Determination Firm hereunder, it is possible that Payments which Executive was entitled to, but did not receive pursuant to Section 11(a), could have been made without the imposition of the Excise Tax (“Underpayment”). In such event, the Determination Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of Executive, but no later than December 31 of the year after the year in which the Underpayment is determined to exist.

(c)In the event that the provisions of Code Section 280G and 4999 or any successor provisions are repealed without succession, this Section 11 shall be of no further force or effect.

12.Restrictions on Conduct of Executive.

(a)General. Executive and the Company understand and agree that the purpose of the provisions of this Section 12 is to protect the legitimate business interests of the Company, as more fully described below, and is not intended to impair or infringe upon Executive’s right to work, earn a living, or acquire and possess property from the fruits of his labor. Executive hereby acknowledges that Executive has received good and valuable consideration for the post-employment restrictions set forth in this Section 12 in the form of the compensation and benefits provided for herein. Executive hereby further acknowledges that the post-employment restrictions set forth in this Section 12 are reasonable and that they do not, and shall not, unduly impair his ability to earn a living after the termination of this Agreement.

In addition, the parties acknowledge: (A) that Executive’s services under this Agreement require special expertise and talent in the provision of Competitive Services and that Executive shall have substantial contacts with customers, suppliers, advertisers and vendors of the Company; (B) that pursuant to this Agreement, Executive shall be placed in a position of trust and responsibility and he shall have access to a substantial amount of Confidential Information and Trade Secrets and that the Company is placing him in such position and giving him access to such information in reliance upon his agreement to comply with the obligations set forth in this Section 12; (C) that due to his management duties, Executive shall be the repository of a substantial portion of the goodwill of the Company and would have an unfair advantage in competing with the Company; (D) that due to Executive’s special experience and talent, the loss of Executive’s services to the Company under this Agreement cannot reasonably or adequately be compensated solely by damages in an action at law; (E) that Executive is capable of competing with the Company; and (F) that Executive is capable of obtaining gainful, lucrative and desirable employment that does not violate the restrictions contained in this Agreement.

Therefore, subject to the limitations of reasonableness imposed by law, Executive shall be subject to the restrictions set forth in this Section 12.

(b)Definitions. The following capitalized terms used in this Section 12 shall have the meanings assigned to them below, which definitions shall apply to both the singular and the plural forms of such terms:

“Competitive Services” means services involving the acquisition, development or commercialization of oral iron pharmaceutical products that are the same as or substantially similar to the oral iron pharmaceutical products offered or provided by the Company or are in competition with the Company’s products.

“Confidential Information” means all data and information relating to the business of the Company that is disclosed to Executive or of which Executive becomes aware as a consequence of his employment and that has value to the Company and is not generally disclosed to those not employed or otherwise engaged by the Company. “Confidential Information” shall include, but is not limited to, financial plans and data concerning the Company; management planning information; business plans; operational methods; market studies; marketing plans or strategies; product development techniques or plans; customer lists; details of customer contracts; current and anticipated customer requirements; past, current and planned research and development; business acquisition plans; and new personnel acquisition plans. “Confidential Information” shall not include information that has become generally available to the public by the act of one who has the right to disclose such information without violating any right or privilege of the Company. This definition shall not limit any definition of “confidential information” or any equivalent term under state or federal law.

“End Date” means the last day of Executive’s employment with the Company for any reason whatsoever.

“Person” means any individual or any corporation, partnership, joint venture, limited liability company, association or other entity or enterprise.

“Principalor Representative” means a principal, owner, partner, shareholder, joint venturer, investor, member, trustee, director, officer, manager, employee, agent, representative or consultant.

“Protected Customers” means any Person to whom the Company sold its products or services or solicited to sell its products or services during the Employment Period and (a) with whom Executive dealt on behalf of the Company; (b) whose dealings with the Company were coordinated or supervised by Executive; or (c) about whom Executive obtained Trade Secrets or Confidential Information in the ordinary course of business as a result of his employment.

“Protected Employees and Contractors” means employees and independent contractors of the Company who were employed or engaged by the Company at any time within six (6) months prior to the End Date.

“ProtectedProviders” means any service provider, vendor or supplier with whom the Company conducted business or solicited to conduct business during the twelve (12) months prior to the End Date.

“Restricted Period” means the Employment Period and the one (1) year period following the End Date.

“Restricted Territory” means countries where Keryx has the right to market Zerenex, including, but not limited to, North America, European Union, Eastern Europe, Central and Latin America.

“Restrictive Covenants” means the restrictive covenants contained in Section 12(c) hereof.

“Trade Secret” means all information, without regard to form, including, but not limited to, technical or nontechnical data, a formula, a pattern, a compilation, a program, a device, a method, a technique, a drawing, a process, financial data, financial plans, product plans, distribution lists or a list of actual or potential customers, advertisers or suppliers which is not commonly known by or available to the public and which information: (A) derives economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use; and (B) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. This definition shall not limit any definition of “trade secret” or any equivalent term under state or federal law.

(c)Restrictive Covenants.

(i)Restriction on Disclosure and Use of Confidential Information and Trade Secrets. Executive understands and agrees that the Confidential Information and Trade Secrets constitute valuable assets of the Company, and may not be converted to Executive’s own use. Accordingly, Executive hereby agrees that throughout the Employment Period and at all times after the End Date, for so long as the information at issue remains either Confidential Information or a Trade Secret, Executive shall not, directly or indirectly, reveal, divulge, or disclose to any Person not expressly authorized by the Company any Confidential Information or Trade Secrets and shall not, directly or indirectly, use or make use of any Confidential Information or Trade Secrets in connection with any business activity other than that of the Company.

Anything herein to the contrary notwithstanding, Executive shall not be restricted from disclosing or using Confidential Information or Trade Secrets that are required to be disclosed by law, court order or other valid legal process; provided , however , that in the event disclosure is required by law, Executive shall provide the Company with prompt, written notice of such requirement so that the Company may seek an appropriate protective order prior to any such required disclosure by Executive.

(ii)Non-Solicitation of Protected Employees and Contractors. Executive understands and agrees that the relationship between the Company and each of its Protected Employees and Contractors constitutes a valuable asset of the Company and may not be converted to Executive’s own use. Accordingly, Executive hereby agrees that, during the Restricted Period, Executive shall not, directly or indirectly, on Executive’s own behalf or as a Principal or Representative of any Person or otherwise, solicit or induce any Protected Employee or Contractor to terminate his or her relationship with the Company or to enter into an employment, consulting or similar relationship with any other Person.

(iii)Non-Solicitation of Protected Customers. Executive understands and agrees that the relationship between the Company and each of its Protected Customers constitutes a valuable asset of the Company and may not be converted to Executive’s own use. Accordingly, Executive hereby agrees that, during the Restricted Period, Executive shall not, directly or indirectly, on Executive’s own behalf or as a Principal or Representative of any Person, solicit, divert, take away or attempt to solicit, divert or take away a Protected Customer for the purpose of providing or selling Competitive Services.

(iv)Non-Interference with Protected Providers. Executive understands and agrees that the relationship between the Company and each of its Protected Providers constitutes a valuable asset of the Company and may not be converted to Executive’s own use. Executive hereby agrees that, during the Restricted Period, Executive shall not, directly or indirectly, solicit or induce or attempt to solicit or induce any Protected Provider to cease, reduce or alter its relationship with the Company.

(v)Non-Competition with the Company. In consideration of the compensation and benefits being paid and to be paid by the Company to Executive hereunder and the equity awards granted by the Company, Executive hereby agrees that, during the Restricted Period, Executive shall not, directly or indirectly, engage in or provide Competitive Services within the Restricted Territory, whether on his own behalf or as a Principal or Representative of any other Person, in a capacity that involves the exercise of any job duties or responsibilities the same as or similar to the job duties and responsibilities executed by Executive on behalf of the Company; provided , however , that the foregoing shall not be deemed to prohibit the ownership by Executive of not more than five percent (5%) of any class of securities of any corporation having a class of securities registered pursuant to the Exchange Act, which investment does not exceed 3% of Executive’s net worth.

(d)Enforcement of Restrictive Covenants.

(i)Rights and Remedies Upon Breach. In the event Executive breaches, or threatens to commit a breach of, any of the provisions of the Restrictive Covenants, the Company shall have the right and remedy to enjoin, preliminarily and permanently, without the necessity of posting bond, Executive from violating or threatening to violate the Restrictive Covenants and to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach or threatened breach of the Restrictive Covenants would cause irreparable injury to the Company and that money damages would not provide an adequate remedy to the Company. Executive further understands and agrees that the Company shall be entitled to require Executive to pay the reasonable costs and attorneys’ fees incurred by the Company in enforcing the terms of the Restrictive Covenants. The foregoing rights and remedies shall be in addition to, and not in lieu of, any other rights and remedies available to the Company at law or in equity.

(ii)Severability of Covenants. The parties hereunder agree that the Restrictive Covenants shall be considered and construed as separate and independent covenants. Should any part or provision of any Restrictive Covenant be held invalid, void or unenforceable in any court of competent jurisdiction, such invalidity, voidness or unenforceability shall not render invalid, void or unenforceable any other part or provision of this Agreement.

(iii)Reformation. The parties hereunder agree that it is their intention that the Restrictive Covenants be enforced in accordance with their terms to the maximum extent possible under applicable law. The parties further agree that, in the event any court of competent jurisdiction shall find that any provision hereof is not enforceable in accordance with its terms, the court shall reform the Restrictive Covenants such that they shall be enforceable to the maximum extent permissible at law.

13.Invention Assignment. Executive agrees that he shall promptly and fully disclose in writing to the Company all inventions, designs, concepts, discoveries, developments, improvements, and innovations, whether or not they merit patent, trademark or copyright protection, conceived of, designed or reduced to practice by Executive, either solely or in concert with others, at any time during his employment, which (i) relate in any manner, whether at the time of conception, design or reduction to practice, to the Company’s business or its actual or demonstrably anticipated research or development; (ii) result from any work performed by Executive on behalf of the Company; or (iii) result from the use of the Company’s equipment, supplies, facilities, Confidential Information or Trade Secrets (collectively referred to as “Inventions”).

Executive acknowledges and agrees that he shall keep and maintain adequate written records of all such Inventions at all stages thereof in the form of notes, sketches, drawings, photographs, printouts, and/or reports relating thereto. These records are and shall remain the property of, and be available to, the Company or its designee(s) at all times. Executive further acknowledges that all such Inventions shall be the exclusive property of the Company. As such, Executive hereby assigns his entire right, title, and interest in and to all such Inventions to the Company or its designee(s). Executive will, at the Company’s request and expense, execute specific transfers, assignments, documents or other instruments and take such further action as may be considered necessary by the Company at any time during or subsequent to Executive’s employment to obtain and defend any intellectual property rights and vest complete title and ownership to such Inventions to the Company or its designee(s).

14.Return of Materials. Executive agrees that he shall not retain or destroy, and shall immediately return to the Company on or prior to his last day of employment, or at any other time the Company requests such return, any and all property of the Company that is in his possession or subject to his control, including, but not limited to, keys, credit and identification cards, equipment, client files and information, and all Confidential Information and Trade Secrets. Executive shall not make, distribute or retain copies of any such information or property. Executive agrees that he shall reimburse the Company for all of its costs, including reasonable attorneys’ fees, of recovering the above materials and otherwise enforcing compliance with this provision if he does not return the materials in compliance with this provision.

15.Successors and Assigns.

(a)This Agreement is personal to Executive and shall not be assignable by Executive. This Agreement shall inure to the benefit of and be enforceable by Executive’s legal representatives.

(b)The Company may assign this Agreement without the consent of Executive. This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

16.Cooperation. Both during and after his employment, Executive shall provide Executive’s reasonable cooperation in connection with any action or proceeding (or any appeal from any action or proceeding) which relates to events occurring during Executive’s employment hereunder. The Company shall reimburse Executive for any reasonable out-of-pocket expenses incurred in connection with Executive’s performance of obligations under this Section 16 at the request of the Company. If Executive is entitled to be paid or reimbursed for any expenses under this Section 16, the amount reimbursable in any one (1) calendar year shall not affect the amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must be made no later than December 31 of the year after the year in which the expense was incurred. Executive’s obligations under this Section 16.

17.Code Section 409A.

(a)General. This Agreement shall be interpreted and administered in a manner so that any amount or benefit payable hereunder shall be paid or provided in a manner that is either exempt from or compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service guidance and Treasury Regulations issued thereunder (and any applicable transition relief under Section 409A of the Code). Nevertheless, the tax treatment of the benefits provided under the Agreement is not warranted or guaranteed. Neither the Company nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by Executive as a result of the application of Section 409A of the Code.

(b)Definitional Restrictions. Notwithstanding anything in this Agreement to the contrary, to the extent that any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable hereunder, or a different form of payment would be effected, by reason of a Change in Control or Executive’s Disability or termination of employment, such amount or benefit shall not be payable or distributable to Executive, and/or such different form of payment shall not be effected, by reason of such circumstance unless (i) the circumstances giving rise to such Change in Control, Disability or termination of employment, as the case may be, meet any description or definition of “change in control event,” “disability” or “separation from service,” as the case may be, in Section 409A of the Code and applicable regulations (without giving effect to any elective provisions that may be available under such definition), or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A of the Code by reason of the short-term deferral exemption or otherwise. This provision does not prohibit the vesting of any amount upon a Change in Control, Disability or termination of employment, however defined. If this provision prevents the payment or distribution of any amount or benefit, such payment or distribution shall be made on the date, if any, on which an event occurs that constitutes a Section 409A-compliant “change in control event,” “disability” or “separation from service,” as the case may be, or such later date as may be required by subsection (c) below. If this provision prevents the application of a different form of payment of any amount or benefit, such payment shall be made in the same form as would have applied absent such designated event or circumstance.

(c)Six-Month Delay in Certain Circumstances. Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would otherwise be payable or distributable under this Agreement by reason of Executive’s separation from service during a period in which he is a Specified Employee (as defined below), then, subject to any permissible acceleration of payment by the Company under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment of employment taxes):

(i)the amount of such non-exempt deferred compensation that would otherwise be payable during the six-month period immediately following Executive’s separation from service shall be accumulated through and paid or provided on the first day of the seventh month following Executive’s separation from service (or, if Executive dies during such period, within 30 days after Executive’s death) (in either case, the “Required Delay Period”); and

(ii)the normal payment or distribution schedule for any remaining payments or distributions shall resume at the end of the Required Delay Period.

For purposes of this Agreement, the term “Specified Employee” has the meaning given such term in Code Section 409A and the final regulations thereunder: provided, however, that the Company’s Specified Employees and its application of the six-month delay rule of Code Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by the Board or a committee thereof, which shall be applied consistently with respect to all nonqualified deferred compensation arrangements of the Company, including this Agreement.

18.Miscellaneous.

(a)Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without reference to principles of conflict of laws.

(b)Captions. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.

(c)Amendments. This Agreement may not be amended or modified otherwise than-by a written agreement executed by the parties hereto or their respective successors and legal representatives.

(d)Notices. All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party, email, or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to Executive:    Gregory P. Madison

10 Deerfield Drive

Milton, MA 02186

Keryx Biopharmaceuticals, Inc.

750 Lexington Ave.

20th Floor

New York, NY 10022

Attention: CEO

Attention: Chairman of the Board

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

(e)Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(f)Withholding. The Company may withhold from any amounts payable under this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(g)Waivers. Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right Executive or the Company may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

(h)Entire Agreement. This Agreement contains the entire agreement between the Company and Executive with respect to the subject matter hereof and, from and after the Effective Date, this Agreement shall supersede any other agreement between the parties with respect to the subject matter hereof.

(i)Arbitration. In the event that a dispute arises between the parties regarding the formation, interpretation and/or the terms and conditions of this Agreement and/or if there arises any other claim or legal dispute between the parties with respect to Executive’s employment or the termination thereof (the “Dispute”), the complaining party shall submit the Dispute in writing to the other party for resolution. If the Dispute is not resolved between the parties within thirty (30) days of the date the Dispute is submitted in writing to the other party, the complaining party must make a demand for final and binding arbitration in New York, New York before an arbitrator pursuant to the Employment Arbitration Rules of the American Arbitration Association in effect at the time of the Dispute (the “AAA Rules”) if the complaining party wishes to pursue the Dispute (“Demand for Arbitration”). Provided , however, that the foregoing shall not preclude (x) the Company from immediately seeking injunctive or other equitable relief in a court of competent jurisdiction in connection with Executive’s breach or threatened breach of the Restrictive Covenants or the provisions set forth in Sections 13 or 14 of this Agreement or (y) Executive from immediately seeking in a court of competent jurisdiction injunctive or other equitable relief or specific performance of his right to be paid during the pendency of the Dispute. The parties expressly understand that by agreeing to this arbitration provision, they are agreeing to waive any rights to a civil action and/or jury trial regarding any Disputes between them. The parties shall share all costs, filing fees, and administrative fees for the arbitration equally as they come due; the parties shall be responsible for their own attorneys’ fees, witness fees, and travel costs. Provided , however, that in the event a Dispute arises following a Change in Control, then the Company or the successor corporation to the Company shall pay to Executive, within thirty (30) days after any such fees or expenses are incurred and substantiated to the Company or the successor corporation to the Company, all costs, reasonable attorney’s fees, legal fees, filing fees, administrative fees for the arbitration, and expenses incurred by Executive as a result of or in connection with any Dispute, including all such fees and expenses, if any, incurred in contesting or disputing the termination of Executive’s employment with the Company or the successor corporation to the Company or in seeking to obtain or enforce any right or benefit provided by this Agreement (other than any such fees or expenses incurred in connection with any such claim which is determined by arbitration, in accordance with this section, to be frivolous) or in connection with any tax audit or proceeding to the extent attributable to the application of Section 409A of the Code, to any payment or benefit provided by the Agreement. The arbitrator shall have the authority to rule on any and all issues properly presented in the Demand for Arbitration and/or pursuant to the AAA Rules and may award any and all relief provided under applicable law. The arbitrator’s award may be enforced, vacated, modified or corrected as set forth in the Federal Arbitration Act, 9 U.S.C § 1 et seq. This Agreement shall be governed by the Federal Arbitration Act, 9 U.S.C § 1 et seq., as amended, and the applicable rules of the American Arbitration Association set forth in this Agreement. This Agreement shall be binding upon, and shall inure to the benefit of Executive, the Company and their respective permitted successors and assigns.

(j)Timing of Release. Whenever in this Agreement a payment or benefit is conditioned on Executive’s execution of a release of claims, the Company shall provide such release to Executive promptly following the Date of Termination, and such release must be executed and all revocation periods shall have expired in accordance with terms set forth in the release, but in no case later than sixty (60) days after the Date of Termination; failing which such payment or benefit shall be forfeited. If such payment or benefit constitutes non-exempt “deferred compensation,” then, subject to Section 17(c) above, such payment or benefit (including any installment payments) that would have otherwise been payable during such 60-day period shall be accumulated and paid on the 60th day after the Date of Termination provided such release shall have been executed and such revocation periods shall have expired. If such payment or benefit is exempt from Section 409A of the Code, the Company may elect to make or commence payment at any time during such 60-day period.

(k)Counterparts; Scanned Signatures. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become a binding agreement when one or more counterparts have been signed by each party and delivered to the other party. A counterpart executed and delivered by PDF or facsimile shall be sufficient for the Agreement to become effective.

[Signature Page Follows]

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and, pursuant to the authorization from the Board, the Company has caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

/s/ Gregory P. Madison        

Gregory P. Madison

KERYX BIOPHARMACEUTICALS, INC.

/s/ Ron Bentsur_             

Ron Bentsur

36406944v.10

EX-21.1

Exhibit 21.1

Keryx Biopharmaceuticals, Inc.

List of Subsidiaries

Name of Subsidiary	State/Jurisdiction of Incorporation
ACCESS Oncology, Inc.	Delaware
Accumin Diagnostics, Inc.	Delaware
AOI Pharma, Inc.	Delaware
AOI Pharmaceuticals, Inc.	Delaware
Neryx Biopharmaceuticals, Inc.	Delaware
Online Collaborative Oncology Group, Inc.	Delaware
Keryx Biomedical Technologies Ltd.	Israel
Keryx (Israel) Ltd.	Israel
Keryx Biopharma UK Ltd.	United Kingdom

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the following registration statements of our reports dated February 21, 2018, with respect to the consolidated balance sheets of Keryx Biopharmaceuticals, Inc. and Subsidiaries (the “Company”), as of December 31, 2017 and 2016, and the related consolidated statements of operations, stockholders' (deficit) equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the effectiveness of Keryx Biopharmaceuticals, Inc. internal control over financial reporting, which appear in this annual report on Form 10-K of the Company for the year ended December 31, 2017:

Form S-8 dated February 5, 2001 (File No. 333-55006)

Form S-8 dated September 29, 2004 (File No. 333-119377)

Form S-8 dated April 6, 2006, as amended (File No. 333-133052)

Form S-8 dated July 31, 2007 (File No. 333-145003)

Form S-8 dated March 25, 2010 (File No. 333-165710)

Form S-8 dated August 2, 2013 (File No. 333-190358)

Form S-8 dated March 11, 2016 (File No. 333-210116)

Form S-8 dated August 23, 2016 (File No. 333-213267)

Form S-3 dated November 9, 2016, as amended (File No. 333-214513)

/s/ UHY LLP

New York, New York

February 21, 2018

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Gregory P. Madison, certify that:

1. I have reviewed this Annual Report on Form 10-K of Keryx Biopharmaceuticals, Inc.;

2. 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;

3. 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;

4. 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) 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;

b) 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;

c) 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

d) 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) 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

b) 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: February 21, 2018	/s/ Gregory P. Madison
	Gregory P. Madison Chief Executive Officer   Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Scott A. Holmes, certify that:

1. I have reviewed this Annual Report on Form 10-K of Keryx Biopharmaceuticals, Inc.;

2. 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;

3. 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;

4. 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) 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;

b) 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;

c) 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

d) 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) 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

b) 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: February 21, 2018	/s/ Scott A. Holmes
	Scott A. Holmes Chief Financial Officer Principal Financial and Accounting Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER OF
KERYX BIOPHARMACEUTICALS, INC.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report on Form 10-K of Keryx Biopharmaceuticals, Inc. (the “Company”) for the year ended December 31, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Gregory P. Madison, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

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.

Date: February 21, 2018	/s/ Gregory P. Madison
	Gregory P. Madison Chief Executive Officer   Principal Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER OF
KERYX BIOPHARMACEUTICALS, INC.
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

        In connection with the Annual Report on Form 10-K of Keryx Biopharmaceuticals, Inc. (the “Company”) for the year ended December 31, 2017 as filed with the Securities and Exchange Commission (the “Report”), I, Scott A. Holmes, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:

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.

Date: February 21, 2018	/s/ Scott A. Holmes
	Scott A. Holmes Chief Financial Officer Principal Financial and Accounting Officer

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2017	Feb. 09, 2018	Jun. 30, 2017
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	KERX
Entity Registrant Name	KERYX BIOPHARMACEUTICALS INC
Entity Central Index Key	0001114220
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		119,175,538
Entity Public Float			$ 662,026,612

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 93,526	$ 111,810
Inventory	28,695	12,681
Accounts receivable, net	8,146	5,236
Other current assets	11,199	3,170
Total current assets	141,566	132,897
Property, plant and equipment, net	4,521	4,211
Goodwill	3,208	3,208
Other assets, net	9,577	1,111
Total assets	158,872	141,427
Current liabilities:
Accounts payable and accrued expenses	45,031	21,190
Deferred lease incentive, current portion	244	244
Other current liabilities	145	117
Total current liabilities	45,420	21,551
Convertible senior notes	125,000	125,000
Deferred lease incentive, net of current portion	1,018	1,262
Deferred tax liability	635	870
Other liabilities	894	1,040
Total liabilities	172,967	149,723
Commitments and contingencies
Stockholders’ (deficit) equity:
Preferred stock, $0.001 par value per share (5,000,000 shares authorized, no shares issued and outstanding)	0	0
Common stock, $0.001 par value per share (230,000,000 and 180,000,000 shares authorized, 119,272,304 and 105,921,052 shares issued, 119,192,356 and 105,841,104 shares outstanding at December 31, 2017 and 2016, respectively)	119	106
Additional paid-in capital	984,681	827,053
Treasury stock, at cost, 79,948 shares at December 31, 2017 and 2016	(357)	(357)
Accumulated deficit	(998,538)	(835,098)
Total stockholders’ deficit	(14,095)	(8,296)
Total liabilities and stockholders’ deficit	$ 158,872	$ 141,427

XML

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value (USD per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (USD per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	230,000,000	180,000,000
Common stock, shares issued (in shares)	119,272,304	105,921,052
Common stock, shares outstanding (in shares)	119,192,356	105,841,104
Treasury stock, shares (in shares)	79,948	79,948

XML

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenues:
Net U.S. Auryxia product sales	$ 55,514	$ 27,173	$ 10,141
License revenue	5,127	4,810	3,539
Total revenues	60,641	31,983	13,680
Costs and expenses:
Cost of goods sold	21,955	37,803	4,520
License expense	3,076	2,886	2,124
Research and development	37,679	29,504	36,694
Selling, general and administrative	99,622	84,553	81,410
Total costs and expenses	162,332	154,746	124,748
Operating loss	(101,691)	(122,763)	(111,068)
Other (expense) income:
Amortization of debt discount	(62,965)	(34,227)	(11,357)
Other (expense) income, net	981	(4,025)	(630)
Total other expense:	(61,984)	(38,252)	(11,987)
Loss before income taxes	(163,675)	(161,015)	(123,055)
Income tax (benefit) expense	(235)	80	90
Net loss	$ (163,440)	$ (161,095)	$ (123,145)
Basic and diluted net loss per common share (USD per share)	$ (1.43)	$ (1.52)	$ (1.19)
Weighted average shares used in computing basic and diluted net loss per common share (in shares)	114,507,668	105,845,121	103,898,399

XML

Consolidated Statements of Stockholders' (Deficit) Equity - USD ($) $ in Thousands		Total	Common stock		Additional paid-in capital	Treasury stock	Accumulated deficit
Beginning Balance (in shares) at Dec. 31, 2014			92,758,789			79,948
Beginning Balance at Dec. 31, 2014		$ 73,484	$ 93		$ 624,606	$ (357)	$ (550,858)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock , net of issuance cost (in shares)			10,541,667
Issuance of common stock, net of issuance costs		118,284	$ 10		118,274
Issuance of restricted stock (in shares)			1,247,250
Issuance of restricted stock		1	$ 1
Forfeiture of restricted stock (in shares )			(330,102)
Forfeiture of restricted stock	[1]	0	$ 0
Surrender of common stock for tax withholding (in shares)			(1,625)
Surrender of common stock for tax withholding		(15)	$ 0	[1]	(15)
Issuance of common stock in connection with the exercise of stock options (in shares)			1,005,576
Issuance of common stock in connection with the exercise of options		1,463	$ 1		1,462
Reclassification of derivative liability to equity		0
Stock-based compensation		16,862			16,862
Net loss		(123,145)					(123,145)
Ending Balance (in shares) at Dec. 31, 2015			105,221,555			79,948
Ending Balance at Dec. 31, 2015		86,934	$ 105		761,189	$ (357)	(674,003)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of restricted stock (in shares)			974,325
Issuance of restricted stock		1	$ 1
Forfeiture of restricted stock (in shares )			(341,603)
Forfeiture of restricted stock	[1]	0	$ 0
Issuance of common stock in connection with the exercise of stock options (in shares)			66,775
Issuance of common stock in connection with the exercise of options		198			198
Reclassification of derivative liability to equity		51,404			51,404
Stock-based compensation		14,262			14,262
Net loss		(161,095)					(161,095)
Ending Balance (in shares) at Dec. 31, 2016			105,921,052			79,948
Ending Balance at Dec. 31, 2016		(8,296)	$ 106		827,053	$ (357)	(835,098)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock , net of issuance cost (in shares)			11,937,174
Issuance of common stock, net of issuance costs		75,619	$ 12		75,607
Issuance of restricted stock (in shares)			1,231,825
Issuance of restricted stock		(302)	$ 1		(303)
Forfeiture of restricted stock (in shares )			(142,251)
Forfeiture of restricted stock	[1]	$ 0
Retirement of restricted stock (in shares)		(59,071)
Issuance of common stock in connection with the exercise of stock options (in shares)			383,575
Issuance of common stock in connection with the exercise of options		$ 1,146	$ 0	[1]	1,146
Increase in value of conversion feature in connection with modification of convertible notes		5			5
Reclassification of derivative liability to equity		62,735			62,735
Stock-based compensation		18,438			18,438
Net loss		(163,440)					(163,440)
Ending Balance (in shares) at Dec. 31, 2017			119,272,304			79,948
Ending Balance at Dec. 31, 2017		$ (14,095)	$ 119		$ 984,681	$ (357)	$ (998,538)

[1] Amount less than one thousand dollars.

XML

Consolidated Statements of Stockholders' (Deficit) Equity (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2015
Statement of Stockholders' Equity [Abstract]
Issuance of common stock, offering costs	$ 1,928	$ 8,216

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Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Cash flows from operating activities
Net loss	$ (163,440,000)	$ (161,095,000)	$ (123,145,000)
Adjustments to reconcile loss to cash flows used in operating activities:
Stock-based compensation expense	18,272,000	13,989,000	16,500,000
Amortization of debt discount	62,965,000	34,227,000	11,357,000
Change in fair value of derivative liability	(225,000)	4,718,000	1,102,000
Depreciation and amortization	937,000	1,005,000	596,000
Loss on disposal of fixed assets	10,000	54,000	507,000
Write-down of inventory to net realizable value	3,467,000	27,968,000	0
Cash received from landlord	0	637,000	1,276,000
Amortization of deferred lease incentive	(244,000)	(244,000)	(163,000)
Deferred income taxes	(235,000)	80,000	90,000
Changes in operating assets and liabilities:
Other current assets	(8,029,000)	(340,000)	1,262,000
Accounts receivable, net	(2,910,000)	(1,580,000)	(2,822,000)
Accrued interest receivable	0	0	47,000
Inventory	(19,496,000)	(2,300,000)	(29,189,000)
Other current liabilities	28,000	(238,000)	0
Security deposits	0	0	(807,000)
Other assets	(8,466,000)	(11,000)	355,000
Accounts payable and accrued expenses	24,023,000	88,000	(8,478,000)
Deferred revenue	0	(3,526,000)	3,112,000
Other liabilities	(146,000)	(36,000)	943,000
Net cash used in operating activities	(93,489,000)	(86,604,000)	(127,457,000)
Cash flows from investing activities
Purchases of property, plant and equipment	(1,257,000)	(2,074,000)	(2,777,000)
Investment in held-to-maturity short-term securities	0	0	0
Proceeds from maturity of held-to-maturity short-term securities	0	0	11,508,000
Net cash (used in) provided by investing activities	(1,257,000)	(2,074,000)	8,731,000
Net cash (used in) provided by investing activities
Proceeds from issuance of common stock, net of commission	75,720,000	0	118,284,000
Payments for common stock issuance costs	0	0	125,000,000
Payments for common stock issuance costs	(102,000)	0	0
Proceeds from exercise of options	1,146,000	198,000	1,463,000
Payments for repurchase of common stock for employee tax withholding	(302,000)	0	(15,000)
Net cash provided by financing activities	76,462,000	198,000	244,732,000
Net (decrease) increase in cash and cash equivalents	(18,284,000)	(88,480,000)	126,006,000
Cash and cash equivalents at beginning of year	111,810,000	200,290,000	74,284,000
Cash and cash equivalents at end of year	93,526,000	111,810,000	200,290,000
Non-cash investing and financing activities
Reclassification of derivative liability to equity	62,735,000	51,404,000	0
Increase of receivable from landlord and deferred lease incentive	$ 0	$ 0	$ 637,000

XML

Description of Business

12 Months Ended

Dec. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

DESCRIPTION OF BUSINESS

OVERVIEW

We are a commercial stage biopharmaceutical company focused on bringing innovative medicines to people with kidney disease. Our long-term vision is to build a multi-product kidney care company. Our marketed product, Auryxia (ferric citrate) tablets, is an orally available, absorbable, iron-based medicine. Auryxia is approved by the U.S. Food and Drug Administration, or FDA, for two indications. Auryxia was originally approved in September 2014 for the control of serum phosphorus levels in patients with chronic kidney disease, or CKD, on dialysis. Additionally, in November 2017, the FDA approved Auryxia for the treatment of iron deficiency anemia in adults with CKD, not on dialysis. With two FDA-approved indications, we will leverage our U.S. clinical and commercial infrastructure to make Auryxia available to millions of people with CKD and either iron deficiency anemia or elevated levels of serum phosphorus, which is referred to as hyperphosphatemia. Ferric citrate is also approved in Japan under the trade name Riona and marketed by our Japanese partner, Japan Tobacco, Inc., or JT, and its subsidiary, Torii Pharmaceutical Co., Ltd., or Torii, and approved in Europe as Fexeric. We use the brand name Auryxia when we refer to ferric citrate for use in the approved indications in the United States. We refer to the product as ferric citrate when referring to its investigational use. Our vision of building a multi-product kidney care company includes expansion of our product portfolio with other medicines that can help patients with kidney disease.

OUR STRATEGY

Our business is focused on creating long-term stockholder value by bringing differentiated medicines to the market for the treatment of people with kidney disease that provide meaningful benefits to patients and their healthcare providers. The three pathways to our strategy are:

Maximize Auryxia's Potential

Auryxia is approved for two indications in the United States. We developed and subsequently launched Auryxia in the United States in late December 2014 following the FDA's approval of Auryxia for the control of serum phosphorus levels in adult patients with CKD on dialysis. In November 2017, the FDA approved Auryxia for the treatment of iron deficiency anemia in adult patients with CKD, not on dialysis. Auryxia is a non-calcium, non-chewable, orally-administered phosphate binder. Auryxia is the first FDA-approved oral iron medication that was specifically developed to treat iron deficiency anemia in CKD patients, not on dialysis. In the United States, there are approximately 450,000 adult patients with CKD requiring dialysis (referred to as End Stage Renal Disease, or ESRD), including approximately 350,000 adults currently taking a phosphate binder. We estimate that in the United States, approximately 1.7 million adults under the care of a nephrologist for CKD have iron deficiency anemia, not on dialysis, including approximately 650,000 adults currently being treated by nephrologists for iron deficiency anemia. Iron deficiency anemia is common in the non-dialysis population and the prevalence and severity increases as CKD advances. Iron deficiency anemia is symptomatic and can significantly impact quality of life. Auryxia is being marketed in the United States to nephrologists and renal care teams through our specialty salesforce and commercial infrastructure. Our field-based organization is aligned to 95 territories calling on target nephrologists and their associated dialysis centers. These target nephrologists treat CKD patients on dialysis and those not on dialysis. We believe strong fundamentals are in place to drive commercial adoption of Auryxia in the dialysis setting and maximize the potential of Auryxia as a treatment of iron deficiency anemia in adults with CKD, not on dialysis.

Expand Our Portfolio

We will evaluate opportunities to expand our product portfolio with other medicines that can help patients with kidney disease. Our business development activities include evaluating clinical-stage drug candidates, as well as commercially available medicines to in-license or acquire to add to our portfolio and provide us with new commercial opportunities. We will seek to add assets that leverage the infrastructure we have built to support our foundational medicine, Auryxia, including our clinical development and commercial teams. We believe these efforts have the potential to provide additional revenues to us in the future.

Manage Growth and Talent

We are committed to creating a culture of success and continue to engage a workforce of high-quality and talented people to support our potential growth.

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Basis of Presentation and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RECENTLY ISSUED ACCOUNTING STANDARDS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we do not believe that the impact of recently issued standards that are not yet effective will have a material impact on our financial position or results of operations upon adoption.

In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606), a comprehensive new standard which amends revenue recognition principles and provides a single set of criteria for revenue recognition among all industries. The new standard provides a five-step framework whereby revenue is recognized when promised goods or services are transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires enhanced disclosures pertaining to revenue recognition in both interim and annual periods. The FASB issued several amendments to ASU No. 2014-09 which have the same effective date and transition date. These standards became effective for us on January 1, 2018 and will be adopted using the modified retrospective method. As of the date of this report, we have finalized our assessments over the impact that these new standards will have on our consolidated results of operations, financial position and disclosures, and have not identified any accounting changes that would materially impact the amount of reported revenues with respect to our product revenues. As of January 1, 2018, we expect to recognize an immaterial adjustment to retained earnings reflecting the cumulative impact for the accounting changes made upon adoption of these new standards.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. Under this standard, the measurement principle for inventory changed from lower of cost or market value to lower of cost and net realizable value. The standard defines net realizable value as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard is applicable to inventory that is accounted for under the first-in, first-out or average cost method and became effective for us on January 1, 2017. The adoption of this standard did not have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019 and must be applied using a modified retrospective transition approach which requires application of the new guidance for all periods presented. The adoption of this standard is expected to have a material impact on our financial position as it will increase the amount of our assets and liabilities. We do not expect this standard to have a material impact on our consolidated statement of operations.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This standard became effective for us on January 1, 2017. The adoptions of this standard did not have a material impact on our financial position, results of operations or statement of cash flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard became effective for us on January 1, 2018. This standard is not expected to have a material impact on our statement of cash flows upon adoption.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include our financial statements and those of our wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, equity revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, judgments and assumptions.  We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances. These estimates are subject to an inherent degree of uncertainty, and as a result, actual results may differ from these estimates under different assumptions or conditions.

CASH AND CASH EQUIVALENTS

We consider liquid investments with original maturities of three months or less at the time of purchase to be cash and cash equivalents. At December 31, 2017, all of our cash and cash equivalents were held in commercial bank accounts.

INVENTORY

Inventory is stated at the lower of cost or estimated realizable value. We determine the cost of our inventory, which includes amounts related to materials, third-party contract manufacturing and packaging services, and manufacturing overhead, on a first-in, first-out basis. We capitalize inventory costs at our suppliers when, based on management’s judgment, the realization of future economic benefit is probable at each given supplier. We received FDA approval for Auryxia on September 5, 2014, and on that date began capitalizing inventory purchases of saleable product from certain suppliers. Prior to FDA approval, all saleable product purchased from such suppliers was included in research and development expense. For an approved product that requires additional regulatory approval for a new manufacturing process or at a new contract manufacturing site, we include costs of product purchases from such suppliers in research and development expense until such time that process or contract manufacturing site is approved.

ACCOUNTS RECEIVABLE, NET

We extend credit to our customers for product sales resulting in accounts receivable. Customer accounts are monitored for past due amounts. Past due accounts receivable determined to be uncollectible are written off against the allowance for doubtful accounts. Allowances for doubtful accounts, if necessary, are estimated based upon past due amounts, historical losses and existing economic factors, and are adjusted periodically. We offer cash discounts to certain of our customers, generally 2% of the sales price, as an incentive for prompt payment. The estimate of cash discounts is recorded at the time of sale. We account for the cash discounts by reducing revenue and accounts receivable by the amount of the discounts we expect our customers to take. The accounts receivable are reported in the consolidated balance sheets, net of the allowances for doubtful accounts, cash discounts and chargebacks. There was no allowance for doubtful accounts at December 31, 2017 and 2016.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets:

	Estimated useful life (years)
Office furniture and equipment	3-7
Computers, software and related equipment	3

Leasehold improvements are depreciated over the shorter of their useful life or the remaining term of the lease exclusive of renewal options.

REVENUE RECOGNITION

Our commercial launch of Auryxia occurred in December 2014. We sell product to a limited number of major wholesalers, our Distributors, as well as certain pharmacies, or collectively, our Customers. Our Distributors resell the product to retail pharmacies for purposes of filling patient prescriptions. In accordance with current GAAP, our revenue recognition policy requires that: (i) there is persuasive evidence that an arrangement exists between us and the Customer, (ii) delivery has occurred, (iii) collectibility is reasonably assured, and (iv) the price is fixed or determinable. In the fourth quarter of 2016, we began to recognize revenue under the pull-through (ex-factory) method based on sales to our Customers as a result of our ability to reasonably estimate product returns.

Prior to the fourth quarter of 2016, we recognized revenue based on the resale of Auryxia for the purposes of filling patient prescriptions, and not based on initial sales from us to our Customers as we did not have sufficient history such that we could reliably estimate returns based on sales to our Customers. As a result, prior to the fourth quarter of 2016, we deferred Auryxia revenue recognition until the earlier of the product being resold for purposes of filling patient prescriptions and the expiration of the right of return (twelve months after the expiration date of the product). The deferred revenue was recorded net of discounts, rebates, and chargebacks.

We have written contracts with our Customers and delivery occurs when a Customer receives Auryxia. We evaluate the creditworthiness of each of our Customers to determine whether revenues can be recognized upon delivery, subject to satisfaction of the other requirements, or whether recognition is required to be deferred until receipt of payment. In order to conclude that the price is fixed or determinable, we must be able to (i) calculate our gross product sales from the sales to Customers and (ii) reasonably estimate our related sales allowances. We calculate gross product sales based on the wholesale acquisition cost that we charge our Customers for Auryxia. We estimate our net product sales by deducting reserve estimates from our gross product sales related to (a) trade allowances, such as invoice discounts for prompt payment and distributor fees, (b) government and private payor rebates, chargebacks and discounts, such as Medicaid reimbursements, (c) expected product returns and (d) costs of incentives offered to certain indirect customers, including patients.

Trade Allowances: We generally provide discounts on Auryxia sales to our Customers in the form of a discount for prompt payment of invoices or a discount directly off the invoice amount. The prompt-pay discount is generally given for payment made within 35 days. Based on our judgment and industry experience, we expect our Customers to earn these discounts. We deduct the full amount of these discounts from our gross product sales and accounts receivable at the time such revenues are recognized. We also pay fees to our Distributors for distribution services which are generally based on a contractual percentage of total purchases made by each Distributor during the period. These fees are also deducted from our gross product sales at the time such revenues are recognized.

Rebates and Chargebacks: We contract with various commercial and Medicare Part D private insurance providers, Medicaid and other government agencies, or collectively, our Third-party Payors, so that Auryxia will be eligible for partial or full reimbursement from such Third-party Payors. We estimate the rebates and chargebacks we will provide to Third-party Payors and deduct these estimated amounts from our gross product sales at the time the revenues are recognized. We estimate the rebates and chargebacks that we will provide to Third-Party Payors based upon (i) our contracts with these Third-Party Payors, (ii) the government-mandated discounts applicable to government-funded programs, and (iii) information obtained from our Customers and other third parties regarding the payor mix for Auryxia.

Product Returns: Consistent with industry practice, we generally offer our Customers a limited right to return our Auryxia based on the product’s expiration date. Our Customers have the right to return Auryxia during the 18-month period beginning six months prior to the labeled expiration date and ending twelve months after the labeled expiration date. Currently the expiration date for Auryxia is eighteen months after it has been converted into tablet form, which is the last step in the manufacturing process for Auryxia and generally occurs within a few months before Auryxia is delivered to Customers. We estimate product returns based on the historical return patterns and we track actual returns by individual manufacturing lots. We expect that Distributors and pharmacies will not stock significant inventory due to the cost of the product, the expense to store the product and the fact that the product is readily available for distribution. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as it becomes available. As of December 31, 2017, we have experienced a relatively limited number of product returns; however, our returns experience may change over time. As we continue to gain more historical experience with actual returns, we may be required to make a future adjustment to our product returns estimate, which would result in a corresponding change to our net product sales in the period of adjustment and could be significant.

Other Incentives: Other incentives that we offer to indirect customers include co-pay assistance rebates provided by us to commercially insured patients who have coverage for Auryxia and who reside in states that permit co-pay assistance programs, and vouchers for a small supply of Auryxia at no patient cost. Our co-pay assistance program is intended to reduce each participating patient’s portion of the financial responsibility for Auryxia’s purchase price to a specified dollar amount. Based upon the terms of the program and data obtained from the third parties which administer the program, we estimate the co-pay assistance amounts and the percentage of patients that we expect to participate in the program in order to establish our accruals for co-pay assistance rebates. We deduct these estimated amounts from our gross product sales at the time the revenues are recognized.

Classification of product sales allowances and accruals

Allowances against receivable balances primarily relate to prompt-pay discounts, chargebacks and product returns and are recorded at the time of sale, resulting in a reduction in product sales revenue and the recording of product sales receivables net of allowances. Accruals related to Medicaid, Medicare Part D and other government and commercial rebates, as well as wholesaler fees, are recorded at the time of sale, resulting in a reduction in product sales and the recording of an increase in accrued expenses.

Our U.S. Auryxia product sales for the years ended December 31, 2017, 2016 and 2015 were offset by provisions for allowances and accruals as set forth in the tables below.

(in thousands)	2017		Percent of gross Auryxia product sales	2016		Percent of gross Auryxia product sales	2015		Percent of gross Auryxia product sales
Gross Auryxia product sales	$	111,845		$	44,557		$	16,295
Less provision for product sales allowances and accruals
Trade allowances	13,093		12%	5,157		12%	1,897		12%
Rebates and chargebacks	40,482		36%	10,703		24%	2,418		15%
Product returns	1,362		1%	879		2%	—		—%
Other incentives (1)	1,394		1%	645		1%	1,839		11%
Total	56,331		50%	17,384		39%	6,154		38%
Net U.S. Auryxia product sales	$	55,514		$	27,173		$	10,141

⁽¹⁾  Includes co-pay assistance and voucher rebates.

We recognize license revenue in accordance with Accounting Standards Codification 605, Revenue Recognition. We analyze each element of our licensing agreement to determine the appropriate revenue recognition. The terms of the license agreement may include payment to us of non-refundable up-front license fees, milestone payments if specified objectives are achieved, and/or royalties on net product sales. We recognize revenue from upfront payments over the period of significant involvement under the related agreements unless the fee is in exchange for products delivered or services rendered that represent the culmination of a separate earnings process and no further performance obligation exists under the contract. We recognize milestone payments as revenue upon the achievement of specified milestones only if (1) the milestone payment is non-refundable, (2) substantive effort is involved in achieving the milestone, (3) the amount of the milestone is reasonable in relation to the effort expended or the risk associated with achievement of the milestone, and (4) the milestone is at risk for both parties. If any of these conditions are not met, we defer the milestone payment and recognize it as revenue over the estimated period of performance under the contract.

For arrangements for which royalty revenue information becomes available and collectibility is reasonably assured, we recognize revenue during the applicable period earned. When collectibility is reasonably assured but a reasonable estimate of royalty revenue cannot be made, the royalty revenue is recognized in the quarter that the licensee provides the written report and related information to us.

The following table sets forth customers or partners who represented 10% or more of our total revenues for 2017, 2016 and 2015:

	December 31, 2017		December 31, 2016		December 31, 2015
Fresenius Medical Care Rx	29	%	22	%	15	%
McKesson Corporation	19	%	31	%	23	%
DaVita Rx	18	%	10	%	19	%
Cardinal Health, Inc.	15	%	11	%	24	%
AmerisourceBergen Drug Corporation	15	%	23	%	17	%

COST OF GOODS SOLD

Cost of goods sold includes the cost of active pharmaceutical ingredient, or API, for Auryxia on which product sales were recognized during the period, as well as the associated costs for tableting, packaging, shipment, insurance and quality assurance, as well as any idle capacity charges we may incur at our contract manufacturers and write-offs of inventory that fails to meet specifications or is otherwise no longer suitable for commercial manufacture. Cost of goods sold also includes royalties due to the licensor of Auryxia related to the U.S. product sales recognized during the period, as well as a manufacturing fee related to API manufactured by us in the licensed territory through September 2017.

LICENSE EXPENSE

License expense include royalty and other expenses due to the licensor of Auryxia related to our sublicense agreement with JT and Torii. Royalty expenses are directly related to the net sales recognized by JT and Torii during the period and is recognized in the same period as the license revenue is recorded. Other expenses are recognized in the period they are incurred.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred. Inventory expenditures prior to regulatory approval of the product candidate or prior to regulatory approval of the contract manufacturing site, if required, are recorded as research and development expense as incurred. The capitalization of inventory for our product candidates commences when management determines that the realization of future economic benefit is probable. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered, or the related services are performed, subject to an assessment of recoverability. We make estimates of costs incurred in relation to external clinical research organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period. We review and accrue CRO expenses and clinical trial expenses based on work performed and rely upon estimates of those costs applicable to the stage of completion of a trial. Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these contracts may be uneven and depend on factors such as the achievement of certain events, the successful recruitment of patients, and the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of expenses in our consolidated financial statements to the actual services received and efforts expended. As such, expenses related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific clinical trial contract.

INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of our deferred tax assets will not be realized.

We, and our subsidiaries, file income tax returns in the United States federal jurisdiction and in various states. Our subsidiary, Keryx Biopharma UK Ltd., files annual returns and accounts in the United Kingdom. We have tax net operating loss carryforwards that are subject to examination for a number of years beyond the year in which they were generated for tax purposes. Since a portion of these net operating loss carryforwards may be utilized in the future, many of these net operating loss carryforwards will remain subject to examination.

We recognize interest and penalties related to uncertain income tax positions in income tax expense.

Our lack of earnings history and the uncertainty surrounding our ability to generate taxable income prior to the reversal or expiration of such deferred tax liability were the primary factors considered by management when recording the valuation allowance against our deferred tax assets.

We are not aware of any unrecorded tax liabilities which would materially impact our financial position or our results of operations.

STOCK-BASED COMPENSATION

We grant stock options and restricted stock awards to employees, directors and consultants. We estimate an expected forfeiture rate and only recognize expense for those equity awards that are expected to vest. Forfeitures are estimated based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes model has several inputs, including the volatility in the price of our stock, the risk-free interest rate, the expected term of the option, the closing market price of our stock on the grant date and the exercise price. We base our estimates of our stock price volatility on the historical volatility of our common stock; however, these estimates are neither predictive nor indicative of the future performance of our stock. For purposes of the fair value calculation, we assume that no dividends will be paid during the life of the stock options. The aggregate fair value of awards calculated using the Black-Scholes option pricing model is generally expensed on a straight‑line basis over the requisite service period. The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management judgment.

The aggregate fair value of restricted stock granted to our employees and directors is determined based upon the quoted closing market price per share on the date of grant, adjusted for estimated forfeitures. This aggregate fair value is generally expensed on a straight‑line basis over the requisite service period.

The total stock-based compensation recorded in a given period is dependent upon the assumptions utilized. As a result, if other assumptions had been used, our recorded stock-based compensation expense could have been materially different from that reported. In addition, because some of the stock options issued to employees, consultants and other third-parties vest upon the achievement of certain performance conditions or milestones, the total expense is uncertain.

BASIC AND DILUTED NET LOSS PER COMMON SHARE

Basic net loss per share is computed by dividing the losses allocable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share does not reflect the effect of shares of common stock to be issued upon the exercise of stock options, as their inclusion would be anti-dilutive. The options outstanding as of December 31, 2017, 2016 and 2015, which are not included in the computation of net loss per share amounts, were 11,967,815, 8,677,998 and 5,411,557, respectively.

IMPAIRMENT

Long-lived assets are reviewed for an impairment loss when circumstances indicate that the carrying value of long-lived tangible and intangible assets with finite lives may not be recoverable. Management’s policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating performance criteria as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event, we make certain assumptions in determining the impairment amount. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset or used in its disposal. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized.

In 2006, ADI, our wholly-owned subsidiary, completed the acquisition of Accumin™, a novel, patent protected, diagnostic for the direct measurement of total, intact urinary albumin, from AusAm Biotechnologies, Inc. We accounted for the ADI transaction as a purchase. The excess of the purchase price over the net assets acquired in the ADI transaction represented goodwill, which was allocated to our Products segment based on the proposed synergies with our then existing drug pipeline activities. In September 2008, we terminated our license agreement related to the ADI product.

Goodwill is reviewed for impairment annually, as of December 31, or when events arise that could indicate that an impairment exists. We test for goodwill impairment by comparing the fair value of the reporting unit with the unit’s carrying value, including goodwill. When the carrying value of the reporting unit is greater than fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. As of December 31, 2017, 2016 and 2015, management conducted its annual assessments of goodwill and concluded that there were no impairments. We will continue to perform impairment tests annually, at December 31, and whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable.

CONCENTRATIONS OF CREDIT RISK

We do not have significant off-balance-sheet risk or credit risk concentrations. We maintain our cash and cash equivalents with multiple financial institutions. See Note 3 – Fair Value Measurements.

Our accounts receivable, net at December 31, 2017 and 2016 represent amounts due to the Company from customers. We perform ongoing credit evaluations of our customers and generally do not require collateral. The following table sets forth customers who represented 10% or more of our total accounts receivable, net as of December 31, 2017 and 2016:

	December 31, 2017		December 31, 2016
Fresenius Medical Care Rx	43	%	22	%
Cardinal Health, Inc.	32	%	11	%
AmerisourceBergen Drug Corporation	26	%	23	%
McKesson Corporation	21	%	31	%
DaVita Rx	—	%	10	%

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Fair Value Measurements

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

FAIR VALUE MEASUREMENTS

We measure certain financial assets and liabilities at fair value on a recurring basis in our statements using a fair value hierarchy. The hierarchy ranks the quality and reliability of inputs, or assumptions, used in the determination of fair value and requires financial assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories:

• Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities;

• Level 2—inputs other than Level 1 quoted prices that are directly or indirectly observable; and

• Level 3—unobservable inputs that are not corroborated by market data.

The following table provides the fair value measurements made on a recurring basis of applicable financial assets as of December 31, 2017 and 2016:

	Financial assets at fair value as of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3
Assets:
Cash equivalents (1)	$	1,895	$	—	$	—
Total assets	$	1,895	$	—	$	—

	Financial assets at fair value as of December 31, 2016
(in thousands)	Level 1		Level 2		Level 3
Assets:
Cash equivalents (1)	$	107,084	$	—	$	—
Total assets	$	107,084	$	—	$	—

⁽¹⁾  Cash equivalents as of December 31, 2017 and 2016 consisted of institutional money market funds. The carrying value of our money market funds approximates fair value due to their short-term maturities.

Debt

In October 2015, we issued $125 million in Convertible Senior Notes due 2020, or the Notes, in a private financing to funds managed by The Baupost Group, L.L.C., or Baupost. As of December 31, 2017 and 2016 the fair value of our Notes was $155.4 million and $195.9 million, respectively, which differs from their carrying value. The fair value of our Notes is influenced by our stock price and stock price volatility. See Note 8 – Debt for additional information on our debt obligations.

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Inventory

12 Months Ended

Dec. 31, 2017

Inventory Disclosure [Abstract]

Inventory

INVENTORY

Inventory consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Raw materials	$	469	$	418
Work in process	25,160		11,430
Finished goods	3,066		833
Total inventory	$	28,695	$	12,681

During the years ended December 31, 2017 and 2016, we wrote off approximately $3.5 million and $28.0 million, respectively, of inventory that was determined to be no longer suitable for commercial manufacture, which was recorded to cost of goods sold. We did not have any write-offs of inventory during the year ended December 31, 2015.

Total inventory as of December 31, 2017 increased by $16.0 million as compared to December 31, 2016 primarily as a result of inventory build-up in connection with capacity expansion initiatives, partially offset by inventory sold to customers.

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Property, Plant and Equipment

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

PROPERTY, PLANT AND EQUIPMENT

(in thousands)	December 31, 2017			December 31, 2016
Leasehold improvements	$	4,353		$	3,916
Office furniture and equipment	1,544			747
Computers, software and related equipment	779			787
	6,676			5,450
Accumulated depreciation	(2,155		)	(1,239		)
Net book value	$	4,521		$	4,211

Depreciation expense for the years ended December 31, 2017, 2016 and 2015 was $0.9 million, $1.0 million and $0.6 million, respectively.

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Other Assets

12 Months Ended

Dec. 31, 2017

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Other Assets

OTHER ASSETS

Other current assets

Other current assets consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Prepaid manufacturing costs	$	7,646	$	289
Prepaid selling, general and administrative expenses	2,265		1,528
Prepaid research and development expenses	1,288		1,353
Total other current assets	$	11,199	$	3,170

Prepaid manufacturing costs as of December 31, 2017 primarily relate to upfront payments to our contract manufacturers related to 2018 production of inventory.

Other assets, net

Other assets, net consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Deferred manufacturing costs	$	7,338	$	—
Deposits	1,099		1,055
Long-term prepaid manufacturing costs	1,000		—
Deferred registration fees	140		56
Total other long-term assets	$	9,577	$	1,111

Deferred costs as of December 31, 2017 consisted of amounts paid or payable under contract manufacturing agreements, including a $5.0 million milestone related to a facility construction agreement and $2.3 million in product premiums payable by us to our contract manufacturer. We capitalize certain expenses as deferred costs related to agreements with a contract manufacturer in connection with the construction of an expanded manufacturing facility. These costs will be capitalized as incurred and will begin to be expensed at such time that we begin to receive product from the newly-constructed facility. These costs will be expensed ratably over the supply period based on anticipated product to be received from the new facility. At December 31, 2017, the amounts included in deferred costs were also recorded as an accrued expense on our consolidated balance sheet as they had not been paid prior to year-end.

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Accounts Payable and Accrued Expenses

12 Months Ended

Dec. 31, 2017

Payables and Accruals [Abstract]

Accounts Payable and Accrued Expenses

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Commercial rebates and fees	$	16,362	$	4,616
Accrued manufacturing expenses	9,434		804
Accrued compensation and related liabilities	7,504		8,190
Accounts payable	6,474		2,225
Professional, license, and other fees and expenses	5,257		5,355
Total accounts payable and accrued expenses	$	45,031	$	21,190

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Debt

12 Months Ended

Dec. 31, 2017

Debt Disclosure [Abstract]

Debt

DEBT

In October 2015, we completed the sale of $125 million of Notes due 2020, in a private placement, or the Private Placement, to funds managed by Baupost pursuant to a Notes Purchase Agreement dated October 14, 2015. The Notes were issued under an Indenture dated as of October 15, 2015, with The Bank of New York Mellon Trust Company, N.A. as trustee, or the Trustee. Under the terms of the Indenture, the Notes may be converted into shares of our common stock at the discretion of Baupost. The indenture subjects us to certain financial and business covenants and contains restrictions on the payments of cash dividends.

The Indenture contains customary terms and events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving us) occurs and is continuing, the Trustee by notice to us, or the holders of at least 25% in aggregate principal amount of the outstanding Notes by written notice to us and the Trustee, may declare 100% of the principal on all of the Notes to be due and payable. Upon such a declaration of acceleration, such principal will be due and payable immediately. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving us, 100% of the principal on all of the Notes will become due and payable automatically.

Further, in connection with the Private Placement, we entered into a Registration Rights Agreement with the purchasers of the Notes (the “Registration Rights Agreement”), pursuant to which we agreed to (i) file a registration statement (the “Resale Registration Statement”) with the SEC covering the resale of the Notes and the underlying common stock which the Notes are convertible into upon the written request of Baupost, and (ii) use commercially reasonable efforts, subject to receipt of necessary information from all the purchasers of the Notes, to cause the SEC to declare the Resale Registration Statement effective. Further, the Registration Rights Agreement permits Baupost to demand from time to time that we file a shelf Registration Statement pursuant to Rule 415 of the Securities Act from which any number of shelf takedowns may be conducted upon written request from Baupost. Finally, the Registration Rights Agreement affords Baupost certain piggyback registration rights.

The Notes are convertible at the option of Baupost at an initial conversion rate of 267.3797 shares of our common stock per $1,000 principal amount, equal to a conversion price of $3.74 per share, which represents the last reported sale price of our stock on October 14, 2015. The conversion rate is subject to adjustment from time to time upon the occurrence of certain events. Further, upon the occurrence of certain fundamental changes involving us, Baupost may require us to repurchase for cash all or part of their Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased.

Per the terms of the Notes, a portion of the Notes was contingently convertible into cash if our stockholders did not approve an increase in the number of authorized shares of our common stock by July 1, 2016. In accordance with accounting guidance for debt with a conversion option, we separated the conversion option from the debt instrument and accounted for it separately as a derivative liability, due to the Notes initially being partially convertible to cash at the option of Baupost. We allocated the proceeds between the debt component and the embedded conversion option (the derivative) by performing a valuation of the derivative as of the transaction date, which was determined based on the difference between the fair value of the Notes with the conversion option and the fair value of the Notes without the conversion option. The fair value of the derivative liability was recognized as a debt discount and the initial carrying amount of the convertible notes represented the difference between the proceeds from the issuance of the Notes and the fair value of the derivative liability on the date of issuance. The excess of the principal amount of the debt component over its carrying amount (“debt discount”) was amortized to interest expense using the effective interest method over the expected life of the debt.

We determined the expected life of the debt was equal to the period through July 1, 2016, as this represents the point at which a portion of the Notes was initially contingently convertible into cash. Accordingly, for the year ended December 31, 2016, $34.2 million of interest expense was recognized related to the Notes, all of which was attributable to the amortization of the debt discount.

Following our 2016 Annual Meeting of Stockholders held on May 25, 2016, we filed a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of Delaware to increase the number of authorized shares of our common stock to allow for the full conversion of the Notes into our common stock. On April 10, 2017, we entered into the First Supplemental Indenture, or the First Supplement, to the Indenture. Under the terms of the First Supplement, the Notes issued under the Indenture were not convertible by the holders thereof until on or after June 8, 2017, except in connection with a “fundamental change” as defined in the Indenture. After June 8, 2017, the Notes are convertible entirely into shares of our common stock or cash depending upon the number of shares of our common stock authorized at the time of such conversion. At our 2017 Annual Meeting of Stockholders held on June 8, 2017, our stockholders ratified the filing and effectiveness of the certificate of amendment filed in May 2016. In addition, at the meeting our stockholders also approved a separate amendment to our certificate of incorporation to increase the number of authorized shares of our common stock to 230,000,000 shares. As a result, the full amount of the Notes is convertible into shares of our common stock. The holders of the Notes may, at their option, convert the Notes until the maturity date thereof.

In accordance with accounting guidance for debt modifications and exchanges, we assessed the terms of the First Supplement and determined that it resulted in a modification. During the three months ended June 30, 2017, we separated the conversion option from the debt instrument and accounted for it separately as a derivative liability, due to the Notes being contingently convertible to cash at the option of Baupost per the terms of the First Supplement. We allocated the proceeds between the debt component and the embedded conversion option (the derivative) by performing a valuation of the derivative as of the date of the First Supplement, which was determined based on the difference between the fair value of the Notes with the conversion option and the fair value of the Notes without the conversion option. The fair value of the derivative liability was recognized as a debt discount and the carrying amount of the convertible senior notes represented the difference between the principal amount of the Notes and the fair value of the derivative liability on the date of the First Supplement. The excess of the principal amount of the debt component over its carrying amount, or debt discount, was amortized to interest expense using the effective interest method over the expected life of the debt. We determined the expected life of the debt was equal to the period through June 8, 2017, as this represented the point at which the Notes was contingently convertible into cash.

For the year ended December 31, 2017, $63.0 million of interest expense was recognized related to the Notes. As of December 31, 2017 and 2016, the balance of the Notes and the carrying value of the Notes was $125 million, and the fair value of the Notes was $155.4 million and $195.9 million, respectively.

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Stockholders' (Deficit) Equity

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stockholders' (Deficit) Equity

STOCKHOLDERS’ (DEFICIT) EQUITY

Preferred Stock

Our amended and restated certificate of incorporation authorizes the issuance of up to 5,000,000 shares of preferred stock, $0.001 par value, with rights senior to those of our common stock.

Common Stock

On January 21, 2015, we announced the pricing of an underwritten public offering in which we sold 10,541,667 shares of our common stock at a price of $12.00 per share for gross proceeds of approximately $126.5 million. Net proceeds from this offering were approximately $118.3 million, net of underwriting discounts and offering expenses of approximately $8.2 million. The shares were sold under Registration Statements (Nos. 333-201605 and 333-201639) on Form S-3 and Form S-3MEF, respectively, filed by us with the SEC.

Equity Incentive Plans

We have in effect the following stock option and incentive plans.

a. The 1999 Stock Option Plan was adopted in November 1999. Under the 1999 Stock Option Plan, our board of directors could grant stock-based awards to directors, consultants and employees. The plan authorizes grants to purchase up to 4,230,000 shares of authorized but unissued common stock. The plan limits the term of each option to no more than 10 years from the date of the grant. The plan permits the board of directors or a committee appointed by the board to administer the plan. The administrator has the authority, in its discretion, to determine the terms and conditions of any option granted to a service provider, including the vesting schedule. As of December 31, 2017, no additional shares of our common stock may be issued under the 1999 Stock Option Plan.

b. The 2004 Long-Term Incentive Plan was adopted in June 2004 by our stockholders. Under the 2004 Long-Term Incentive Plan, the compensation committee of our board of directors is authorized to grant stock-based awards to directors, consultants and employees. The 2004 plan authorizes grants to purchase up to 4,000,000 shares of authorized but unissued common stock. The plan limits the term of each option to no more than 10 years from the date of grant. As of December 31, 2017, no additional shares of our common stock may be issued under the 2004 Long-Term Incentive Plan.

c. The 2007 Incentive Plan was adopted in June 2007 by our stockholders. Under the 2007 Incentive Plan, the compensation committee of our board of directors is authorized to grant stock-based awards to directors, consultants, employees and officers. The 2007 Incentive Plan authorizes grants to purchase up to 6,000,000 shares of authorized but unissued common stock. The plan expires 10 years from adoption and limits the term of each option to no more than 10 years from the date of grant. As of December 31, 2017, up to an additional 45,754 shares may be issued under the 2007 Incentive Plan.

d. The 2009 CEO Incentive Plan was adopted in May 2009. Under the 2009 CEO Incentive Plan, our board of directors granted an option to Ron Bentsur, our former Chief Executive Officer, to purchase up to 600,000 shares of authorized but unissued common stock. The option has a term of 10 years from the date of grant. During the year ended December 31, 2015, the option was exercised in full.

e. The 2013 Incentive Plan was adopted in June 2013 by our stockholders at our 2013 Annual Meeting of Stockholders. The 2013 Incentive plan was amended by our stockholders at a special meeting of our stockholders in November 2014, which increased the number of authorized shares issuable thereunder from 3,500,000 to 9,500,000, and at our 2016 Annual Meeting of Stockholders held on May 25, 2016, which increased the number of authorized shares issuable thereunder from 9,500,000 to 18,000,000. Under the 2013 Incentive Plan, the Compensation Committee of the Company’s Board of Directors is authorized to grant stock-based awards to directors, officers, employees and consultants. The plan expires 10 years from adoption and limits the term of each option to no more than 10 years from the date of grant. As of December 31, 2017, up to an additional 1,980,669 shares may be issued under the 2013 Incentive Plan.

Total shares available for the issuance of stock options or other stock-based awards under our stock option and incentive plans were 2,026,423 shares at December 31, 2017.

Stock Options

The following table summarizes stock option activity for all plans for the year ended December 31, 2017:

	Number of shares		Weighted- average exercise price		Weighted- average remaining contractual term	Aggregate Intrinsic Value
Outstanding at December 31, 2016	8,677,998		$	7.28	8.12	$	8,840,412
Granted	4,669,150		5.46
Exercised	(383,575	)	2.99			$	1,767,281
Forfeited or Expired	(995,758	)	7.04
Outstanding at December 31, 2017	11,967,815		$	6.73	8.00	$	2,395,566
Vested and expected to vest at December 31, 2017	7,963,262		$	7.42	7.61	$	2,303,825
Exercisable at December 31, 2017	4,816,619		$	8.61	6.80	$	1,678,842

The weighted-average grant-date fair value of stock options granted during 2017, 2016 and 2015 was $3.91, $3.47, and $8.47, respectively. The aggregate intrinsic value of options exercised during 2017, 2016 and 2015, measured as of the exercise date, was approximately $1.8 million, $0.2 million, and $8.6 million, respectively.

Upon the exercise of stock options, we issue new shares of our common stock. As of December 31, 2017, 3,753,750 options issued to employees are unvested, milestone-based options.

Restricted Stock

Certain employees, directors and consultants have been awarded restricted stock under our equity incentive plans. The time-vesting restricted stock grants vest primarily over a period of three to four years. The following table summarizes restricted stock activity for the year ended December 31, 2017:

	Number of Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at December 31, 2016	1,524,884		$	7.07	$	8,935,820
Granted	1,231,825		5.71
Vested	(671,090	)	6.49		$	4,157,589
Forfeited or Retired	(201,322	)	7.04
Outstanding at December 31, 2017	1,884,297		$	6.39	$	8,761,981

The weighted-average grant-date fair value of restricted stock granted during 2017, 2016 and 2015 was $5.71, $3.86, and $4.76, respectively. The total fair value of restricted stock that vested during 2017, 2016 and 2015 was $4.2 million, $2.4 million and $4.7 million, respectively.

As of December 31, 2017, 310,000 shares of restricted stock issued to employees are unvested, milestone-based shares.

Stock-Based Compensation

The following tables summarize stock-based compensation expense information about equity incentive grants for the years ended December 31, 2017, 2016 and 2015:

	For the years ended December 31,
(in thousands)	2017		2016		2015
Cost of goods sold	$	167	$	125	$	14
Research and development expenses	2,466		2,687		3,519
Selling, general and administrative expenses	15,639		11,177		12,967
	$	18,272	$	13,989	$	16,500

	For the years ended December 31,
(in thousands)	2017		2016		2015
Stock-based compensation expense associated with restricted stock	$	5,738	$	4,159	$	5,073
Stock-based compensation expense associated with stock options	12,534		9,830		11,427
	$	18,272	$	13,989	$	16,500

Stock-based compensation costs capitalized as part of inventory were immaterial for the years ended December 31, 2017, 2016 and 2015.

The fair value of stock options granted is estimated at the date of grant using the Black-Scholes pricing model. The expected term of options granted is derived from historical data and the expected vesting period. Expected volatility is based on the historical volatility of our common stock. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. We have assumed no expected dividend yield, as dividends have never been paid to stock or option holders and will not be paid for the foreseeable future.

Black-Scholes Option Valuation Assumptions	2017		2016		2015
Risk-free interest rates	2.1	%	1.5	%	1.7	%
Dividend yield	—	%	—	%	—	%
Volatility	84.1	%	81.4	%	89.2	%
Weighted-average expected term	6.0 years		6.0 years		6.0 years

We used historical information to estimate forfeitures within the valuation model. As of December 31, 2017, there was $9.0 million and $5.5 million of total unrecognized compensation cost related to non-vested stock options and restricted stock, respectively, which is expected to be recognized over weighted-average periods of 1.9 years and 1.6 years, respectively. These amounts do not include, as of December 31, 2017, 3,753,750 options outstanding and 310,000 shares of restricted stock outstanding which are milestone-based and vest upon certain corporate milestones. Stock-based compensation will be measured and recorded if and when it is probable that the milestone will occur.

During the year ended December 31, 2017, we recognized $4.6 million of stock-based compensation expense related to milestone-based awards which vested in connection with certain corporate milestones.

Sales Agreement

On November 9, 2016, we entered into a Controlled Equity Offering^SM Sales Agreement, or the Sales Agreement, with Cantor Fitzgerald & Co., as sales agent, or Cantor Fitzgerald, pursuant to which we were initially able to offer and sell, from time to time, through Cantor Fitzgerald, shares of our common stock having an aggregate offering price of up to $75.0 million.

We are not obligated to sell any shares under the Sales Agreement. Subject to the terms and conditions of the Sales Agreement, Cantor Fitzgerald will use commercially reasonable efforts consistent with its normal trading and sales practices, applicable state and federal law, rules and regulations and the rules of the Nasdaq Capital Market to sell shares from time to time based upon our instructions, including any price, time or size limits specified by us. Under the Sales Agreement, Cantor Fitzgerald may sell shares by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act. Cantor Fitzgerald’s obligations to sell shares under the Sales Agreement are subject to satisfaction of certain conditions. We will pay Cantor Fitzgerald a commission of up to 3.0% of the aggregate gross proceeds from each sale of shares and have agreed to provide Cantor Fitzgerald with customary indemnification and contribution rights. We have also agreed to reimburse Cantor Fitzgerald for the reasonable and documented fees and expenses of its outside legal counsel, not to exceed $50,000 in the aggregate, in connection with entering into the Sales Agreement.

We filed a registration statement on Form S-3 (No. 333-214513) which was declared effective by the SEC on December 6, 2016, which included a prospectus covering the sale of the $75.0 million shares which could be sold by Cantor Fitzgerald under the Sales Agreement. In July 2017, we filed a new prospectus supplement with the SEC relating to the Sales Agreement under which we may offer and sell, from time to time, through Cantor Fitzgerald, shares of our common stock having an additional aggregate offering price of up to $75.0 million. During the year ended December 31, 2017, we sold 11,937,174 shares under the Sales Agreement for aggregate net proceeds of $75.7 million, which included all of the initial $75.0 million shares issuable pursuant to the Sales Agreement. As of the date hereof, we may sell up to an additional $72.4 million under the Sales Agreement pursuant to the July 2017 prospectus supplement. The initial $75.0 million of common stock issued pursuant to the Sales Agreement and the additional $75.0 million of common stock issuable pursuant to the Sales Agreement are included as part of the $250 million of our securities we registered on the registration statement on Form S-3 (No. 333-214513) we filed in November 2016, which the SEC declared effective on December 6, 2016.

The offering of shares of our common stock pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. We and Cantor Fitzgerald may each terminate the Sales Agreement at any time upon ten days’ prior notice.

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License Agreements

12 Months Ended

Dec. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

License Agreements

LICENSE AGREEMENTS

In November 2005, we entered into a license agreement with Panion & BF Biotech, Inc. (“Panion”). Under the license agreement, we acquired the exclusive worldwide rights, excluding certain Asian-Pacific countries, for the development and marketing of ferric citrate. To date, we have paid an aggregate of $11.6 million of milestone payments to Panion, including $2.0 million paid upon European marketing approval in 2015. In addition, Panion is eligible to receive royalty payments based on a mid-single digit percentage of net sales of ferric citrate.

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 commercialization of ferric citrate in Japan, which is being marketed in the United States under the trade name Auryxia. JT and Torii are responsible for the future development and commercialization costs in Japan. Effective as of June 8, 2009, we entered into an Amended and Restated Sublicense Agreement with JT and Torii, which, among other things, provided for the elimination of all significant on-going obligations under the sublicense agreement.

In January 2013, JT and Torii filed its new drug application with the Japanese Ministry of Health, Labour and Welfare for marketing approval of ferric citrate in Japan for the treatment of hyperphosphatemia in patients with CKD.

In January 2014, JT and Torii received manufacturing and marketing approval of ferric citrate from the Japanese Ministry of Health, Labour and Welfare. Ferric citrate, launched in May 2014 and being marketed in Japan by JT’s subsidiary, Torii Pharmaceutical Co., Ltd., under the brand name Riona, is indicated as an oral treatment for the improvement of hyperphosphatemia in patients with CKD. Under the terms of the license agreement with JT and Torii, we received a non-refundable payment of $10.0 million in February 2014 for the achievement of the marketing approval milestone. As a result, we recorded license revenue of $10.0 million in accordance with our revenue recognition policy, which is included in the year ended December 31, 2014. We also receive royalty payments based on a tiered double-digit percentage of net sales of Riona in Japan escalating up to the mid-teens, as well as up to an additional $55.0 million upon the achievement of certain annual net sales milestones. In accordance with our revenue recognition policy, royalty revenues are recognized in the quarter that JT and Torii provide their written report and related information to us regarding sales of Riona, which generally will be one quarter following the quarter in which the underlying sales by JT and Torii occurred. For the years ended December 31, 2017 and 2016, we recorded $5.1 million and $4.8 million, respectively, in license revenue related to royalties earned on net sales of Riona in Japan. We record the associated mid-single digit percentage of net sales royalty expense due Panion, the licensor of ferric citrate, in the same period as the royalty revenue from JT and Torii is recorded. For the years ended December 31, 2017 and 2016, we recorded $3.1 million and $2.9 million, respectively, in license expense related to royalties due to the licensor of ferric citrate relating to sales of Riona in Japan.

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Income Taxes

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

In December 2017, H.R.1, known as the Tax Cuts and Jobs Act, was signed into law. The Tax Cuts and Jobs Act, among other items, reduces the corporate income tax rate from 35% to 21%, effective January 1, 2018. As such, the Company has completed a revaluation of the Company's net deferred tax assets. The Company's deferred tax assets, net of deferred tax liabilities, represent expected corporate tax benefits anticipated to be realized in the future. The reduction in the federal corporate tax rate reduces these benefits.

The Company has evaluated the impact of the Tax Cuts and Jobs Act and has determined that this results in a reduction in the Company's deferred tax asset of $111.7 million in the fourth quarter of 2017. However, our lack of earnings history and the uncertainty surrounding our ability to generate taxable income prior to the utilization of the deferred tax assets is offset in full by a valuation allowance.

We account for income taxes under the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized. In determining the need for a valuation allowance, management reviews both positive and negative evidence, including current and historical results of operations, future income projections and the overall prospects of our business. Based upon management’s assessment of all available evidence, we believe that it is more-likely-than-not that the deferred tax assets will not be realizable; and therefore, a full valuation allowance is established. The valuation allowance for deferred tax assets was $216.0 million and $289.7 million as of December 31, 2017 and 2016, respectively, a decrease of $73.7 million.

As of December 31, 2017, we have U.S. net operating loss (“NOL”) carryforwards of approximately $812.2 million. For income tax purposes, these NOLs will expire in the years 2019 through 2037. Due to our various equity transactions, the utilization of certain NOLs could be subject to annual limitations imposed by Internal Revenue Code Section 382 relating to the change of control provision and/or the separate return limitation year losses limitation.

For the years ended December 31, 2017, 2016 and 2015, we recognized $(0.2) million, $0.1 million and $0.1 million, respectively, in income tax (benefit) expense related to the recording of a deferred tax liability associated with capitalized goodwill, an indefinite-lived intangible asset that is being amortized for tax purposes. Indefinite-lived intangibles are non-monetary assets which are not amortized under GAAP since there is no foreseeable limit to the cash flows provided by them. Our lack of earnings history and the uncertainty surrounding our ability to generate taxable income prior to the reversal or expiration of such deferred tax liability were the primary factors considered by management when recording the valuation allowance against our deferred tax assets. However, with the reduction of the corporate income tax rate from 35% to 21%, effective January 1, 2018, the deferred tax liability associated with capitalized goodwill was reduced by $0.3 million generating current year income of $0.3 million.

The income tax provision consists of the following:

(in thousands)	December 31, 2017			December 31, 2016		December 31, 2015
Current:
Federal	$	—		$	—	$	—
State	—			—		—
Total current	—			—		—
Deferred:
Federal	(258		)	73		81
State	23			7		9
Total deferred	(235		)	80		90
Total income taxes	$	(235	)	$	80	$	90

Income tax expense differed from amounts computed by applying the U.S. federal income tax rate of 34% to pretax loss as follows:

	For the years ended December 31,
(in thousands)	2017			2016			2015
Loss before income taxes, as reported in the consolidated statements of operations	$	(163,675	)	$	(161,015	)	$	(123,055	)
Computed “expected” tax benefit	(55,650		)	(54,745		)	(41,838		)
Increase (decrease) in income taxes resulting from:
Expected (benefit) expense from state & local taxes	(5,307		)	(5,222		)	(3,991		)
Stock-based compensation expense	(360		)	(17		)	(2,328		)
Tax impact of derivative liability	23,450			—			16,977
Permanent differences	(305		)	3,087			1,445
Impact of state NOL carryforward change	111,681			—			—
Prior year true-up	(2		)	(58		)	2,191
Change in the balance of the valuation allowance for deferred tax assets allocated to income tax expense	(73,742		)	57,035			27,634
	$	(235	)	$	80		$	90

The significant components of deferred income tax expense (benefit) attributable to loss from operations are as follows:

	For the years ended December 31,
(in thousands)	2017			2016			2015
Deferred tax expense (benefit)	$	50,057		$	(56,955	)	$	(44,521	)
Tax impact of derivative liability	23,450			—			16,977
Increase in the valuation allowance for deferred tax asset	(73,742		)	57,035			27,634
	$	(235	)	$	80		$	90

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are presented below.

(in thousands)	December 31, 2017			December 31, 2016
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	193,310		$	255,809
Stock-based compensation expense	14,315			16,735
Capitalized inventory	24			2,044
Inventory reserves	3,829			9,288
Research and development	2,242			2,087
Intangible assets due to different amortization methods	1,546			2,495
Tax-deductible goodwill	(635		)	(870		)
Other temporary differences	691			1,241
Net deferred tax asset, excluding valuation allowance	215,322			288,829
Less valuation allowance	(215,957		)	(289,699		)
Net deferred tax liabilities	$	(635	)	$	(870	)

We file income tax returns in the U.S federal and various state and local jurisdictions. For federal and state income tax purposes, the 2016, 2015 and 2014 tax years remain open for examination under the normal three-year statute of limitations. The statute of limitations for income tax audits in the United States will commence upon utilization of net operating losses and will expire three years from the filing of the tax return.

There was no accrual for uncertain tax positions or for interest and penalties related to uncertain tax positions for 2017, 2016 and 2015. We do not believe that there will be a material change in our unrecognized tax positions over the next twelve months. All of the unrecognized tax benefits, if recognized, would be offset by the valuation allowance.

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Other (Expense) Income

12 Months Ended

Dec. 31, 2017

Other Income and Expenses [Abstract]

Other (Expense) Income

OTHER (EXPENSE) INCOME

The components of other (expense) income are as follows:

	For the years ended December 31,
(in thousands)	2017			2016			2015
Interest income	$	707		$	698		$	472
Amortization of debt discount	(62,965		)	(34,227		)	(11,357		)
Other income (expense), net	274			(4,723		)	(1,102		)
	$	(61,984	)	$	(38,252	)	$	(11,987	)

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Our contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. These include commitments related to our facility lease, purchases of inventory and other purchases related to our product, debt obligations, consulting services and subscription fees, among others.

Facility Leases

In April 2015, we signed a lease agreement for approximately 27,300 square feet in Boston, Massachusetts, for a 94-month term that commenced on May 1, 2015. In order to make the space usable for our operations, substantial improvements were made. Our landlord agreed to pay for up to approximately $1.9 million of the improvements, and we bore all additional costs that were incurred. As such, we have determined that we are the owner of the improvements and account for tenant improvements paid by our landlord as a lease incentive. On May 1, 2015, in accordance with ASC 840-20, Operating Leases, we recorded a deferred lease incentive, and an associated receivable from our landlord, for the total amount to be paid by the landlord for improvements. The deferred lease incentive is being amortized as a partial offset to rent expense over the term of the lease, and the receivable was drawn down as cash was received from our landlord. We began occupying the space in November 2015. Improvements made to our leased space have been recorded as fixed assets and will be depreciated over the assets’ useful lives or the remaining lease term, whichever is shorter.

Future minimum payments under our non-cancelable facility lease as of December 31, 2017 are as follows (in thousands):

Period	Future Minimum Lease Payments
Year Ending December 31, 2018	$	1,628
Year Ending December 31, 2019	1,655
Year Ending December 31, 2020	1,683
Year Ending December 31, 2021	1,710
Year Ending December 31, 2022	1,737
Thereafter	291
Total	$	8,704

Total rental expense was approximately $1.2 million, $1.9 million and $2.2 million for the years ended December 31, 2017, 2016, and 2015, respectively.

Contingent Milestone Payments

We may be required to pay up to $10.0 million in contingent manufacturing milestone payments to a contract manufacturer related to certain construction related matters if such activities are achieved by the contract manufacturer within a pre-specified time frame. These milestones will be capitalized, if achieved, as a deferred cost on our balance sheet until such time that we begin to receive product from the new facility being constructed by our contract manufacturer. As of December 31, 2017, one such milestone in the amount of $5.0 million was achieved. This amount is recorded on our balance sheet as an accrued expense and a deferred cost in other assets, net as of December 31, 2017. As the achievement of the remaining milestones was not considered probable as of December 31, 2017, such contingencies have not been recorded in our consolidated financial statements. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain manufacturing milestones.

Litigation

Four purported class action lawsuits have been filed against us and certain of our current and former officers (Gregory P. Madison, Scott A. Holmes, Ron Bentsur, and James Oliviero). Three of these actions were filed in the U.S. District Court for the Southern District of New York, captioned respectively Terrell Jackson v. Keryx Biopharmaceuticals, Inc., et al., No. 1:16-cv-06131, filed on August 2, 2016, Richard J. Erickson v. Keryx Biopharmaceuticals, Inc., et al. No. 1:16-cv-06218, filed on August 4, 2016, and Richard King v. Keryx Biopharmaceuticals, Inc., et al., No. 1:16-cv-06233, filed on August 5, 2016. The Jackson complaint purports to be brought on behalf of stockholders who purchased our common stock between February 25, 2016 and August 1, 2016, the Erickson complaint purports to be brought on behalf of stockholders who purchased our common stock between March 2, 2016 and July 29, 2016, and the King complaint purports to be brought on behalf of stockholders who purchased our common stock between February 25, 2016 and July 29, 2016. On August 26, 2016, the fourth complaint, captioned Tim Karth v. Keryx Biopharmaceuticals, Inc., et al., No. 1:16-cv-11745, was filed in the U.S. District Court for the District of Massachusetts, which complaint was subsequently amended. The Karth complaint purports to be brought on behalf of stockholders who purchased our common stock between May 8, 2013 and August 1, 2016. The Jackson, Erickson and King matters were transferred to the U.S. District Court for the District of Massachusetts on April 5, 2017 and subsequently consolidated with the Karth action. Each complaint generally alleges that we and certain of our current and former officers violated Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning us and our business operations and future prospects in light of the August 1, 2016 announcement of an interruption in our supply of Auryxia. We have moved to dismiss the consolidated action. Two stockholder derivative complaints were also filed on December 16, 2016 against us and certain of our current and former officers (Gregory P. Madison, Scott A. Holmes, Ron Bentsur and James Oliviero), certain of our current directors (Kevin J. Cameron, Daniel P. Regan, Steven C. Gilman, Michael Rogers and John P. Butler) and our former directors (Michael P. Tarnok, Joseph Feczko, Jack Kaye and Wyche Fowler, Jr.), in the Superior Court of Massachusetts, one captioned Venkat Vara Prasad Malledi v. Keryx Biopharmaceuticals, Inc., et al., No. 16-3865 and one captioned James Anderson v. Keryx Biopharmaceuticals, Inc., et al., No. 16-3866.  Each of these two complaints generally allege that the individual defendants breached their fiduciary duties owed to us, unjustly enriched themselves by their actions, abused their control positions with us, mismanaged us and wasted corporate assets since July 31, 2013 in light of our August 1, 2016 announcement by us of an interruption in the supply of our product Auryxia. On June 27, 2017, the Superior Court granted the parties' motion to consolidate and stay the derivative litigations. All of the complaints seek unspecified damages, interest, attorneys’ fees, and other costs. We deny any allegations of wrongdoing and intend to vigorously defend against these lawsuits. There is no assurance, however, that we or the other defendants will be successful in our defense of either of these lawsuits or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of these actions. Moreover, we are unable to predict the outcome or reasonably estimate a range of possible losses at this time. A resolution of these lawsuits adverse to us or the other defendants, however, could have a material effect on our financial position and results of operations in the period in which the particular lawsuit is resolved.

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Business Segments

12 Months Ended

Dec. 31, 2017

Segment Reporting [Abstract]

Business Segments

BUSINESS SEGMENTS

We have determined that we conduct our operations in one business segment: the manufacture, development and commercialization of products for use in treating human diseases. Long-lived assets consist entirely of property, plant and equipment and are located in the United States for all periods presented.

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Quarterly Consolidated Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Consolidated Financial Data (Unaudited)

QUARTERLY CONSOLIDATED FINANCIAL DATA (UNAUDITED)

	2017
	Mar. 31			June 30			Sept. 30			Dec. 31
	(in thousands, except per share data)
Revenues:
Net U.S. Auryxia product sales	$	10,505		$	14,116		$	13,597		$	17,296
License revenue	1,314			1,028			1,399			1,386
Total revenues	11,819			15,144			14,996			18,682
Costs and expenses:
Cost of goods sold	4,273			4,379			5,856			7,447
License expense	789			617			838			832
Research and development	6,764			9,012			9,275			12,628
Selling, general and administrative	23,103			24,986			22,746			28,787
Total costs and expenses	34,929			38,994			38,715			49,694
Operating loss	(23,110		)	(23,850		)	(23,719		)	(31,012		)
Other (expense) income:
Amortization of debt discount	—			(62,965		)	—			—
Other (expense) income, net	114			338			241			288
Total other (expense) income:	114			(62,627		)	241			288
Loss before income taxes	(22,996		)	(86,477		)	(23,478		)	(30,724		)
Income tax expense (benefit)	20			20			20			(295		)
Net loss	$	(23,016	)	$	(86,497	)	$	(23,498	)	$	(30,429	)
Basic and diluted net loss per common share*	$	(0.21	)	$	(0.77	)	$	(0.20	)	$	(0.26	)

	2016
	Mar. 31			June 30			Sept. 30			Dec. 31
	(in thousands, except per share data)
Revenues:
Product revenue, net	$	5,616		$	8,279		$	5,050		$	8,228
License revenue	1,209			1,009			1,287			$	1,305
Total revenues	6,825			9,288			6,337			9,533
Operating expenses:
Cost of goods sold	1,071			5,099			18,196			13,437
License expense:	726			605			772			783
Research and development	7,616			7,029			8,674			6,185
Selling, general and administrative	20,809			20,188			20,521			23,035
Total operating expenses	30,222			32,921			48,163			43,440
Operating loss	(23,397		)	(23,633		)	(41,826		)	(33,907		)
Other (expense) income:
Amortization of debt discount	(15,748		)	(18,479		)	—			—
Other (expense) income, net	(1,799		)	(2,519		)	150			143
Total other (expense) income:	(17,547		)	(20,998		)	150			143
Loss before income taxes	(40,944		)	(44,631		)	(41,676		)	(33,764		)
Income taxes	20			20			20			20
Net loss	$	(40,964	)	$	(44,651	)	$	(41,696	)	$	(33,784	)
Basic and diluted net loss per common share*	$	(0.39	)	$	(0.42	)	$	(0.39	)	$	(0.32	)

* The aggregate of quarterly computed basic and diluted net loss per common share may not agree with the annual amount due to rounding.

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Recently Issued Accounting Standards

RECENTLY ISSUED ACCOUNTING STANDARDS

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies that we adopt as of the specified effective date. Unless otherwise discussed, we do not believe that the impact of recently issued standards that are not yet effective will have a material impact on our financial position or results of operations upon adoption.

In May 2014, the FASB issued Accounting Standards Update, or ASU, No. 2014-09, Revenue from Contracts with Customers (Topic 606), a comprehensive new standard which amends revenue recognition principles and provides a single set of criteria for revenue recognition among all industries. The new standard provides a five-step framework whereby revenue is recognized when promised goods or services are transferred to a customer at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires enhanced disclosures pertaining to revenue recognition in both interim and annual periods. The FASB issued several amendments to ASU No. 2014-09 which have the same effective date and transition date. These standards became effective for us on January 1, 2018 and will be adopted using the modified retrospective method. As of the date of this report, we have finalized our assessments over the impact that these new standards will have on our consolidated results of operations, financial position and disclosures, and have not identified any accounting changes that would materially impact the amount of reported revenues with respect to our product revenues. As of January 1, 2018, we expect to recognize an immaterial adjustment to retained earnings reflecting the cumulative impact for the accounting changes made upon adoption of these new standards.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. Under this standard, the measurement principle for inventory changed from lower of cost or market value to lower of cost and net realizable value. The standard defines net realizable value as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The standard is applicable to inventory that is accounted for under the first-in, first-out or average cost method and became effective for us on January 1, 2017. The adoption of this standard did not have a material impact on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019 and must be applied using a modified retrospective transition approach which requires application of the new guidance for all periods presented. The adoption of this standard is expected to have a material impact on our financial position as it will increase the amount of our assets and liabilities. We do not expect this standard to have a material impact on our consolidated statement of operations.

In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. This standard became effective for us on January 1, 2017. The adoptions of this standard did not have a material impact on our financial position, results of operations or statement of cash flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard became effective for us on January 1, 2018. This standard is not expected to have a material impact on our statement of cash flows upon adoption.

Principles of Consolidation

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include our financial statements and those of our wholly-owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

USE OF ESTIMATES

The preparation of our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates, judgments and assumptions that affect the reported amount of assets, liabilities, equity revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, judgments and assumptions.  We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances. These estimates are subject to an inherent degree of uncertainty, and as a result, actual results may differ from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

CASH AND CASH EQUIVALENTS

We consider liquid investments with original maturities of three months or less at the time of purchase to be cash and cash equivalents. At December 31, 2017, all of our cash and cash equivalents were held in commercial bank accounts.

Inventory

INVENTORY

Inventory is stated at the lower of cost or estimated realizable value. We determine the cost of our inventory, which includes amounts related to materials, third-party contract manufacturing and packaging services, and manufacturing overhead, on a first-in, first-out basis. We capitalize inventory costs at our suppliers when, based on management’s judgment, the realization of future economic benefit is probable at each given supplier. We received FDA approval for Auryxia on September 5, 2014, and on that date began capitalizing inventory purchases of saleable product from certain suppliers. Prior to FDA approval, all saleable product purchased from such suppliers was included in research and development expense. For an approved product that requires additional regulatory approval for a new manufacturing process or at a new contract manufacturing site, we include costs of product purchases from such suppliers in research and development expense until such time that process or contract manufacturing site is approved.

Accounts Receivable, Net

ACCOUNTS RECEIVABLE, NET

We extend credit to our customers for product sales resulting in accounts receivable. Customer accounts are monitored for past due amounts. Past due accounts receivable determined to be uncollectible are written off against the allowance for doubtful accounts. Allowances for doubtful accounts, if necessary, are estimated based upon past due amounts, historical losses and existing economic factors, and are adjusted periodically. We offer cash discounts to certain of our customers, generally 2% of the sales price, as an incentive for prompt payment. The estimate of cash discounts is recorded at the time of sale. We account for the cash discounts by reducing revenue and accounts receivable by the amount of the discounts we expect our customers to take. The accounts receivable are reported in the consolidated balance sheets, net of the allowances for doubtful accounts, cash discounts and chargebacks.

Property, Plant and Equipment

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets:

	Estimated useful life (years)
Office furniture and equipment	3-7
Computers, software and related equipment	3

Leasehold improvements are depreciated over the shorter of their useful life or the remaining term of the lease exclusive of renewal options.

Revenue Recognition

We recognize license revenue in accordance with Accounting Standards Codification 605, Revenue Recognition. We analyze each element of our licensing agreement to determine the appropriate revenue recognition. The terms of the license agreement may include payment to us of non-refundable up-front license fees, milestone payments if specified objectives are achieved, and/or royalties on net product sales. We recognize revenue from upfront payments over the period of significant involvement under the related agreements unless the fee is in exchange for products delivered or services rendered that represent the culmination of a separate earnings process and no further performance obligation exists under the contract. We recognize milestone payments as revenue upon the achievement of specified milestones only if (1) the milestone payment is non-refundable, (2) substantive effort is involved in achieving the milestone, (3) the amount of the milestone is reasonable in relation to the effort expended or the risk associated with achievement of the milestone, and (4) the milestone is at risk for both parties. If any of these conditions are not met, we defer the milestone payment and recognize it as revenue over the estimated period of performance under the contract.

For arrangements for which royalty revenue information becomes available and collectibility is reasonably assured, we recognize revenue during the applicable period earned. When collectibility is reasonably assured but a reasonable estimate of royalty revenue cannot be made, the royalty revenue is recognized in the quarter that the licensee provides the written report and related information to us.

REVENUE RECOGNITION

Our commercial launch of Auryxia occurred in December 2014. We sell product to a limited number of major wholesalers, our Distributors, as well as certain pharmacies, or collectively, our Customers. Our Distributors resell the product to retail pharmacies for purposes of filling patient prescriptions. In accordance with current GAAP, our revenue recognition policy requires that: (i) there is persuasive evidence that an arrangement exists between us and the Customer, (ii) delivery has occurred, (iii) collectibility is reasonably assured, and (iv) the price is fixed or determinable. In the fourth quarter of 2016, we began to recognize revenue under the pull-through (ex-factory) method based on sales to our Customers as a result of our ability to reasonably estimate product returns.

Prior to the fourth quarter of 2016, we recognized revenue based on the resale of Auryxia for the purposes of filling patient prescriptions, and not based on initial sales from us to our Customers as we did not have sufficient history such that we could reliably estimate returns based on sales to our Customers. As a result, prior to the fourth quarter of 2016, we deferred Auryxia revenue recognition until the earlier of the product being resold for purposes of filling patient prescriptions and the expiration of the right of return (twelve months after the expiration date of the product). The deferred revenue was recorded net of discounts, rebates, and chargebacks.

We have written contracts with our Customers and delivery occurs when a Customer receives Auryxia. We evaluate the creditworthiness of each of our Customers to determine whether revenues can be recognized upon delivery, subject to satisfaction of the other requirements, or whether recognition is required to be deferred until receipt of payment. In order to conclude that the price is fixed or determinable, we must be able to (i) calculate our gross product sales from the sales to Customers and (ii) reasonably estimate our related sales allowances. We calculate gross product sales based on the wholesale acquisition cost that we charge our Customers for Auryxia. We estimate our net product sales by deducting reserve estimates from our gross product sales related to (a) trade allowances, such as invoice discounts for prompt payment and distributor fees, (b) government and private payor rebates, chargebacks and discounts, such as Medicaid reimbursements, (c) expected product returns and (d) costs of incentives offered to certain indirect customers, including patients.

Trade Allowances: We generally provide discounts on Auryxia sales to our Customers in the form of a discount for prompt payment of invoices or a discount directly off the invoice amount. The prompt-pay discount is generally given for payment made within 35 days. Based on our judgment and industry experience, we expect our Customers to earn these discounts. We deduct the full amount of these discounts from our gross product sales and accounts receivable at the time such revenues are recognized. We also pay fees to our Distributors for distribution services which are generally based on a contractual percentage of total purchases made by each Distributor during the period. These fees are also deducted from our gross product sales at the time such revenues are recognized.

Rebates and Chargebacks: We contract with various commercial and Medicare Part D private insurance providers, Medicaid and other government agencies, or collectively, our Third-party Payors, so that Auryxia will be eligible for partial or full reimbursement from such Third-party Payors. We estimate the rebates and chargebacks we will provide to Third-party Payors and deduct these estimated amounts from our gross product sales at the time the revenues are recognized. We estimate the rebates and chargebacks that we will provide to Third-Party Payors based upon (i) our contracts with these Third-Party Payors, (ii) the government-mandated discounts applicable to government-funded programs, and (iii) information obtained from our Customers and other third parties regarding the payor mix for Auryxia.

Product Returns: Consistent with industry practice, we generally offer our Customers a limited right to return our Auryxia based on the product’s expiration date. Our Customers have the right to return Auryxia during the 18-month period beginning six months prior to the labeled expiration date and ending twelve months after the labeled expiration date. Currently the expiration date for Auryxia is eighteen months after it has been converted into tablet form, which is the last step in the manufacturing process for Auryxia and generally occurs within a few months before Auryxia is delivered to Customers. We estimate product returns based on the historical return patterns and we track actual returns by individual manufacturing lots. We expect that Distributors and pharmacies will not stock significant inventory due to the cost of the product, the expense to store the product and the fact that the product is readily available for distribution. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as it becomes available. As of December 31, 2017, we have experienced a relatively limited number of product returns; however, our returns experience may change over time. As we continue to gain more historical experience with actual returns, we may be required to make a future adjustment to our product returns estimate, which would result in a corresponding change to our net product sales in the period of adjustment and could be significant.

Other Incentives: Other incentives that we offer to indirect customers include co-pay assistance rebates provided by us to commercially insured patients who have coverage for Auryxia and who reside in states that permit co-pay assistance programs, and vouchers for a small supply of Auryxia at no patient cost. Our co-pay assistance program is intended to reduce each participating patient’s portion of the financial responsibility for Auryxia’s purchase price to a specified dollar amount. Based upon the terms of the program and data obtained from the third parties which administer the program, we estimate the co-pay assistance amounts and the percentage of patients that we expect to participate in the program in order to establish our accruals for co-pay assistance rebates. We deduct these estimated amounts from our gross product sales at the time the revenues are recognized.

Classification of product sales allowances and accruals

Allowances against receivable balances primarily relate to prompt-pay discounts, chargebacks and product returns and are recorded at the time of sale, resulting in a reduction in product sales revenue and the recording of product sales receivables net of allowances. Accruals related to Medicaid, Medicare Part D and other government and commercial rebates, as well as wholesaler fees, are recorded at the time of sale, resulting in a reduction in product sales and the recording of an increase in accrued expenses.

Cost of Goods Sold

COST OF GOODS SOLD

Cost of goods sold includes the cost of active pharmaceutical ingredient, or API, for Auryxia on which product sales were recognized during the period, as well as the associated costs for tableting, packaging, shipment, insurance and quality assurance, as well as any idle capacity charges we may incur at our contract manufacturers and write-offs of inventory that fails to meet specifications or is otherwise no longer suitable for commercial manufacture. Cost of goods sold also includes royalties due to the licensor of Auryxia related to the U.S. product sales recognized during the period, as well as a manufacturing fee related to API manufactured by us in the licensed territory through September 2017.

License Expense

LICENSE EXPENSE

License expense include royalty and other expenses due to the licensor of Auryxia related to our sublicense agreement with JT and Torii. Royalty expenses are directly related to the net sales recognized by JT and Torii during the period and is recognized in the same period as the license revenue is recorded. Other expenses are recognized in the period they are incurred.

Research and Development Costs

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred. Inventory expenditures prior to regulatory approval of the product candidate or prior to regulatory approval of the contract manufacturing site, if required, are recorded as research and development expense as incurred. The capitalization of inventory for our product candidates commences when management determines that the realization of future economic benefit is probable. Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and amortized over the period that the goods are delivered, or the related services are performed, subject to an assessment of recoverability. We make estimates of costs incurred in relation to external clinical research organizations, or CROs, and clinical site costs. We analyze the progress of clinical trials, including levels of patient enrollment, invoices received and contracted costs when evaluating the adequacy of the amount expensed and the related prepaid asset and accrued liability. Significant judgments and estimates must be made and used in determining the accrued balance and expense in any accounting period. We review and accrue CRO expenses and clinical trial expenses based on work performed and rely upon estimates of those costs applicable to the stage of completion of a trial. Accrued CRO costs are subject to revisions as such trials progress to completion. Revisions are charged to expense in the period in which the facts that give rise to the revision become known. With respect to clinical site costs, the financial terms of these agreements are subject to negotiation and vary from contract to contract. Payments under these contracts may be uneven and depend on factors such as the achievement of certain events, the successful recruitment of patients, and the completion of portions of the clinical trial or similar conditions. The objective of our policy is to match the recording of expenses in our consolidated financial statements to the actual services received and efforts expended. As such, expenses related to clinical site costs are recognized based on our estimate of the degree of completion of the event or events specified in the specific clinical trial contract.

Income Taxes

INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of our deferred tax assets will not be realized.

We, and our subsidiaries, file income tax returns in the United States federal jurisdiction and in various states. Our subsidiary, Keryx Biopharma UK Ltd., files annual returns and accounts in the United Kingdom. We have tax net operating loss carryforwards that are subject to examination for a number of years beyond the year in which they were generated for tax purposes. Since a portion of these net operating loss carryforwards may be utilized in the future, many of these net operating loss carryforwards will remain subject to examination.

We recognize interest and penalties related to uncertain income tax positions in income tax expense.

Our lack of earnings history and the uncertainty surrounding our ability to generate taxable income prior to the reversal or expiration of such deferred tax liability were the primary factors considered by management when recording the valuation allowance against our deferred tax assets.

We are not aware of any unrecorded tax liabilities which would materially impact our financial position or our results of operations.

Stock-Based Compensation

STOCK-BASED COMPENSATION

We grant stock options and restricted stock awards to employees, directors and consultants. We estimate an expected forfeiture rate and only recognize expense for those equity awards that are expected to vest. Forfeitures are estimated based on historical experience at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes model has several inputs, including the volatility in the price of our stock, the risk-free interest rate, the expected term of the option, the closing market price of our stock on the grant date and the exercise price. We base our estimates of our stock price volatility on the historical volatility of our common stock; however, these estimates are neither predictive nor indicative of the future performance of our stock. For purposes of the fair value calculation, we assume that no dividends will be paid during the life of the stock options. The aggregate fair value of awards calculated using the Black-Scholes option pricing model is generally expensed on a straight‑line basis over the requisite service period. The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management judgment.

The aggregate fair value of restricted stock granted to our employees and directors is determined based upon the quoted closing market price per share on the date of grant, adjusted for estimated forfeitures. This aggregate fair value is generally expensed on a straight‑line basis over the requisite service period.

The total stock-based compensation recorded in a given period is dependent upon the assumptions utilized. As a result, if other assumptions had been used, our recorded stock-based compensation expense could have been materially different from that reported. In addition, because some of the stock options issued to employees, consultants and other third-parties vest upon the achievement of certain performance conditions or milestones, the total expense is uncertain.

Basic and Diluted Net Loss Per Common Share

BASIC AND DILUTED NET LOSS PER COMMON SHARE

Basic net loss per share is computed by dividing the losses allocable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted net loss per share does not reflect the effect of shares of common stock to be issued upon the exercise of stock options, as their inclusion would be anti-dilutive. The options outstanding as of December 31, 2017, 2016 and 2015, which are not included in the computation of net loss per share amounts, were 11,967,815, 8,677,998 and 5,411,557, respectively.

Impairment

IMPAIRMENT

Long-lived assets are reviewed for an impairment loss when circumstances indicate that the carrying value of long-lived tangible and intangible assets with finite lives may not be recoverable. Management’s policy in determining whether an impairment indicator exists, a triggering event, comprises measurable operating performance criteria as well as qualitative measures. If an analysis is necessitated by the occurrence of a triggering event, we make certain assumptions in determining the impairment amount. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset or used in its disposal. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized.

In 2006, ADI, our wholly-owned subsidiary, completed the acquisition of Accumin™, a novel, patent protected, diagnostic for the direct measurement of total, intact urinary albumin, from AusAm Biotechnologies, Inc. We accounted for the ADI transaction as a purchase. The excess of the purchase price over the net assets acquired in the ADI transaction represented goodwill, which was allocated to our Products segment based on the proposed synergies with our then existing drug pipeline activities. In September 2008, we terminated our license agreement related to the ADI product.

Goodwill is reviewed for impairment annually, as of December 31, or when events arise that could indicate that an impairment exists. We test for goodwill impairment by comparing the fair value of the reporting unit with the unit’s carrying value, including goodwill. When the carrying value of the reporting unit is greater than fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. As of December 31, 2017, 2016 and 2015, management conducted its annual assessments of goodwill and concluded that there were no impairments. We will continue to perform impairment tests annually, at December 31, and whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable.

Concentrations of Credit Risk

CONCENTRATIONS OF CREDIT RISK

We do not have significant off-balance-sheet risk or credit risk concentrations. We maintain our cash and cash equivalents with multiple financial institutions. See Note 3 – Fair Value Measurements.

Our accounts receivable, net at December 31, 2017 and 2016 represent amounts due to the Company from customers. We perform ongoing credit evaluations of our customers and generally do not require collateral.

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Basis of Presentation and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Accounting Policies [Abstract]

Property Plant and Equipment Useful Life

Property, plant and equipment are stated at historical cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets:

	Estimated useful life (years)
Office furniture and equipment	3-7
Computers, software and related equipment	3

Schedule of Provisions for Allowances and Accruals

Our U.S. Auryxia product sales for the years ended December 31, 2017, 2016 and 2015 were offset by provisions for allowances and accruals as set forth in the tables below.

(in thousands)	2017		Percent of gross Auryxia product sales	2016		Percent of gross Auryxia product sales	2015		Percent of gross Auryxia product sales
Gross Auryxia product sales	$	111,845		$	44,557		$	16,295
Less provision for product sales allowances and accruals
Trade allowances	13,093		12%	5,157		12%	1,897		12%
Rebates and chargebacks	40,482		36%	10,703		24%	2,418		15%
Product returns	1,362		1%	879		2%	—		—%
Other incentives (1)	1,394		1%	645		1%	1,839		11%
Total	56,331		50%	17,384		39%	6,154		38%
Net U.S. Auryxia product sales	$	55,514		$	27,173		$	10,141

⁽¹⁾  Includes co-pay assistance and voucher rebates.

Schedule of Concentration Risk

The following table sets forth customers or partners who represented 10% or more of our total revenues for 2017, 2016 and 2015:

	December 31, 2017		December 31, 2016		December 31, 2015
Fresenius Medical Care Rx	29	%	22	%	15	%
McKesson Corporation	19	%	31	%	23	%
DaVita Rx	18	%	10	%	19	%
Cardinal Health, Inc.	15	%	11	%	24	%
AmerisourceBergen Drug Corporation	15	%	23	%	17	%

Customer Who Represented 10% Or More Total Account Receivable

The following table sets forth customers who represented 10% or more of our total accounts receivable, net as of December 31, 2017 and 2016:

	December 31, 2017		December 31, 2016
Fresenius Medical Care Rx	43	%	22	%
Cardinal Health, Inc.	32	%	11	%
AmerisourceBergen Drug Corporation	26	%	23	%
McKesson Corporation	21	%	31	%
DaVita Rx	—	%	10	%

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements of Financial Assets

The following table provides the fair value measurements made on a recurring basis of applicable financial assets as of December 31, 2017 and 2016:

	Financial assets at fair value as of December 31, 2017
(in thousands)	Level 1		Level 2		Level 3
Assets:
Cash equivalents (1)	$	1,895	$	—	$	—
Total assets	$	1,895	$	—	$	—

	Financial assets at fair value as of December 31, 2016
(in thousands)	Level 1		Level 2		Level 3
Assets:
Cash equivalents (1)	$	107,084	$	—	$	—
Total assets	$	107,084	$	—	$	—

⁽¹⁾  Cash equivalents as of December 31, 2017 and 2016 consisted of institutional money market funds. The carrying value of our money market funds approximates fair value due to their short-term maturities.

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Inventory (Tables)

12 Months Ended

Dec. 31, 2017

Inventory Disclosure [Abstract]

Summary of Inventories

Inventory consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Raw materials	$	469	$	418
Work in process	25,160		11,430
Finished goods	3,066		833
Total inventory	$	28,695	$	12,681

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Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

(in thousands)	December 31, 2017			December 31, 2016
Leasehold improvements	$	4,353		$	3,916
Office furniture and equipment	1,544			747
Computers, software and related equipment	779			787
	6,676			5,450
Accumulated depreciation	(2,155		)	(1,239		)
Net book value	$	4,521		$	4,211

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Other Assets (Tables)

12 Months Ended

Dec. 31, 2017

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Schedule of Other Current Assets

Other current assets consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Prepaid manufacturing costs	$	7,646	$	289
Prepaid selling, general and administrative expenses	2,265		1,528
Prepaid research and development expenses	1,288		1,353
Total other current assets	$	11,199	$	3,170

Schedule of Other Assets, Net

Other assets, net consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Deferred manufacturing costs	$	7,338	$	—
Deposits	1,099		1,055
Long-term prepaid manufacturing costs	1,000		—
Deferred registration fees	140		56
Total other long-term assets	$	9,577	$	1,111

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Accounts Payable and Accrued Expenses (Tables)

12 Months Ended

Dec. 31, 2017

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

Accounts payable and accrued expenses consisted of the following at December 31, 2017 and 2016:

(in thousands)	December 31, 2017		December 31, 2016
Commercial rebates and fees	$	16,362	$	4,616
Accrued manufacturing expenses	9,434		804
Accrued compensation and related liabilities	7,504		8,190
Accounts payable	6,474		2,225
Professional, license, and other fees and expenses	5,257		5,355
Total accounts payable and accrued expenses	$	45,031	$	21,190

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Stockholders' (Deficit) Equity (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Option Activity

The following table summarizes stock option activity for all plans for the year ended December 31, 2017:

	Number of shares		Weighted- average exercise price		Weighted- average remaining contractual term	Aggregate Intrinsic Value
Outstanding at December 31, 2016	8,677,998		$	7.28	8.12	$	8,840,412
Granted	4,669,150		5.46
Exercised	(383,575	)	2.99			$	1,767,281
Forfeited or Expired	(995,758	)	7.04
Outstanding at December 31, 2017	11,967,815		$	6.73	8.00	$	2,395,566
Vested and expected to vest at December 31, 2017	7,963,262		$	7.42	7.61	$	2,303,825
Exercisable at December 31, 2017	4,816,619		$	8.61	6.80	$	1,678,842

Summary of Restricted Share Activity

The following table summarizes restricted stock activity for the year ended December 31, 2017:

	Number of Shares		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
Outstanding at December 31, 2016	1,524,884		$	7.07	$	8,935,820
Granted	1,231,825		5.71
Vested	(671,090	)	6.49		$	4,157,589
Forfeited or Retired	(201,322	)	7.04
Outstanding at December 31, 2017	1,884,297		$	6.39	$	8,761,981

Stock Based Compensation

The following tables summarize stock-based compensation expense information about equity incentive grants for the years ended December 31, 2017, 2016 and 2015:

	For the years ended December 31,
(in thousands)	2017		2016		2015
Cost of goods sold	$	167	$	125	$	14
Research and development expenses	2,466		2,687		3,519
Selling, general and administrative expenses	15,639		11,177		12,967
	$	18,272	$	13,989	$	16,500

Schedule of Share Based Compensation Expense

	For the years ended December 31,
(in thousands)	2017		2016		2015
Stock-based compensation expense associated with restricted stock	$	5,738	$	4,159	$	5,073
Stock-based compensation expense associated with stock options	12,534		9,830		11,427
	$	18,272	$	13,989	$	16,500

Black-Scholes Option Valuation Assumptions

Black-Scholes Option Valuation Assumptions	2017		2016		2015
Risk-free interest rates	2.1	%	1.5	%	1.7	%
Dividend yield	—	%	—	%	—	%
Volatility	84.1	%	81.4	%	89.2	%
Weighted-average expected term	6.0 years		6.0 years		6.0 years

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income Tax Provision

The income tax provision consists of the following:

(in thousands)	December 31, 2017			December 31, 2016		December 31, 2015
Current:
Federal	$	—		$	—	$	—
State	—			—		—
Total current	—			—		—
Deferred:
Federal	(258		)	73		81
State	23			7		9
Total deferred	(235		)	80		90
Total income taxes	$	(235	)	$	80	$	90

Schedule of Effective Income Tax Rate Reconciliation

Income tax expense differed from amounts computed by applying the U.S. federal income tax rate of 34% to pretax loss as follows:

	For the years ended December 31,
(in thousands)	2017			2016			2015
Loss before income taxes, as reported in the consolidated statements of operations	$	(163,675	)	$	(161,015	)	$	(123,055	)
Computed “expected” tax benefit	(55,650		)	(54,745		)	(41,838		)
Increase (decrease) in income taxes resulting from:
Expected (benefit) expense from state & local taxes	(5,307		)	(5,222		)	(3,991		)
Stock-based compensation expense	(360		)	(17		)	(2,328		)
Tax impact of derivative liability	23,450			—			16,977
Permanent differences	(305		)	3,087			1,445
Impact of state NOL carryforward change	111,681			—			—
Prior year true-up	(2		)	(58		)	2,191
Change in the balance of the valuation allowance for deferred tax assets allocated to income tax expense	(73,742		)	57,035			27,634
	$	(235	)	$	80		$	90

Schedule of Components of Income Tax Expense (Benefit)

The significant components of deferred income tax expense (benefit) attributable to loss from operations are as follows:

	For the years ended December 31,
(in thousands)	2017			2016			2015
Deferred tax expense (benefit)	$	50,057		$	(56,955	)	$	(44,521	)
Tax impact of derivative liability	23,450			—			16,977
Increase in the valuation allowance for deferred tax asset	(73,742		)	57,035			27,634
	$	(235	)	$	80		$	90

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2017 and 2016 are presented below.

(in thousands)	December 31, 2017			December 31, 2016
Deferred tax assets (liabilities):
Net operating loss carryforwards	$	193,310		$	255,809
Stock-based compensation expense	14,315			16,735
Capitalized inventory	24			2,044
Inventory reserves	3,829			9,288
Research and development	2,242			2,087
Intangible assets due to different amortization methods	1,546			2,495
Tax-deductible goodwill	(635		)	(870		)
Other temporary differences	691			1,241
Net deferred tax asset, excluding valuation allowance	215,322			288,829
Less valuation allowance	(215,957		)	(289,699		)
Net deferred tax liabilities	$	(635	)	$	(870	)

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Other (Expense) Income (Tables)

12 Months Ended

Dec. 31, 2017

Other Income and Expenses [Abstract]

Schedule of Other Nonoperating Income (Expense)

The components of other (expense) income are as follows:

	For the years ended December 31,
(in thousands)	2017			2016			2015
Interest income	$	707		$	698		$	472
Amortization of debt discount	(62,965		)	(34,227		)	(11,357		)
Other income (expense), net	274			(4,723		)	(1,102		)
	$	(61,984	)	$	(38,252	)	$	(11,987	)

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments

Future minimum payments under our non-cancelable facility lease as of December 31, 2017 are as follows (in thousands):

Period	Future Minimum Lease Payments
Year Ending December 31, 2018	$	1,628
Year Ending December 31, 2019	1,655
Year Ending December 31, 2020	1,683
Year Ending December 31, 2021	1,710
Year Ending December 31, 2022	1,737
Thereafter	291
Total	$	8,704

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Quarterly Consolidated Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2017

Quarterly Financial Information Disclosure [Abstract]

Quarterly Consolidated Financial Data

	2017
	Mar. 31			June 30			Sept. 30			Dec. 31
	(in thousands, except per share data)
Revenues:
Net U.S. Auryxia product sales	$	10,505		$	14,116		$	13,597		$	17,296
License revenue	1,314			1,028			1,399			1,386
Total revenues	11,819			15,144			14,996			18,682
Costs and expenses:
Cost of goods sold	4,273			4,379			5,856			7,447
License expense	789			617			838			832
Research and development	6,764			9,012			9,275			12,628
Selling, general and administrative	23,103			24,986			22,746			28,787
Total costs and expenses	34,929			38,994			38,715			49,694
Operating loss	(23,110		)	(23,850		)	(23,719		)	(31,012		)
Other (expense) income:
Amortization of debt discount	—			(62,965		)	—			—
Other (expense) income, net	114			338			241			288
Total other (expense) income:	114			(62,627		)	241			288
Loss before income taxes	(22,996		)	(86,477		)	(23,478		)	(30,724		)
Income tax expense (benefit)	20			20			20			(295		)
Net loss	$	(23,016	)	$	(86,497	)	$	(23,498	)	$	(30,429	)
Basic and diluted net loss per common share*	$	(0.21	)	$	(0.77	)	$	(0.20	)	$	(0.26	)

	2016
	Mar. 31			June 30			Sept. 30			Dec. 31
	(in thousands, except per share data)
Revenues:
Product revenue, net	$	5,616		$	8,279		$	5,050		$	8,228
License revenue	1,209			1,009			1,287			$	1,305
Total revenues	6,825			9,288			6,337			9,533
Operating expenses:
Cost of goods sold	1,071			5,099			18,196			13,437
License expense:	726			605			772			783
Research and development	7,616			7,029			8,674			6,185
Selling, general and administrative	20,809			20,188			20,521			23,035
Total operating expenses	30,222			32,921			48,163			43,440
Operating loss	(23,397		)	(23,633		)	(41,826		)	(33,907		)
Other (expense) income:
Amortization of debt discount	(15,748		)	(18,479		)	—			—
Other (expense) income, net	(1,799		)	(2,519		)	150			143
Total other (expense) income:	(17,547		)	(20,998		)	150			143
Loss before income taxes	(40,944		)	(44,631		)	(41,676		)	(33,764		)
Income taxes	20			20			20			20
Net loss	$	(40,964	)	$	(44,651	)	$	(41,696	)	$	(33,784	)
Basic and diluted net loss per common share*	$	(0.39	)	$	(0.42	)	$	(0.39	)	$	(0.32	)

* The aggregate of quarterly computed basic and diluted net loss per common share may not agree with the annual amount due to rounding.

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Description of Business - Additional information (Detail) Patient in Thousands	Dec. 31, 2017 territory Patient
Product Information [Line Items]
Number of territories | territory	95
Dialysis
Product Information [Line Items]
Number of patients	650
Phosphate Binder
Product Information [Line Items]
Number of patients	350
Chronic Kidney Disease | Nephrologist
Product Information [Line Items]
Number of patients	450
Iron Deficiency Anemia | Nephrologist
Product Information [Line Items]
Number of patients	1,700

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Basis of Presentation and Summary of Significant Accounting Policies - Additional information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Accounting Policies [Abstract]
Prompt payment discount, percent	2.00%
Allowance for doubtful accounts receivable	$ 0	$ 0
Option outstanding, not included in computation of net loss per share amount (in shares)	11,967,815	8,677,998	5,411,557

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Basis of Presentation and Summary of Significant Accounting Policies - Property Plant and Equipment Useful Life (Detail)	12 Months Ended
	Dec. 31, 2017
Office furniture and equipment | Minimum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	3 years
Office furniture and equipment | Maximum
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	7 years
Computers, software and related equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, useful life	3 years

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Basis of Presentation and Summary of Significant Accounting Policies - Schedule of Provisions for Allowances and Accruals (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Allowance for Sales Return and Doubtful Accounts [Line Items]
Gross Auryxia product sales									$ 111,845	$ 44,557	$ 16,295
Provision for product sales allowances and accruals									56,331	17,384	6,154
Net U.S. Auryxia product sales	$ 17,296	$ 13,597	$ 14,116	$ 10,505	$ 8,228	$ 5,050	$ 8,279	$ 5,616	$ 55,514	$ 27,173	$ 10,141
Percent of gross Auryxia product sales									50.00%	39.00%	38.00%
Trade allowances
Allowance for Sales Return and Doubtful Accounts [Line Items]
Provision for product sales allowances and accruals									$ 13,093	$ 5,157	$ 1,897
Percent of gross Auryxia product sales									12.00%	12.00%	12.00%
Rebates and chargebacks
Allowance for Sales Return and Doubtful Accounts [Line Items]
Provision for product sales allowances and accruals									$ 40,482	$ 10,703	$ 2,418
Percent of gross Auryxia product sales									36.00%	24.00%	15.00%
Product returns
Allowance for Sales Return and Doubtful Accounts [Line Items]
Provision for product sales allowances and accruals									$ 1,362	$ 879	$ 0
Percent of gross Auryxia product sales									1.00%	2.00%	0.00%
Other incentives (1)
Allowance for Sales Return and Doubtful Accounts [Line Items]
Provision for product sales allowances and accruals									$ 1,394	$ 645	$ 1,839
Percent of gross Auryxia product sales									1.00%	1.00%	11.00%

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Basis of Presentation and Summary of Significant Accounting Policies - Customer Who Represented 10% Or More Total Revenue (Detail) - Total revenues, net - Customer concentration risk	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Fresenius Medical Care Rx
Concentration Risk [Line Items]
Concentration risk percentage	29.00%	22.00%	15.00%
McKesson Corporation
Concentration Risk [Line Items]
Concentration risk percentage	19.00%	31.00%	23.00%
DaVita Rx
Concentration Risk [Line Items]
Concentration risk percentage	18.00%	10.00%	19.00%
Cardinal Health, Inc.
Concentration Risk [Line Items]
Concentration risk percentage	15.00%	11.00%	24.00%
AmerisourceBergen Drug Corporation
Concentration Risk [Line Items]
Concentration risk percentage	15.00%	23.00%	17.00%

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Basis of Presentation and Summary of Significant Accounting Policies Basis of Presentation and Summary of Significant Accounting Policies - Customer With 10% or More of Total Accounts Receivable (Details) - Accounts Receivable - Customer concentration risk	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Fresenius Medical Care Rx
Concentration Risk [Line Items]
Concentration risk percentage	43.00%	22.00%
Cardinal Health, Inc.
Concentration Risk [Line Items]
Concentration risk percentage	32.00%	11.00%
AmerisourceBergen Drug Corporation
Concentration Risk [Line Items]
Concentration risk percentage	26.00%	23.00%
McKesson Corporation
Concentration Risk [Line Items]
Concentration risk percentage	21.00%	31.00%
DaVita Rx
Concentration Risk [Line Items]
Concentration risk percentage	0.00%	10.00%

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Fair Value Measurements of Financial Assets (Detail) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Oct. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proceeds from convertible debt		$ 0	$ 0	$ 125,000
Convertible debt, fair value disclosures		155,400	195,900
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value measurement, recurring basis		1,895	107,084
Level 1 | Cash equivalents (1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value measurement, recurring basis		1,895	107,084
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value measurement, recurring basis		0	0
Level 2 | Cash equivalents (1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value measurement, recurring basis		0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value measurement, recurring basis		0	0
Level 3 | Cash equivalents (1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value measurement, recurring basis		$ 0	$ 0
Convertible senior notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proceeds from convertible debt	$ 125,000

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Inventory - Summary of Inventories (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 469,000	$ 418,000
Work in process	25,160,000	11,430,000
Finished goods	3,066,000	833,000
Total inventory	28,695,000	12,681,000
Write-down of inventory	3,467,000	$ 27,968,000	$ 0
Increase in inventory	$ 16,000,000

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Property, Plant and Equipment (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 6,676	$ 5,450
Accumulated depreciation	(2,155)	(1,239)
Net book value	4,521	4,211
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	4,353	3,916
Office furniture and equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	1,544	747
Computers, software and related equipment
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 779	$ 787

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Property, Plant and Equipment - Narrative (Detail) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Abstract]
Depreciation	$ 0.9	$ 1.0	$ 0.6

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Other Assets - Schedule of Other Current Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Prepaid manufacturing costs	$ 7,646	$ 289
Prepaid selling, general and administrative expenses	2,265	1,528
Prepaid research and development expenses	1,288	1,353
Total other current assets	$ 11,199	$ 3,170

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Other Assets - Schedule of Other Assets, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Deferred manufacturing costs	$ 7,338	$ 0
Deposits	1,099	1,055
Long-term prepaid manufacturing costs	1,000	0
Deferred registration fees	140	56
Total other long-term assets	9,577	$ 1,111
Facility construction agreement	5,000
Product premiums	$ 2,300

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Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Commercial rebates and fees	$ 16,362	$ 4,616
Accrued manufacturing expenses	9,434	804
Accrued compensation and related liabilities	7,504	8,190
Accounts payable	6,474	2,225
Professional, license, and other fees and expenses	5,257	5,355
Total accounts payable and accrued expenses	$ 45,031	$ 21,190

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Debt - Additional Information (Detail) $ / shares in Units, $ in Thousands		1 Months Ended	12 Months Ended
	Oct. 14, 2015 $ / shares	Oct. 31, 2015 USD ($)	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 USD ($)	Jun. 08, 2017 shares
Debt Conversion [Line Items]
Payments for common stock issuance costs			$ 0	$ 0	$ 125,000
Convertible senior note repurchase price as percentage of principal amount			100.00%
Notes, interest expense			$ 63,000	$ 34,200
Common stock, shares authorized (in shares) | shares			230,000,000	180,000,000		230,000,000
Convertible senior notes			$ 125,000	$ 125,000
Notes, fair value			$ 155,400	$ 195,900
Convertible senior notes
Debt Conversion [Line Items]
Payments for common stock issuance costs		$ 125,000
Minimum aggregate principal amount outstanding for declaration notice			25.00%
Debt instrument, convertible, conversion ratio	0.2673797
Conversion price, per share (USD per share) | $ / shares	$ 3.74
Convertible senior notes | Default (other than certain events of bankruptcy, insolvency or reorganization)
Debt Conversion [Line Items]
Redemption percentage			100.00%
Convertible senior notes | Events of bankruptcy, insolvency or reorganization
Debt Conversion [Line Items]
Redemption percentage			100.00%

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Stockholders' (Deficit) Equity - Additional Information (Detail) - USD ($)			1 Months Ended	12 Months Ended
	Nov. 09, 2016	Jan. 21, 2015	Nov. 30, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Jul. 31, 2017	May 25, 2016	Nov. 30, 2014
Stockholders Equity Note [Line Items]
Preferred stock, shares authorized (in shares)				5,000,000	5,000,000
Preferred stock, par value (USD per share)				$ 0.001	$ 0.001
Proceeds from issuance of common stock, net				$ 75,720,000	$ 0	$ 118,284,000
Underwriting discounts and offering expenses				$ 1,928,000		$ 8,216,000
Shares available for the issuance of stock options (in shares)				2,026,423
Weighted average grant date fair value of options granted (USD per share)				$ 3.91	$ 3.47	$ 8.47
Options exercised, intrinsic value				$ 1,800,000	$ 200,000	$ 8,600,000
Total unrecognized compensation cost related to non-vest stock options				$ 9,000,000
Securities registered with SEC amount			$ 250,000,000
Long Term Incentive Plan 2004
Stockholders Equity Note [Line Items]
Plan authorizes grants to purchase common stock (in shares)				4,000,000
Shares available for the issuance of stock options (in shares)				0
CEO Incentive Plan 2009
Stockholders Equity Note [Line Items]
Plan authorizes grants to purchase common stock (in shares)				600,000
Share based compensation arrangement by share based payment award contractual term				10 years
Stock Option Plan 1999
Stockholders Equity Note [Line Items]
Plan authorizes grants to purchase common stock (in shares)				4,230,000
Incentive Plan 2007
Stockholders Equity Note [Line Items]
Plan authorizes grants to purchase common stock (in shares)				6,000,000
Shares available for the issuance of stock options (in shares)				45,754
Maximum
Stockholders Equity Note [Line Items]
Stock awards vesting period				4 years
Maximum | Long Term Incentive Plan 2004
Stockholders Equity Note [Line Items]
Share based compensation arrangement by share based payment award contractual term				10 years
Maximum | Stock Option Plan 1999
Stockholders Equity Note [Line Items]
Share based compensation arrangement by share based payment award contractual term				10 years
Shares available for the issuance of stock options (in shares)				0
Maximum | Incentive Plan 2007
Stockholders Equity Note [Line Items]
Share based compensation arrangement by share based payment award contractual term				10 years
Maximum | Incentive Plan 2013
Stockholders Equity Note [Line Items]
Plan authorizes grants to purchase common stock (in shares)								18,000,000	9,500,000
Share based compensation arrangement by share based payment award contractual term				10 years
Shares available for the issuance of stock options (in shares)				1,980,669
Minimum
Stockholders Equity Note [Line Items]
Stock awards vesting period				3 years
Minimum | Incentive Plan 2013
Stockholders Equity Note [Line Items]
Plan authorizes grants to purchase common stock (in shares)								9,500,000	3,500,000
Stock compensation plan
Stockholders Equity Note [Line Items]
Options exercised, intrinsic value				$ 1,767,281
Number of options (in shares)				11,967,815	8,677,998
Weighted average recognition periods for unrecognized compensation cost				1 year 10 months 24 days
Restricted stock
Stockholders Equity Note [Line Items]
Granted (USD per share)				$ 5.71	$ 3.86	$ 4.76
Fair value of restricted stock vested during period				$ 4,200,000	$ 2,400,000	$ 4,700,000
Restricted stock issued (in shares)				1,884,297	1,524,884
Total unrecognized compensation cost related to restricted stock				$ 5,500,000
Weighted average recognition periods for unrecognized compensation cost				1 year 7 months 6 days
Restricted stock | Milestone-based and vest upon certain corporate milestones
Stockholders Equity Note [Line Items]
Restricted stock issued (in shares)				310,000
Stock-based compensation expense				$ 4,600,000
Stock options | Milestone-based and vest upon certain corporate milestones
Stockholders Equity Note [Line Items]
Number of options (in shares)				3,753,750
Public Offering
Stockholders Equity Note [Line Items]
Stock issued during period, shares, new issues (in shares)		10,541,667
Share price (USD per share)		$ 12.00
Proceeds from issuance of common stock, gross		$ 126,500,000
Proceeds from issuance of common stock, net		118,300,000
Underwriting discounts and offering expenses		$ 8,200,000
Controlled Equity Offering
Stockholders Equity Note [Line Items]
Proceeds from issuance of common stock, net				$ 75,700,000
Stock authorized for sale	$ 75,000,000.0						$ 75,000,000.0
Sales agreement, maximum commission fee percent				3.00%
Expense reimbursement limit, maximum	$ 50,000
Number of shares issued in transaction (in shares)				11,937,174
Sale of stock remaining authorized amount				$ 72,400,000
Sales agreement termination notice				10 days

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Stockholders' (Deficit) Equity - Summary of Stock Option Activity (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Aggregate Intrinsic Value
Exercised	$ 1,800,000	$ 200,000	$ 8,600,000
Stock compensation plan
Number of shares
Outstanding at beginning of period (in shares)	8,677,998
Granted (in shares)	4,669,150
Exercised (in shares)	(383,575)
Forfeited or Expired (in shares)	(995,758)
Outstanding at end of period (in shares)	11,967,815	8,677,998
Vested and expected to vest at period end (in shares)	7,963,262
Exercisable at period end (in shares)	4,816,619
Weighted- average exercise price
Outstanding at beginning of period (USD per share)	$ 7.28
Granted (USD per share)	5.46
Exercised (USD per share)	2.99
Forfeited or Expired (USD per share)	7.04
Outstanding at end of period (USD per share)	6.73	$ 7.28
Vested and expected to vest at period end (USD per share)	7.42
Exercisable at period end (USD per share)	$ 8.61
Weighted- average remaining contractual term
Outstanding at beginning of period	8 years	8 years 1 month 13 days
Vested and expected to vest at period end	7 years 7 months 10 days
Exercisable at period end	6 years 9 months 18 days
Aggregate Intrinsic Value
Outstanding at beginning of period	$ 8,840,412
Exercised	1,767,281
Outstanding at end of period	2,395,566	$ 8,840,412
Vested and expected to vest at period end	2,303,825
Exercisable at period end	$ 1,678,842

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Stockholders' (Deficit) Equity - Summary of Restricted Share Activity (Detail) - Restricted stock - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Number of Shares
Outstanding at beginning of period (in shares)	1,524,884
Granted (in shares)	1,231,825
Vested (in shares)	(671,090)
Forfeited (in shares)	(201,322)
Outstanding at end of period (in shares)	1,884,297	1,524,884
Weighted Average Grant Date Fair Value
Outstanding at beginning of period (USD per share)	$ 7.07
Granted (USD per share)	5.71	$ 3.86	$ 4.76
Vested (USD per share)	6.49
Forfeited (USD per share)	7.04
Outstanding at end of period (USD per share)	$ 6.39	$ 7.07
Aggregate Intrinsic Value
Outstanding at beginning of period	$ 8,935,820
Vested	4,200,000
Outstanding at end of period	$ 8,761,981	$ 8,935,820

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Stockholders' (Deficit) Equity - Stock Based Compensation (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 18,272	$ 13,989	$ 16,500
Cost of goods sold
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	167	125	14
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	2,466	2,687	3,519
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 15,639	$ 11,177	$ 12,967

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Stockholders' (Deficit) Equity - Summary of Share Based Compensation Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation expense associated with restricted stock	$ 5,738	$ 4,159	$ 5,073
Stock-based compensation expense associated with stock options	12,534	9,830	11,427
Stock compensation expense	$ 18,272	$ 13,989	$ 16,500

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Stockholders' (Deficit) Equity - Black Scholes Option Valuation Assumptions (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Risk-free interest rates	2.10%	1.50%	1.70%
Dividend yield	0.00%	0.00%	0.00%
Volatility	84.10%	81.40%	89.20%
Weighted-average expected term	6 years	6 years	6 years

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License Agreements - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended								12 Months Ended				146 Months Ended
	Feb. 28, 2014	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2017
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
License agreements, non-refundable milestone payment received	$ 10,000
License revenue		$ 1,386	$ 1,399	$ 1,028	$ 1,314	$ 1,305	$ 1,287	$ 1,009	$ 1,209	$ 5,127	$ 4,810	$ 3,539	$ 10,000
License agreements, potential milestone receivable										55,000
License revenue related to royalties										5,100	4,800
License expense related to royalties										$ 3,100	$ 2,900
Licensing agreements
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payments to acquire right for development and marketing of Ferric Citrate														$ 11,600
Milestone payment												$ 2,000

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Income Taxes - Additional Information (Detail) - USD ($)	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Reduction to deferred tax asset as a result of the Tax Cuts and Jobs Act									$ 111,700,000
Valuation allowance for deferred tax assets	$ 215,957,000				$ 289,699,000				215,957,000	$ 289,699,000
Decrease in deferred tax assets valuation allowance									73,700,000
Net operating loss carryforwards	812,200,000								812,200,000
Income tax (benefit) expense	(295,000)	$ 20,000	$ 20,000	$ 20,000	20,000	$ 20,000	$ 20,000	$ 20,000	(235,000)	$ 80,000	$ 90,000
Decrease of goodwill deferred tax liability as result of the Tax Cuts and Jobs Act									300,000
Income from reduction of goodwill deferred tax liability as result of the Tax Cuts and Jobs Act									$ 300,000
US Federal income tax rate									34.00%	34.00%	34.00%
Unrecognized tax benefits, accrued interest and penalties	$ 0				$ 0				$ 0	$ 0	$ 0

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Income Taxes - Income Tax Provision (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Current:
Federal									$ 0	$ 0	$ 0
State									0	0	0
Total current									0	0	0
Deferred:
Federal									(258)	73	81
State									23	7	9
Total deferred									(235)	80	90
Total income taxes	$ (295)	$ 20	$ 20	$ 20	$ 20	$ 20	$ 20	$ 20	$ (235)	$ 80	$ 90

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Income Taxes - Effective Income Tax Rate Reconciliation (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Loss before income taxes	$ (30,724)	$ (23,478)	$ (86,477)	$ (22,996)	$ (33,764)	$ (41,676)	$ (44,631)	$ (40,944)	$ (163,675)	$ (161,015)	$ (123,055)
Computed “expected” tax benefit									(55,650)	(54,745)	(41,838)
Increase (decrease) in income taxes resulting from:
Expected (benefit) expense from state & local taxes									(5,307)	(5,222)	(3,991)
Stock-based compensation expense									(360)	(17)	(2,328)
Tax impact of derivative liability									23,450	0	16,977
Permanent differences									(305)	3,087	1,445
Impact of state NOL carryforward change									111,681	0	0
Prior year true-up									(2)	(58)	2,191
Change in the balance of the valuation allowance for deferred tax assets allocated to income tax expense									(73,742)	57,035	27,634
Total income taxes	$ (295)	$ 20	$ 20	$ 20	$ 20	$ 20	$ 20	$ 20	$ (235)	$ 80	$ 90

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Income Taxes - Significant Components of Deferred Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Deferred tax expense (benefit)	$ 50,057	$ (56,955)	$ (44,521)
Tax impact of derivative liability	23,450	0	16,977
Increase in the valuation allowance for deferred tax asset	(73,742)	57,035	27,634
Total deferred	$ (235)	$ 80	$ 90

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Income Taxes - Deferred Tax Assets and Deferred Tax Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Deferred tax assets (liabilities):
Net operating loss carryforwards	$ 193,310	$ 255,809
Stock-based compensation expense	14,315	16,735
Capitalized inventory	24	2,044
Inventory reserves	3,829	9,288
Research and development	2,242	2,087
Intangible assets due to different amortization methods	1,546	2,495
Tax-deductible goodwill	(635)	(870)
Other temporary differences	691	1,241
Net deferred tax asset, excluding valuation allowance	215,322	288,829
Less valuation allowance	(215,957)	(289,699)
Net deferred tax liabilities	$ (635)	$ (870)

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Other (Expense) Income - Components of Interest and Other Income, Net (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Other Income and Expenses [Abstract]
Interest income									$ 707	$ 698	$ 472
Amortization of debt discount	$ 0	$ 0	$ (62,965)	$ 0	$ 0	$ 0	$ (18,479)	$ (15,748)	(62,965)	(34,227)	(11,357)
Other income (expense), net									274	(4,723)	(1,102)
Total other expense:	$ 288	$ 241	$ (62,627)	$ 114	$ 143	$ 150	$ (20,998)	$ (17,547)	$ (61,984)	$ (38,252)	$ (11,987)

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Commitments and Contingencies - Additional Information (Detail) $ in Millions		1 Months Ended	12 Months Ended
	Dec. 16, 2016 lawsuit	Apr. 30, 2015 USD ($) ft²	Dec. 31, 2017 USD ($) lawsuit milestone	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Commitments and Contingencies [Line Items]
Lease agreement term		94 months
Rental expense			$ 1.2	$ 1.9	$ 2.2
Boston, Massachusetts
Commitments and Contingencies [Line Items]
Space lease agreement (square feet) | ft²		27,300
Receivable from landlord		$ 1.9
Pending Litigation
Commitments and Contingencies [Line Items]
Loss contingency, number of class action lawsuits | lawsuit			4
Pending Litigation | Filed US District Court, S. District New York
Commitments and Contingencies [Line Items]
Loss contingency, number of class action lawsuits | lawsuit			3
Pending Litigation | Breach of Fiduciary Duties
Commitments and Contingencies [Line Items]
Loss contingency, number of complaints filed | lawsuit	2
Manufacturing Milestone Payment
Commitments and Contingencies [Line Items]
Potential milestone payment amount			$ 10.0
Milestones achieved during period | milestone			1
Milestone payment accrual			$ 5.0

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Commitments and Contingencies - Schedule of Future Minimum Lease Payments (Details) $ in Thousands	Dec. 31, 2017 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Year Ending December 31, 2018	$ 1,628
Year Ending December 31, 2019	1,655
Year Ending December 31, 2020	1,683
Year Ending December 31, 2021	1,710
Year Ending December 31, 2022	1,737
Thereafter	291
Total	$ 8,704

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Business Segments (Details)	12 Months Ended
	Dec. 31, 2017 Segment
Segment Reporting [Abstract]
Number of business segments	1

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Quarterly Consolidated Financial Data (Unaudited) (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Revenues:
Net U.S. Auryxia product sales	$ 17,296	$ 13,597	$ 14,116	$ 10,505	$ 8,228	$ 5,050	$ 8,279	$ 5,616	$ 55,514	$ 27,173	$ 10,141
License revenue	1,386	1,399	1,028	1,314	1,305	1,287	1,009	1,209	5,127	4,810	3,539	$ 10,000
Total revenues	18,682	14,996	15,144	11,819	9,533	6,337	9,288	6,825	60,641	31,983	13,680
Costs and expenses:
Cost of goods sold	7,447	5,856	4,379	4,273	13,437	18,196	5,099	1,071	21,955	37,803	4,520
License expense	832	838	617	789	783	772	605	726	3,076	2,886	2,124
Research and development	12,628	9,275	9,012	6,764	6,185	8,674	7,029	7,616	37,679	29,504	36,694
Selling, general and administrative	28,787	22,746	24,986	23,103	23,035	20,521	20,188	20,809	99,622	84,553	81,410
Total costs and expenses	49,694	38,715	38,994	34,929	43,440	48,163	32,921	30,222	162,332	154,746	124,748
Operating loss	(31,012)	(23,719)	(23,850)	(23,110)	(33,907)	(41,826)	(23,633)	(23,397)	(101,691)	(122,763)	(111,068)
Other (expense) income:
Amortization of debt discount	0	0	(62,965)	0	0	0	(18,479)	(15,748)	(62,965)	(34,227)	(11,357)
Other (expense) income, net	288	241	338	114	143	150	(2,519)	(1,799)	981	(4,025)	(630)
Total other expense:	288	241	(62,627)	114	143	150	(20,998)	(17,547)	(61,984)	(38,252)	(11,987)
Loss before income taxes	(30,724)	(23,478)	(86,477)	(22,996)	(33,764)	(41,676)	(44,631)	(40,944)	(163,675)	(161,015)	(123,055)
Income tax (benefit) expense	(295)	20	20	20	20	20	20	20	(235)	80	90
Net loss	$ (30,429)	$ (23,498)	$ (86,497)	$ (23,016)	$ (33,784)	$ (41,696)	$ (44,651)	$ (40,964)	$ (163,440)	$ (161,095)	$ (123,145)
Basic and diluted net loss per common share (USD per share)	$ (0.26)	$ (0.20)	$ (0.77)	$ (0.21)	$ (0.32)	$ (0.39)	$ (0.42)	$ (0.39)	$ (1.43)	$ (1.52)	$ (1.19)