Revenue Recognition

3 Months Ended

Mar. 31, 2024

Revenue Recognition

Revenue Recognition

13. Revenue Recognition

The Company has recognized revenue under its license and collaboration agreements from (1) its share of the profit generated by KORSUVA injection sales in the United States during the three months ended March 31, 2024 and 2023; (2) commercial supply revenue from the Company’s sales of commercial product to CSL Vifor during the three months ended March 31, 2024 and 2023; (3) royalty revenue from net sales of Kapruvia in Europe during the three months ended March 31, 2023; (4) clinical compound sales from certain license agreements during the three months ended March 31, 2024 and 2023; and (5) other revenue which represents royalty payments earned by the Company under Vifor Agreement No. 2 and the Maruishi Agreement under the HCR Agreement during the three months ended March 31, 2024. As of March 31, 2024, the Company has not earned any sales-based milestones under its collaboration agreements.

As of March 31, 2024, the Company had license and collaboration agreements with CSL Vifor, Maruishi and CKDP. The following table provides amounts included in the Company’s Condensed Consolidated Statements of Comprehensive Loss as revenue for the three months ended March 31, 2024 and 2023, respectively:

	Three Months Ended March 31,
	2024		2023
Collaborative revenue
CSL Vifor (KORSUVA injection profit sharing)	$	788	$	2,750
Total collaborative revenue	$	788	$	2,750
Commercial supply revenue
CSL Vifor* (KORSUVA injection)	$	640	$	3,191
Total commercial supply revenue	$	640	$	3,191
Royalty revenue
CSL Vifor (Kapruvia ex-U.S.)	$	—	$	125
Total royalty revenue	$	—	$	125
Clinical compound revenue
Maruishi	$	84	$	99
Total clinical compound revenue	$	84	$	99
Other revenue (non-cash)
CSL Vifor (Kapruvia ex-U.S.)	$	290	$	—
Maruishi		333		—
Total other revenue	$	623	$	—

Collaborative revenue

Beginning in April 2022, the Company began recording its share of the profit generated by KORSUVA injection sales by CSL Vifor to third parties in the United States. Under the license agreements with CSL Vifor, KORSUVA injection net sales are calculated by CSL Vifor which are net of discounts, rebates, and allowances. These amounts include the use of estimates and judgments, which could be adjusted based on actual results in the future. The Company records its share of the net profits from the sales of KORSUVA injection in the United States on a net basis (since the Company is not the primary obligor and does not retain inventory risk) and presents the revenue earned each period as collaborative revenue. During the three months ended March 31, 2024 and 2023, the Company recorded $788 and $2,750, respectively, as collaborative revenue for its profit-share from the sales of KORSUVA injection in the United States.

Commercial supply revenue

Under the Vifor International Supply Agreement, the Company’s only performance obligation is the delivery of KORSUVA injection to CSL Vifor in accordance with the receipt of purchase orders. Revenue from the sale of commercial supply product to CSL Vifor is recognized as delivery of the product occurs. The Company had commercial supply revenue of $640 and $3,191 for the three months ended March 31, 2024 and 2023, respectively, with associated COGS of $620 and $2,590, respectively.

Royalty revenue

Royalty revenue includes amounts related to the Company’s royalties earned from CSL Vifor on the net sales of Kapruvia in Europe, based on the amount of net sales in a licensed territory during a calendar year. Sales-based royalty

payments related to a license of IP are recognized as revenue when the respective sales occur, and the net sales tier is achieved. The Company recognized royalty revenue of approximately $125 for the three months ended March 31, 2023, which were related to the Company’s royalties on the net sales of Kapruvia in Europe. Beginning on October 1, 2023, royalty revenue is no longer recognized until the Company has fulfilled its obligations under the HCR Agreement (see Note 10, Royalty Purchase and Sale Agreement).

Clinical compound revenue

The Company’s only performance obligation under the supply agreement with Maruishi is to deliver clinical compound to Maruishi in accordance with the receipt of purchase orders. During the three months ended March 31, 2024 and 2023, the Company recognized clinical compound revenue of $84 and $99, respectively, from the sale of clinical compound to Maruishi.

Other revenue

The Company recorded other non-cash revenue of $623 which represents the royalty payments earned by the Company under Vifor Agreement No. 2 and the Maruishi Agreement during the three months ended March 31, 2024 in conjunction with ex-U.S. sales of KORSUVA/Kapruvia, which will be remitted to HCR under the terms of the HCR Agreement. This non-cash revenue will continue to be recorded until the Company has fulfilled its obligations under the HCR Agreement. There was no other revenue recorded for the three months ended March 31, 2023 as the HCR Agreement went into effect during the fourth quarter of 2023 (see Note 10, Royalty Purchase and Sale Agreement).

Contract balances

As of March 31, 2024 and December 31, 2023, the Company recorded accounts receivable, net – related party of $1,718 and $2,765, respectively, which primarily related to its profit-sharing revenue from sales of KORSUVA injection in the United States by CSL Vifor, its commercial supply of KORSUVA injection to CSL Vifor, and royalty payments from CSL Vifor. The Company also recorded $346 and $415 within other receivables which primarily related to royalty payments from Maruishi as of March 31, 2024 and December 31, 2023, respectively. There were no other contract assets or contract liabilities related to the CSL Vifor, Maruishi and CKDP agreements as of March 31, 2024 and December 31, 2023.

The Company routinely assesses the creditworthiness of its license and collaboration partners. The Company has not experienced any losses related to receivables from its license and collaboration partners as of March 31, 2024 and December 31, 2023.