Revenue Recognition

6 Months Ended

Jun. 30, 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 six months ended June 30, 2024 and the three and six months ended June 30, 2023; (2) commercial supply revenue from the Company’s sales of commercial product

to CSL Vifor during the six months ended June 30, 2024 and the three and six months ended June 30, 2023; (3) royalty revenue from net sales of Kapruvia in Europe during each of the three and six months ended June 30, 2023; (4) clinical compound sales from certain license agreements during each of the six months ended June 30, 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 and six months ended June 30, 2024. As of June 30, 2024, the Company has not earned any sales-based milestones under its collaboration agreements.

As of June 30, 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 each of the three and six months ended June 30, 2024 and 2023, respectively:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023			2024	2023
Collaborative revenue
CSL Vifor (KORSUVA injection profit sharing)	$	—	$	5,410	$	788	$	8,160
Total collaborative revenue	$	—	$	5,410	$	788	$	8,160
Commercial supply revenue
CSL Vifor (KORSUVA injection)	$	—	$	1,400	$	640	$	4,591
Total commercial supply revenue	$	—	$	1,400	$	640	$	4,591
Royalty revenue
CSL Vifor (Kapruvia ex-U.S.)	$	—	$	123	$	—	$	248
Total royalty revenue	$	—	$	123	$	—	$	248
Clinical compound revenue
Maruishi	$	—	$	—	$	84	$	99
Total clinical compound revenue	$	—	$	—	$	84	$	99
Other revenue (non-cash)
CSL Vifor (Kapruvia ex-U.S.)	$	359	$	—	$	649	$	—
Maruishi		632		—		965		—
Total other revenue	$	991	$	—	$	1,614	$	—

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.

For the three months ended June 30, 2024, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately negative $2,664, which resulted in the Company’s profit share amount of negative $1,447. For the three months ended June 30, 2023, CSL Vifor recorded net sales of $11,467, which resulted in the Company’s profit share amount of $5,410. The negative net sales reported by CSL Vifor was primarily due to higher rebates and chargebacks due to price decreases on KORSUVA injection related to the expiration of Transition Drug Add-on Payment Adjustment in April 2024. Based on the terms of the agreement, the negative profit will be offset against net

profits in future periods. However, the Company has recorded a liability in accrued professional fees and other within accounts payable and accrued expenses for $1,447 and a corresponding expense in other general and administrative, or G&A, expense as a result of the negative profit share amount in the second quarter of 2024. For the six months ended June 30, 2024, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately negative $858. For the six months ended June 30, 2023, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately $17,141. For the six months ended June 30, 2024 and 2023, the Company recorded associated collaborative revenue of $788 and $8,160, respectively.

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. There was no commercial supply revenue for the three months ended June 30, 2024. The Company had commercial supply revenue of $1,400 for the three months ended June 30, 2023, with associated COGS of $1,418, and $640 and $4,591 for the six months ended June 30, 2024 and 2023, respectively, with associated COGS of $620 and $4,008, 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 $123 and $248 for the three and six months ended June 30, 2023, respectively, 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. There was no clinical compound revenue for the three months ended June 30, 2024 and 2023. During the six months ended June 30, 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 $991 and $1,614 which represents the royalty payments earned by the Company under Vifor Agreement No. 2 and the Maruishi Agreement during the three and six months ended June 30, 2024, respectively, 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 and six months ended June 30, 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 June 30, 2024 and December 31, 2023, the Company recorded accounts receivable, net – related party of $359 and $2,765, respectively, which primarily related to royalty payments from CSL Vifor in the current period and 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 in the prior period. The Company also recorded $645 and $415 within other receivables which primarily related to royalty payments from Maruishi as of June 30, 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 June 30, 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 June 30, 2024 and December 31, 2023.