UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________

FORM 10-Q

_________________________________

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

For the quarterly period ended September 30, 2024

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: 001-36257

 TRAVERE THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware	27-4842691
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

3611 Valley Centre Drive, Suite 300

San Diego, CA 92130

(Address of Principal Executive Offices)

(888) 969-7879

(Registrant's Telephone number including area code)

N/A

Former name, former address and former fiscal year, if changed since last report

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	TVTX	The Nasdaq Global Market

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☑ No ☐

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

Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	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 ☑

 The number of shares of outstanding common stock, par value $0.0001 per share, of the Registrant as of October 28, 2024 was 78,049,928.

TRAVERE THERAPEUTICS, INC.

Form 10-Q

For the Fiscal Quarter Ended September 30, 2024

TABLE OF CONTENTS

		Page No.
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	4
	Unaudited Consolidated Statements of Operations and Comprehensive (Loss) Income for the three and nine months ended September 30, 2024 and 2023	5
	Unaudited Consolidated Statements of Stockholders' (Deficit) Equity for the three and nine months ended September 30, 2024 and 2023	6
	Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2024 and 2023	8
	Notes to Unaudited Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	38
Item 1A.	Risk Factors	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	66
Item 6.	Exhibits	68

1

FORWARD-LOOKING STATEMENTS 

This report contains forward-looking statements regarding our business, financial condition, results of operations and prospects. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not deemed to represent an all-inclusive means of identifying forward-looking statements as denoted in this report. Additionally, statements concerning future matters are forward-looking statements.

Although forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in or anticipated by the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, without limitation, those specifically addressed under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and in this Quarterly Report on Form 10-Q. You are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. 

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned to not unduly rely upon these statements.

We file reports with the Securities and Exchange Commission ("SEC"). The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us.

We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report, except as required by law. Readers are urged to carefully review and consider the various disclosures made throughout the entirety of this quarterly report, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

Risk Factor Summary

Below is a summary of material factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found under the heading “Risk Factors” in Item 1A of Part II of this Quarterly Report on Form 10-Q and should be carefully considered, together with other information in this Quarterly Report on Form 10-Q and our other filings with the SEC before making investment decisions regarding our common stock.

•Our future prospects are highly dependent upon our ability to successfully develop and execute commercialization strategies for our products, including FILSPARI, and to attain market acceptance among physicians, patients and healthcare payers.

•Our clinical trials are expensive and time-consuming and may fail to demonstrate the safety and efficacy of our product candidates.

•Success in nonclinical testing and early clinical trials does not ensure that later clinical trials will be successful.

•Communications and/or feedback from regulatory authorities related to our clinical trials does not guarantee any particular outcome from or timeline for regulatory review, and expedited regulatory review pathways may not actually lead to faster development or approval.

•In order to operate our business and increase adoption and sales of our products, we need to continue to develop our commercial organization, including maintaining a highly experienced and skilled workforce with qualified sales representatives.

•Interim, topline and preliminary data from our clinical trials that we announce or publish may change materially as more patient data become available and audit and verification procedures are completed.

•We face substantial generic and other competition, and our operating results will suffer if we fail to compete effectively.

•Healthcare reform initiatives, unfavorable pricing regulations, and changes in reimbursement practices of third-party payers or patients' access to insurance coverage could affect the pricing of and demand for our products.

•We are dependent on third parties to manufacture and distribute our products.

•The market opportunities for our products and product candidates may be smaller than we believe they are.

•Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval or commercialization.

•We do not currently have patent protection for certain of our commercial products. If we are unable to obtain and maintain intellectual property relating to our technology and products, their value may be adversely affected.

•We expect to rely on orphan drug status to develop and commercialize certain of our product candidates, but our orphan drug designations may not confer marketing exclusivity or other expected commercial benefits.

•We will likely experience fluctuations in operating results and could incur substantial losses, and the market price for shares of our common stock may be volatile.

2

•Negative publicity regarding any of our products could impair our ability to market any such product and may require us to spend time and money to address these issues.

•We may need substantial funding and may be unable to raise capital when needed. Our indebtedness could adversely affect our financial condition.

•We may not receive some or all of the potential milestone and/or royalty payments from our corporate and licensing transactions.

•We may be unable to successfully integrate new products or businesses we may acquire.

•We may become involved in litigation matters, which could result in substantial costs, divert management's attention and otherwise have a material adverse effect on our business, operating results or financial condition.

•We are subject to significant ongoing regulatory obligations and oversight, which may result in significant additional expense and may limit our commercial success.

3

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value and share amounts)

	September 30, 2024		December 31, 2023
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	36,409	$	58,176
Marketable debt securities, at fair value	241,030		508,675
Accounts receivable, net	25,170		21,179
Inventory	6,356		9,410
Prepaid expenses and other current assets	15,775		19,335
Total current assets	324,740		616,775
Long-term inventory	36,522		31,494
Property and equipment, net	6,162		7,479
Operating lease right of use assets	15,662		18,061
Intangible assets, net	104,205		104,443
Other assets	17,119		10,661
Total assets	$	504,410	$	788,913
Liabilities and Stockholders' (Deficit) Equity
Current liabilities:
Accounts payable	$	23,195	$	41,675
Accrued expenses	83,916		118,991
Convertible debt, current portion	68,599		—
Deferred revenue, current portion	3,799		7,096
Operating lease liabilities, current portion	5,297		4,909
Other current liabilities	5,232		5,237
Total current liabilities	190,038		177,908
Convertible debt, less current portion	309,957		377,263
Operating lease liabilities, less current portion	18,581		22,612
Other non-current liabilities	16,288		10,320
Total liabilities	534,864		588,103
Commitments and Contingencies (See Note 13)
Stockholders' (Deficit) Equity:
Preferred stock $0.0001 par value; 20,000,000 shares authorized; no shares issued and outstanding as of September 30, 2024 and December 31, 2023	—		—
Common stock $0.0001 par value; 200,000,000 shares authorized; 77,909,042, and 75,367,117 issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	8		7
Additional paid-in capital	1,357,457		1,327,881
Accumulated deficit	(1,386,903)		(1,125,622)
Accumulated other comprehensive loss	(1,016)		(1,456)
Total stockholders' (deficit) equity	(30,454)		200,810
Total liabilities and stockholders' (deficit) equity	$	504,410	$	788,913

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

4

TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(in thousands, except share and per share amounts)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net product sales	$	61,001	$	33,932	$	153,161	$	87,621
License and collaboration revenue	1,897		3,163		5,227		12,558
Total revenue	62,898		37,095		158,388		100,179
Operating expenses:
Cost of goods sold	1,626		1,289		5,191		6,886
Research and development	51,679		60,590		155,429		185,244
Selling, general and administrative	65,619		67,801		194,618		201,954
In-process research and development	—		—		65,205		—
Restructuring	123		—		1,035		—
Total operating expenses	119,047		129,680		421,478		394,084
Operating loss	(56,149)		(92,585)		(263,090)		(293,905)
Other income, net:
Interest income	3,570		5,842		14,022		14,616
Interest expense	(2,777)		(2,821)		(8,365)		(8,513)
Other income (expense), net	520		335		(2,737)		220
Total other income, net	1,313		3,356		2,920		6,323
Loss from continuing operations before income tax provision	(54,836)		(89,229)		(260,170)		(287,582)
Income tax benefit (provision) on continuing operations	84		(12)		(192)		(155)
Loss from continuing operations, net of tax	(54,752)		(89,241)		(260,362)		(287,737)
(Loss) income from discontinued operations, net of tax	(59)		239,976		(919)		266,511
Net (loss) income	$	(54,811)	$	150,735	$	(261,281)	$	(21,226)
Per share data
Basic and diluted:
Net loss from continuing operations	$	(0.70)	$	(1.17)	$	(3.36)	$	(3.91)
Net income (loss) from discontinued operations	—		3.14		(0.01)		3.62
Net (loss) income per common share	$	(0.70)	$	1.97	$	(3.37)	$	(0.29)
Weighted average common shares outstanding	77,779,379		76,305,603		77,473,161		73,523,620
Comprehensive (loss) income:
Net (loss) income	$	(54,811)	$	150,735	$	(261,281)	$	(21,226)
Foreign currency translation (loss) gain	(803)		8		230		(728)
Unrealized gain (loss) on marketable debt securities	1,421		194		210		(18)
Comprehensive (loss) income	$	(54,193)	$	150,937	$	(260,841)	$	(21,972)

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

5

TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

(unaudited, in thousands, except share amounts)

	Three Months Ended September 30, 2024											Three Months Ended September 30, 2023
	Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Deficit		Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount										Shares	Amount
Balance - June 30	76,456,562	$	8	$	1,348,865	$	(1,634)	$	(1,332,092)	$	15,147	74,971,807	$	7	$	1,306,517	$	(3,855)	$	(1,186,184)	$	116,485
Share based compensation	—	—		7,729		—		—		7,729		—	—		11,775		—		—		11,775
Issuance of common stock under the equity incentive plan and proceeds from exercise	202,480	—		571		—		—		571		139,710	—		151		—		—		151
Employee stock purchase program purchase and expense	—	—		292		—		—		292		—	—		418		—		—		418
Exercise of pre-funded common stock warrants	1,250,000	—		—		—		—		—		—	—		—		—		—		—
Foreign currency translation adjustments	—	—		—		(803)		—		(803)		—	—		—		8		—		8
Unrealized gain on marketable debt securities	—	—		—		1,421		—		1,421		—	—		—		194		—		194
Net (loss) income	—	—		—		—		(54,811)		(54,811)		—	—		—		—		150,735		150,735
Balance - September 30	77,909,042	$	8	$	1,357,457	$	(1,016)	$	(1,386,903)	$	(30,454)	75,111,517	$	7	$	1,318,861	$	(3,653)	$	(1,035,449)	$	279,766

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

6

TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY

(unaudited, in thousands, except share amounts)

	Nine Months Ended September 30, 2024											Nine Months Ended September 30, 2023
	Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Deficit		Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount										Shares	Amount
Balance - December 31	75,367,117	$	7	$	1,327,881	$	(1,456)	$	(1,125,622)	$	200,810	64,290,570	$	6	$	1,059,975	$	(2,907)	$	(1,014,223)	$	42,851
Share based compensation	—	—		26,763		—		—		26,763		—	—		36,273		—		—		36,273
Issuance of common stock under the equity incentive plan and proceeds from exercise	1,052,425	1		571		—		—		572		960,657	—		3,240		—		—		3,240
Employee stock purchase program purchase and expense	239,500	—		2,242		—		—		2,242		156,540	—		3,545		—		—		3,545
Issuance of common stock, net of issuance costs of $12.6 million	—	—		—		—		—		—		9,703,750	1		191,198		—		—		191,199
Issuance of pre-funded common stock warrants, net of issuance costs of $1.6 million	—	—		—		—		—		—		—	—		24,630		—		—		24,630
Exercise of pre-funded common stock warrants	1,250,000	—		—		—		—		—		—	—		—		—		—		—
Foreign currency translation adjustments	—	—		—		230		—		230		—	—		—		(728)		—		(728)
Unrealized gain (loss) on marketable debt securities	—	—		—		210		—		210		—	—		—		(18)		—		(18)
Net loss	—	—		—		—		(261,281)		(261,281)		—	—		—		—		(21,226)		(21,226)
Balance - September 30	77,909,042	$	8	$	1,357,457	$	(1,016)	$	(1,386,903)	$	(30,454)	75,111,517	$	7	$	1,318,861	$	(3,653)	$	(1,035,449)	$	279,766

7

TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

	For the Nine Months Ended September 30,
	2024		2023
Cash Flows From Operating Activities:
Net loss	$	(261,281)	$	(21,226)
Net (loss) income from discontinued operations	(919)		266,511
Net loss from continuing operations	(260,362)		(287,737)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	31,464		29,042
Share based compensation	27,699		36,102
In-process research and development	65,205		—
Other	5,022		(5,815)
Changes in operating assets and liabilities:
Accounts receivable	(4,017)		(3,295)
Inventory	(3,486)		(17,027)
Prepaid expenses and other current and non-current assets	(4,903)		(4,402)
Accounts payable	(18,573)		7,468
Accrued expenses	(38,794)		(3,903)
Deferred revenue, current and non-current	(5,557)		(10,200)
Other current and non-current liabilities	4,909		(1,217)
Net cash used in operating activities - continuing operations	(201,393)		(260,984)
Net cash (used in) provided by operating activities - discontinued operations	(362)		51,436
Net cash used in operating activities	(201,755)		(209,548)
Cash Flows From Investing Activities:
Proceeds from the sale and maturity of marketable debt securities	271,285		284,575
Purchase of marketable debt securities	—		(381,294)
Purchase of fixed assets	(82)		(643)
Purchase of intangible assets	(26,569)		(36,086)
Payment of milestone	(65,000)		—
Net cash provided by (used in) investing activities - continuing operations	179,634		(133,448)
Net cash provided by investing activities - discontinued operations	—		206,174
Net cash provided by investing activities	179,634		72,726
Cash Flows From Financing Activities:
Payment of guaranteed minimum royalty	(1,575)		(1,575)
Proceeds from the issuance of common stock, net of issuance costs	—		191,198
Proceeds from the issuance of pre-funded warrants, net of issuance costs	—		24,630
Proceeds from exercise of stock options	571		3,240
Proceeds from issuances under the employee stock purchase plan	1,307		2,258
Net cash provided by financing activities - continuing operations	303		219,751
Net cash used in financing activities - discontinued operations	—		(1,123)
Net cash provided by financing activities	303		218,628
Effect of exchange rate changes on cash	51		750
Net (decrease) increase in cash and cash equivalents	(21,767)		82,556
Cash and cash equivalents, beginning of year	58,176		61,688
Cash and cash equivalents, end of period	$	36,409	$	144,244

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

TRAVERE THERAPEUTICS, INC. AND SUBSIDIARIES

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  DESCRIPTION OF BUSINESS

Organization and Description of Business

Travere Therapeutics, Inc. (“we”, “our”, “us”, “Travere” and the “Company”) refers to Travere Therapeutics, Inc., a Delaware corporation, as well as its subsidiaries. Travere is a fully integrated biopharmaceutical company headquartered in San Diego, California focused on identifying, developing and delivering life-changing therapies to people living with rare kidney and metabolic diseases. The Company regularly evaluates and, where appropriate, acts on opportunities to expand its product pipeline through licenses and acquisitions of products in areas that will serve patients with serious unmet medical need and that the Company believes offer attractive growth characteristics.

Discontinued Operations - Sale of Bile Acid Product Portfolio

In July 2023, Travere entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Mirum Pharmaceuticals, Inc. ("Mirum Pharmaceuticals" or “Mirum”), pursuant to which Mirum agreed to purchase from Travere substantially all of the assets primarily related to Travere’s business of development, manufacture (including synthesis, formulation, finishing or packaging) and commercialization of Chenodal and Cholbam (also known as Kolbam, and together with Chenodal, the “Products”), collectively, the "bile acid business". On August 31, 2023, the Company and Mirum consummated the transactions contemplated by the Purchase Agreement (the “Closing”). In connection with the Closing, Mirum paid Travere an upfront cash payment of $210.0 million. Pursuant to the Purchase Agreement, after the Closing, Travere is eligible to receive up to $235.0 million upon the achievement of certain milestones based on specified amounts of annual net sales (tiered from $125.0 million to $500.0 million) of the Products. The Company has reflected the bile acid business as a discontinued operation in the unaudited consolidated financial statements for all periods presented. See Note 18 for further discussion.

Unless otherwise noted, amounts and disclosures throughout the Notes to the unaudited consolidated financial statements relate to the Company's continuing operations.

Approved Products:

FILSPARI® (sparsentan)

On September 5, 2024, the FDA granted full approval of FILSPARI® (sparsentan) to slow kidney function decline in adults with primary Immunoglobulin A nephropathy (IgAN) who are at risk of disease progression. FILSPARI is the only oral, once-daily, non-immunosuppressive medication that directly targets glomerular injury in the kidney by blocking two critical pathways of IgAN disease progression (endothelin-1 and angiotensin II).

FILSPARI had previously been granted accelerated approval in February 2023 based on the surrogate marker of proteinuria. Full approval is based on positive long-term confirmatory results from the PROTECT Study demonstrating that FILSPARI significantly slowed kidney function decline over two years compared to irbesartan. FILSPARI initially became commercially available in the U.S. in February 2023 under accelerated approval, and the Company is providing a comprehensive patient support program throughout the patient’s treatment journey.

In September 2021, the Company entered into a license and collaboration agreement with Vifor (International) Ltd. ("CSL Vifor"). In April 2024, the Company and CSL Vifor announced that the European Commission has granted conditional marketing authorization (“CMA”) for FILSPARI (sparsentan) for the treatment of adults with primary IgAN with a urine protein excretion ≥1.0 g/day (or urine protein-to-creatinine ratio ≥0.75 g/g). The CMA is granted for all member states of the European Union, as well as in Iceland, Liechtenstein and Norway. The European Commission's decision follows the positive opinion from the Committee for Medicinal Products for Human Use (“CHMP”) in February 2024, based on results from the pivotal Phase 3 PROTECT Study of FILSPARI in IgAN. Under the terms of the License Agreement, the Company will be entitled to receive a regulatory milestone payment of $17.5 million upon receipt of full regulatory approval by the European Commission for IgAN, and an additional milestone payment upon achievement of market access initiatives in certain countries. FILSPARI became commercially available in Europe under the CMA in August 2024, with an initial launch in Germany and Austria. In October 2024, the Company and CSL Vifor announced that Swissmedic has granted temporary marketing authorization for FILSPARI for the treatment of adults with primary IgAN with a urine protein excretion ≥1.0 g/day (or urine protein-to-creatinine ratio ≥0.75 g/g).

Thiola® and Thiola EC® (tiopronin tablets)

Thiola® and Thiola EC® (tiopronin tablets) are approved in the United States for the prevention of cystine (kidney) stone formation in patients with severe homozygous cystinuria.

Clinical-Stage Programs:

Sparsentan for the treatment of FSGS

Sparsentan remains a novel investigational product candidate which has been granted Orphan Drug Designation for the treatment of focal segmental glomerulosclerosis (FSGS) in the U.S. and the European Economic Area countries (the “EEA”). In December 2023, the Company announced that it had completed its planned Type C meeting with the FDA to discuss previously reported results from the Phase 3 DUPLEX Study of sparsentan in FSGS. The FDA acknowledged the high unmet need for approved therapies as well as the challenges in studying FSGS but indicated that the two-year results from the Phase 3 DUPLEX Study alone were not sufficient to support an sNDA submission. Together with CSL Vifor, the Company also plans to engage with the EMA to determine the potential for a subsequent variation to the CMA of sparsentan for the treatment of FSGS, subject to a review decision on the pending application for CMA of sparsentan in IgAN. The Company is conducting additional analyses of FSGS data and plans to engage with regulators to evaluate potential regulatory pathways for a sparsentan FSGS indication.

8

Pegtibatinase

Pegtibatinase is a novel investigational human enzyme replacement candidate being evaluated for the treatment of classical homocystinuria (HCU). Pegtibatinase has been granted Rare Pediatric Disease, Fast Track and Breakthrough Therapy designations by the FDA, as well as orphan drug designation in the United States and European Union. In May 2023, the Company announced positive topline results from cohort 6 in the Phase 1/2 COMPOSE Study. In December 2023, the Company initiated the pivotal Phase 3 HARMONY Study to support the potential approval of pegtibatinase for the treatment of classical HCU. The HARMONY Study is a global, randomized, multi-center, double-blind, placebo-controlled Phase 3 clinical trial designed to evaluate the efficacy and safety of pegtibatinase as a novel treatment to reduce total homocysteine (tHcy) levels. In the beginning of 2024, the first patients were dosed in the HARMONY Study.

In September 2024, the Company announced a voluntary pause of enrollment in the Phase 3 HARMONY Study. The voluntary enrollment pause enables the Company to work to address necessary process improvements in manufacturing scale-up to support commercial scale manufacturing as well as full enrollment in the HARMONY Study. Patients currently enrolled in pegtibatinase studies continue to receive study medication from small scale batches which are unaffected by the scale-up process. Currently enrolled patients will be able to continue on study medication as scheduled for the duration of the trials they are participating in. The voluntary enrollment pause was enacted following our determination that the desired drug substance profile was not achieved in the recent scale-up process. The Company expects to further evaluate the necessary commercial process improvements to enable the continuation of the Phase 3 program.

The Company acquired pegtibatinase as part of the November 2020 acquisition of Orphan Technologies Limited.

Preclinical Programs:

The Company is party to a collaboration agreement with PharmaKrysto Limited and their early-stage cystinuria discovery program, whereby the Company is responsible for funding all research and development expenses for the pre-clinical activities associated with the cystinuria program.

NOTE 2.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 20, 2024. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information, the instructions for Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for any future periods. The December 31, 2023 balance sheet information was derived from the audited financial statements as of that date. Certain reclassifications have been made to the prior period consolidated financial statements to conform to the current period presentation, including reclassifying the prior period revenues and expenses attributable to the bile acid business as net income from discontinued operations. These reclassifications did not have an impact on total assets or total liabilities in the Consolidated Balance Sheets or net loss in the Consolidated Statements of Operations.

A summary of the significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows:

Principles of Consolidation

The unaudited consolidated financial statements represent the consolidation of the accounts of the Company, its subsidiaries and variable interest entities for which the Company has been determined to be the primary beneficiary, in conformity with accounting principles generally accepted in the United States ("U.S. GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. See Note 6 for further discussion of variable interest entities (“VIE”) that the Company consolidates.

Revenue Recognition

The Company recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers ("ASC 606"), the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue from contracts when it is probable that the entity will collect substantially all the consideration it is entitled to in exchange for the goods or services it transfers to the customer. See Note 3 and Note 4 for further discussion.

9

Payments received under collaboration and licensing agreements may include non-refundable fees at the inception of the arrangements, milestone payments for specific achievements and royalties on the sale of products. At the inception of arrangements that include milestone payments, the Company uses judgment to evaluate whether the milestones are probable of being achieved and estimates the amount to include in the transaction price utilizing the most likely amount method. If it is probable that a significant revenue reversal will not occur, the estimated amount is included in the transaction price. Milestone payments that are not within the Company or the licensee’s control, such as regulatory approvals, are considered to be constrained due to a high degree of uncertainty and are not included in the transaction price until such uncertainty is resolved. At the end of each reporting period, the Company re-evaluates the probability of achievement of development milestones and any related constraint and adjusts the estimate of the overall transaction price, if necessary. The Company recognizes aggregate sales-based milestones and royalty payments from product sales of which the license is deemed to be the predominant item to which the royalties relate, at the later of when the related sales occur or when the performance obligation to which the sales-based milestone or royalty has been allocated has been satisfied. Revenue from collaboration and licensing agreements may also include sales of inventory, at cost plus a margin, which is recorded in license and collaboration revenue.

The Company utilizes significant judgment to develop estimates of the stand-alone selling price for each distinct performance obligation based upon the relative stand-alone selling price. Variable consideration that relates specifically to the Company’s efforts to satisfy specific performance obligations is allocated entirely to those performance obligations. The stand-alone selling price for license-related performance obligations requires judgment in developing assumptions to project probability-weighted cash flows based upon estimates of forecasted revenues, clinical and regulatory timelines and discount rates. The stand-alone selling price for clinical development performance obligations is based on forecasted expected costs of satisfying a performance obligation plus an appropriate margin.

If the licenses to intellectual property are determined to be distinct from the other performance obligations identified in the arrangement and have stand-alone functionality, the Company recognizes revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the licensee and the licensee is able to benefit from the license. For licenses that are not distinct from other promises, the Company applies judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the related revenue recognition accordingly.

The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. Revenue is recorded proportionally as costs are incurred. The Company generally utilizes the cost-to-cost method of progress because it best measures the transfer of control to the customer which occurs as the Company incurs costs. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. The Company uses judgment to estimate the total costs expected to complete the clinical development performance obligations, which include subcontractor costs, labor, materials, other direct costs and an allocation of indirect costs. The Company evaluates these cost estimates and the progress each reporting period and adjusts the measure of progress, if necessary.

Cost of goods sold

Cost of goods sold includes the cost of inventory sold, third party manufacturing and supply chain costs, product shipping and handling costs, and provisions for excess and obsolete inventory. Cost of goods sold also includes the cost of goods sold under the Company's license and collaboration agreements, which currently consists of the sale of active pharmaceutical ingredients to the Company's collaboration partners, at cost or at cost plus a margin.

The following table summarizes cost of goods sold for the three and nine months ended September 30, 2024 and 2023 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Cost of goods sold - product sales	$	1,626	$	1,289	$	5,059	$	3,842
Cost of goods sold - license and collaboration	—		—		132		3,044
Total cost of goods sold	$	1,626	$	1,289	$	5,191	$	6,886

Capitalization of Inventory Costs

Prior to the regulatory approval of the Company's drug candidates, the Company incurs expenses for the manufacture of drug product supplies to support clinical development that could potentially be available to support the commercial launch of those drugs. The Company capitalizes inventory costs associated with its products after regulatory approval, when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized. Until the date at which regulatory approval has been received, costs related to the production of inventory are recorded as research and development expenses as incurred. Any eventual sale of previously expensed ("zero-cost") inventories may impact future margins, for any periods in which those inventories are sold.

Prior to the February 2023 FDA accelerated approval of FILSPARI (sparsentan), the Company expensed the production of active pharmaceutical ingredients purchased to support the commercial launch of FILSPARI, in research and development expenses. For the three and nine months ended September 30, 2024 and 2023, sales of FILSPARI primarily consisted of zero-cost inventories. As of September 30, 2024, the Company had approximately $2.6 million of zero-cost inventory. The Company expects to continue to record zero cost of goods sold on the sale of previously expensed inventories through at least 2025. The Company began capitalizing inventory costs associated with FILSPARI following the February 2023 accelerated approval.

Research and Development Expenses

Research and development includes expenses related to sparsentan, pegtibatinase, and the Company's other pipeline programs. The Company expenses all research and development costs as they are incurred. The Company's research and development costs are composed of salaries and bonuses, benefits, share-based compensation, license fees, milestones under license agreements, costs paid to third-party contractors to perform research, conduct clinical

10

trials, costs to develop drug materials and delivery devices, costs to manufacture drug product supplies to support clinical development, and associated overhead expenses and facilities costs. The Company charges direct internal and external program costs to the respective development programs. The Company also incurs indirect costs that are not allocated to specific programs because such costs benefit multiple development programs and allow us to increase our pharmaceutical development capabilities. These consist of internal shared resources related to the development and maintenance of systems and processes applicable to all of our programs.

Nonrefundable advance payments for goods and services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services rendered.

Clinical Trial Expenses

The Company records expenses in connection with its clinical trials under contracts with contract research organizations ("CROs") that support conducting and managing clinical trials, as well as contract manufacturing organizations ("CMOs") for the manufacture of drug product supplies to support clinical development. The financial terms and activities of these agreements vary from contract to contract and may result in uneven expense levels. Generally, these agreements set forth activities that drive the recording of expenses such as start-up, initiation activities, enrollment, treatment of patients, or the completion of other clinical trial activities, and in the case of CMOs, costs associated with the production of drug product supplied and the procurement of raw materials to be consumed in the manufacturing process.

Expenses related to clinical trials are accrued based on our estimates of the progress of services performed, including actual level of patient enrollment, completion of patient studies and progress of the clinical trials or the delivery of goods. Other incidental costs related to patient enrollment or treatment are accrued when reasonably certain. If the amounts we are obligated to pay under our clinical trial agreements are modified (for instance, as a result of changes in the clinical trial protocol or scope of work to be performed), the Company adjusts its estimates accordingly on a prospective basis. Revisions to the Company's contractual payment obligations are charged to expense in the period in which the facts that give rise to the revision become reasonably certain.

The Company currently has two Phase 2 clinical trials and four Phase 3 clinical trials in process that are in varying stages of activity, with ongoing non-clinical support trials. As such, clinical trial expenses will vary depending on all the factors set forth above and may fluctuate significantly from quarter to quarter.

Intangible Assets with Cost Accumulation Model

In 2014, the Company entered into a license agreement with Mission Pharmacal in which the Company obtained the exclusive right to license the trademark of Thiola. The acquisition of the Thiola license qualified as an asset acquisition under the principles of ASC 805, Business Combinations ("ASC 805") in effect at the time of acquisition. The license agreement requires the Company to make royalty payments based on net sales of Thiola. The liability for royalties in excess of the annual contractual minimum is recognized in the period in which the royalties become probable and estimable, which is typically in the period corresponding with the respective sales. The Company records an offsetting increase to the cost basis of the asset under the cost accumulation model ("Thiola Intangible"). The additional cost basis is subsequently amortized over the remaining useful life.

In the second quarter of 2023, the Company reduced the estimated useful life of the Thiola Intangible to better reflect the pattern of projected future cash flows. The change in estimated useful life was accounted for as a change in accounting estimate with the remaining carrying amounts of the Thiola Intangible being amortized prospectively over the new useful life.

Consistent with all prior periods since Thiola was acquired, the Company has not accrued any liability for future royalties in excess of the annual contractual minimum at September 30, 2024 as such royalties are not yet probable and estimable.

Variable Interest Entity

The Company reviews each investment and collaboration agreement to determine if it has a variable interest in the entity. In assessing whether the Company has a variable interest in the entity as a whole, the Company considers and makes judgments regarding the purpose and design of the entity, the value of the licensed assets to the entity, the value of the entity’s total assets and the significant activities of the entity. If the Company has a variable interest in the entity as a whole, the Company assesses whether or not the Company is a primary beneficiary of that VIE, based on a number of factors, including: (i) which party has the power to direct the activities that most significantly affect the VIE’s economic performance, (ii) the parties’ contractual rights and responsibilities pursuant to the collaboration agreement, and (iii) which party has the obligation to absorb losses of or the right to receive benefits from the VIE that could be significant to the VIE. If the Company determines that it is the primary beneficiary of a VIE at the onset of the collaboration, the collaboration is treated as a business combination and the Company consolidates the financial statements of the VIE into the Company’s consolidated financial statements. On a quarterly basis, the Company evaluates whether it continues to be the primary beneficiary of the consolidated VIE. If the Company determines that it is no longer the primary beneficiary of a consolidated VIE, it deconsolidates the VIE in the period in which the determination is made.

Assets and liabilities recorded as a result of consolidating the financial results of the VIE into the Company’s consolidated balance sheet do not represent additional assets that could be used to satisfy claims against the Company’s general assets or liabilities for which creditors have recourse to the Company’s general assets.

Equity Securities

The Company applies the equity method of accounting for investments when it has significant influence, but no controlling interest in the investee. Judgment regarding the level of influence over each equity method investment includes key factors such as ownership interest, representation on the board of directors, participation in joint steering committees and material intercompany transactions. The Company evaluates any basis difference between the carrying value and fair value of the Company's proportionate share of the investee's net assets. Basis differences relating to in-process research and development (IPR&D) are expensed when the investee is not considered a business as defined in ASC 805, Business Combinations, due to substantially all of the estimated fair value of the gross assets being concentrated in a group of similar IPR&D assets with no alternative future use. For the nine months ending September 30, 2024, the Company recognized $3.4 million in other expense in the Company's consolidated statements of operations for these basis adjustments. The equity method investment's carrying value was reduced to zero as the Company's proportionate share of the basis difference exceeded the carrying value.

11

See Note 6 for further discussion. Investments accounted for using the equity method may be reported on a lag of up to three months if the financial statements of the investee are not available in sufficient time for the Company to apply the equity method as of the current reporting date.

Discontinued Operations

Discontinued operations is presented when there is a disposal of a component or a group of components that in the Company's judgment represents a strategic shift that will have a major effect on the Company's operations and financial results. Results of operations directly related to discontinued operations are aggregated into a single line item in the Consolidated Statements of Operations for all periods presented. See Note 18 for further discussion.

Restructuring

Restructuring charges consist primarily of employee severance, one-time termination benefits related to the reduction of its workforce, and other costs. Liabilities for costs associated with a restructuring activity are recognized when the liability is incurred and are measured at fair value. One-time termination benefits are expensed at the date the entity notifies the employee, unless the employee must provide future service, in which case the benefits are expensed ratably over the service period. Termination benefits are calculated based on regional benefit practices and local statutory requirements.

In December 2023, the Company initiated a restructuring plan that resulted in a reduction of its workforce, primarily impacting non-field-based employees. One-time termination benefits include severance, continuation of health insurance coverage, and other benefits for a specified period of time. The Company estimated that it will incur a total of $12.0 million to $14.0 million in non-recurring charges in connection with the restructuring, of which the Company has recognized a total of $12.4 million as of September 30, 2024, including $0.1 million and $1.0 million for the three and nine months ended September 30, 2024, respectively. As of September 30, 2024 and December 31, 2023, the Company had accruals related to the restructuring of $0.4 million and $11.4 million, respectively, which is included in accrued expenses in the Consolidated Balance Sheets. Cash payments totaling $12.1 million were made related to the restructuring during 2024. The Company expects that it will incur and pay all remaining restructuring costs during 2024.

The following table sets forth a summary of changes in accrued restructuring costs for the nine months ended September 30, 2024 and 2023 (in thousands):

	Restructuring
	2024		2023
Liability balance at January 1,	$	11,421	$	—
Restructuring expenses	1,035		—
Payments	(12,132)		—
Foreign currency impact	34		—
Liability balance at September 30,	$	358	$	—

Recently Adopted Accounting Pronouncements

In November 2023, the FASB issued ASU No. 2023-07, Improvements to Reportable Segment Disclosure. The FASB amended the guidance in ASC 280, Segment Reporting ("ASC 280"), to require a public entity to disclose significant segment expenses and other segment items on an annual and interim basis and to provide in interim periods all disclosures about a reportable segment's profit or loss and assets that are currently required annually. Public entities with a single reportable segment are required to provide the new disclosures and all the disclosures required under ASC 280. The guidance is applied retrospectively to all periods presented in financial statements, unless it is impracticable. This new guidance is effective for public business entities for annual periods beginning after December 15, 2023, and for interim periods beginning after December 15, 2024. The Company plans to adopt this new standard for its Annual Report on Form 10-K for the fiscal year ended December 31, 2024. While this accounting standard will increase disclosures, it will not have a material impact on the Company's financial statements.

Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") or other standard setting bodies. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial position or results of operations upon adoption.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures. This new standard does not change accounting for income taxes but requires new disclosures focusing on two areas, the effective rate reconciliation and taxes paid. This new standard is effective for public business entities for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company expects to adopt this new standard beginning in fiscal 2025 when it becomes effective.

NOTE 3. REVENUE RECOGNITION

Product Sales, Net

Product sales consist of FILSPARI and tiopronin products (Thiola and Thiola EC). The Company sells its products to specialty pharmacies and through direct-to-patient distributors worldwide, with the United States representing over 98% of net product sales.

12

The Company sells FILSPARI to two direct-to-patient specialty pharmacies. The Company sells its tiopronin products to patients and pharmacies, with distribution facilitated through a single direct-to-patient distributor. Revenues from product sales are recognized in satisfaction of a single performance obligation when the customer obtains control of the Company’s product. For FILSPARI, sales are recognized upon delivery of the product to the specialty pharmacies. The Company receives payments from its FILSPARI sales based on terms that are generally 30 days from shipment of the product to the specialty pharmacy. For the Company's tiopronin products, product sales are recognized upon delivery to the patient. The Company receives payments from sales of its other products, primarily through third party payers, based on terms that generally are within 30 days of delivery of product to the patient. Contracts do not contain significant financing components based on the typical period of time between performance of services and collection of consideration.

Deductions from Revenue

Revenues from product sales are recorded at the net sales price, which includes provisions resulting from discounts, rebates and co-pay assistance that are offered to customers, payers and other indirect customers relating to the Company’s sales of its products. These provisions are based on the estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale, using the most likely amount method, and are classified as a reduction of accounts receivable (if the amount is payable to a customer) or as a current liability (if the amount is payable to a party other than a customer). The Company includes these estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transactions will not occur. Where appropriate, these reserves take into consideration the Company’s historical experience, current contractual and statutory requirements and specific known market events and trends. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is entitled based on the terms of the contract. If actual results in the future vary from the Company’s provisions, the Company will adjust the estimate, which would affect net product revenue and earnings in the period such variances become known. For the nine months ended September 30, 2024 and 2023, adjustments to net product revenue related to performance obligations satisfied in previous periods were $0.5 million and $0.4 million, respectively.

Government Rebates: The Company calculates the rebates that it will be obligated to provide to government programs and deducts these estimated amounts from its gross product sales at the time the revenues are recognized. Allowances for government rebates and discounts are established based on an estimated allocation of payers and the government-mandated discounts applicable to government-funded programs. Rebate discounts are included in accrued expenses in the accompanying Consolidated Balance Sheets.

Commercial Rebates: The Company calculates the rebates it incurs according to any contracts with certain commercial payers and deducts these amounts from its gross product sales at the time the revenues are recognized. Allowances for commercial rebates are established based on actual payer information, which is reasonably estimated at the time of delivery for applicable products. Rebate discounts are included in accrued expenses in the accompanying Consolidated Balance Sheets.

Prompt Pay Discounts: The Company offers discounts to certain customers for prompt payments. The Company accrues for the calculated prompt pay discount based on the gross amount of each invoice for those customers at the time of sale.

Other Fees: The Company pays service fees to certain customers based on a contractually fixed percentage of the wholesale acquisition cost (WAC) and fees for data. Other fees are recorded as an offset to revenue based on contractual terms at the time revenue from the sale is recognized.

Product Returns: Consistent with industry practice, the Company offers its customers a limited right to return product purchased directly from the Company, which is principally based upon the product’s expiration date. Historically, returns have been immaterial.

Co-pay Assistance: The Company offers a co-pay assistance program, which is intended to provide financial assistance to qualified commercially insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the estimated cost per claim associated with product that has been recognized as revenue.

The following table summarizes net product sales for the three and nine months ended September 30, 2024 and 2023 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
FILSPARI	$	35,619	$	8,044	$	82,578	$	14,509
Tiopronin products	25,382		25,888		70,583		73,112
Total net product sales	$	61,001	$	33,932	$	153,161	$	87,621

13

NOTE 4. COLLABORATION AND LICENSE AGREEMENTS

License Agreement with CSL Vifor

On September 15, 2021, the Company entered into a license and collaboration agreement (“CSL Vifor License Agreement”) with Vifor (International) Ltd. (“CSL Vifor”), pursuant to which the Company granted an exclusive license to CSL Vifor for the commercialization of sparsentan in Europe, Australia and New Zealand ("CSL Vifor Licensed Territories"). CSL Vifor also has first right of negotiation to expand the licensed territories into Canada, China, Brazil and/ or Mexico. Under the terms of the CSL Vifor License Agreement, the Company received an upfront payment of $55.0 million and will be eligible for up to $135.0 million in aggregate regulatory and market access related milestone payments and up to $655.0 million in aggregate sales-based milestone payments for a total potential value of up to $845.0 million. The Company is also entitled to receive tiered double-digit royalties up to 40 percent of annual net sales of sparsentan in the CSL Vifor Licensed Territories.

Under the CSL Vifor License Agreement, CSL Vifor will be responsible for all commercialization activities in the CSL Vifor Licensed Territories. The Company remains responsible for the worldwide clinical development of sparsentan through regulatory approval as defined and will retain all rights to sparsentan in the United States and rest of world outside of the CSL Vifor Licensed Territories. Development costs for any post regulatory approval development activities, subject to approval by both parties, will be borne by the Company and CSL Vifor as defined, respectively. The CSL Vifor License Agreement will remain in effect, unless terminated earlier, until the expiration of all royalty terms for sparsentan in the licensed territories. Each party has the right to terminate the CSL Vifor License Agreement for the other party’s uncured material breach, insolvency or if the time required for performance under the CSL Vifor License Agreement by the other party is extended due to a force majeure event that continues for six months or more.

The Company assessed the CSL Vifor License Agreement and determined that it meets both criteria to be considered a collaborative agreement within the Scope of ASC 808, Collaborative Arrangements ("ASC 808") of active participation by both parties and exposures to significant risks and rewards dependent on the commercial success of the activities. Both parties participate on joint steering and other committees overseeing the collaboration activities. Also, both parties are exposed to significant risks and rewards based on the economic outcomes of regulatory approvals and commercialization of sparsentan.

The Company determined the transaction price under the CSL Vifor License Agreement totaled $55.0 million, consisting of the fixed non-refundable upfront payment. The variable regulatory and access related milestones were excluded from the transaction price given the substantial uncertainty related to their achievement. Sales-based milestone payments and royalties on net sales were excluded from the transaction price and will be recognized at the later of when the related sales occur or when the performance obligation to which the sales-based milestone or royalty has been allocated have been satisfied.

The Company concluded that CSL Vifor represented a customer and applied relevant guidance from ASC 606 to evaluate the accounting under the CSL Vifor License Agreement. In accordance with this guidance, the Company concluded that the promise to grant the license is distinct from the promise to provide clinical development services resulting in two performance obligations. As a result, the Company allocated $12.0 million of the transaction price, based on the performance obligations' relative standalone selling prices, to the license, which was recognized in full in 2021. The remaining $43.0 million of the transaction price was allocated to the clinical development activities and recorded as deferred revenue, which will be recognized over the development period based upon the ratio of costs incurred to date to the total estimated costs.

For the three and nine months ended September 30, 2024, the Company recognized $1.8 million and $5.1 million, respectively, in license and collaboration revenue for clinical development activities, based upon the ratio of costs incurred to total estimated costs. For the three and nine months ended September 30, 2023, the Company recognized $3.2 million and $9.3 million, respectively, in license and collaboration revenue for clinical development activities, based upon the ratio of costs incurred to total estimated costs. For the nine months ended September 30, 2023, the Company recognized an additional $3.3 million in license and collaboration revenue from the sale of active pharmaceutical ingredients to CSL Vifor at cost plus a margin.

Deferred revenue related to the clinical development activities as of September 30, 2024 was $3.8 million, with the total amount classified as current based upon amounts expected to be realized within the next year. As of December 31, 2023, deferred revenue related to the clinical development activities was $8.9 million, of which $7.1 million was classified as current. The Company estimates that the remainder of the deferred revenue balance will be fully realized by mid-2025.

For the three and nine months ended September 30, 2024, the Company recognized $0.1 million and $0.1 million, respectively, in license and collaboration revenue for royalties earned on net sales of FILSPARI in the CSL Vifor Licensed Territories following the August 2024 launch.

Licensing Agreement with Renalys

In January 2024, the license agreement (“Renalys License Agreement”) between the Company and Renalys Pharma, Inc. (“Renalys”) came into effect. Pursuant to the terms of the Renalys License Agreement, the Company granted an exclusive license to Renalys for the development and commercialization of sparsentan in Japan, South Korea, Taiwan and other specified Asian countries ("Renalys Licensed Territories"). Under the terms of the Renalys License Agreement, the Company received a non-refundable upfront payment and will be eligible to receive up to $120.0 million in aggregate development and sales-based milestones. The Company is also entitled to receive tiered double-digit to mid-20 percent royalties of annual net sales of sparsentan in the Renalys Licensed Territories. In addition, the Company received an option to purchase shares of common stock of Renalys (“Option Agreement”), which it exercised in January 2024. The Company has the option to purchase all equity securities of Renalys at any time prior to the top-line results of the Phase 3 trial in Japan (“Buyout Right”).

Under the Renalys License Agreement, Renalys will be responsible for all development and commercialization activities in the Renalys Licensed Territories. The Renalys License Agreement will remain in effect, unless terminated earlier, until the expiration of all royalty terms for sparsentan in the Renalys Licensed Territories. Each party has the right to terminate the Renalys License Agreement for the other party’s uncured material breach or insolvency, or if the time required for performance under the Renalys License Agreement by the other party is extended due to a force majeure event that continues for nine months or more. Renalys may terminate the Renalys License Agreement for any reason upon prior written notice to the Company. The Company may terminate the Renalys License Agreement if Renalys abandons development in Japan or South Korea prior to first commercial sales of sparsentan in either Japan or South Korea.

14

The Company assessed the Renalys License Agreement and determined that it meets both criteria to be considered a collaborative agreement within the Scope of ASC 808, Collaborative Arrangements of active participation by both parties and exposures to significant risks and rewards dependent on the commercial success of the activities. Both parties participate on a joint steering committee overseeing the development and commercial activities. Also, both parties are exposed to significant risks and rewards based on the economic outcomes of regulatory approvals and commercialization of sparsentan.

The Company determined the transaction price under the Renalys License Agreement totaled $8.3 million, consisting of the fixed non-refundable upfront payment, milestone payment and estimated fair value of the Option Agreement. The variable development-related milestones were excluded from the transaction price given the substantial uncertainty related to their achievement. Sales-based milestone payments and royalties on net sales were excluded from the transaction price and will be recognized at the later of when the related sales occur or when the performance obligation to which the sales-based milestone or royalty has been allocated has been satisfied.

The Company concluded that Renalys represents a customer and applied relevant guidance from ASC 606 to evaluate the accounting under the Renalys License Agreement. In accordance with this guidance, the Company concluded that the promise to grant the license is distinct, resulting in one performance obligation as the license has stand-alone functionally at contract inception. The Buyout Right precludes transferring control of the license to Renalys under ASC 606 and the Company’s option to repurchase the common stock at a price greater than the original license premium results in accounting for the Renalys License Agreement as a financing arrangement. The transaction price was recorded in other non-current liabilities, and will be recognized in revenue upon exercise or termination of the Buyout Right.

See Note 6 for further discussion of VIE’s.

NOTE 5. MARKETABLE DEBT SECURITIES

The Company's marketable debt securities as of September 30, 2024 and December 31, 2023 were composed of available-for-sale commercial paper and corporate and government debt securities. The primary objective of the Company’s investment portfolio is to preserve capital and liquidity while enhancing overall returns. The Company’s investment policy limits interest-bearing security investments to certain types of instruments issued by institutions with primarily investment grade credit ratings and places restrictions on maturities and concentration by asset class and issuer.

Marketable debt securities consisted of the following (in thousands):

	September 30, 2024		December 31, 2023
Marketable debt securities:
Commercial paper	$	—	$	34,458
Corporate debt securities	193,468		368,323
Securities of government sponsored entities	47,562		105,894
Total available-for-sale marketable debt securities	$	241,030	$	508,675

The following is a summary of short-term marketable debt securities classified as available-for-sale as of September 30, 2024 (in thousands):

	Remaining Contractual Maturity (in years)	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Estimated Fair Value
Marketable debt securities:
Corporate debt securities	Less than 1	$	170,739	$	663	$	(18)	$	171,384
Securities of government-sponsored entities	Less than 1	47,523		50		(11)		47,562
Total maturity less than 1 year		218,262		713		(29)		218,946
Corporate debt securities	1 to 2	21,815		269		—		22,084
Total maturity 1 to 2 years		21,815		269		—		22,084
Total available-for-sale marketable debt securities		$	240,077	$	982	$	(29)	$	241,030

The following is a summary of short-term marketable debt securities classified as available-for-sale as of December 31, 2023 (in thousands):

15

	Remaining Contractual Maturity (in years)	Amortized Cost		Unrealized Gains		Unrealized Losses		Aggregate Estimated Fair Value
Marketable debt securities:
Commercial paper	Less than 1	$	34,450	$	25	$	(17)	$	34,458
Corporate debt securities	Less than 1	133,463		29		(408)		133,084
Securities of government-sponsored entities	Less than 1	81,334		36		(274)		81,096
Total maturity less than 1 year		249,247		90		(699)		248,638
Corporate debt securities	1 to 2	233,969		1,444		(174)		235,239
Securities of government-sponsored entities	1 to 2	24,718		106		(26)		24,798
Total maturity 1 to 2 years		258,687		1,550		(200)		260,037
Total available-for-sale securities		$	507,934	$	1,640	$	(899)	$	508,675

For the three and nine months ended September 30, 2024 and 2023, realized gains and losses on marketable debt securities were immaterial. As of September 30, 2024 and December 31, 2023, the accrued interest receivable related to the Company's marketable debt securities was $2.5 million and $4.6 million, respectively, and was recorded in prepaid expenses and other current assets on the Consolidated Balance Sheets.

The Company reviews the available-for-sale marketable debt securities for declines in fair value below the cost basis each quarter. For any security whose fair value is below its amortized cost basis, the Company first evaluates whether it intends to sell the impaired security, or will otherwise be more likely than not required to sell the security before recovery. If either are true, the amortized cost basis of the security is written down to its fair value at the reporting date. If neither circumstance holds true, the Company assesses whether any portion of the unrealized loss is a result of a credit loss. Any amount deemed to be attributable to credit loss is recognized in the income statement, with the amount of the loss limited to the difference between fair value and amortized cost and recorded as an allowance for credit losses. The portion of the unrealized loss related to factors other than credit losses is recognized in other comprehensive income (loss).

The following is a summary of available-for-sale marketable debt securities in an unrealized loss position with no credit losses reported as of September 30, 2024 (in thousands):

	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Corporate debt securities	$	—	$	—	$	38,602	$	18	$	38,602	$	18
Securities of government-sponsored entities	—		—		18,836		11		18,836		11
Total	$	—	$	—	$	57,438	$	29	$	57,438	$	29

The following is a summary of available-for-sale marketable debt securities in an unrealized loss position with no credit losses reported as of December 31, 2023 (in thousands):

	Less Than 12 Months				12 Months or Greater				Total
Description of Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Commercial paper	$	24,798	$	17	$	—	$	—	$	24,798	$	17
Corporate debt securities	140,802		405		28,775		177		169,577		582
Securities of government-sponsored entities	61,933		217		12,540		83		74,473		300
Total	$	227,533	$	639	$	41,315	$	260	$	268,848	$	899

As of September 30, 2024 and December 31, 2023, the amortized cost of the available-for-sale marketable debt securities in an unrealized loss position was $57.5 million and $269.7 million, respectively.

As of September 30, 2024 and December 31, 2023, the Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis. The decrease in unrealized losses for the nine months ended September 30, 2024 was primarily due to fluctuations in short-term interest rates. The Company does not believe the unrealized losses incurred during the period are due to credit-related factors. The credit ratings of the securities held remain of the highest quality. Moreover, the Company continues to receive payments of interest and principal as they become due, and our expectation is that those payments will continue to be received timely. Factors unknown to us at this time may cause actual results to differ and require adjustments to the Company’s estimates and assumptions in the future.

16

NOTE 6. VARIABLE INTEREST ENTITIES

Stock Purchase and Collaboration Agreement with PharmaKrysto

In March 2022, the Company entered into a Collaboration Agreement with PharmaKrysto Limited (“PharmaKrysto”), a privately held pre-clinical stage company related to PharmaKrysto's early-stage cystinuria discovery program, and concurrently therewith entered into a Stock Purchase Agreement with PharmaKrysto (together, the "Agreements"). Pursuant to the terms of the Agreements, the Company paid PharmaKrysto's shareholders $0.6 million in cash to purchase 5% of the outstanding common shares of PharmaKrysto and $0.4 million to PharmaKrysto as a one-time signing fee. Under the Collaboration Agreement, the Company will fund all research and development expenses for the pre-clinical activities associated with the cystinuria program, which are estimated to be approximately $5.0 million. The Agreements require the Company to purchase an additional 5% of the outstanding common shares for $1.0 million upon the occurrence of a specified pre-clinical milestone, and grant an option to the Company to purchase all of the remaining outstanding shares of PharmaKrysto for $5.0 million upon the occurrence of a subsequent pre-clinical milestone prior to expiration of the option on March 8, 2025. If the Company elects to exercise the option, it would be required to perform commercially reasonable clinical diligence obligations. In addition, it would be required to make cash milestone payments totaling up to an aggregate $16.0 million upon the achievement of certain development and regulatory milestones, plus tiered royalty payments of less than 4% on future net sales of a product, if approved. The Company has the right to terminate the Agreements and return the shares for a nominal price at any time upon 60 days’ notice, subject to survival of contingent obligations, if any.

The Company determined that PharmaKrysto is a VIE because it lacks the resources to conduct the cystinuria clinical program and the limitation on the residual returns through the Company's option to purchase the remaining outstanding shares. The Company further concluded that it is the primary beneficiary of the VIE due to the Company's ultimate control over the research and development program, and its obligation, subject to continuation of the collaboration, to fund 100% of research and development costs of the program pursuant to the terms of the Collaboration Agreement.

The upfront payments were expensed to research and development and other income (expense), net upon initial consolidation. The consolidated assets and liabilities as of September 30, 2024 and December 31, 2023 were immaterial. The results of operations were not significant for the three and nine months ended September 30, 2024 and 2023. The Company is not required to provide additional funding other than the contractually required amounts disclosed above. The creditors and beneficial holders of PharmaKrysto have no recourse to the general credit or assets of the Company.

Licensing Agreement with Renalys

In January 2024, the Renalys License Agreement between the Company and Renalys came into effect and the Company exercised its option to purchase shares of common stock of Renalys. The Company determined that Renalys is a VIE as they could require additional funding to support development and commercial activities. The Company has variable interests in Renalys, including an equity interest, Buyout Right and performance-related payments under the Renalys License Agreement that absorb variability from the performance of Renalys.

In order to determine the primary beneficiary of Renalys, the Company evaluated its variable interest to identify if the Company had the power to direct the activities that most significantly impact the economic performance. Based upon the capital structure, governing documents and overall business operations, the Company determined that it is not the primary beneficiary as it does do not have the power to direct the activities that most significantly impact the economic performance of Renalys and does not have an obligation to absorb losses.

As of September 30, 2024, the carrying amount of the liabilities related to the Company’s variable interests was $8.3 million, recorded in other non-current liabilities in the Company’s Consolidated Balance Sheets. The Company’s maximum exposure to loss as of September 30, 2024 is zero. The Company is not required to provide additional funding. The creditors have no recourse to the general credit or assets of the Company.

NOTE 7.  LEASES

As of September 30, 2024, the Company had two operating leases, including one operating lease with Kilroy Realty, L.P. (the "Landlord") for office space located in San Diego, California, which was entered into in April 2019 and subsequently amended in May 2020. Coinciding with the Company's ability to direct the use of the office space, which occurred in phases over 2020, and utilizing a discount rate equal to the Company's estimated incremental borrowing rate, the Company established ROU assets totaling $34.6 million and lease liabilities totaling $34.5 million. The total ROU asset and lease liability at measurement were each offset by lease incentives associated with tenant improvement allowances totaling $7.9 million.

The initial term of the office lease ends in August 2028, and the Landlord has granted the Company an option to extend the term of the lease by a period of 5 years. At lease inception, it was not reasonably certain that the Company will extend the term of the lease and therefore the renewal period has been excluded from the aforementioned ROU asset and lease liability measurements. The measurement of the lease term occurs from the February 2021 occupancy date of the office space.

The Company has one operating lease with Esprit Investments Limited for office space located in Dublin, Ireland, which was entered into in October 2022. The initial term of the office lease ends in September 2027. The lease provides the option to extend the term of the lease by a period of 5 years, although at lease inception, it was not reasonably certain that the Company would elect this option and therefore the renewal period was excluded from the initial lease measurement. Utilizing a discount rate equal to the Company's estimated incremental borrowing rate, the Company established an ROU asset and corresponding lease liability of $0.4 million.

17

The following is a schedule of the future minimum rental commitments for the Company's operating leases reconciled to the lease liability and ROU asset as of September 30, 2024 (in thousands):

	September 30, 2024
2024 (remaining three months)	$	1,648
2025	6,673
2026	6,889
2027	7,064
2028	4,781
Total undiscounted future minimum payments	27,055
Present value discount	(3,177)
Total lease liability	23,878
Unamortized lease incentives	(3,853)
Cash payments in excess of straight-line lease expense	(4,363)
Total ROU asset	$	15,662

The weighted-average remaining lease term and weighted-average discount rate of the Company's operating leases are as follows:

	September 30, 2024		December 31, 2023
Weighted-average remaining lease term in years	3.9		4.7
Weighted-average discount rate	6.48	%	6.48	%

For the three and nine months ended September 30, 2024, the Company recorded $1.3 million and $3.7 million, respectively, in expense related to operating leases, including amortized tenant improvement allowances. For the three and nine months ended September 30, 2023, the Company recorded $1.2 million and $3.7 million, respectively, in expense related to operating leases, including amortized tenant improvement allowances.

NOTE 8.  FAIR VALUE MEASUREMENTS

The Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 – Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2 – Quoted prices in markets that are not active or financial instruments for which all significant inputs are observable, either directly or indirectly; and

Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

The valuation techniques used to measure the fair value of the Company’s debt securities and all other financial instruments, all of which have counter-parties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. Based on the fair value hierarchy, the Company classified marketable debt securities within Level 2.

Financial instruments with carrying values approximating fair value include cash and cash equivalents, accounts receivable, and accounts payable, due to their short-term nature. As of September 30, 2024, the fair value of the Company's 2.5% Convertible Senior Notes due 2025 was $66.0 million and the fair value of the Company's 2.25% Convertible Senior Notes due 2029 was $272.8 million. As of December 31, 2023, the fair value of the Company's 2.5% Convertible Senior Notes due 2025 was $58.3 million and the fair value of the Company's 2.25% Convertible Senior Notes due 2029 was $212.1 million. The fair values were estimated utilizing market quotations and are considered Level 2.

The following table presents the Company’s assets, measured and recognized at fair value on a recurring basis, classified under the appropriate level of the fair value hierarchy as of September 30, 2024 (in thousands):

	As of September 30, 2024
	Total carrying and estimated fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:
Cash and cash equivalents	$	36,409	$	36,409	$	—	$	—
Marketable debt securities, available-for-sale	241,030		—		241,030		—
Total	$	277,439	$	36,409	$	241,030	$	—

18

The following table presents the Company’s assets, measured and recognized at fair value on a recurring basis, classified under the appropriate level of the fair value hierarchy as of December 31, 2023 (in thousands):

	As of December 31, 2023
	Total carrying and estimated fair value		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets:
Cash and cash equivalents	$	58,176	$	58,176	$	—	$	—
Marketable debt securities, available-for-sale	508,675		—		508,675		—
Total	$	566,851	$	58,176	$	508,675	$	—

NOTE 9. INTANGIBLE ASSETS

Ligand License Agreement

In 2012, the Company entered into an agreement with Ligand Pharmaceuticals, Inc. ("Ligand") for a worldwide sublicense to develop, manufacture and commercialize sparsentan (the “Ligand License Agreement”). As consideration for the license, the Company is required to make substantial payments upon the achievement of certain milestones, totaling up to $114.1 million. Through September 30, 2024 the Company has capitalized $47.2 million for contractual milestones achieved under the Ligand License Agreement, including $5.8 million for the nine months ended September 30, 2024. Pursuant to the Ligand License Agreement, the Company is obligated to pay to Ligand (and Bristol-Myers Squibb Company ("BMS")) an escalating royalty between 15% and 17% of net sales of sparsentan, with payments due quarterly. The Company began incurring costs associated with such royalties following the February 2023 approval of FILSPARI (sparsentan). For the three and nine months ended September 30, 2024, the Company capitalized $5.4 million and $12.4 million, respectively, to intangible assets for royalties owed on net sales of FILSPARI. The cost of the milestone payments and royalty payments are being amortized to selling, general and administration on a straight-line basis through April 30, 2033.

The following table sets forth amortizable intangible assets as of September 30, 2024 and December 31, 2023 (in thousands):

	September 30, 2024		December 31, 2023
Finite-lived intangible assets	$	212,866	$	183,037
Less: accumulated amortization	(109,408)		(79,347)
Net carrying value	$	103,458	$	103,690

As of September 30, 2024 and December 31, 2023, the Company had goodwill of $0.8 million.

The following table summarizes amortization expense for the three and nine months ended September 30, 2024 and 2023 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	—	$	2,447	$	—	$	7,261
Selling, general and administrative	10,812		8,461		30,061		20,097
Total amortization expense	$	10,812	$	10,908	$	30,061	$	27,358

NOTE 10.  CONVERTIBLE NOTES PAYABLE

The composition of the Company’s convertible senior notes are as follows (in thousands):

	September 30, 2024		December 31, 2023
2.25% convertible senior notes due 2029	$	316,250	$	316,250
2.50% convertible senior notes due 2025	68,904		68,904
Unamortized debt issuance costs - 2.25% convertible senior notes due 2029	(6,293)		(7,348)
Unamortized debt issuance costs - 2.50% convertible senior notes due 2025	(305)		(543)
Total convertible senior notes, net of unamortized debt discount and debt issuance costs	$	378,556	$	377,263

Convertible Senior Notes Due 2029

On March 11, 2022, the Company completed a registered underwritten public offering of $316.3 million aggregate principal amount of 2.25% Convertible Senior Notes due 2029 (“2029 Notes”), which includes $41.3 million aggregate principal amount of 2029 Notes sold pursuant to the full exercise of the

19

underwriters’ option to purchase additional 2029 Notes. The Company issued the 2029 Notes under an indenture, dated as of September 10, 2018, as supplemented by the second supplemental indenture, dated as of March 11, 2022 (collectively, the “2029 Indenture”). The 2029 Notes will mature on March 1, 2029, unless earlier repurchased, redeemed, or converted. The 2029 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 2.25%, payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2022.

The Company received net proceeds from the issuance of the 2029 Notes of $306.4 million, after deducting commissions and offering expenses of $9.9 million. At September 30, 2024, accrued interest on the 2029 Notes of $0.6 million is included in accrued expenses in the accompanying Consolidated Balance Sheets. The 2029 Notes comprise the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the 2029 Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables.

Holders may convert their 2029 Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2022 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock for each of at least 20 trading days, whether or not consecutive, during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter exceeds 130% of the conversion price on the applicable trading day; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) if the trading price per $1,000 principal amount of 2029 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions of the Company’s common stock; (4) if the Company calls the 2029 Notes for redemption; and (5) at any time from, and including, December 1, 2028 until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, based on the applicable conversion rate. The initial conversion rate for the 2029 Notes is 31.3740 shares of the Company’s common stock per $1,000 principal amount of 2029 Notes, which represents an initial conversion price of approximately $31.87 per share. If a “make-whole fundamental change” (as defined in the 2029 Indenture) occurs, then the Company will, in certain circumstances, increase the conversion rate for a specified period of time.

The 2029 Notes will be redeemable, in whole or in part at the Company’s option at any time, and from time to time, on or after March 2, 2026 and, in the case of any partial redemption, on or before the 40th scheduled trading day before the maturity date, at a cash redemption price equal to the principal amount of the 2029 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on (1) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. However, the Company may not redeem less than all of the outstanding 2029 Notes unless at least $100.0 million aggregate principal amount of 2029 Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice. In addition, calling any 2029 Note for redemption will constitute a make-whole fundamental change with respect to that 2029 Note, in which case the conversion rate applicable to the conversion of that 2029 Note will be increased in certain circumstances if it is converted after it is called for redemption. If a fundamental change (as defined in the 2029 Indenture) occurs, then, except as described in the 2029 Indentures, holders may require the Company to repurchase their 2029 Notes at a cash repurchase price equal to the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation. Upon the receipt of conversion requests, the settlement of the 2029 Notes will be paid pursuant to the terms of the 2029 Indenture. In the event that all of the 2029 Notes are converted, the Company would be required to repay the principal amount and any conversion premium in any combination of cash and shares of its common stock at the Company’s option. In addition, calling the 2029 Notes for redemption will constitute a “make-whole fundamental change."

The Company incurred approximately $9.9 million of debt issuance costs relating to the issuance of the 2029 Notes, which were recorded as a reduction to the 2029 Notes on the Consolidated Balance Sheets. The debt issuance costs are being amortized and recognized as additional interest expense over the expected life of the 2029 Notes using the effective interest method. The Company determined the expected life of the debt is equal to the seven-year term of the 2029 Notes. The effective interest rate on the 2029 Notes is 2.74%.

Convertible Senior Notes Due 2025

On September 10, 2018, the Company completed a registered underwritten public offering of $276.0 million aggregate principal amount of 2.50% Convertible Senior Notes due 2025 ("2025 Notes"), and entered into a base indenture and supplemental indenture agreement (collectively, the "2025 Indenture") with respect to the 2025 Notes. The 2025 Notes will mature on September 15, 2025, unless earlier repurchased, redeemed, or converted. The 2025 Notes are senior unsecured obligations of the Company and bear interest at an annual rate of 2.50%, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on March 15, 2019.

The net proceeds from the issuance of the 2025 Notes were approximately $267.2 million, after deducting commissions and the offering expenses of $8.8 million payable by the Company. At September 30, 2024, accrued interest of $0.1 million is included in accrued expenses in the accompanying Consolidated Balance Sheets. The 2025 Notes comprise the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness; (ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the 2025 Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness; and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables.

Holders may convert their 2025 Notes at their option only in the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on December 31, 2018 (and only during such calendar quarter), if the last reported sale price per share of the Company’s common stock for each of at least 20 trading days, whether or not consecutive, during the period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter exceeds 130% of the conversion price on the applicable trading day; (2) during the five consecutive business

20

days immediately after any 10 consecutive trading day period (“measurement period”) if the trading price per $1,000 principal amount of 2025 Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls the 2025 Notes for redemption; and (5) at any time from, and including, May 15, 2025 until the close of business on the scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s election, based on the applicable conversion rate.

The initial conversion rate for the 2025 Notes is 25.7739 shares of the Company’s common stock per $1,000 principal amount of 2025 Notes, which represents an initial conversion price of approximately $38.80 per share. If a “make-whole fundamental change” (as defined in the 2025 Indenture) occurs, then the Company will, in certain circumstances, increase the conversion rate for a specified period of time.

The 2025 Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after September 15, 2022 and, in the case of any partial redemption, on or before the 40th scheduled trading day before the maturity date, at a cash redemption price equal to the principal amount of the 2025 Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice. If a fundamental change (as defined in the 2025 Indenture) occurs, then, subject to certain exceptions, holders may require the Company to repurchase their 2025 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation. Upon the receipt of conversion requests, the settlement of the 2025 Notes will be paid pursuant to the terms of the 2025 Indenture. In the event that all of the 2025 Notes are converted, the Company would be required to repay the principal amount and any conversion premium in any combination of cash and shares of its common stock at the Company’s option. In addition, calling the 2025 Notes for redemption will constitute a “make-whole fundamental change."

The Company incurred approximately $8.8 million of debt issuance costs relating to the issuance of the 2025 Notes, which were recorded as a reduction to the 2025 Notes on the Consolidated Balance Sheets. The debt issuance costs are being amortized and recognized as additional interest expense over the expected life of the 2025 Notes using the effective interest method. The Company determined the expected life of the debt is equal to the seven-year term of the 2025 Notes. The effective interest rate on the 2025 Notes is 2.98%.

On March 11, 2022, the Company completed its repurchase of $207.1 million aggregate principal amount of 2025 Notes for cash, including accrued and unpaid interest, for a total of $213.8 million. This transaction involved a contemporaneous exchange of cash between the Company and holders of the 2025 Notes participating in the issuance of the 2029 Notes. Accordingly, we evaluated the transaction for modification or extinguishment accounting in accordance with ASC 470-50, Debt – Modifications and Extinguishments on a creditor-by creditor basis depending on whether the exchange was determined to have substantially different terms. The repurchase of the 2025 Notes and issuance of the 2029 Notes were deemed to have substantially different terms based on the present value of the cash flows or significant difference between the value of the conversion option immediately prior to and after the exchange. Therefore, the repurchase of the 2025 Notes was accounted for as a debt extinguishment. The Company recorded a $7.6 million loss on extinguishment of debt on its Consolidated Statements of Operations for the nine months ended September 30, 2023, which includes the write-off of related deferred financing costs of $3.4 million. After giving effect to the repurchase, the total remaining principal amount outstanding under the 2025 Notes as of September 30, 2024 was $68.9 million.

The 2025 and 2029 Notes are accounted for in accordance with ASC 470-20, Debt with conversion and Other Options (“ASC 470-20”) and ASC 815-40, Contracts in Entity’s Own Equity (“ASC 815-40”). Under ASC 815-40, to qualify for equity classification (or nonbifurcation, if embedded) the instrument (or embedded feature) must be both (1) indexed to the issuer’s stock and (2) meet the requirements of equity classification guidance. Based upon the Company’s analysis, it was determined that the 2025 Notes and the 2029 Notes do not contain embedded features requiring recognition as derivatives and bifurcation, and therefore are measured at amortized cost and recorded as liabilities on the Consolidated Balance Sheets.

The 2025 and 2029 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company. There were no events of default for the 2025 Notes or 2029 Notes at September 30, 2024.

The 2025 and 2029 Notes are classified on the Company's Consolidated Balance Sheets at September 30, 2024 as short-term and long-tern convertible debt, respectively.

The following table sets forth total interest expense recognized related to the 2025 and 2029 Notes (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Contractual interest expense	$	2,210	$	2,210	$	6,629	$	6,629
Amortization of debt issuance costs	432		430		1,293		1,288
Total interest expense for the 2025 and 2029 Notes	$	2,642	$	2,640	$	7,922	$	7,917

Total interest expense recognized for the three and nine months ended September 30, 2024 was $2.8 million and $8.4 million, respectively. Total interest expense recognized for the three and nine months ended September 30, 2023 was $2.8 million and $8.5 million, respectively.

21

NOTE 11. ACCRUED EXPENSES

Accrued expenses at September 30, 2024 and December 31, 2023 consisted of the following (in thousands):

	September 30, 2024		December 31, 2023
Compensation related costs	$	28,295	$	29,908
Research and development	17,065		26,006
Accrued royalties	10,168		6,991
Sales discounts, rebates, and allowances	9,920		13,730
Selling, general and administrative	7,607		7,190
French rebate accrual	6,292		5,377
Transition services accrual	1,239		12,282
Accrued restructuring costs	358		11,421
Miscellaneous accrued expenses	2,972		6,086
Total accrued expenses	$	83,916	$	118,991

NOTE 12.  NET LOSS PER COMMON SHARE

Basic and diluted net income (loss) per common share is calculated by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. In accordance with ASC 260, Earnings per Share, if a company had a discontinued operation, the company uses income from continuing operations, adjusted for preferred dividend and similar adjustments, as its control number to determine whether potential common shares are dilutive.

As discussed in Note 17, as part of its February 2023 underwritten public offering, the Company issued and sold pre-funded warrants to purchase 1.25 million shares of its common stock at a price to the public of $20.9999 per pre-funded warrant. The pre-funded warrants were immediately exercisable upon issuance, and were exercised in the third quarter of 2024, resulting in the issuance of 1.25 million shares of the Company's common stock. Due to the nominal exercise price of the pre-funded warrants and the lack of any contingencies to exercise, the shares underlying the pre-funded warrants have been included in the calculation of basic net loss per common share since the date the warrants were issued.

The Company’s potentially dilutive shares, which include outstanding stock options, restricted stock units, and shares issuable upon conversion of the 2025 Notes and 2029 Notes, are considered to be common stock equivalents and are not included in the calculation of diluted net loss per share because their effect is anti-dilutive.

Basic and diluted net income (loss) per share is calculated as follows (net loss amounts are stated in thousands):

	Three Months Ended September 30,
	2024					2023
	Shares	Net Income (loss)		EPS		Shares	Net Income (loss)		EPS
Continuing operations	77,779,379	$	(54,752)	$	(0.70)	76,305,603	$	(89,241)	$	(1.17)
Discontinued operations	77,779,379	(59)		—		76,305,603	239,976		3.14
Basic and diluted loss per share	77,779,379	$	(54,811)	$	(0.70)	76,305,603	$	150,735	$	1.97
	Nine Months Ended September 30,
	2024					2023
	Shares	Net Income (loss)		EPS		Shares	Net Income (loss)		EPS
Continuing operations	77,473,161	$	(260,362)	$	(3.36)	73,523,620	$	(287,737)	$	(3.91)
Discontinued operations	77,473,161	(919)		(0.01)		73,523,620	266,511		3.62
Basic and diluted loss per share	77,473,161	$	(261,281)	$	(3.37)	73,523,620	$	(21,226)	$	(0.29)

22

The following common stock equivalents have been excluded because they were anti-dilutive:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Convertible debt	11,697,953	11,697,952	11,697,953	11,697,952
Options	10,235,428	10,533,703	10,759,644	10,600,069
Restricted stock	3,809,142	3,504,350	3,828,261	3,482,829
Total anti-dilutive shares	25,742,523	25,736,005	26,285,858	25,780,850

NOTE 13.  COMMITMENTS AND CONTINGENCIES

Commitments

Certain of the Company's contractual arrangements with contract manufacturing organizations ("CMOs") require binding forecasts or commitments to purchase minimum amounts for the manufacture of drug product supply, which may be material to the Company's financial statements.

Contingencies

In November 2020, the Company completed the acquisition of Orphan Technologies Limited (“Orphan”), including Orphan’s rare metabolic disorder drug pegtibatinase. The Company acquired Orphan by purchasing all of the outstanding shares. Under the Agreement, the Company has also agreed to make contingent cash payments up to an aggregate of $427.0 million based on the achievement of certain development, regulatory and commercialization events as set forth in the Agreement, as well as additional tiered mid-single digit royalty payments based upon future net sales of any pegtibatinase products in the US and Europe, subject to certain reductions as set forth in the Agreement, and a contingent payment in the event a pediatric rare disease voucher for any pegtibatinase product is granted.

Substantially all of the value of the assets acquired was concentrated within pegtibatinase, and as of the acquisition date, the Company did not anticipate any economic benefit to be derived from pegtibatinase other than the primary indication. Accordingly, the transaction was treated as an asset acquisition with amounts charged to IPR&D expense on the date of acquisition.

In accordance with ASC 450, Contingencies, contingent cash payments will be accrued for when it is probable that a liability has been incurred and the amount can be reasonably estimated. In March 2024, the Company recognized $65.2 million in IPR&D expense upon the achievement of a development milestone, which was paid during the second quarter of 2024 and recorded within investing activities in the Consolidated Statements of Cash Flows.

Legal Proceedings

From time to time in the normal course of business, the Company is subject to various legal matters such as threatened or pending claims or litigation. Although the results of claims and litigation cannot be predicted with certainty, the Company does not believe it is a party to any claim or litigation in which the outcome, if determined adversely to it, would individually or in the aggregate be reasonably expected to have a material adverse effect on its results of operations or financial condition.

NOTE 14.  SHARE-BASED COMPENSATION

Stock Options

The following table summarizes stock option activity during the nine months ended September 30, 2024:

	Shares Underlying Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2023	10,211,353	$	21.52	4.91	$	—
Granted	1,524,300	8.63		—	—
Exercised	(52,000)	10.99		—	159,600
Forfeited/canceled	(1,920,196)	19.68		—	—
Outstanding at September 30, 2024	9,763,457	$	19.92	5.50	$	299,450
Vested and expected to vest at September 30, 2024	9,763,457	$	19.92	5.50	$	299,450

At September 30, 2024, unamortized stock compensation for stock options was $19.7 million, with a remaining weighted-average recognition period of 2.5 years.

23

At September 30, 2024, outstanding options to purchase 7.2 million shares of common stock were exercisable with a weighted-average exercise price per share of $21.61. During the nine months ended September 30, 2024, the Company had forfeitures of 1.9 million shares due to a combination of employee turnover, the December 2023 reorganization and the August 2023 divestiture of the bile acid business.

Restricted Stock Units

Service Based Restricted Stock Units

The following table summarizes the Company’s service based restricted stock unit activity during the nine months ended September 30, 2024:

	Number of Restricted Stock Units	Weighted Average Grant Date Fair Value
Unvested at December 31, 2023	2,874,046	$	22.97
Granted	2,040,625	8.90
Vested	(934,175)	23.11
Forfeited/canceled	(372,070)