AKEBIA THERAPEUTICS, INC. Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

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Business Overview
Our current portfolio includes:
Auryxia
Operating Overview
•address the issues identified in the CRL for vadadustat that we received from the FDA and pursue our appeal of the CRL for vadadustat with the FDA;
•conduct and enroll patients in any clinical trials, including post-marketing studies or any other clinical trials for Auryxia, vadadustat or any other product or product candidate, including those that may be in-licensed or acquired;
•seek marketing approvals for vadadustat and any other product candidate, including those that may be in-licensed or acquired;
•conduct discovery and development activities for additional product candidates or platforms that may lead to the discovery of additional product candidates;
•make royalty, milestone or other payments under our license agreements and any future license agreements;
•maintain, protect and expand our intellectual property portfolio;
•make decisions with respect to our personnel, including the retention of key employees;
•make decisions with respect to our infrastructure, including to support our operations as a fully integrated publicly traded biopharmaceutical company; and
•experience any additional delays or encounter issues with any of the above.
COVID-19 pandemic precautions have caused moderate delays in enrolling new clinical trials and may cause delays in enrolling other new clinical trials. We are using remote monitoring and central monitoring, where possible.
For additional information on the various risks posed by the COVID-19 pandemic, please refer to Part I, Item 1A. Risk Factors.
Financial Overview
Revenue
Cost of Goods Sold
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for the development of vadadustat, which include:
•personnel-related expenses, including salaries, benefits, recruiting fees, travel and stock-based compensation expense of our research and development personnel;
•expenses incurred under agreements with CROs and investigative sites that conduct our clinical trials;
•the cost of acquiring, developing and manufacturing clinical study materials through CMOs;
•facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies;
•costs associated with preclinical, clinical and regulatory activities; and
•costs associated with pre-launch inventory build for vadadustat in the United States and Europe, for which we received the CRL from the FDA in the United States in March 2022.
25,907
74,413
73,439
Selling, General and Administrative Expenses
Results of Operations
Comparison of the Years Ended December 31, 2022 and 2021
Vadadustat external development expenses $ 9.6
Restructuring. Restructuring expenses were $15.9 million for the year ended December 31, 2022 due to one-time termination benefits and contractual termination benefits for severance, healthcare, and non-cash stock-based compensation related to the April 2022 and November 2022 reductions in force. There were no restructuring expenses for the year ended December 31, 2021.
Loss on Extinguishment of Debt. During the year ended December 31, 2022, we recorded a debt extinguishment loss of $0.9 million related to the principal prepayments made on the Term Loans pursuant to the Second Amendment and Waiver.
Comparison of the Years Ended December 31, 2021 and 2020
Liquidity and Capital Resources
Cash Flows
Net cash used in operating activities during the year ended December 31, 2021 of $253.0 million was largely driven by net payroll-related expenses, rebate payments and payments for inventory.
Investing Activities. Net cash used in investing activities during the year ended December 31, 2022 of $0.1 million was comprised of purchases of equipment.
Operating Capital Requirements
Contractual Obligations and Commitments
Leases
Term Loans
Liability Related to Sale of Future Royalties
Refund Liability to Customer
Manufacturing Agreements
As a result of the Merger, our contractual obligations include Keryx’s commercial supply agreement with Siegfried Evionnaz SA, or Siegfried, and previously included a commercial supply agreement with BioVectra Inc., or BioVectra, to supply commercial drug substance for Auryxia.
Other Third Party Contracts
Critical Accounting Policies and Significant Judgments and Estimates
Product Revenue, Net
Collaboration Revenues
Refund Liability to Customer
We value our inventories at the lower-of-cost or net realizable value. We determine the cost of our inventories, which includes amounts related to materials and manufacturing overhead, on a first-in, first-out basis. We classify inventory costs as long-term, in other assets in our consolidated balance sheets, when we expect to utilize the inventory beyond our normal operating cycle.
Excess Purchase Commitment Liability
Liability Related to Sale of Future Royalties
We maintain a definite-lived intangible asset related to developed product rights for Auryxia, which was acquired on December 12, 2018 as part of the Merger.
Income Taxes
Recent Accounting Pronouncements
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