10-Q

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 March 31, 2017

Or

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

For the transition period from                      to                     

Commission File Number: 001-35420

ChemoCentryx, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	94-3254365
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

850 Maude Avenue

Mountain View, California 94043

(Address of Principal Executive Offices) (Zip Code)

(650) 210-2900

(Registrant’s Telephone Number, Including Area Code)

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    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	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐

Emerging Growth Company   ☒

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

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

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of April 28, 2017, was 48,173,540.

CHEMOCENTRYX, INC.

QUARTERLY REPORT ON FORM 10-Q

For the quarterly period ended March 31, 2017

Table of Contents

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets – March 31, 2017 and December 31, 2016	3
	Condensed Consolidated Statements of Operations – Three Months Ended March 31, 2017 and 2016	4
	Condensed Consolidated Statements of Comprehensive Loss – Three Months Ended March 31, 2017 and 2016	5
	Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, 2017 and 2016	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	21
Item 4.	Controls and Procedures	21
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Mine Safety Disclosures	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
SIGNATURES		23
EXHIBIT INDEX

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands except share data)

(unaudited)

	March 31,			December 31,
	2017			2016
Assets
Current assets:
Cash and cash equivalents	$	18,954		$	12,024
Short-term investments		99,493			105,740
Accounts receivable		—			30,205
Prepaid expenses and other current assets		1,407			722
Total current assets		119,854			148,691
Property and equipment, net		984			905
Long-term investments		31,203			5,997
Other assets		330			279
Total assets	$	152,371		$	155,872
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	819		$	671
Accrued liabilities		6,809			8,645
Deferred revenue		34,872			29,019
Total current liabilities		42,500			38,335
Deferred revenue		63,463			67,547
Other non-current liabilities		86			101
Total liabilities		106,049			105,983
Stockholders’ equity:
Preferred stock:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding;		—			—
Common stock, $0.001 par value, 200,000,000 shares authorized at March 31, 2017 and December 31, 2016; 48,168,540 shares and 48,057,920 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively.		48			48
Additional paid-in capital		359,429			356,966
Note receivable		(16	)		(16	)
Accumulated other comprehensive loss		(84	)		(50	)
Accumulated deficit		(313,055	)		(307,059	)
Total stockholders’ equity		46,322			49,889
Total liabilities and stockholders’ equity	$	152,371		$	155,872

See accompanying notes.

3

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Three Months Ended March 31,
	2017			2016
Revenue:
Collaboration and license revenue	$	8,230		$	—
Total revenue		8,230			—
Operating expenses:
Research and development		9,970			11,245
General and administrative		4,573			4,084
Total operating expenses		14,543			15,329
Loss from operations		(6,313	)		(15,329	)
Other income (expense):
Interest income		317			86
Total other income, net		317			86
Net loss	$	(5,996	)	$	(15,243	)
Basic and diluted net loss per common share	$	(0.12	)	$	(0.34	)
Shares used to compute basic and diluted net loss per common share		48,115			44,277

See accompanying notes.

4

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2017			2016
Net loss	$	(5,996	)	$	(15,243	)
Unrealized gain (loss) on available-for-sale securities		(34	)		56
Comprehensive loss	$	(6,030	)	$	(15,187	)

See accompanying notes.

5

CHEMOCENTRYX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Three Months Ended March 31,
	2017			2016
Operating activities
Net loss	$	(5,996	)	$	(15,243	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment		98			86
Stock-based compensation		2,399			2,303
Noncash interest expense, net		44			89
Changes in assets and liabilities:
Accounts receivable		30,205			—
Prepaids and other current assets		(685	)		(234	)
Other assets		(51	)		—
Accounts payable		148			619
Other liabilities		(1,851	)		1,265
Deferred revenue		1,769			—
Net cash provided by (used in) operating activities		26,080			(11,115	)
Investing activities
Purchases of property and equipment, net		(177	)		(62	)
Purchases of investments		(55,387	)		(12,714	)
Maturities of investments		36,350			24,278
Net cash provided by (used in) investing activities		(19,214	)		11,502
Financing activities
Proceeds from exercise of stock options		361			210
Employees’ tax withheld and paid for restricted stock units		(297	)		—
Net cash provided by financing activities		64			210
Net increase in cash and cash equivalents		6,930			597
Cash and cash equivalents at beginning of period		12,024			12,823
Cash and cash equivalents at end of period	$	18,954		$	13,420

See accompanying notes.

6

CHEMOCENTRYX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(unaudited)

1. Description of Business

ChemoCentryx, Inc. (the Company) commenced operations in 1997. The Company is a clinical-stage biopharmaceutical company focused on developing new medications targeted at inflammatory disorders, autoimmune diseases and cancer. The Company’s principal operations are in the United States and it operates in one segment.

Unaudited Interim Financial Information

The financial information filed is unaudited. The Condensed Consolidated Financial Statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for the fair statement of the results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. The December 31, 2016 Condensed Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America (GAAP). The results for interim periods are not necessarily indicative of the results for the entire year or any other interim period. The Condensed Consolidated Financial Statements should be read in conjunction with the Company’s financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on March 14, 2017.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Concentration of Credit Risk

The Company invests in a variety of financial instruments and, by its policy, limits the amount of credit exposure with any one issuer, industry or geographic area.

Accounts receivable are typically unsecured and are concentrated in the pharmaceutical industry and government sector. Accordingly, the Company may be exposed to credit risk generally associated with pharmaceutical companies and government funded entities. The Company has not historically experienced any significant losses due to concentration of credit risk.

Accounts receivable consists of the following (in thousands):

	March 31, 2017		December 31, 2016
Vifor (International) Ltd. (1)	$	—	$	30,000
U.S. Food and Drug Administration		—		205
	$	—	$	30,205

(1) As of December 31, 2016, accounts receivable excluded the additional $20.0 million cash commitment which is due from Vifor in December 2017 in connection with the CCX140 Agreement.

As of March 31, 2017, accounts receivable excluded the remaining $30.0 million cash commitments due from Vifor, $20.0 million of which is due in December 2017 in connection with the CCX140 Agreement and $10.0 million of which is due in February 2018 in connection with the territory expansion of the Avacopan Agreement. See Note 7, “Collaboration and License Agreements” for a detailed discussion.

7

Net Loss Per Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents.

Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and dilutive common stock equivalent shares outstanding for the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants, (ii) vesting of restricted stock units (RSUs) and restricted stock awards, and (iii) the purchase from contributions to the 2012 Employee Stock Purchase Plan (the ESPP), (calculated based on the treasury stock method), are only included in the calculation of diluted net loss per share when their effect is dilutive.

For the three months ended March 31, 2017 and 2016, the following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

	Three Months Ended March 31,
	2017		2016
Options to purchase common stock, including purchases from contributions to ESPP		10,646,551		9,239,472
Restricted stock units		565,345		292,481
Restricted stock awards		31,306		—
Warrants to purchase common stock		150,000		150,000
		11,393,202		9,681,953

Comprehensive Loss

Comprehensive loss comprises net loss and other comprehensive income (loss). For the periods presented other comprehensive income (loss) consists of unrealized gains and losses on the Company’s available-for-sale securities. For the three months ended March 31, 2017 and 2016, there were no sales of investments, and therefore there were no reclassifications.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standard Board (FASB) issued a comprehensive new standard on revenue from contracts with customers. The standard’s core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB voted to delay the effective date of the new standard by one year. The standard would become effective for the Company beginning in the first quarter of 2018. Early application would be permitted in 2017. Entities would have the option of using either a full retrospective or a modified retrospective approach to adopt this new guidance. In 2016, the FASB updated the guidance for reporting revenue gross versus net to improve the implementation guidance on principal versus agent considerations, and for identifying performance obligations and the accounting of intellectual property licenses. In addition, the FASB introduced practical expedients and made narrow scope improvements to the new accounting guidance.

The Company currently plans to adopt the accounting standard update on January 1, 2018, using the modified retrospective approach. The cumulative effect of adopting the accounting standard update will be recorded to retained earnings on January 1, 2018. The Company is currently at the early stages of analyzing its collaboration agreements to determine the differences in the accounting treatment under Accounting Standards Update (ASU) No.2014-09 compared to the current accounting treatment. During 2016, the Company entered into two license and collaboration agreements. The Company has primarily derived its revenues from license and collaboration agreements. The consideration the Company is eligible to receive under these agreements includes of upfront payments, research and development funding, milestone payments, and royalties. Each license and collaboration agreement is unique and will need to be assessed separately under the five-step process under the new standard. The new revenue recognition standard differs from the current accounting standard in many respects, such as in the accounting for variable considerations and the measurement of progress toward completion of performance obligations. While the Company has not completed an assessment of the impact of adoption, the adoption of ASU No. 2014-09 may have a material effect on its financial statements.

8

In February 2016, the FASB issued a new standard that requires all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for the Company on January 1, 2019. The Company is currently evaluating the impact of the adoption of this standard on its financial statements. However, the Company expects the adoption of this accounting guidance to result in an increase in lease assets and a corresponding increase in lease liabilities on its balance sheets.

In March 2016, the FASB issued ASU No. 2016-09—Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax consequences, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company adopted ASU No. 2016-09 on January 1, 2017. Under this guidance, on a prospective basis, companies will no longer record excess tax benefits and tax deficiencies from stock option exercises in additional paid-in capital (APIC). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. In addition, the guidance eliminates the requirement that excess tax benefits be realized before companies can recognize them. The ASU requires a cumulative-effect adjustment for previously unrecognized excess tax benefits in opening retained earnings in the annual period of adoption. As of January 1, 2017, the Company had an unrecognized excess tax benefit of $2.1 million. Upon adoption, the Company recognized this excess tax benefit as a deferred tax asset with a corresponding increase to the Company’s deferred tax asset valuation allowance. Additionally, as provided for under this new guidance, the Company elected to continue to estimate forfeitures. The adoption of this aspect of the guidance did not have a material impact on the Company’s financial statements.

3. Cash Equivalents and Investments

The amortized cost and fair value of cash equivalents and investments at March 31, 2017 and December 31, 2016 were as follows (in thousands):

	March 31, 2017
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Money market fund	$	9,650	$	—	$	—		$	9,650
U.S. treasury securities		67,701		—		(66	)		67,635
Commercial paper		29,239		—		—			29,239
Corporate debt securities		42,239		—		(18	)		42,221
Total available-for-sale securities	$	148,829	$	—	$	(84	)	$	148,745
Classified as:
Cash equivalents								$	18,049
Short-term investments									99,493
Long-term investments									31,203
Total available-for-sale securities								$	148,745
	December 31, 2016
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Money market fund	$	9,746	$	—	$	—		$	9,746
U.S. treasury securities		49,693		1		(22	)		49,672
Commercial paper		16,183		—		—			16,183
Corporate debt securities		45,911		—		(29	)		45,882
Total available-for-sale securities	$	121,533	$	1	$	(51	)	$	121,483
Classified as:
Cash equivalents								$	9,746
Short-term investments									105,740
Long-term investments									5,997
Total available-for-sale securities								$	121,483

9

Cash equivalents in the tables above exclude cash of $0.9 million and $2.3 million as of March 31, 2017 and December 31, 2016, respectively. All available-for-sale securities held as of March 31, 2017 had contractual maturities of less than two years. There have been no significant realized gains or losses on available-for-sale securities for the periods presented. No available-for-sale securities held as of March 31, 2017 have been in a continuous unrealized loss position for more than 12 months. As of March 31, 2017, unrealized losses on available-for-sale investments are not attributed to credit risk and are considered to be temporary. The Company believes that it is more-likely-than-not that investments in an unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. The Company believes it has no other-than-temporary impairments on its securities because it does not intend to sell these securities and it believes it is not more likely than not that it will be required to sell these securities before the recovery of their amortized cost basis. To date, the Company has not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value.

4. Fair Value Measurements

The Company determines the fair value of financial assets and liabilities using three levels of inputs as follows:

Level 1—Inputs which include quoted prices in active markets for identical assets and liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements are as follows (in thousands) as of March 31, 2017 and December 31, 2016:

	March 31, 2017
Description	Level 1		Level 2		Level 3		Total
Money market fund	$	9,650	$	—	$	—		9,650
U.S. treasury securities		—		67,635		—		67,635
Commercial paper		—		29,239		—		29,239
Corporate debt securities		—		42,221		—		42,221
Total assets	$	9,650	$	139,095	$	—	$	148,745
	December 31, 2016
Description	Level 1		Level 2		Level 3		Total
Money market fund	$	9,746	$	—	$	—	$	9,746
U.S. treasury securities		—		49,672		—		49,672
Commercial paper		—		16,183		—		16,183
Corporate debt securities		—		45,882		—		45,882
Total assets	$	9,746	$	111,737	$	—	$	121,483

During the three months ended March 31, 2017, there were no transfers between Level 1 and Level 2 financial assets. When the Company uses observable market prices for identical securities that are traded in less active markets, the Company classifies its marketable debt instruments as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. The Company corroborates non-binding market consensus prices with observable market data using statistical models when observable market data exists. The discounted cash flow model uses observable market inputs, such as LIBOR-based yield curves, currency spot and forward rates, and credit ratings.

10

5. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	March 31, 2017		December 31, 2016
Research and development related	$	4,098	$	5,482
Compensation related		1,245		2,460
Consulting and professional services		996		421
Other		470		282
	$	6,809	$	8,645

6. Related-Party Transactions

Bio-Techne

Bio-Techne Corporation, formerly Techne Corporation, is one of the Company’s principal stockholders. In connection with the Company’s initial public offering (IPO) in February 2012, Bio-Techne received a warrant with a ten-year term to purchase 150,000 shares of the Company’s common stock at an exercise price per share equal to $20.00 per share, or 200% of the IPO price of its common stock, which was outstanding as of March 31, 2017. The Company had an accounts payable balance due to Bio-Techne for the purchases of research materials of $4,394 and $24,885 as of March 31, 2017 and December 31, 2016, respectively.

7. Collaboration and License Agreements

In May 2016, the Company entered into an exclusive collaboration and license agreement with Vifor (International) Ltd. (Vifor) pursuant to which the Company granted Vifor exclusive rights to commercialize avacopan in Europe and certain other markets (the Avacopan Agreement). Avacopan is the Company’s lead drug candidate for the treatment of patients with anti-neutrophil cytoplasmic auto-antibody associated vasculitis and other rare diseases. The Company retains control of ongoing and future development of avacopan (other than country-specific development in the licensed territories) and all commercialization rights to avacopan in the United States and China. The Avacopan Agreement also provides Vifor with an exclusive option to negotiate during 2016 a worldwide license agreement for one of the Company’s other drug candidates, CCX140, an orally administered inhibitor of the chemokine receptor known as CCR2.

In connection with the Avacopan Agreement, the Company received a non-refundable upfront payment of $85.0 million, comprising $60.0 million in cash and $25.0 million in the form of an equity investment to purchase 3,333,333 shares of the Company’s common stock at a price of $7.50 per share. The $85.0 million upfront consideration was initially allocated as of June 30, 2016 as follows:

• $7.0 million for the issuance of 3,333,333 shares of the Company’s common stock valued at $2.10 per share, the closing stock price on the effective date of the agreement, May 9, 2016.

• $12.5 million, which was creditable against an upfront fee payable by Vifor, should the parties enter into a worldwide license agreement for CCX140. The amount creditable decreased ratably into the fourth quarter of 2016. In October 2016, the amount creditable expired and was reclassified to the amortizable portion of deferred revenue as discussed below.

• The remaining upfront consideration of $65.5 million will be recognized over the estimated period of performance under the Avacopan Agreement, which approximates 4.2 years, ending in June 2020. The deliverables under the Avacopan Agreement consist of intellectual property licenses, development and regulatory services for the submission of the Marketing Authorization Application (MAA). The Company considered the provisions of the revenue recognition multiple-element arrangement guidance and concluded that the license and the development and regulatory activities for the submission of the MAA do not have stand-alone value because the rights conveyed to do not permit Vifor to perform all efforts necessary to use the Company’s technology to bring the compound through development and, upon regulatory approval, commercialization of the compound. Accordingly, the Company combined these deliverables and allocated the remaining upfront consideration of $65.5 million into a single unit of accounting.

Following the October 2016 expiration of the $12.5 million potentially creditable towards a CCX140 license agreement, such amount was reclassified to the amortizable portion of deferred revenue, which continues to be recognized over the estimated period of performance under the Avacopan Agreement ending in June 2020.

11

7. Collaboration and License Agreements (continued)

In February 2017, Vifor and the Company expanded the Vifor territories under the Avacopan Agreement to include all markets outside the United States and China (the Avacopan Amendment). The Company retains control of ongoing and future development of avacopan (other than country-specific development in the licensed territories), and all commercialization rights to avacopan in the United States and China. In connection with this arrangement, the Company received a $20.0 million upfront cash commitment for the expanded rights, $10.0 million of which was received in February 2017. The remaining $10.0 million is due in February 2018 and is not reflected in accounts receivable as of March 31, 2017. The February 2017 Avacopan Amendment and the original May 2016 Avacopan Agreement are accounted for as a combined agreement. The February 2017 Avacopan Amendment did not represent a material modification given among other factors, there were no changes to the Company’s deliverables under the arrangement. As such, the additional upfront commitment of $20.0 million under the Avacopan Amendment will be recognized over the remaining estimated period of performance ending in June 2020. For the three months ended March 31, 2017, the Company recognized $5.7 million of collaboration and license revenue under the Avacopan Agreement and the Avacopan Amendment.

Upon achievement of certain regulatory and commercial milestones with avacopan, the Company will receive additional payments of up to $510.0 million under the Avacopan Agreement. In addition, the Company will receive royalties, with rates ranging between the teens and mid-twenties, on future potential net sales of avacopan by Vifor in the licensed territories.

In December 2016, the Company entered into a second collaboration and license agreement with Vifor pursuant to which the Company granted Vifor exclusive rights to commercialize CCX140 (the CCX140 Agreement) in markets outside the U.S. and China,. CCX140 is an orally-administered inhibitor of the chemokine receptor known as CCR2. The Company retains marketing rights in the U.S. and China, while Vifor has commercialization rights in the rest of the world. Pursuant to the CCX140 Agreement, the Company will be responsible for the clinical development of CCX140 in rare renal diseases, while sharing the cost of such development with Vifor. Vifor retains an option to solely develop and commercialize CCX140 in more prevalent forms of chronic kidney disease (CKD). Should Vifor later exercise the CKD option, ChemoCentryx would receive co-promotion rights in CKD in the U.S.

Under the terms of the CCX140 Agreement, the Company received a non-refundable upfront commitment of $50.0 million, $30.0 million of which was received in January 2017. The remaining $20.0 million, which is due on the first anniversary of the CCX140 Agreement, was not reflected in accounts receivable as of March 31, 2017.

The upfront commitment of $50.0 million will be recognized over the estimated period of performance under the CCX140 Agreement, which approximates 5.0 years, ending in December 2021. The deliverables under the CCX140 Agreement consist of intellectual property licenses, development and regulatory services for the submission of the Marketing Authorisation Application (MAA). The Company considered the provisions of the revenue recognition multiple-element arrangement guidance and concluded that the license and the development and regulatory activities for the submission of the MAA do not have stand-alone value because the rights conveyed to do not permit Vifor to perform all efforts necessary to use the Company’s technology to bring the compound through development and, upon regulatory approval, commercialization of the compound. Accordingly, the Company combined these deliverables and allocated the upfront consideration of $50.0 million into a single unit of accounting. For the three months ended March 31, 2017, the Company recognized $2.5 million of collaboration and license revenue under the CCX140 Agreement.

Upon achievement of certain regulatory and commercial milestones with CCX140, the Company will receive additional payments of up to $625.0 million under the CCX140 Agreement. In addition, the Company will receive tiered double-digit royalties on net sales of CCX140 in the licensed territories.

Under the Avacopan Agreement and the CCX140 Agreement, the Company determined that future contingent payments related to regulatory milestones meet the definition of a substantive milestone under the accounting guidance. Accordingly, revenue for the achievement of these milestones will be recognized in the period when the milestone is achieved. The Company will be eligible to receive contingent payments related to commercial milestones based on the performance of Vifor and these payments are not considered to be milestones under the accounting guidance. These contingent commercial milestone payments will be included in the allocation of arrangement consideration if and when achieved, resulting in an accounting treatment similar to the upfront payment. As of March 31, 2017, the Company had not received any milestone payments under the Avacopan Agreement or the CCX140 Agreement. The Company expects to recognize royalty revenue in the period of sale of the related product, based on the underlying contract terms. The Avacopan Agreement and the CCX140 Agreement are accounted for as separate arrangements.

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8. Government Grant

In April 2016, the Company was awarded an Orphan Products Development grant by the U.S. Food and Drug Administration to support the clinical development of avacopan in the amount of $500,000, which was fully recognized and received as of March 31, 2017. The term of the grant expires in May 2017. During the three months ended March 31, 2017 and 2016, the Company did not recognize any grant revenue.

9. Equity Incentive Plans

Stock Options

During the three months ended March 31, 2017, the Company had the following option activities under its equity incentive plans:

				Outstanding Options
	Available for Grant			Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance at December 31, 2016		1,655,524			9,345,515		$	7.72
Shares authorized		1,900,000
Granted (1)		(1,660,466	)		1,458,200			6.71
Exercised (2)		40,208			(73,563	)		4.91
Forfeited and expired		119,685			(119,685	)		6.34
Balance at March 31, 2017		2,054,951			10,610,467		$	7.62		6.83	$	10,548,578

(1) The difference between shares granted in the number of shares available for grant and outstanding options represents the RSUs granted for the period.

(2) Shares presented as available for grant represents shares repurchased for tax withholding upon vesting of RSUs.

Restricted Stock

During the three months ended March 31, 2017, the activity for restricted stock is summarized as follows:

	Shares			Weighted Average Grant-Date Fair Value
Balance at December 31, 2016		471,650		$	4.60
Granted		202,266			6.62
Vested		(77,265	)		3.66
Canceled		—			—
Unvested at March 31, 2017		596,651		$	5.40

Stock-based Compensation

Total stock-based compensation expense was $2.4 million and $2.3 million during the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, $13.0 million, $2.3 million, and $0.1 million of total unrecognized compensation expenses associated with outstanding stock options, unvested restricted stock, and the ESPP, net of estimated forfeitures, were expected to be recognized over a weighted-average period of 2.68, 1.98, and 0.12 years, respectively.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and the financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission, or SEC, on March 14, 2017.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,” “aim,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “potential” or “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

• the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs;

• our ability to advance drug candidates into, and successfully complete, clinical trials;

• the commercialization of our drug candidates;

• the implementation of our business model, strategic plans for our business, drug candidates and technology;

• the scope of protection we are able to establish and maintain for intellectual property rights covering our drug candidates and technology;

• estimates of our expenses, future revenues, capital requirements and our needs for additional financing;

• the timing or likelihood of regulatory filings and approvals;

• our ability to maintain and establish collaborations or obtain additional government grant funding;

• our financial performance; and

• developments relating to our competitors and our industry.

These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those included in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 14, 2017.

Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, industry and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. For all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

ChemoCentryx^®, the ChemoCentryx logo, Traficet™ and Traficet-EN™ are our trademarks in the United States, the European Community, Australia and Japan. EnabaLink^® and RAM^® are our trademarks in the United States. Each of the other trademarks, trade names or service marks appearing in this Quarterly Report on Form 10-Q belongs to its respective holder.

Unless the context requires otherwise, in this Quarterly Report on Form 10-Q the terms “ChemoCentryx,” “we,” “us” and “our” refer to ChemoCentryx, Inc., a Delaware corporation, and our subsidiary taken as a whole.

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Overview

ChemoCentryx is a biopharmaceutical company developing new medications targeted at inflammatory disorders, autoimmune diseases and cancer. Each of our drug candidates selectively blocks a specific chemokine or chemoattractant receptors, leaving the rest of the immune system intact. Our drug candidates are small molecules, which are orally administered, offering significant quality of life benefits, since patients swallow a capsule or pill instead of having to visit a clinic for an infusion or undergo an injection.

In 2016 we executed on our strategy to form an alliance with a partner that could provide upfront commitments and milestones to support the clinical development of our leading two drugs, avacopan and CCX140, to registration and pay us royalties upon sales in international markets, while we develop our own commercial infrastructure to sell directly in the United States.

To help us manage the wide array of opportunities, we have segmented our pipeline into early stage and late stage compounds.

Late Stage Compounds

We have chosen to focus initially on kidney disease, particularly on rare indications, where orphan drug candidates tend to enjoy a faster path to market and better reimbursement. Our leading drug candidates address areas of clear unmet need, where the current standard of care, or SOC, is insufficient to halt progression of the disease and/or where today’s treatment options come with serious side effects, such as those which accompany the prolonged use of steroids:

Avacopan (CCX168) - Complement Inhibition in Orphan and Rare Diseases

Avacopan (CCX168) is an orally-administered complement inhibitor targeting the C5a receptor, or C5aR, and is being developed for orphan and rare diseases, including 1) anti-neutrophil cytoplasmic auto-antibody associated vasculitis, or AAV, a devastating autoimmune disease that destroys blood vessels and can lead to kidney failure; 2) atypical hemolytic uremic syndrome, or aHUS, a rare, life threatening disease; and 3) complement 3 glomerulopathy, or C3G, a debilitating kidney disease.

Avacopan has been granted orphan drug designation by the U.S. Food and Drug Administration, or FDA, for the treatment of AAV, aHUS and C3G and by the European Medicines Agency, or EMA for the treatment of microscopic polyangiitis and granulomatosis with polyangiitis, both forms of AAV. Additionally, avacopan has been granted PRIority MEdicines, or PRIME, designation from the EMA, to expedite its clinical development, and to potentially accelerate its marketing authorization.

Following completion of two Phase II clinical trials in patients with AAV, the results of which demonstrated that avacopan was safe, well-tolerated and provided effective steroid-free control of the disease, we launched the Phase III ADVOCATE trial in December 2016. The FDA and the EMA concurred with the design of the study. ADVOCATE is a randomized, double-blind two-arm study enrolling 300 patients at approximately 200 sites in the United States, Canada, Europe, Australia, and New Zealand. We also plan to initiate clinical endpoint trials, ones that could potentially support the registration of avacopan in these indications, of avacopan for the treatment of patients with C3G and aHUS in 2017.

CCX140 - Chronic and Rare Kidney Diseases

CCX140 is an orally-administered inhibitor of the chemokine receptor known as CCR2, has been in development for diabetic nephropathy, or DN, a form of chronic kidney disease, or CKD, and is now being developed for focal segmental glomerulosclerosis, or FSGS, a rare renal disease characterized by progressive proteinuria—excess protein in the urine—and impaired renal function.

A Phase II clinical trial of CCX140 in patients with DN met its primary endpoint by demonstrating that CCX140 given orally once daily added to an SOC renin-angiotensin-aldosterone system inhibitor treatment resulted in a statistically significant reduction in proteinuria, beyond that achieved with SOC alone. Based on the safety and efficacy data related to reduction in proteinuria observed in the Phase II trial in DN, we plan to initiate in 2017 a clinical endpoint trial of CCX140 for the treatment of patients with FSGS, for which there are currently no FDA-approved treatments.

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Global Kidney Health Alliance with Vifor

In May 2016 we announced a partnership with Vifor (International) Ltd., or Vifor, a European-based world leader specializing in kidney disease, for the commercial rights to avacopan in Europe and certain other international markets, which we refer to as the Avacopan Agreement. We expanded our partnership with Vifor in December 2016 with an additional deal for our other late stage drug candidate, CCX140, whereby we granted Vifor worldwide rights outside of the United States and China, which we refer to as the CCX140 Agreement; and in February 2017, we announced a further deal with Vifor for avacopan that harmonized the geographic commercialization rights underlying the agreements for both drug candidates, which we refer to as the Avacopan Amendment.

We have secured $155 million in upfront cash payments and commitments, plus substantial potential milestone payments pursuant to our agreements with Vifor. Through our alliance, we maintain the commercial rights of avacopan and CCX140 in the United States and China, and also retain control of the clinical development programs for rare renal disease. Vifor gains the commercial rights for all other international markets, and will pay us double-digit tiered royalties on potential net sales.

At a future time defined in the contract, Vifor has an option to solely develop and commercialize CCX140 in more prevalent forms of CKD. Should Vifor later exercise the CKD option, we would receive co-promotion rights for CKD in the United States, and we estimate that the clinical development and registration process for CKD would end at approximately the same time as Orphan Drug exclusivity.

Early Stage Compounds

While the science has led us to focus initially on kidney disease, our targeted blocking system designed to stop the spread of inflammatory disease-inducing cells shows promise in other disease areas. Over time we plan to bring forward drug candidates to treat other inflammatory and autoimmune disorders, as well as cancer, where our drug candidate CCX872 has shown promise in a Phase I trial for non-operable pancreatic cancer. Our ability to do so will grow as we increase our scale and start to earn revenues and royalties from the commercialization of our late stage kidney disease franchise.

Since commencing our operations in 1997, our efforts have focused on research, development and the advancement of our drug candidates into and through clinical trials. As a result, we have incurred significant losses. We have funded our operations primarily through the sale of convertible preferred and common stock, contract revenue under our collaborations, government contracts and grants and borrowings under equipment financing arrangements.

As of March 31, 2017, we had an accumulated deficit of $313.1 million. We expect to continue to incur net losses as we develop our drug candidates, expand clinical trials for our drug candidates currently in clinical development, expand our research and development activities, expand our systems and facilities, seek regulatory approvals and engage in commercialization preparation activities in anticipation of FDA approval of our drug candidates. In addition, if a product is approved for commercialization, we will need to expand our organization. Significant capital is required to launch a product and many expenses are incurred before revenues are received. We are unable to predict the extent of any future losses or when we will become profitable, if at all.

JOBS Act

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for implementing new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to delay such adoption of new or revised accounting standards, and as a result, we may not implement new or revised accounting standards on the relevant dates on which adoption of such standards is required for other companies.

Subject to certain conditions set forth in the JOBS Act, as an emerging growth company, we intend to rely on certain of these exemptions, including without limitation, providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 and implementing any requirement that may be adopted regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). These exemptions will apply for a period of five years following the completion of our IPO although if the market value of our common stock that is held by nonaffiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31.

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Critical Accounting Policies and Significant Judgments and Estimates

There have been no material changes in our critical accounting policies during the three months ended March 31, 2017, as compared to those disclosed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 14, 2017.

Results of Operations

Revenue 

We have not generated any revenue from product sales. For the three months ended March 31, 2017, our revenue was derived from the recognition of the upfront payment related to the Avacopan Agreement, Avacopan Amendment and CCX140 Agreement. Total revenue for the periods as compared to the same periods in the prior year were as follows (in thousands):

	Three Months Ended March 31,
	2017			2016
Collaboration and license revenue	$	8,230		$	—
Total revenue	$	8,230		$	—
Dollar increase	$	8,230
Percentage increase		100	%

The increase in revenue from 2016 to 2017 for the three month period was due to amortization of the upfront license fee commitments from Vifor pursuant to the Avacopan Agreement, Avacopan Amendment and CCX140 Agreement.

Research and development expenses

Research and development expenses represent costs incurred to conduct basic research, the discovery and development of novel small molecule therapeutics, development of our suite of proprietary drug discovery technologies, preclinical studies and clinical trials of our drug candidates. We recognize all research and development expenses as they are incurred. These expenses consist primarily of salaries and related benefits, including stock-based compensation, third-party contract costs relating to research, formulation, manufacturing, preclinical study and clinical trial activities, laboratory consumables, and allocated facility costs. Total research and development expenses for the three months ended March 31, 2017, as compared to the same period in the prior year, were as follows (in thousands):

	Three Months Ended March 31,
	2017			2016
Research and development expenses	$	9,970		$	11,245
Dollar decrease	$	(1,275	)
Percentage decrease		-11	%

The decrease in research and development expenses from 2016 to 2017 for the three month period was primarily attributable to lower Phase I and Phase II clinical development expenses in 2017 partially offset by an increase in Phase III development expenses. Phase I clinical development expense was lower in the 2017 period compared to the 2016 period due to the completion of enrollment in the Phase I clinical trial for CCX872 in patients with advanced pancreatic cancer in 2016. The decrease in Phase II development expense was due to the completion of the CLEAR and CLASSIC Phase II clinical trials for avacopan for the treatment of AAV in 2016. These decreases were partially offset by an increase in Phase III development expense due to the initiation of Phase III ADVOCATE trial for avacopan in patients with AAV in the fourth quarter of 2016.

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The following table summarizes our research and development expenses by project (in thousands):

	Three Months Ended March 31,
	2017		2016
Phase I	$	382	$	2,806
Phase II		1,052		5,079
Phase III		5,085		—
Research and drug discovery		3,451		3,360
Total R&D	$	9,970	$	11,245

We track development expenses that are directly attributable to our clinical development candidates by phase of clinical development. Such development expenses include third-party contract costs relating to formulation, manufacturing, preclinical studies and clinical trial activities. We allocate research and development salaries, benefits or indirect costs to our development candidates and we have included such costs in research and development expenses. All remaining research and development expenses are reflected in “Research and drug discovery” which represents early stage drug discovery programs. Such expenses include allocated employee salaries and related benefits, stock-based compensation, consulting and contracted services to supplement our in-house laboratory activities, laboratory consumables and allocated facility costs associated with these earlier stage programs.

At any given time, we typically have several active early stage research and drug discovery projects. Our internal resources, employees and infrastructure are not directly tied to any individual research or drug discovery project and are typically deployed across multiple projects. As such, we do not maintain information regarding these costs incurred for our early stage research and drug discovery programs on a project specific basis. We expect our research and development expenses to increase as we advance our development programs further and increase the number and size of our clinical trials. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. We or our partners may never succeed in achieving marketing approval for any of our drug candidates. The probability of success for each drug candidate may be affected by numerous factors, including preclinical data, clinical data, competition, manufacturing capability and commercial viability. Our strategy includes entering into additional partnerships with third parties for the development and commercialization of some of our independent drug candidates.

The successful development of our drug candidates is highly uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each drug candidate and are difficult to predict for each product. Given the uncertainty associated with clinical trial enrollments and the risks inherent in the development process, we are unable to determine the duration and completion costs of the current or future clinical trials of our drug candidates or if, or to what extent, we will generate revenues from the commercialization and sale of any of our drug candidates. We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to the scientific and clinical success of each drug candidate, as well as ongoing assessment as to each drug candidate’s commercial potential. We will need to raise additional capital or may seek additional strategic alliances in the future in order to complete the development and commercialization of our drug candidates, including avacopan, CCX140, CCX872 and vercirnon.

General and administrative expenses

Total general and administrative expenses for the three months ended March 31, 2017, as compared to the same period in the prior year were as follows (in thousands):

	Three Months Ended March 31,
	2017			2016
General and administrative expenses	$	4,573		$	4,084
Dollar increase	$	489
Percentage increase		12	%

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General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation and travel expenses, in executive, finance, business and corporate development and other administrative functions. Other general and administrative expenses include allocated facility-related costs not otherwise included in research and development expenses, legal costs of pursuing patent protection of our intellectual property, and professional fees for auditing, tax, and legal services.

The increase from 2016 to 2017 for the three month period was primarily due to increase in intellectual property related expenses partially offset by lower travel expenses.

We expect that general and administrative expenses will increase in the future as we expand our operating activities and incur additional costs associated with being a public company. These public company related increases will likely include, but not be limited to, investor and public relations expenses, legal and accounting related fees, and expenses associated with preparing to meet the requirements pursuant to the Sarbanes-Oxley Act of 2002, including in connection with the expiration of our status as an emerging growth company, expected to occur in 2017.

Other income, net

Other income, net primarily consists of interest income earned on our marketable securities. Total other income, net, for the three month period, as compared to the same period in the prior year was as follows (in thousands):

	Three Months Ended March 31,
	2017			2016
Interest income	$	317		$	86
Total other income, net	$	317		$	86
Dollar increase		231
Percentage increase		269	%

The increase in total other income, net from 2016 to 2017 for the three month period was primarily due to higher cash and investment balances in 2017 due to the receipt of upfront payments totaling $125.0 million received from Vifor in connection with the Avacopan Agreement and CCX140 Agreement.

Liquidity and Capital Resources

As of March 31, 2017, we had approximately $149.7 million in cash, cash equivalents and investments. Such amounts exclude $30.0 million in remaining upfront commitments in connection with the December 2016 CCX140 Agreement and February 2017 Avacopan Amendment, which are due on the first anniversary of these agreements. The following table shows a summary of our cash flows for the three months ended March 31, 2017 and 2016 (in thousands):

	Three Months Ended March 31,
	2017			2016
Cash provided by (used in)
Operating activities	$	26,080		$	(11,115	)
Investing activities		(19,214	)		11,502
Financing activities		64			210

Operating activities. Net cash provided by operating activities was $26.1 million for the three months ended March 31, 2017, compared to net cash used of $11.1 million for the same period in 2016. This change was primarily due to changes in working capital items and a lower net loss in 2017. For the three months ended March 31, 2017, changes in working capital included the receipt of $30.0 million of accounts receivable from the first installment of the upfront commitment under the CCX140 Agreement.

Investing activities. Net cash provided by or used in investing activities for periods presented primarily relate to the purchase and maturity of investments used to fund the day-to-day needs of our business.

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Financing activities. Net cash provided by financing activities was $0.1 million for the three months ended March 31, 2017, compared to net cash provided of $0.2 million for the same period in 2016. Net cash provided by financing activities for both periods presented were primarily derived from proceeds from the exercise of stock options. For the three months ended March 31, 2017, cash used for financing activities also included $0.3 million (the value of withheld shares), for tendered ChemoCentryx, Inc. common stock to satisfy employee tax withholding requirements upon vesting of restricted stock units.

As of March 31, 2017, we had approximately $149.7 million in cash, cash equivalents and investments, excluding the $30.0 million in remaining upfront commitments in connection with the December 2016 CCX140 Agreement and the February 2017 Avacopan Amendment, which are due on the first anniversary of these agreements. We believe that our available cash, cash equivalents and investments will be sufficient to fund our anticipated level of operations for at least 12 months following our financial statement issuance date, May 10, 2017. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Our future capital requirements are difficult to forecast and will depend on many factors, including:

• the terms and timing of any other collaborative, licensing and other arrangements that we may establish;

• the initiation, progress, timing and completion of preclinical studies and clinical trials for our drug candidates and potential drug candidates;

• the number and characteristics of drug candidates that we pursue;

• the progress, costs and results of our clinical trials;

• the outcome, timing and cost of regulatory approvals;

• delays that may be caused by changing regulatory approvals;

• the cost and timing of hiring new employees to support continued growth;

• the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims;

• the cost and timing of procuring clinical and commercial supplies of our drug candidates;

• the cost and timing of establishing sales, marketing and distribution capabilities; and

• the extent to which we acquire or invest in businesses, products or technologies.

Contractual Obligations and Commitments

There have been no material changes outside the ordinary course of our business to the contractual obligations we reported in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 14, 2017.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued a comprehensive new standard on revenue from contracts with customers. The standard’s core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB voted to delay the effective date of the new standard by one year. The standard would become effective for us beginning in the first quarter of 2018. Early application would be permitted in 2017. Entities would have the option of using either a full retrospective or a modified retrospective approach to adopt this new guidance. In 2016, the FASB updated the guidance for reporting revenue gross versus net to improve the implementation guidance on principal versus agent considerations, and for identifying performance obligations and the accounting of intellectual property licenses. In addition, the FASB introduced practical expedients and made narrow scope improvements to the new accounting guidance.

We currently plan to adopt the accounting standard update on January 1, 2018, using the modified retrospective approach. The cumulative effect of adopting the accounting standard update will be recorded to retained earnings on January 1, 2018. We are currently at the early stages of analyzing our collaboration agreements to determine the differences in the accounting treatment under Accounting Standard Update, or ASU, No. 2014-09 compared to the current accounting treatment. During 2016, we entered into two license and collaboration agreements. We have primarily derived our revenues from license and collaboration agreements. The consideration we are eligible to receive under these agreements includes of upfront payments, research and development funding, milestone payments, and royalties. Each license and collaboration agreement is unique and will need to be assessed separately under the five-step process under the new standard. The new revenue recognition standard differs from the current accounting standard in many respects, such as in the accounting for variable considerations and the measurement of progress toward completion of performance obligations. While we have not completed an assessment of the impact of adoption, the adoption of ASU No. 2014-09 may have a material effect on our financial statements.

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In February 2016, the FASB issued a new standard that requires all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for us on January 1, 2019. We are currently evaluating the impact of the adoption of this standard on our financial statements. However, we expect the adoption of this accounting guidance to result in an increase in lease assets and a corresponding increase in lease liabilities on our balance sheets.

In March 2016, the FASB issued ASU No. 2016-09—Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax consequences, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. We adopted ASU No. 2016-09 on January 1, 2017. Under this guidance, on a prospective basis, companies will no longer record excess tax benefits and tax deficiencies from stock option exercises in additional paid-in capital (APIC). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. In addition, the guidance eliminates the requirement that excess tax benefits be realized before companies can recognize them. The ASU requires a cumulative-effect adjustment for previously unrecognized excess tax benefits in opening retained earnings in the annual period of adoption. As of January 1, 2017, we had an unrecognized excess tax benefit of $2.1 million. Upon adoption, we recognized this excess tax benefit as a deferred tax asset with a corresponding increase to our deferred tax asset valuation allowance. Additionally, as provided for under this new guidance, we elected to continue to estimate forfeitures. The adoption of this aspect of the guidance did not have a material impact on our financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our market risks at March 31, 2017 have not changed significantly from those discussed in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 14, 2017.

Item 4. Controls and Procedures

Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

As of March 31, 2017, management, with the participation of our Disclosure Committee, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial and Administrative Officer, to allow timely decisions regarding required disclosures.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective. Based on this evaluation, our Chief Executive Officer and Chief Financial and Administrative Officer concluded that, as of March 31, 2017, the design and operation of our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There has been no change in our internal control over financial reporting during the three months ended March 31, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Not Applicable.

Item 1A. Risk Factors

There have been no material changes to the risk factors included in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC on March 14, 2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

Not Applicable.

Item 6. Exhibits

A list of exhibits is set forth on the Exhibit Index immediately following the signature page of this Quarterly Report on Form 10-Q, and is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CHEMOCENTRYX, INC.
Date: May 10, 2017	/s/ Thomas J. Schall, Ph.D.
	Thomas J. Schall, Ph.D. President and Chief Executive Officer (Principal Executive Officer)
Date: May 10, 2017	/s/ Susan M. Kanaya
	Susan M. Kanaya Executive Vice President, Chief Financial and Administrative Officer and Secretary (Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit Number	Description
10.1†	Letter Agreement dated as of February 13, 2017 between the Registrant and Vifor (International) Ltd.
10.2#	Non-Employee Director Compensation Policy.
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Loss, (iv) Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial Statements.

# Indicates management contract or compensatory plan.

† Confidential treatment has been requested for portions of this exhibit. These portions have been omitted and filed separately with the SEC.

EX-10.1

Exhibit 10.1

CERTAIN MATERIAL (INDICATED BY AN ASTERISK) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

February 13, 2017

Vifor (International) Ltd.

Rechenstrasse 37

CH-9014 St. Gallen

Switzerland

Re:     Grant of Rights to CCX168 in Expanded Territory

Ladies and Gentlemen:

As you know, Vifor Fresenius Medical Care Renal Pharma Ltd. (“VFMCRP”) and ChemoCentryx, Inc. (“ChemoCentryx”) are parties to that certain Collaboration and License Agreement, dated May 9, 2016 (the “VFMCRP Agreement”), pursuant to which ChemoCentryx granted VFMCRP an exclusive license to commercialize ChemoCentryx’s proprietary C5aR inhibitor known as CCX168 in certain countries. Capitalized terms used but not otherwise defined in this letter agreement (this “Letter”) will have the meanings provided in the VFMCRP Agreement. The VFMCRP Agreement was originally entered into between Vifor (International) Ltd. (“Vifor”) and ChemoCentryx and was subsequently assigned by Vifor to VFMCRP, so that references in the VFMCRP Agreement to VIT now refer to VFMCRP.

ChemoCentryx now desires to grant to Vifor rights to CCX168 in certain other countries that are consistent with the rights granted to VFMCRP in the VFMCRP Agreement, with the understanding that Vifor intends to assign such rights to VFMCRP prior to June 30, 2018.

ChemoCentryx and Vifor, intending to be legally bound, hereby agree as follows:

1. “Vifor Territory” means (i) all countries of the world excluding the U.S., China, Europe, Central America, South America, Mexico, Canada, South Korea, and Africa and (ii) China, if China is added to the Vifor Territory pursuant to Section 1(a) below.

650 210.2900 Voice

650 210.2910 Fax

850 Maude Avenue

Mountain View, CA 94043, USA                                                                                  Medicines In Motion

1. Confidential

(a) ChemoCentryx shall notify Vifor within thirty (30) days after entering into a written agreement with a Third Party for development of the Product for Regulatory Approval in China (a “China Agreement”). If ChemoCentryx has not entered into a China Agreement by [***], then Vifor may elect to expand the Vifor Territory to include China by (i) delivering written notice of such expansion to ChemoCentryx and (ii) paying ChemoCentryx a one-time, non-refundable, non-creditable payment of [***] United States dollars (US$[***]), in each case (i) and (ii) within thirty (30) days after [***]. Upon ChemoCentryx’s receipt of such notice and payment during such thirty (30)-day period, the Vifor Territory will automatically be expanded to include China. If ChemoCentryx does not receive such notice and payment during such thirty (30)-day period, the Vifor Territory shall continue to exclude China.

(b) “China” means the People’s Republic of China, the Hong Kong Special Administrative Region of the People’s Republic of China and the Macao Special Administrative Region of the People’s Republic of China.

(c) “China Agreement Revenue” means all amounts received by ChemoCentryx from a Third Party under a China Agreement, but specifically excluding: (a) amounts received in consideration of the issuance of equity or debt securities of ChemoCentryx or its Affiliate; (b) payments for research, development, or commercialization activities undertaken by ChemoCentryx or its Affiliate; (c) reimbursements for amounts paid or costs incurred by or on behalf of ChemoCentryx or its Affiliate, including patent prosecution, maintenance, enforcement or defense expenses; (d) amounts received as an extension of credit or loan or as a distribution of a patent enforcement award; or (e) payments for the supply of goods and/or services. Notwithstanding the foregoing, if an upfront payment under a China Agreement includes amounts received in consideration of the issuance of equity or debt securities of ChemoCentryx or its Affiliate, [***], will be included in China Agreement Revenue. [***]. In the event that ChemoCentryx grants rights to the Product along with a license to any proprietary technology or intellectual property related to products other than the Product, ChemoCentryx shall reasonably and in good faith allocate the amounts received among all technology licensed or sublicensed, and China Agreement Revenue shall include only the portion allocated to the Product. For clarity, China Agreement Revenue excludes amounts received by ChemoCentryx from a Third Party in connection with a sale of substantially all of the business or assets to which this Agreement relates.

(d) Within sixty (60) days after the end of each Calendar Quarter in which ChemoCentryx receives China Agreement Revenue, ChemoCentryx shall pay to Vifor an amount equal to [***] ([***]%) of all China Agreement Revenue received by ChemoCentryx during such Calendar Quarter.

2. Subject to the terms and conditions of this Letter and the agreement referenced in Section 8(a) if and when entered into, as applicable, ChemoCentryx hereby grants to Vifor an exclusive (even as to ChemoCentryx), royalty bearing license, with the right to grant sublicenses as provided under the terms of Section 2.2 of the VFMCRP Agreement (as applied to Vifor in place of VFMCRP, and with Japan and China (if included in the Vifor Territory pursuant to

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

2. Confidential

Section 1 above) being deemed Major Market Countries), under the ChemoCentryx Know-How and ChemoCentryx Patents (as applied to the Vifor Territory in place of the VIT Territory as referenced in such defined terms in the VFMCRP Agreement) (a) to seek Regulatory Approval and Pricing and Reimbursement Approval for and Commercialize the Product in the Field in the Vifor Territory and (b) to conduct those Development activities in the Field in the Vifor Territory allocated to Vifor in the Development Plan.

3. Notwithstanding Section 2 above, if Vifor intends to grant a sublicense under the foregoing license, Vifor shall notify ChemoCentryx in writing. Any such sublicense shall be subject to and consistent with all terms of the VFMCRP Agreement, as if the sublicense were granted by VFMCRP under the VFMCRP Agreement as amended by the amendment attached hereto as Exhibit A. No such sublicense may be granted unless and until Vifor and ChemoCentryx enter into an agreement governing at least the following:

(a) Development of the Product for the sublicensed country(ies), which would be considered Additional Studies and subject to the approval of the JSC (with decision-making authority as provided in the VFMCRP Agreement, as applied to the Vifor Territory in place of the VFMCRP Territory), unless agreed otherwise by ChemoCentryx and Vifor in writing;

(b) Economic terms identical to the VFMCRP Agreement applicable to the rights for the sublicensed country(ies), including allocation of costs for any activities conducted therein;

(c) ChemoCentryx’s rights to use any data and results generated with respect to the sublicensed country(ies);

(d) Rights to obtain licenses to Third Party intellectual property rights in the sublicensed country(ies); and

(e) Consequences for the sublicensee’s breach of its sublicense agreement with Vifor.

4. ChemoCentryx and Vifor intend that prior to June 30, 2018, Vifor will assign the rights granted in Section 2 above to VFMCRP.

5. No activities will be conducted prior to June 30, 2018 under the license granted in Section 2 above with respect to the Vifor Territory except with the prior written approval of ChemoCentryx, which shall not be unreasonably withheld. Any Development of the Product in the Vifor Territory will be conducted pursuant to the Development Plan.

6. In consideration for the rights granted under this Letter, VIT shall make a non-refundable, non-creditable payment to ChemoCentryx of twenty million United States dollars (US$20,000,000), payable in the following two (2) installments:

(a) ten million United States dollars (US$10,000,000) within ten (10) Business Days after the date of this Letter; and

(b) ten million United States dollars (US$10,000,000) on the first anniversary of the date of this Letter.

3. Confidential

7. If VFMCRP and ChemoCentryx enter into the amendment attached hereto as Exhibit A by June 30, 2018, then this Letter will immediately terminate and be of no force and effect.

8. If VFMCRP and ChemoCentryx do not enter into the amendment attached hereto as Exhibit A by June 30, 2018, then as promptly as possible following such date:

(a) ChemoCentryx and VIT shall enter into a collaboration and license agreement that sets forth the terms and conditions for the Vifor Territory consistent with the VFMCRP Agreement but with necessary changes, as discussed by ChemoCentryx and Vifor as of the date of this Letter; and

(b) ChemoCentryx and VFMCRP shall amend the VFMCRP Agreement with necessary changes to take into account the agreement for the Vifor Territory referenced in Section 8(a), as discussed by ChemoCentryx and VIT as of the date of this Letter.

9. This Letter may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. This Letter may be executed and delivered electronically or by facsimile and upon such delivery such electronic or facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

10. This Letter shall be governed by and construed in accordance with the laws of the State of New York without reference to any rules of conflict of laws.

11. This Letter constitutes the entire agreement, both written and oral, between ChemoCentryx and Vifor with respect to the subject matter hereof, and any and all prior agreements with respect to the subject matter hereof, either written or oral, expressed or implied, are superseded hereby, merged and canceled, and are null and void and of no effect.

4. Confidential

If the foregoing is acceptable to you, please sign this Letter in the space provided below and return it to me.

Sincerely,
CHEMOCENTRYX, INC.
By:	/s/ Thomas J. Schall
Name:	Thomas J. Schall
Title:	President and Chief Executive Officer

Agreed to and accepted as of the date of this Letter:

VIFOR (INTERNATIONAL) LTD.
By:	/s/ Christoph Springer
Name:	Christoph Springer
Title:	Global Head of Business Development
By:	/s/ Oliver P. Kronenberg
Name:	Oliver P. Kronenberg
Title:	Group General Counsel

5. Confidential

Exhibit A

AMENDMENT TO COLLABORATION AND LICENSE AGREEMENT

This AMENDMENT TO THE COLLABORATION AND LICENSE AGREEMENT (the “Amendment”) is effective as of [            ], 2017 (the “Amendment Effective Date”) by and between CHEMOCENTRYX, INC., a Delaware corporation, having an address at 850 Maude Avenue, Mountain View, CA 94043, U.S. (“ChemoCentryx”), and VIFOR FRESENIUS MEDICAL CARE RENAL PHARMA LTD., a corporation organized under the laws of Switzerland, having an address at Rechenstrasse 37, CH-9014 St. Gallen, Switzerland (“VFMCRP”). ChemoCentryx and VFMCRP may be referred to herein individually as a “Party” or collectively as the “Parties”.

RECITALS

A. ChemoCentryx and VFMCRP are parties to that certain Collaboration and License Agreement, dated May 9, 2016 (the “Agreement”), pursuant to which ChemoCentryx granted VFMCRP an exclusive license to commercialize ChemoCentryx’s proprietary C5aR inhibitor known as CCX168 in certain countries. The Agreement was originally entered into between Vifor (International) Ltd. (“VIT”) and ChemoCentryx and was subsequently assigned by VIT to VFMCRP.

B. On February 8, 2017, ChemoCentryx and Vifor (International) Ltd. (“Vifor”) entered into a letter agreement pursuant to which ChemoCentryx granted Vifor an exclusive license to commercialize CCX168 in all countries of the world (excluding the U.S. and China) that were not previously licensed to VFMCRP, and Vifor paid ChemoCentryx ten million United States dollars (US$10,000,000), equal to one-half of the total upfront payment for such rights. Such letter agreement is terminated concurrently with the Parties’ entry into this Agreement.

C. This Amendment, which includes an option to expand the territory licensed to VFMCRP to include China, and which is being entered into in accordance with Section 16.2 of the Agreement, provides for such territory expansion and payment therefor by VFMCRP in accordance with the terms and conditions of this Amendment.

NOW, THEREFORE, the Parties agree as follows:

1. AMENDMENT OF THE AGREEMENT

The Parties hereby agree to amend the terms of the Agreement as provided below, effective as of the Amendment Effective Date. Except to the extent the Agreement is explicitly amended by this Amendment, the Agreement will remain in full force and effect in accordance with its terms. Capitalized terms used in this Amendment that are not otherwise defined herein shall have the meanings such terms are given in the Agreement.

1.1 All references in the Agreement to “VIT” are hereby amended to refer instead to “VFMCRP”.

1.2 Section 1.85 of the Agreement is hereby deleted and replaced in its entirety with the following:

1.85 “Major Market Countries” means France, Switzerland, Germany, Italy, Spain, the United Kingdom, Brazil, Japan, Canada, Mexico, South Korea and, if added to the VFMCRP Territory pursuant to Section 2.11, China.

1.3 Section 1.134 of the Agreement is hereby deleted and replaced in its entirety with the following:

1.134 “VFMCRP Territory” means (a) the world, excluding the U.S. and China, and (b) China, if China is added to the VFMCRP Territory pursuant to Section 2.11.

1.4 The following new definitions are hereby added to the end of Article 1 of the Agreement as new Sections 1.136, 1.137 and 1.138:

1.136 “China” means the People’s Republic of China, the Hong Kong Special Administrative Region of the People’s Republic of China and the Macao Special Administrative Region of the People’s Republic of China.

1.137 “China Agreement” has the meaning set forth in Section 2.11.

1.138 “China Agreement Revenue” means all amounts received by ChemoCentryx from a Third Party under a China Agreement, but specifically excluding: (a) amounts received in consideration of the issuance of equity or debt securities of ChemoCentryx or its Affiliate; (b) payments for research, development, or commercialization activities undertaken by ChemoCentryx or its Affiliate; (c) reimbursements for amounts paid or costs incurred by or on behalf of ChemoCentryx or its Affiliate, including patent prosecution, maintenance, enforcement or defense expenses; (d) amounts received as an extension of credit or loan or as a distribution of a patent enforcement award; or (e) payments for the supply of goods and/or services. Notwithstanding the foregoing, if an upfront payment under a China Agreement includes amounts received in consideration of the issuance of equity or debt securities of ChemoCentryx or its Affiliate, [***], will be included in China Agreement Revenue. [***]. In the event that ChemoCentryx grants rights to the Product along with a license to any proprietary technology or intellectual property related to products other than the Product, ChemoCentryx shall reasonably and in good faith allocate the amounts received among all technology licensed or sublicensed, and China Agreement Revenue shall include only the portion allocated to the Product. For clarity, China Agreement Revenue excludes amounts received by ChemoCentryx from a Third Party in connection with a sale of substantially all of the business or assets to which this Agreement relates.

1.5 The last sentence of Section 2.10(d) of the Agreement and Section 2.10(e) of the Agreement are hereby deleted.

1.6 The following new Section 2.11 is hereby added to the Agreement:

2.11 China. ChemoCentryx shall notify VFMCRP within thirty (30) days after entering into a written agreement with a Third Party for development of the

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

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Product for Regulatory Approval in China (a “China Agreement”). If ChemoCentryx has not entered into a China Agreement by [***], then VFMCRP may elect to expand the VFMCRP Territory to include China by (a) delivering written notice of such expansion to ChemoCentryx and (b) paying ChemoCentryx a one-time, non-refundable, non-creditable payment of [***] United States dollars (US$[***]), in each case (a) and (b) within thirty (30) days after [***]. Upon ChemoCentryx’s receipt of such notice and payment during such thirty (30)-day period, the VFMCRP Territory will automatically be expanded to include China. If ChemoCentryx does not receive such notice and payment during such thirty (30)-day period, the VFMCRP Territory shall continue to exclude China. [Note: To be revised if these rights were granted to VIT prior to the execution of this Amendment.]

1.7 The following new Section 8.5 is hereby added to the Agreement:

8.5 China Agreement Revenue. Within sixty (60) days after the end of each Calendar Quarter in which ChemoCentryx receives China Agreement Revenue, ChemoCentryx shall pay to VFMCRP an amount equal to [***] percent ([***]%) of all China Agreement Revenue received by ChemoCentryx during such Calendar Quarter.

1.8 Section 9.4 of the Agreement is hereby deleted and replaced in its entirety with the following:

9.4 Records; Audit. VFMCRP shall keep, and shall cause its Affiliates and Sublicensees to keep, complete and accurate records pertaining to the sale or other disposition of the Product in sufficient detail to permit ChemoCentryx to confirm the accuracy of commercial milestone and royalty payments due hereunder. ChemoCentryx shall keep, and shall cause its Affiliates to keep, complete and accurate records pertaining to the China Agreement Revenue received by ChemoCentryx in sufficient detail to permit VFMCRP to confirm the accuracy of payments due under Section 8.5. Such records shall be kept for such period of time required by Applicable Laws, but in no case less than three (3) years following the end of the Calendar Quarter to which they pertain. Each Party shall have the right to have an independent, certified public accountant reasonably acceptable to the other Party audit such records of the other Party to confirm Net Sales, royalties, and other payments, in the case of VFMCRP as audited Party, and to confirm China Agreement Revenue, in the case of ChemoCentryx as audited Party, for a period covering not more than three (3) years following the Calendar Quarter to which they pertain. Such audits may be exercised only once for any period and no more than once per Calendar Year during normal business hours upon reasonable prior written notice to the audited Party. Any such auditor shall not disclose the audited Party’s confidential information to the auditing Party, except to the extent such disclosure is necessary to verify the accuracy of the financial reports furnished by the audited Party or the amount of payments by the audited Party under this Agreement. Any amounts shown to be owed but unpaid shall be paid within thirty (30) days after the accountant’s report, plus

*** Certain information on this page has been omitted and filed separately with the Commission. Confidential treatment has been requested with respect to the omitted portions.

3

interest (as set forth in Section 9.5) from the original due date. Any overpayment by the audited Party revealed by an audit shall be credited against future payments owed by the audited Party to the other Party (and if no further payments are due, shall be refunded by the auditing Party at the request of the audited Party). The auditing Party shall bear the full cost of such audit unless such audit discloses an underpayment by the audited Party of more than five percent (5%) of the amount of royalties or other payments due under this Agreement for any applicable Calendar Quarter, in which case, the audited Party shall bear the cost of such audit.

2. PAYMENTS

2.1 In consideration for the expansion of the VFMCRP Territory as set forth in this Amendment, VFMCRP shall make a non-refundable, non-creditable payment to ChemoCentryx of ten million United States dollars (US$10,000,000) on or before February 8, 2018; provided that if the Agreement is terminated prior to such date, such payment shall remain due and payable despite such termination, unless the Agreement is terminated by VFMCRP pursuant to Section 14.3 of the Agreement. [Note: To be deleted if this payment was made by VIT prior to the execution of this Amendment.]

3. MISCELLANEOUS

3.1 Full Force and Effect. This Amendment amends the terms of the Agreement and is deemed incorporated into the Agreement. The provisions of the Agreement, as amended by this Amendment, remain in full force and effect.

3.2 Entire Agreement. The Agreement, as amended by this Amendment constitute the entire agreement, both written and oral, between the Parties with respect to the subject matter hereof, and any and all prior agreements with respect to the subject matter hereof, either written or oral, expressed or implied, are superseded hereby, merged and canceled, and are null and void and of no effect.

3.3 Counterparts. This Amendment may be executed in one or more counterparts, each of which will be an original and all of which together will constitute one instrument.

4

IN WITNESS WHEREOF, the Parties have executed this Amendment as of the Amendment Effective Date.

CHEMOCENTRYX, INC. VIFOR FRESENIUS MEDICAL CARE RENAL PHARMA LTD.

By:	By:
Name:	Name:
Title:	Title:
	By:
	Name:
	Title:

EX-10.2

Exhibit 10.2

CHEMOCENTRYX, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

(As Amended and Restated Effective March 1, 2017)

Non-employee members of the board of directors (the “Board”) of ChemoCentryx, Inc. (the “Company”) shall be eligible to receive cash and equity compensation as set forth in this Non-Employee Director Compensation Policy (this “Policy”). The cash and equity compensation described in this Policy shall be paid or be made, as applicable, automatically and without further action of the Board, to each member of the Board who is not an employee of the Company or any parent or subsidiary of the Company (each, a “Non-Employee Director”) who may be eligible to receive such cash or equity compensation, unless such Non-Employee Director declines the receipt of such cash or equity compensation by written notice to the Company. This Policy shall remain in effect until it is revised or rescinded by further action of the Board. The terms and conditions of this Policy shall supersede any prior cash or equity compensation arrangements between the Company and its Non-Employee Directors.

1. Cash Compensation.

(a) Annual Retainers. Each Non-Employee Director shall be eligible to receive an annual retainer of $42,500 for service on the Board. In addition, a Non-Employee Director shall receive the following additional annual retainers, as applicable:

(i) Lead Independent Director. A Non-Employee Director serving as Lead Independent Director shall receive an additional annual retainer of $25,000 for such service.

(ii) Chairperson of the Audit Committee. A Non-Employee Director serving as Chairperson of the Audit Committee shall receive an additional annual retainer of $20,000 for such service.

(iii) Member of the Audit Committee. A Non-Employee Director serving as a member of the Audit Committee (other than the Chairperson) shall receive an additional annual retainer of $10,000 for such service.

(iv) Chairperson of the Compensation Committee. A Non-Employee Director serving as Chairperson of the Compensation Committee shall receive an additional annual retainer of $15,000 for such service.

(v) Member of the Compensation Committee. A Non-Employee Director serving as a member of the Compensation Committee (other than the Chairperson) shall receive an additional annual retainer of $10,000 for such service.

(vi) Chairperson of the Nominating and Corporate Governance Committee. A Non-Employee Director serving as Chairperson of the Nominating and Corporate Governance Committee shall receive an additional annual retainer of $10,000 for such service.

(vii) Member of the Nominating and Corporate Governance Committee. A Non-Employee Director serving as a member of the Nominating and Corporate Governance Committee (other than the Chairperson) shall receive an additional annual retainer of $6,000 for such service.

(b) Payment of Retainers. The annual retainers described in Section 1(a) shall be earned on a quarterly basis based on a calendar quarter and shall be paid by the Company in arrears not later than the fifth business day following the end of each calendar quarter. In the event a Non-Employee Director does not serve as a Non-Employee Director, or in the applicable positions described in Section 1(a), for an entire calendar quarter, the retainer paid to such Non-Employee Director shall be prorated for the portion of such calendar quarter actually served as a Non-Employee Director, or in such positions, as applicable. Non-Employee Directors may elect to receive vested shares of common stock in lieu of the foregoing retainers on the date on which such retainers would otherwise have been paid in cash in accordance with the terms and conditions of the Company’s 2012 Equity Incentive Award Plan (the “Equity Plan”).

2. Equity Compensation. Non-Employee Directors shall be granted the equity awards described below. The awards described below shall be granted under and shall be subject to the terms and provisions of the Equity Plan and shall be granted subject to the execution and delivery of award agreements, including attached exhibits, in substantially the same forms previously approved by the Board, setting forth the vesting schedule applicable to such awards and such other terms as may be required by the Equity Plan.

(a) Initial Awards. A person who is initially elected or appointed to the Board following the Public Trading Date, and who is a Non-Employee Director at the time of such initial election or appointment, shall be automatically granted such number of restricted stock units (or, if so elected by a Non-Employee Director prior to the date of such initial election or appointment, shares of restricted common stock) on the date of such initial election or appointment as is determined by dividing (i) $175,000 by (ii) the Fair Market Value (as defined in the Equity Plan) per share of the Company’s common stock on the date of grant. The awards described in this Section 2(a) shall be referred to as “Initial Awards.” No Non-Employee Director shall be granted more than one Initial Award.

(b) Subsequent Awards. A person who is a Non-Employee Director immediately following each annual meeting of the Company’s stockholders and who will continue to serve as a Non-Employee Director immediately following such annual meeting shall be automatically granted such number of restricted stock units (or, if so elected by a Non-Employee Director prior to the date of such annual meeting, shares of restricted common stock) on the date of such annual meeting of the Company’s stockholders as is determined by dividing (i) $90,000 by (ii) the Fair Market Value per share of the Company’s common stock on the date of grant. The awards described in this Section 2(b) shall be referred to as “Subsequent Awards.” For the avoidance of doubt, a Non-Employee Director elected for the first time to the Board at an annual meeting of the Company’s stockholders shall only receive an Initial Award in connection with such election, and shall not receive any Subsequent Award on the date of such meeting as well.

(c) Termination of Employment of Employee Directors. Members of the Board who are employees of the Company or any parent or subsidiary of the Company who subsequently terminate their employment with the Company and any parent or subsidiary of the Company and remain on the Board will not receive an Initial Award pursuant to Section 2(a) above, but to the extent that they are otherwise eligible, will be eligible to receive, after termination from employment with the Company and any parent or subsidiary of the Company, Subsequent Awards as described in Section 2(b) above.

(d) Vesting of Awards Granted to Non-Employee Directors. Each Initial Award shall vest and become exercisable in three equal annual installments on each of the first three anniversaries of the date of grant, subject to the Non-Employee Director continuing in service on the Board through each such vesting date. Each Subsequent Award shall vest and/or become exercisable on the first anniversary of the date of grant, subject to the Non-Employee Director continuing in service on the Board through such vesting date. All of a Non-Employee Director’s Initial Awards and Subsequent Awards shall vest in full upon the occurrence of a Change in Control (as defined in the Equity Plan).

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Thomas J. Schall, Ph.D., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ChemoCentryx, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Thomas J. Schall, Ph.D.

Thomas J. Schall, Ph.D.

Chief Executive Officer

Date: May 10, 2017

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Susan M. Kanaya, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of ChemoCentryx, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Susan M. Kanaya

Susan M. Kanaya

Chief Financial and Administrative Officer

Date: May 10, 2017

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

In connection with the Quarterly Report on Form 10-Q of ChemoCentryx, Inc. (the “Company”) for the period ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Thomas J. Schall, Ph.D., as Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 10, 2017	/s/ Thomas J. Schall, Ph.D.
	Thomas J. Schall, Ph.D.
	Chief Executive Officer

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

In connection with the Quarterly Report on Form 10-Q of ChemoCentryx, Inc. (the “Company”) for the period ended March 31, 2017, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Susan M. Kanaya, as Chief Financial and Administrative Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 10, 2017	/s/ Susan M. Kanaya
	Susan M. Kanaya
	Chief Financial and Administrative Officer

The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 28, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	CCXI
Entity Registrant Name	ChemoCentryx, Inc.
Entity Central Index Key	0001340652
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		48,173,540

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 18,954	$ 12,024
Short-term investments	99,493	105,740
Accounts receivable		30,205
Prepaid expenses and other current assets	1,407	722
Total current assets	119,854	148,691
Property and equipment, net	984	905
Long-term investments	31,203	5,997
Other assets	330	279
Total assets	152,371	155,872
Current liabilities:
Accounts payable	819	671
Accrued liabilities	6,809	8,645
Deferred revenue	34,872	29,019
Total current liabilities	42,500	38,335
Deferred revenue	63,463	67,547
Other non-current liabilities	86	101
Total liabilities	106,049	105,983
Preferred stock:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding;
Common stock, $0.001 par value, 200,000,000 shares authorized at March 31, 2017 and December 31, 2016; 48,168,540 shares and 48,057,920 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively.	48	48
Additional paid-in capital	359,429	356,966
Note receivable	(16)	(16)
Accumulated other comprehensive loss	(84)	(50)
Accumulated deficit	(313,055)	(307,059)
Total stockholders' equity	46,322	49,889
Total liabilities and stockholders' equity	$ 152,371	$ 155,872

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	48,168,540	48,057,920
Common stock, shares outstanding	48,168,540	48,057,920

XML

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenue:
Collaboration and license revenue	$ 8,230
Total revenue	8,230
Operating expenses:
Research and development	9,970	$ 11,245
General and administrative	4,573	4,084
Total operating expenses	14,543	15,329
Loss from operations	(6,313)	(15,329)
Other income (expense):
Interest income	317	86
Total other income, net	317	86
Net loss	$ (5,996)	$ (15,243)
Basic and diluted net loss per common share	$ (0.12)	$ (0.34)
Shares used to compute basic and diluted net loss per common share	48,115	44,277

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Condensed Consolidated Statement of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (5,996)	$ (15,243)
Unrealized gain (loss) on available-for-salesecurities	(34)	56
Comprehensive loss	$ (6,030)	$ (15,187)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Operating activities
Net loss	$ (5,996)	$ (15,243)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation of property and equipment	98	86
Stock-based compensation	2,399	2,303
Noncash interest expense, net	44	89
Changes in assets and liabilities:
Accounts receivable	30,205
Prepaids and other current assets	(685)	(234)
Other assets	(51)
Accounts payable	148	619
Other liabilities	(1,851)	1,265
Deferred revenue	1,769
Net cash provided by (used in) operating activities	26,080	(11,115)
Investing activities
Purchases of property and equipment, net	(177)	(62)
Purchases of investments	(55,387)	(12,714)
Maturities of investments	36,350	24,278
Net cash provided by (used in) investing activities	(19,214)	11,502
Financing activities
Proceeds from exercise of stock options	361	210
Employees' tax withheld and paid for restricted stock units	(297)
Net cash provided by financing activities	64	210
Net increase in cash and cash equivalents	6,930	597
Cash and cash equivalents at beginning of period	12,024	12,823
Cash and cash equivalents at end of period	$ 18,954	$ 13,420

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Description of Business

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

1. Description of Business

ChemoCentryx, Inc. (the Company) commenced operations in 1997. The Company is a clinical-stage biopharmaceutical company focused on developing new medications targeted at inflammatory disorders, autoimmune diseases and cancer. The Company’s principal operations are in the United States and it operates in one segment.

Unaudited Interim Financial Information

The financial information filed is unaudited. The Condensed Consolidated Financial Statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for the fair statement of the results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. The December 31, 2016 Condensed Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America (GAAP). The results for interim periods are not necessarily indicative of the results for the entire year or any other interim period. The Condensed Consolidated Financial Statements should be read in conjunction with the Company’s financial statements and the notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on March 14, 2017.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Concentration of Credit Risk

The Company invests in a variety of financial instruments and, by its policy, limits the amount of credit exposure with any one issuer, industry or geographic area.

Accounts receivable are typically unsecured and are concentrated in the pharmaceutical industry and government sector. Accordingly, the Company may be exposed to credit risk generally associated with pharmaceutical companies and government funded entities. The Company has not historically experienced any significant losses due to concentration of credit risk.

Accounts receivable consists of the following (in thousands):

	March 31, 2017		December 31, 2016
Vifor (International) Ltd. (1)	$	—	$	30,000
U.S. Food and Drug Administration		—		205
	$	—	$	30,205

(1) As of December 31, 2016, accounts receivable excluded the additional $20.0 million cash commitment which is due from Vifor in December 2017 in connection with the CCX140 Agreement.

As of March 31, 2017, accounts receivable excluded the remaining $30.0 million cash commitments due from Vifor, $20.0 million of which is due in December 2017 in connection with the CCX140 Agreement and $10.0 million of which is due in February 2018 in connection with the territory expansion of the Avacopan Agreement. See Note 7, “Collaboration and License Agreements” for a detailed discussion.

Net Loss Per Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents.

Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and dilutive common stock equivalent shares outstanding for the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants, (ii) vesting of restricted stock units (RSUs) and restricted stock awards, and (iii) the purchase from contributions to the 2012 Employee Stock Purchase Plan (the ESPP), (calculated based on the treasury stock method), are only included in the calculation of diluted net loss per share when their effect is dilutive.

For the three months ended March 31, 2017 and 2016, the following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

	Three Months Ended March 31,
	2017		2016
Options to purchase common stock, including purchases from contributions to ESPP		10,646,551		9,239,472
Restricted stock units		565,345		292,481
Restricted stock awards		31,306		—
Warrants to purchase common stock		150,000		150,000
		11,393,202		9,681,953

Comprehensive Loss

Comprehensive loss comprises net loss and other comprehensive income (loss). For the periods presented other comprehensive income (loss) consists of unrealized gains and losses on the Company’s available-for-sale securities. For the three months ended March 31, 2017 and 2016, there were no sales of investments, and therefore there were no reclassifications.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standard Board (FASB) issued a comprehensive new standard on revenue from contracts with customers. The standard’s core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB voted to delay the effective date of the new standard by one year. The standard would become effective for the Company beginning in the first quarter of 2018. Early application would be permitted in 2017. Entities would have the option of using either a full retrospective or a modified retrospective approach to adopt this new guidance. In 2016, the FASB updated the guidance for reporting revenue gross versus net to improve the implementation guidance on principal versus agent considerations, and for identifying performance obligations and the accounting of intellectual property licenses. In addition, the FASB introduced practical expedients and made narrow scope improvements to the new accounting guidance.

The Company currently plans to adopt the accounting standard update on January 1, 2018, using the modified retrospective approach. The cumulative effect of adopting the accounting standard update will be recorded to retained earnings on January 1, 2018. The Company is currently at the early stages of analyzing its collaboration agreements to determine the differences in the accounting treatment under Accounting Standards Update (ASU) No.2014-09 compared to the current accounting treatment. During 2016, the Company entered into two license and collaboration agreements. The Company has primarily derived its revenues from license and collaboration agreements. The consideration the Company is eligible to receive under these agreements includes of upfront payments, research and development funding, milestone payments, and royalties. Each license and collaboration agreement is unique and will need to be assessed separately under the five-step process under the new standard. The new revenue recognition standard differs from the current accounting standard in many respects, such as in the accounting for variable considerations and the measurement of progress toward completion of performance obligations. While the Company has not completed an assessment of the impact of adoption, the adoption of ASU No. 2014-09 may have a material effect on its financial statements.

In February 2016, the FASB issued a new standard that requires all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for the Company on January 1, 2019. The Company is currently evaluating the impact of the adoption of this standard on its financial statements. However, the Company expects the adoption of this accounting guidance to result in an increase in lease assets and a corresponding increase in lease liabilities on its balance sheets.

In March 2016, the FASB issued ASU No. 2016-09—Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax consequences, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company adopted ASU No. 2016-09 on January 1, 2017. Under this guidance, on a prospective basis, companies will no longer record excess tax benefits and tax deficiencies from stock option exercises in additional paid-in capital (APIC). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. In addition, the guidance eliminates the requirement that excess tax benefits be realized before companies can recognize them. The ASU requires a cumulative-effect adjustment for previously unrecognized excess tax benefits in opening retained earnings in the annual period of adoption. As of January 1, 2017, the Company had an unrecognized excess tax benefit of $2.1 million. Upon adoption, the Company recognized this excess tax benefit as a deferred tax asset with a corresponding increase to the Company’s deferred tax asset valuation allowance. Additionally, as provided for under this new guidance, the Company elected to continue to estimate forfeitures. The adoption of this aspect of the guidance did not have a material impact on the Company’s financial statements.

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Cash Equivalents and Investments

3 Months Ended

Mar. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Cash Equivalents and Investments

3. Cash Equivalents and Investments

The amortized cost and fair value of cash equivalents and investments at March 31, 2017 and December 31, 2016 were as follows (in thousands):

	March 31, 2017
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Money market fund	$	9,650	$	—	$	—		$	9,650
U.S. treasury securities		67,701		—		(66	)		67,635
Commercial paper		29,239		—		—			29,239
Corporate debt securities		42,239		—		(18	)		42,221
Total available-for-sale securities	$	148,829	$	—	$	(84	)	$	148,745
Classified as:
Cash equivalents								$	18,049
Short-term investments									99,493
Long-term investments									31,203
Total available-for-sale securities								$	148,745
	December 31, 2016
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Money market fund	$	9,746	$	—	$	—		$	9,746
U.S. treasury securities		49,693		1		(22	)		49,672
Commercial paper		16,183		—		—			16,183
Corporate debt securities		45,911		—		(29	)		45,882
Total available-for-sale securities	$	121,533	$	1	$	(51	)	$	121,483
Classified as:
Cash equivalents								$	9,746
Short-term investments									105,740
Long-term investments									5,997
Total available-for-sale securities								$	121,483

Cash equivalents in the tables above exclude cash of $0.9 million and $2.3 million as of March 31, 2017 and December 31, 2016, respectively. All available-for-sale securities held as of March 31, 2017 had contractual maturities of less than two years. There have been no significant realized gains or losses on available-for-sale securities for the periods presented. No available-for-sale securities held as of March 31, 2017 have been in a continuous unrealized loss position for more than 12 months. As of March 31, 2017, unrealized losses on available-for-sale investments are not attributed to credit risk and are considered to be temporary. The Company believes that it is more-likely-than-not that investments in an unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. The Company believes it has no other-than-temporary impairments on its securities because it does not intend to sell these securities and it believes it is not more likely than not that it will be required to sell these securities before the recovery of their amortized cost basis. To date, the Company has not recorded any impairment charges on marketable securities related to other-than-temporary declines in market value.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The Company determines the fair value of financial assets and liabilities using three levels of inputs as follows:

Level 1—Inputs which include quoted prices in active markets for identical assets and liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements are as follows (in thousands) as of March 31, 2017 and December 31, 2016:

	March 31, 2017
Description	Level 1		Level 2		Level 3		Total
Money market fund	$	9,650	$	—	$	—		9,650
U.S. treasury securities		—		67,635		—		67,635
Commercial paper		—		29,239		—		29,239
Corporate debt securities		—		42,221		—		42,221
Total assets	$	9,650	$	139,095	$	—	$	148,745
	December 31, 2016
Description	Level 1		Level 2		Level 3		Total
Money market fund	$	9,746	$	—	$	—	$	9,746
U.S. treasury securities		—		49,672		—		49,672
Commercial paper		—		16,183		—		16,183
Corporate debt securities		—		45,882		—		45,882
Total assets	$	9,746	$	111,737	$	—	$	121,483

During the three months ended March 31, 2017, there were no transfers between Level 1 and Level 2 financial assets. When the Company uses observable market prices for identical securities that are traded in less active markets, the Company classifies its marketable debt instruments as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. The Company corroborates non-binding market consensus prices with observable market data using statistical models when observable market data exists. The discounted cash flow model uses observable market inputs, such as LIBOR-based yield curves, currency spot and forward rates, and credit ratings.

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Accrued Liabilities

3 Months Ended

Mar. 31, 2017

Payables and Accruals [Abstract]

Accrued Liabilities

5. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	March 31, 2017		December 31, 2016
Research and development related	$	4,098	$	5,482
Compensation related		1,245		2,460
Consulting and professional services		996		421
Other		470		282
	$	6,809	$	8,645

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Related-Party Transactions

3 Months Ended

Mar. 31, 2017

Related Party Transactions [Abstract]

Related-Party Transactions

6. Related-Party Transactions

Bio-Techne

Bio-Techne Corporation, formerly Techne Corporation, is one of the Company’s principal stockholders. In connection with the Company’s initial public offering (IPO) in February 2012, Bio-Techne received a warrant with a ten-year term to purchase 150,000 shares of the Company’s common stock at an exercise price per share equal to $20.00 per share, or 200% of the IPO price of its common stock, which was outstanding as of March 31, 2017. The Company had an accounts payable balance due to Bio-Techne for the purchases of research materials of $4,394 and $24,885 as of March 31, 2017 and December 31, 2016, respectively.

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Collaboration and License Agreements

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Collaboration and License Agreements

7. Collaboration and License Agreements

In May 2016, the Company entered into an exclusive collaboration and license agreement with Vifor (International) Ltd. (Vifor) pursuant to which the Company granted Vifor exclusive rights to commercialize avacopan in Europe and certain other markets (the Avacopan Agreement). Avacopan is the Company’s lead drug candidate for the treatment of patients with anti-neutrophil cytoplasmic auto-antibody associated vasculitis and other rare diseases. The Company retains control of ongoing and future development of avacopan (other than country-specific development in the licensed territories) and all commercialization rights to avacopan in the United States and China. The Avacopan Agreement also provides Vifor with an exclusive option to negotiate during 2016 a worldwide license agreement for one of the Company’s other drug candidates, CCX140, an orally administered inhibitor of the chemokine receptor known as CCR2.

In connection with the Avacopan Agreement, the Company received a non-refundable upfront payment of $85.0 million, comprising $60.0 million in cash and $25.0 million in the form of an equity investment to purchase 3,333,333 shares of the Company’s common stock at a price of $7.50 per share. The $85.0 million upfront consideration was initially allocated as of June 30, 2016 as follows:

• $7.0 million for the issuance of 3,333,333 shares of the Company’s common stock valued at $2.10 per share, the closing stock price on the effective date of the agreement, May 9, 2016.

• $12.5 million, which was creditable against an upfront fee payable by Vifor, should the parties enter into a worldwide license agreement for CCX140. The amount creditable decreased ratably into the fourth quarter of 2016. In October 2016, the amount creditable expired and was reclassified to the amortizable portion of deferred revenue as discussed below.

• The remaining upfront consideration of $65.5 million will be recognized over the estimated period of performance under the Avacopan Agreement, which approximates 4.2 years, ending in June 2020. The deliverables under the Avacopan Agreement consist of intellectual property licenses, development and regulatory services for the submission of the Marketing Authorization Application (MAA). The Company considered the provisions of the revenue recognition multiple-element arrangement guidance and concluded that the license and the development and regulatory activities for the submission of the MAA do not have stand-alone value because the rights conveyed to do not permit Vifor to perform all efforts necessary to use the Company’s technology to bring the compound through development and, upon regulatory approval, commercialization of the compound. Accordingly, the Company combined these deliverables and allocated the remaining upfront consideration of $65.5 million into a single unit of accounting.

Following the October 2016 expiration of the $12.5 million potentially creditable towards a CCX140 license agreement, such amount was reclassified to the amortizable portion of deferred revenue, which continues to be recognized over the estimated period of performance under the Avacopan Agreement ending in June 2020.

7. Collaboration and License Agreements (continued)

In February 2017, Vifor and the Company expanded the Vifor territories under the Avacopan Agreement to include all markets outside the United States and China (the Avacopan Amendment). The Company retains control of ongoing and future development of avacopan (other than country-specific development in the licensed territories), and all commercialization rights to avacopan in the United States and China. In connection with this arrangement, the Company received a $20.0 million upfront cash commitment for the expanded rights, $10.0 million of which was received in February 2017. The remaining $10.0 million is due in February 2018 and is not reflected in accounts receivable as of March 31, 2017. The February 2017 Avacopan Amendment and the original May 2016 Avacopan Agreement are accounted for as a combined agreement. The February 2017 Avacopan Amendment did not represent a material modification given among other factors, there were no changes to the Company’s deliverables under the arrangement. As such, the additional upfront commitment of $20.0 million under the Avacopan Amendment will be recognized over the remaining estimated period of performance ending in June 2020. For the three months ended March 31, 2017, the Company recognized $5.7 million of collaboration and license revenue under the Avacopan Agreement and the Avacopan Amendment.

Upon achievement of certain regulatory and commercial milestones with avacopan, the Company will receive additional payments of up to $510.0 million under the Avacopan Agreement. In addition, the Company will receive royalties, with rates ranging between the teens and mid-twenties, on future potential net sales of avacopan by Vifor in the licensed territories.

In December 2016, the Company entered into a second collaboration and license agreement with Vifor pursuant to which the Company granted Vifor exclusive rights to commercialize CCX140 (the CCX140 Agreement) in markets outside the U.S. and China,. CCX140 is an orally-administered inhibitor of the chemokine receptor known as CCR2. The Company retains marketing rights in the U.S. and China, while Vifor has commercialization rights in the rest of the world. Pursuant to the CCX140 Agreement, the Company will be responsible for the clinical development of CCX140 in rare renal diseases, while sharing the cost of such development with Vifor. Vifor retains an option to solely develop and commercialize CCX140 in more prevalent forms of chronic kidney disease (CKD). Should Vifor later exercise the CKD option, ChemoCentryx would receive co-promotion rights in CKD in the U.S.

Under the terms of the CCX140 Agreement, the Company received a non-refundable upfront commitment of $50.0 million, $30.0 million of which was received in January 2017. The remaining $20.0 million, which is due on the first anniversary of the CCX140 Agreement, was not reflected in accounts receivable as of March 31, 2017.

The upfront commitment of $50.0 million will be recognized over the estimated period of performance under the CCX140 Agreement, which approximates 5.0 years, ending in December 2021. The deliverables under the CCX140 Agreement consist of intellectual property licenses, development and regulatory services for the submission of the Marketing Authorisation Application (MAA). The Company considered the provisions of the revenue recognition multiple-element arrangement guidance and concluded that the license and the development and regulatory activities for the submission of the MAA do not have stand-alone value because the rights conveyed to do not permit Vifor to perform all efforts necessary to use the Company’s technology to bring the compound through development and, upon regulatory approval, commercialization of the compound. Accordingly, the Company combined these deliverables and allocated the upfront consideration of $50.0 million into a single unit of accounting. For the three months ended March 31, 2017, the Company recognized $2.5 million of collaboration and license revenue under the CCX140 Agreement.

Upon achievement of certain regulatory and commercial milestones with CCX140, the Company will receive additional payments of up to $625.0 million under the CCX140 Agreement. In addition, the Company will receive tiered double-digit royalties on net sales of CCX140 in the licensed territories.

Under the Avacopan Agreement and the CCX140 Agreement, the Company determined that future contingent payments related to regulatory milestones meet the definition of a substantive milestone under the accounting guidance. Accordingly, revenue for the achievement of these milestones will be recognized in the period when the milestone is achieved. The Company will be eligible to receive contingent payments related to commercial milestones based on the performance of Vifor and these payments are not considered to be milestones under the accounting guidance. These contingent commercial milestone payments will be included in the allocation of arrangement consideration if and when achieved, resulting in an accounting treatment similar to the upfront payment. As of March 31, 2017, the Company had not received any milestone payments under the Avacopan Agreement or the CCX140 Agreement. The Company expects to recognize royalty revenue in the period of sale of the related product, based on the underlying contract terms. The Avacopan Agreement and the CCX140 Agreement are accounted for as separate arrangements.

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Government Grant

3 Months Ended

Mar. 31, 2017

Text Block [Abstract]

Government Grant

8. Government Grant

In April 2016, the Company was awarded an Orphan Products Development grant by the U.S. Food and Drug Administration to support the clinical development of avacopan in the amount of $500,000, which was fully recognized and received as of March 31, 2017. The term of the grant expires in May 2017. During the three months ended March 31, 2017 and 2016, the Company did not recognize any grant revenue.

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Equity Incentive Plans

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Equity Incentive Plans

9. Equity Incentive Plans

Stock Options

During the three months ended March 31, 2017, the Company had the following option activities under its equity incentive plans:

				Outstanding Options
	Available for Grant			Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance at December 31, 2016		1,655,524			9,345,515		$	7.72
Shares authorized		1,900,000
Granted (1)		(1,660,466	)		1,458,200			6.71
Exercised (2)		40,208			(73,563	)		4.91
Forfeited and expired		119,685			(119,685	)		6.34
Balance at March 31, 2017		2,054,951			10,610,467		$	7.62		6.83	$	10,548,578

(1) The difference between shares granted in the number of shares available for grant and outstanding options represents the RSUs granted for the period.

(2) Shares presented as available for grant represents shares repurchased for tax withholding upon vesting of RSUs.

Restricted Stock

During the three months ended March 31, 2017, the activity for restricted stock is summarized as follows:

	Shares			Weighted Average Grant-Date Fair Value
Balance at December 31, 2016		471,650		$	4.60
Granted		202,266			6.62
Vested		(77,265	)		3.66
Canceled		—			—
Unvested at March 31, 2017		596,651		$	5.40

Stock-based Compensation

Total stock-based compensation expense was $2.4 million and $2.3 million during the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, $13.0 million, $2.3 million, and $0.1 million of total unrecognized compensation expenses associated with outstanding stock options, unvested restricted stock, and the ESPP, net of estimated forfeitures, were expected to be recognized over a weighted-average period of 2.68, 1.98, and 0.12 years, respectively.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Concentration of Credit Risk

Concentration of Credit Risk

The Company invests in a variety of financial instruments and, by its policy, limits the amount of credit exposure with any one issuer, industry or geographic area.

Accounts receivable are typically unsecured and are concentrated in the pharmaceutical industry and government sector. Accordingly, the Company may be exposed to credit risk generally associated with pharmaceutical companies and government funded entities. The Company has not historically experienced any significant losses due to concentration of credit risk.

Accounts receivable consists of the following (in thousands):

	March 31, 2017		December 31, 2016
Vifor (International) Ltd. (1)	$	—	$	30,000
U.S. Food and Drug Administration		—		205
	$	—	$	30,205

(1) As of December 31, 2016, accounts receivable excluded the additional $20.0 million cash commitment which is due from Vifor in December 2017 in connection with the CCX140 Agreement.

As of March 31, 2017, accounts receivable excluded the remaining $30.0 million cash commitments due from Vifor, $20.0 million of which is due in December 2017 in connection with the CCX140 Agreement and $10.0 million of which is due in February 2018 in connection with the territory expansion of the Avacopan Agreement. See Note 7, “Collaboration and License Agreements” for a detailed discussion.

Net Loss Per Share

Net Loss Per Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents.

Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and dilutive common stock equivalent shares outstanding for the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants, (ii) vesting of restricted stock units (RSUs) and restricted stock awards, and (iii) the purchase from contributions to the 2012 Employee Stock Purchase Plan (the ESPP), (calculated based on the treasury stock method), are only included in the calculation of diluted net loss per share when their effect is dilutive.

For the three months ended March 31, 2017 and 2016, the following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

	Three Months Ended March 31,
	2017		2016
Options to purchase common stock, including purchases from contributions to ESPP		10,646,551		9,239,472
Restricted stock units		565,345		292,481
Restricted stock awards		31,306		—
Warrants to purchase common stock		150,000		150,000
		11,393,202		9,681,953

Comprehensive Loss

Comprehensive Loss

Comprehensive loss comprises net loss and other comprehensive income (loss). For the periods presented other comprehensive income (loss) consists of unrealized gains and losses on the Company’s available-for-sale securities. For the three months ended March 31, 2017 and 2016, there were no sales of investments, and therefore there were no reclassifications.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standard Board (FASB) issued a comprehensive new standard on revenue from contracts with customers. The standard’s core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. On July 9, 2015, the FASB voted to delay the effective date of the new standard by one year. The standard would become effective for the Company beginning in the first quarter of 2018. Early application would be permitted in 2017. Entities would have the option of using either a full retrospective or a modified retrospective approach to adopt this new guidance. In 2016, the FASB updated the guidance for reporting revenue gross versus net to improve the implementation guidance on principal versus agent considerations, and for identifying performance obligations and the accounting of intellectual property licenses. In addition, the FASB introduced practical expedients and made narrow scope improvements to the new accounting guidance.

The Company currently plans to adopt the accounting standard update on January 1, 2018, using the modified retrospective approach. The cumulative effect of adopting the accounting standard update will be recorded to retained earnings on January 1, 2018. The Company is currently at the early stages of analyzing its collaboration agreements to determine the differences in the accounting treatment under Accounting Standards Update (ASU) No.2014-09 compared to the current accounting treatment. During 2016, the Company entered into two license and collaboration agreements. The Company has primarily derived its revenues from license and collaboration agreements. The consideration the Company is eligible to receive under these agreements includes of upfront payments, research and development funding, milestone payments, and royalties. Each license and collaboration agreement is unique and will need to be assessed separately under the five-step process under the new standard. The new revenue recognition standard differs from the current accounting standard in many respects, such as in the accounting for variable considerations and the measurement of progress toward completion of performance obligations. While the Company has not completed an assessment of the impact of adoption, the adoption of ASU No. 2014-09 may have a material effect on its financial statements.

In February 2016, the FASB issued a new standard that requires all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for the Company on January 1, 2019. The Company is currently evaluating the impact of the adoption of this standard on its financial statements. However, the Company expects the adoption of this accounting guidance to result in an increase in lease assets and a corresponding increase in lease liabilities on its balance sheets.

In March 2016, the FASB issued ASU No. 2016-09—Improvements to Employee Share-Based Payment Accounting, which is intended to simplify several aspects of the accounting for share-based payment award transactions, including the income tax consequences, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. The Company adopted ASU No. 2016-09 on January 1, 2017. Under this guidance, on a prospective basis, companies will no longer record excess tax benefits and tax deficiencies from stock option exercises in additional paid-in capital (APIC). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement. In addition, the guidance eliminates the requirement that excess tax benefits be realized before companies can recognize them. The ASU requires a cumulative-effect adjustment for previously unrecognized excess tax benefits in opening retained earnings in the annual period of adoption. As of January 1, 2017, the Company had an unrecognized excess tax benefit of $2.1 million. Upon adoption, the Company recognized this excess tax benefit as a deferred tax asset with a corresponding increase to the Company’s deferred tax asset valuation allowance. Additionally, as provided for under this new guidance, the Company elected to continue to estimate forfeitures. The adoption of this aspect of the guidance did not have a material impact on the Company’s financial statements.

Fair Value of Financial Assets and Liabilities

The Company determines the fair value of financial assets and liabilities using three levels of inputs as follows:

Level 1—Inputs which include quoted prices in active markets for identical assets and liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 When the Company uses observable market prices for identical securities that are traded in less active markets, the Company classifies its marketable debt instruments as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. The Company corroborates non-binding market consensus prices with observable market data using statistical models when observable market data exists. The discounted cash flow model uses observable market inputs, such as LIBOR-based yield curves, currency spot and forward rates, and credit ratings.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Summary of Accounts Receivable

Accounts receivable consists of the following (in thousands):

	March 31, 2017		December 31, 2016
Vifor (International) Ltd. (1)	$	—	$	30,000
U.S. Food and Drug Administration		—		205
	$	—	$	30,205

(1) As of December 31, 2016, accounts receivable excluded the additional $20.0 million cash commitment which is due from Vifor in December 2017 in connection with the CCX140 Agreement.

Potentially Dilutive Securities Excluded from Calculation of Diluted Net Loss per Share Due to Anti-Dilutive Effect

For the three months ended March 31, 2017 and 2016, the following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

	Three Months Ended March 31,
	2017		2016
Options to purchase common stock, including purchases from contributions to ESPP		10,646,551		9,239,472
Restricted stock units		565,345		292,481
Restricted stock awards		31,306		—
Warrants to purchase common stock		150,000		150,000
		11,393,202		9,681,953

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Cash Equivalents and Investments (Tables)

3 Months Ended

Mar. 31, 2017

Investments, Debt and Equity Securities [Abstract]

Amortized Cost and Fair Value of Cash Equivalents and Investments

The amortized cost and fair value of cash equivalents and investments at March 31, 2017 and December 31, 2016 were as follows (in thousands):

	March 31, 2017
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Money market fund	$	9,650	$	—	$	—		$	9,650
U.S. treasury securities		67,701		—		(66	)		67,635
Commercial paper		29,239		—		—			29,239
Corporate debt securities		42,239		—		(18	)		42,221
Total available-for-sale securities	$	148,829	$	—	$	(84	)	$	148,745
Classified as:
Cash equivalents								$	18,049
Short-term investments									99,493
Long-term investments									31,203
Total available-for-sale securities								$	148,745
	December 31, 2016
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Money market fund	$	9,746	$	—	$	—		$	9,746
U.S. treasury securities		49,693		1		(22	)		49,672
Commercial paper		16,183		—		—			16,183
Corporate debt securities		45,911		—		(29	)		45,882
Total available-for-sale securities	$	121,533	$	1	$	(51	)	$	121,483
Classified as:
Cash equivalents								$	9,746
Short-term investments									105,740
Long-term investments									5,997
Total available-for-sale securities								$	121,483

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements of Company's Financial Assets and Liabilities

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements are as follows (in thousands) as of March 31, 2017 and December 31, 2016:

	March 31, 2017
Description	Level 1		Level 2		Level 3		Total
Money market fund	$	9,650	$	—	$	—		9,650
U.S. treasury securities		—		67,635		—		67,635
Commercial paper		—		29,239		—		29,239
Corporate debt securities		—		42,221		—		42,221
Total assets	$	9,650	$	139,095	$	—	$	148,745
	December 31, 2016
Description	Level 1		Level 2		Level 3		Total
Money market fund	$	9,746	$	—	$	—	$	9,746
U.S. treasury securities		—		49,672		—		49,672
Commercial paper		—		16,183		—		16,183
Corporate debt securities		—		45,882		—		45,882
Total assets	$	9,746	$	111,737	$	—	$	121,483

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Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2017

Payables and Accruals [Abstract]

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	March 31, 2017		December 31, 2016
Research and development related	$	4,098	$	5,482
Compensation related		1,245		2,460
Consulting and professional services		996		421
Other		470		282
	$	6,809	$	8,645

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Equity Incentive Plans (Tables)

3 Months Ended

Mar. 31, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Option Activities under Its Equity Incentive Plans

During the three months ended March 31, 2017, the Company had the following option activities under its equity incentive plans:

				Outstanding Options
	Available for Grant			Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance at December 31, 2016		1,655,524			9,345,515		$	7.72
Shares authorized		1,900,000
Granted (1)		(1,660,466	)		1,458,200			6.71
Exercised (2)		40,208			(73,563	)		4.91
Forfeited and expired		119,685			(119,685	)		6.34
Balance at March 31, 2017		2,054,951			10,610,467		$	7.62		6.83	$	10,548,578

(1) The difference between shares granted in the number of shares available for grant and outstanding options represents the RSUs granted for the period.

(2) Shares presented as available for grant represents shares repurchased for tax withholding upon vesting of RSUs.

Restricted Stock Activity

During the three months ended March 31, 2017, the activity for restricted stock is summarized as follows:

	Shares			Weighted Average Grant-Date Fair Value
Balance at December 31, 2016		471,650		$	4.60
Granted		202,266			6.62
Vested		(77,265	)		3.66
Canceled		—			—
Unvested at March 31, 2017		596,651		$	5.40

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Description of Business - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2017 Segment
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of operating segment	1

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Summary of Significant Accounting Policies - Summary of Accounts Receivable (Detail) $ in Thousands	Dec. 31, 2016 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	$ 30,205
Vifor (International) Ltd [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	30,000
US Food and Drug Administration [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Accounts receivable	$ 205

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Summary of Significant Accounting Policies - Summary of Accounts Receivable (Parenthetical) (Detail) - Vifor (International) Ltd [Member] - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Cash commitment	$ 30.0
CCX140 Agreement [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Cash commitment	20.0	$ 20.0
Avacopan Agreement [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Cash commitment	$ 10.0

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Summary of Significant Accounting Policies - Potentially Dilutive Securities Excluded from Calculation of Diluted Net Loss per Share Due to Anti-Dilutive Effect (Detail) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	11,393,202	9,681,953
Options to Purchase Common Stock, Including Purchases from Contributions to ESPP [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	10,646,551	9,239,472
Unvested Restricted Stock Units (RSUs) [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	565,345	292,481
Restricted Stock Awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	31,306
Warrants to Purchase Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share	150,000	150,000

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Jan. 01, 2017
Accounting Policies [Abstract]
Reclassification adjustment from accumulated other comprehensive income for unrealized gain (loss) realized upon the sale of available-for-sale securities	$ 0	$ 0
Unrecognized excess tax benefit			$ 2,100,000

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Cash Equivalents and Investments - Amortized Cost and Fair Value of Cash Equivalents and Investments (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 148,829	$ 121,533
Gross Unrealized Gains		1
Gross Unrealized Losses	(84)	(51)
Available-for-sale Securities	148,745	121,483
Money Market Fund [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	9,650	9,746
Available-for-sale Securities	9,650	9,746
U.S. Treasury Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	67,701	49,693
Gross Unrealized Gains		1
Gross Unrealized Losses	(66)	(22)
Available-for-sale Securities	67,635	49,672
Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	29,239	16,183
Available-for-sale Securities	29,239	16,183
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	42,239	45,911
Gross Unrealized Losses	(18)	(29)
Available-for-sale Securities	$ 42,221	$ 45,882

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Cash Equivalents and Investments - Amortized Cost and Fair Value of Cash Equivalents and Investments 2 (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Cash and Cash Equivalents [Abstract]
Cash equivalents	$ 18,049	$ 9,746
Short-term investments	99,493	105,740
Long-term investments	31,203	5,997
Available-for-sale Securities	$ 148,745	$ 121,483

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Cash Equivalents and Investments - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2017 USD ($) Investment	Dec. 31, 2016 USD ($)
Cash and Cash Equivalents [Abstract]
Maturity period available-for-sale securities	Less than two years
Significant realized gains or losses on available-for-sale securities	$ 0
Cash	$ 900,000	$ 2,300,000
Number of available-for-sale securities in a continuous unrealized loss position for more than 12 months | Investment	0

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Fair Value Measurements - Fair Value Measurements of Company's Financial Assets and Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 148,745	$ 121,483
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	148,745	121,483
Money Market Fund [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	9,650	9,746
Money Market Fund [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	9,650	9,746
U.S. Treasury Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	67,635	49,672
U.S. Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	67,635	49,672
Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	29,239	16,183
Commercial Paper [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	29,239	16,183
Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	42,221	45,882
Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	42,221	45,882
Level 1 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	9,650	9,746
Level 1 [Member] | Money Market Fund [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	9,650	9,746
Level 2 [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	139,095	111,737
Level 2 [Member] | U.S. Treasury Securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	67,635	49,672
Level 2 [Member] | Commercial Paper [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	29,239	16,183
Level 2 [Member] | Corporate Debt Securities [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 42,221	$ 45,882

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Fair Value Measurements - Additional Information (Detail)	Mar. 31, 2017 USD ($)
Fair Value Disclosures [Abstract]
Transfers from Level 1 to Level 2 financial assets	$ 0
Transfers from Level 2 to Level 1 financial assets	$ 0

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Accrued Liabilities - Accrued Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Research and development related	$ 4,098	$ 5,482
Compensation related	1,245	2,460
Consulting and professional services	996	421
Other	470	282
Accrued liabilities	$ 6,809	$ 8,645

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Related-Party Transactions - Additional Information (Detail) - USD ($)	1 Months Ended
	Feb. 29, 2012	Mar. 31, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Accounts payable balance		$ 819,000	$ 671,000
Bio-Techne Corporation [Member]
Related Party Transaction [Line Items]
Warrant contractual term	10 years
Purchase of warrant common stock	150,000
Warrants to purchase common stock, exercise price	$ 20.00
Warrant common stock exercise price rate	200.00%
Accounts payable balance		$ 4,394	$ 24,885

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Collaboration and License Agreements - Additional Information (Detail) - USD ($)			1 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended
	Jan. 31, 2017	May 09, 2016	Feb. 28, 2017	May 31, 2016	Mar. 31, 2017	Jun. 30, 2016	Dec. 31, 2016	Oct. 31, 2016
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Collaboration and license revenue					$ 8,230,000
Avacopan Agreement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Non refundable upfront payments received				$ 85,000,000
Non refundable upfront payment received in cash				60,000,000
Non refundable upfront payment received in equity investment				$ 25,000,000
Share price of common stock in equity investment				$ 7.50
Non refundable upfront payment received in equity investment, shares				3,333,333
Non refundable upfront payments allocated for issuance of common stock		$ 7,000,000
Issuance of common stock, per share value		$ 2.10
Creditable upfront fee for CCX140 Agreement						$ 12,500,000
Non refundable upfront payments allocated for development and regulatory activities.						$ 65,500,000
Estimated period of performance						4 years 2 months 12 days
Amount of upfront fee expired								$ 12,500,000
Upfront cash commitment			$ 20,000,000
Upfront cash commitment received			$ 10,000,000
Non refundable upfront payment not reflected in accounts receivable					10,000,000
Additional Upfront cash commitment					20,000,000
Collaboration and license revenue					5,700,000
Milestone payments received					$ 0
CCX140 Agreement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Estimated period of performance					5 years
Upfront cash commitment received	$ 30,000,000
Non refundable upfront payment not reflected in accounts receivable					$ 20,000,000
Collaboration and license revenue					2,500,000
Non refundable upfront commitment					$ 50,000,000
Maximum [Member] | Avacopan Agreement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential milestone payments receivable						$ 510,000,000
Maximum [Member] | CCX140 Agreement [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Potential milestone payments receivable							$ 625,000,000

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Government Grant - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Government Grants [Abstract]
Orphan products development grant	$ 500,000
Grant revenue	$ 0	$ 0

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Equity Incentive Plans - Option Activities under Its Equity Incentive Plans (Detail)	3 Months Ended
	Mar. 31, 2017 USD ($) $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Shares Available for Grant, Outstanding Beginning Balance	1,655,524
Available for Grant, Shares authorized	1,900,000
Shares Available for Grant, Granted	(1,660,466)
Shares Available for Grant, Exercised	40,208
Shares Available for Grant, Forfeited and expired	119,685
Shares Available for Grant, Outstanding Ending Balance	2,054,951
Shares, Options Outstanding, Beginning Balance	9,345,515
Shares, Options Outstanding, authorized	0
Shares, Options Outstanding, Granted	1,458,200
Shares, Options Outstanding, Exercised	(73,563)
Shares, Options Outstanding, Forfeited and expired	(119,685)
Shares, Options Outstanding, Ending Balance	10,610,467
Weighted Average Exercise Price, Options Outstanding, Beginning Balance | $ / shares	$ 7.72
Weighted Average Exercise Price, Options Outstanding, Shares authorized | $ / shares	0
Weighted Average Exercise Price, Options Outstanding, Granted | $ / shares	6.71
Weighted Average Exercise Price, Options Outstanding, Exercised | $ / shares	4.91
Weighted Average Exercise Price, Options Outstanding, Forfeited and expired | $ / shares	6.34
Weighted Average Exercise Price, Options Outstanding, Ending Balance | $ / shares	$ 7.62
Options Outstanding, Weighted Average Remaining Contractual Term	6 years 9 months 29 days
Aggregate Intrinsic Value, Outstanding | $	$ 10,548,578

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Equity Incentive Plans - Restricted Stock Activity (Detail) - Restricted Stocks [Member]	3 Months Ended
	Mar. 31, 2017 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Unvested, Beginning Balance | shares	471,650
Shares, Granted | shares	202,266
Shares, Vested | shares	(77,265)
Shares, Canceled | shares	0
Shares, Unvested, Ending Balance | shares	596,651
Weighted Average Grant-Date Fair Value, Unvested, Beginning Balance | $ / shares	$ 4.60
Weighted Average Grant-Date Fair Value, Granted | $ / shares	6.62
Weighted Average Grant-Date Fair Value, Vested | $ / shares	3.66
Weighted Average Grant-Date Fair Value, Canceled | $ / shares	0
Weighted Average Grant-Date Fair Value, Unvested, Ending Balance | $ / shares	$ 5.40

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Equity Incentive Plans - Stock Options - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation	$ 2,399	$ 2,303
ESPP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expenses	$ 100
Total unrecognized compensation expenses, weighted-average period	1 month 13 days
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expenses	$ 13,000
Total unrecognized compensation expenses, weighted-average period	2 years 8 months 5 days
Unvested Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expenses	$ 2,300
Total unrecognized compensation expenses, weighted-average period	1 year 11 months 23 days