SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2024

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

The Company has evaluated events and transactions occurring after the balance sheet date through the filing date of this Quarterly Report on Form 10-Q with the SEC, to ensure that the unaudited condensed consolidated financial statements include appropriate disclose of events both recognized in the accompanying unaudited condensed consolidated financial statements as of June 30, 2024, and events which occurred subsequently but were not recognized in the consolidated financial statements. The Company has concluded that no subsequent events have occurred that require disclosure other than the following:

CSL Vifor Termination and Settlement Agreement

On July 10, 2024, the Company and CSL Vifor entered into the Vifor Termination Agreement, pursuant to which, the Company and CSL Vifor agreed, among other things, to terminate, effective immediately, the Vifor License Agreement, pursuant to which the Company granted to CSL Vifor an exclusive license to sell Vafseo to the Supply Group in the U.S.

Under the Vifor License Agreement, CSL Vifor contributed $40.0 million to the Working Capital Fund, established to partially fund the Company’s costs of purchasing Vafseo from its contract manufacturers. Pursuant to the terms of the Vifor Termination Agreement, and generally consistent with the terms of the Vifor License Agreement, as amended, the Company has agreed to repay the Working Capital Fund to CSL Vifor through the WCF Royalty Payments. The WCF Royalty Payments will commence on July 1, 2025, and will continue until the earlier of (i) the cumulative total of the WCF Royalty Payments equals $40.0 million, or (ii) May 31, 2028. See Note 8, Deferred Revenue, Refund Liability and Liability Related to Sale of Future Royalties, for further information on the repayment of the Working Capital Fund.

In addition, the Company will pay CSL Vifor decreasing quarterly tiered royalty payments ranging from a high single-digit percentage of the Company’s net sales of Vafseo up to $450.0 million to mid-single digit percentage of the Company’s net sales of Vafseo above $450.0 million, in each case, in the U.S. during a calendar year, or the Settlement Royalty Payments. The Settlement Royalty Payments will commence upon the first sale of Vafseo by the Company, its affiliates or third-party licensees to a third party for use in the U.S., and will continue until the later of the (i) expiration of the last-to-expire valid claim listed in the FDA Orange Book that would be infringed by the making, using, selling or importing of Vafseo in the U.S. or (ii) the expiration of marketing or regulatory exclusivity for Vafseo in the U.S., or the Settlement Royalty Term. Beginning on July 1, 2027 and throughout the Settlement Royalty Term, the Company has the option to make a one-time payment to CSL Vifor, or the Royalty Buy-Down Option, upon which the Settlement Royalty Payments will be adjusted as of the date of exercise of the Royalty Buy-Down Option such that the Company will then only pay CSL Vifor quarterly royalty payments based on a mid-single digit percentage of the Company’s net sales of Vafseo up to $450.0 million in the U.S. during a calendar year in lieu of the above Settlement Royalty Payments. If the Company exercises the Royalty Buy-Down Option, the WCF Royalty Payments will continue as described above.

The WCF Royalty Payments, the Settlement Royalty Payments and the Royalty Buy-Down Option are in consideration for the termination of the Vifor License Agreement and all obligations thereunder, and the covenants and agreements set forth in the Vifor Termination Agreement, including the settlement and release of all disputes and claims arising from the Vifor License Agreement.

Amendment to BlackRock Credit Agreement

On July 10, 2024, in connection with the Vifor Termination Agreement, the Company and Kreos entered into the BlackRock Credit Amendment. The BlackRock Credit Amendment includes certain covenants of the Company related to the Vifor Termination Agreement.

See Note 7, Indebtedness, for further information about the BlackRock Credit Agreement.