Cara Therapeutics Inc

Previous wording

On February 1, 2024, we received a letter from The Nasdaq Stock Market, or Nasdaq, notifying us that, for the previous 30 consecutive business day periods prior to the date of the letter, the closing bid price for our common stock was below $1.00. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial period of 180 calendar days, or until July 30, 2024, to regain compliance with Nasdaq’s bid price requirement. On July 31, 2024, we received a notice, or the Extension Notice, from the Listing Qualifications Department of Nasdaq informing us that Nasdaq granted us an additional 180 calendar days, or until January 27, 2025, to regain compliance with the minimum closing bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2), or the Rule. In connection with the Extension Notice, the listing of our common stock was transferred from the Nasdaq Global Market to the Nasdaq Capital Market, effective as of August 1, 2024. The Extension Notice has no other immediate effect on the listing of the Company’s common stock.

Current wording

On February 1, 2024, we received a letter from The Nasdaq Stock Market, or Nasdaq, notifying us that, for the previous 30 consecutive business day periods prior to the date of the letter, the closing bid price for our common stock was below $1.00. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial period of 180 calendar days, or until July 30, 2024, to regain compliance with Nasdaq’s bid price requirement. On July 31, 2024, we received a notice, or the Extension Notice, from the Listing Qualifications Department of Nasdaq informing us that Nasdaq granted us an additional 180 calendar days, or until January 27, 2025, to regain compliance with the minimum closing bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2), or the Rule. In connection with the Extension Notice, the listing of our common stock was transferred from the Nasdaq Global Market to the Nasdaq Capital Market, effective as of August 1, 2024. The Extension Notice had no other immediate effect on the listing of the Company’s common stock.

Previous wording

We intend to continue actively monitor the bid price for our common stock between now and January 27, 2025, and will consider available options to resolve the deficiency and regain compliance with the Rule. These options include, but are not limited to, effecting a reverse stock split, if necessary, to attempt to regain compliance. If we do not regain compliance within the additional compliance period, Nasdaq will provide notice that our common stock will be subject to delisting. We would then be entitled to appeal that determination to a Nasdaq hearings panel. There is no assurance, however, that the Company will regain compliance with the Rule or that our common stock will not be delisted from Nasdaq.

Current wording

We intend to continue to actively monitor the bid price for our common stock between now and January 27, 2025, and will consider available options to resolve the deficiency and regain compliance with the Rule. These options include, but are not limited to, effecting a reverse stock split, if necessary, to attempt to regain compliance. If we do not regain compliance within the additional compliance period, Nasdaq will provide notice that our common stock will be subject to delisting. We would then be entitled to appeal that determination to a Nasdaq hearings panel. There is no assurance, however, that the Company will regain compliance with the Rule or that our common stock will not be delisted from Nasdaq.

Previous wording

For the three months ended June 30, 2024, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately negative $2.7 million, which resulted in our profit share amount of negative $1.4 million. For the three months ended June 30, 2023, CSL Vifor recorded net sales of $11.4 million, which resulted in our profit share amount of $5.4 million. The negative net sales reported by CSL Vifor was primarily due to higher rebates and chargebacks due to price decreases on KORSUVA injection related to the expiration of TDAPA in April 2024. Based on the terms of the agreement, the negative profit will be offset against net profits in future periods. However, we have recorded a liability in accrued professional fees and other within accounts payable and accrued expenses for $1.4 million and a corresponding expense in other general and administrative, or G&A, expense as a result of the negative profit share amount in the second quarter of 2024. For the six months ended June 30, 2024, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately negative $0.9 million. For the six months ended June 30, 2023, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately $17.1 million. For the six months ended June 30, 2024 and 2023, we recorded associated collaborative revenue of $0.8 million and $8.2 million, respectively. As a result of the final CY 2024 rule, we expect no meaningful revenue contribution from KORSUVA injection following the TDAPA period expiration.

Current wording

For the three months ended September 30, 2024, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately $3.0 million, which resulted in our profit share amount of $1.3 million. For the three months ended September 30, 2023, CSL Vifor recorded net sales of $4.4 million, which resulted in our profit share amount of $1.9 million. For the nine months ended September 30, 2024, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately $2.1 million, which included negative net sales reported by CSL Vifor for the second quarter of 2024 primarily due to higher rebates and chargebacks due to price decreases on KORSUVA injection related to the expiration of TDAPA in April 2024. For the nine months ended September 30, 2023, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately $21.5 million. For the nine months ended September 30, 2024 and 2023, we recorded associated collaborative revenue of $2.1 million and $10.1 million, respectively. However, we have recorded an expense in other general and administrative, or G&A, expense for approximately $1.4 million for the nine months ended September 30, 2024 as a result of the negative profit share amount in the second quarter of 2024. As a result of the final CY 2024 rule, we expect no meaningful revenue contribution from KORSUVA injection following the TDAPA period expiration.

Previous wording

In April 2022, the European Commission granted a marketing authorization to difelikefalin injection under the brand name Kapruvia for the treatment of moderate-to-severe pruritus associated with advanced CKD in adult hemodialysis patients. The marketing authorization approves Kapruvia for use in all member states of the EU, as well as Iceland, Liechtenstein, and Norway. Difelikefalin injection was also approved in the UK (04/2022) and Switzerland (08/2022) under the brand name Kapruvia as well as Singapore (08/2022), Canada (08/2022), Australia (11/2022), UAE (01/2023), Kuwait (05/2023), Israel (06/2023), Japan (09/2023), and Saudi Arabia (01/2024) under the brand name KORSUVA injection. For the three and six months ended June 30, 2023, we recorded royalty revenue of approximately $123,000 and $248,000, respectively, which represented our royalties on net sales of Kapruvia.

Current wording

In April 2022, the European Commission granted a marketing authorization to difelikefalin injection under the brand name Kapruvia for the treatment of moderate-to-severe pruritus associated with advanced CKD in adult hemodialysis patients. The marketing authorization approves Kapruvia for use in all member states of the EU, as well as Iceland, Liechtenstein, and Norway. Difelikefalin injection was also approved in the UK (04/2022) and Switzerland (08/2022) under the brand name Kapruvia as well as Singapore (08/2022), Canada (08/2022), Australia (11/2022), UAE (01/2023), Kuwait (05/2023), Israel (06/2023), Japan (09/2023), and Saudi Arabia (01/2024) under the brand name KORSUVA injection. For the three and nine months ended September 30, 2023, we recorded royalty revenue of approximately $167,000 and $415,000, respectively, which represented our royalties on net sales of Kapruvia.

Previous wording

During the fourth quarter of 2023, we entered into a Purchase and Sale Agreement, or the HCR Agreement, with HCRX Investments Holdco, L.P. and Healthcare Royalty Partners IV, L.P., or collectively HCR, pursuant to which HCR will receive current and future royalty and milestone payments for Kapruvia and KORSUVA (ex-U.S. only) up to certain capped amounts in exchange for certain payments made to us. As a result, there was no royalty revenue recorded for the three and six months ended June 30, 2024. However, we recorded other revenue of approximately $1.0 million and $1.6 million for the three and six months ended June 30, 2024, respectively, of which approximately $0.4 million and $0.6 million, respectively, related to CSL Vifor royalties to be paid to HCR under this agreement (see “Royalty Purchase and Sale Agreement” below).

Current wording

During the fourth quarter of 2023, we entered into a Purchase and Sale Agreement, or the HCR Agreement, with HCRX Investments Holdco, L.P. and Healthcare Royalty Partners IV, L.P., or collectively HCR, pursuant to which HCR will receive current and future royalty and milestone payments for Kapruvia and KORSUVA (ex-U.S. only) up to certain capped amounts in exchange for certain payments made to us. As a result, there was no royalty revenue recorded for the three and nine months ended September 30, 2024. However, we recorded other revenue of approximately $1.3 million and $2.9 million for the three and nine months ended September 30, 2024, respectively, of which approximately $0.4 million and $1.1 million, respectively, related to CSL Vifor royalties to be paid to HCR under this agreement (see “Royalty Purchase and Sale Agreement” below).

Previous wording

million, respectively, related to Maruishi royalties to be paid to HCR under this agreement (see “Royalty Purchase and Sale Agreement” below). There was no other revenue recorded for the three and six months ended June 30, 2023 as the HCR Agreement was not entered into until the fourth quarter of 2023.

Current wording

During the fourth quarter of 2023, we entered into the HCR Agreement where we sold our future royalties and milestones for KORSUVA in Japan to HCR. For the three and nine months ended September 30, 2024, we recorded other revenue of approximately $1.3 million and $2.9 million, respectively, of which approximately $0.8 million and $1.8 million, respectively, related to Maruishi royalties to be paid to HCR under this agreement (see “Royalty Purchase and Sale Agreement” below). There was no other revenue recorded for the three and nine months ended September 30, 2023 as the HCR Agreement was not entered into until the fourth quarter of 2023.

Previous wording

In April 2022, our partner CSL Vifor initiated the commercialization of KORSUVA injection in the United States. The launch was initially driven by independent and mid-size dialysis organizations coupled with product stocking at the wholesaler level. In the third quarter of 2022, large dialysis organizations, or LDOs, came on-line driving a significant quarter-to-quarter increase in order volume from the wholesaler. This stocking at the clinic level, particularly from Fresenius Medical Care, or FMC, resulted in significant subsequent quarterly revenue fluctuations. In the third quarter of 2023, FMC decided to reallocate all remaining clinic level inventory within its network of clinics resulting in limited revenues in the fourth quarter of 2023 and during the three months ended March 31, 2024 and no revenue in the three months ended June 30, 2024.

Current wording

In April 2022, our partner CSL Vifor initiated the commercialization of KORSUVA injection in the United States. The launch was initially driven by independent and mid-size dialysis organizations coupled with product stocking at the wholesaler level. In the third quarter of 2022, large dialysis organizations, or LDOs, came on-line driving a significant quarter-to-quarter increase in order volume from the wholesaler. This stocking at the clinic level, particularly from Fresenius Medical Care, or FMC, resulted in significant subsequent quarterly revenue fluctuations. In the third quarter of 2023, FMC decided to reallocate all remaining clinic level inventory within its network of clinics resulting in limited revenues in the fourth quarter of 2023 and the nine months ended September 30, 2024.

Previous wording

During the fourth quarter of 2023, we entered into the HCR Agreement where we sold our current and future royalties and milestone payments for Kapruvia and KORSUVA injection to HCR. For the three and six months ended June 30, 2024, we recorded other revenue of approximately $1.0 million and $1.6 million, respectively, of which approximately $0.4 million and $0.6 million, respectively, related to CSL Vifor royalties to be paid to HCR under this agreement and approximately $0.6 million and $1.0 million, respectively, related to Maruishi royalties to be paid to HCR under this agreement (see “Royalty Purchase and Sale Agreement” below).

Current wording

During the fourth quarter of 2023, we entered into the HCR Agreement where we sold our current and future royalties and milestone payments for Kapruvia and KORSUVA injection to HCR. For the three and nine months ended September 30, 2024, we recorded other revenue of approximately $1.3 million and $2.9 million, respectively, of which approximately $0.4 million and $1.1 million, respectively, related to CSL Vifor royalties to be paid to HCR under this agreement and approximately $0.8 million and $1.8 million, respectively, related to Maruishi royalties to be paid to HCR under this agreement (see “Royalty Purchase and Sale Agreement” below).

Previous wording

We are also eligible for sales-based or regulatory milestone payments, which could be earned in the future in accordance with certain licensing agreements and would be subject to the HCR Agreement for ex-U.S. milestone payments. For the three and six months ended June 30, 2024 and 2023, we did not record any sales-based or regulatory milestone revenue.

Current wording

We are also eligible for sales-based or regulatory milestone payments, which could be earned in the future in accordance with certain licensing agreements and would be subject to the HCR Agreement for ex-U.S. milestone payments. For the three and nine months ended September 30, 2024 and 2023, we did not record any sales-based or regulatory milestone revenue.

Previous wording

Under the terms of the HCR Agreement, Cara received an initial payment of $17.5 million less certain transaction costs in November 2023. In December 2023, we received an additional $20.0 million less certain advisory fees, upon satisfying the milestone event for pricing of Kapruvia® (difelikefalin) in Germany being approved above a certain threshold amount per dose. The terms of the HCR Agreement also provide for an additional $2.5 million milestone payment to Cara Royalty Sub upon achievement of a 2024 sales milestone of KORSUVA in Japan.

Current wording

Under the terms of the HCR Agreement, Cara received an initial payment of $17.5 million less certain transaction costs in November 2023. In December 2023, we received an additional $20.0 million less certain advisory fees, upon satisfying the milestone event for pricing of Kapruvia® (difelikefalin) in Germany being approved above a certain threshold amount per dose. The terms of the HCR Agreement also provide for an additional $2.5 million milestone payment to Cara Royalty Sub upon achievement of a 2024 sales milestone of KORSUVA in Japan. As of the date of this filing, we expect to achieve this milestone in the fourth quarter of 2024.

Previous wording

The HCR Agreement will automatically expire, and the payment of Royalties to HCR will cease, when HCR has received payments of Royalties equal to two times the aggregate amount of payments made by HCR under the HCR Agreement if achieved on or prior to December 31, 2029, or 2.8 times the aggregate amount of payments made by HCR under the HCR Agreement, if not achieved on or prior to December 31, 2029. In the event of a change of control, Cara Royalty Sub will pay to HCR an amount equal to 2.8 times the aggregate amount of payments made by HCR less the total net amounts paid by Cara Royalty Sub to HCR as of the effective date of control. In certain situations, Cara Royalty Sub would not be obligated to pay the change of control payment to HCR. After the HCR Agreement expires, all rights to receive the Royalties return to Cara Royalty Sub. During the three and six months ended June 30, 2024, approximately $0.6 million and $1.3 million, respectively, was repaid to HCR under the HCR Agreement.

Current wording

The HCR Agreement will automatically expire, and the payment of Royalties to HCR will cease, when HCR has received payments of Royalties equal to two times the aggregate amount of payments made by HCR under the HCR Agreement if achieved on or prior to December 31, 2029, or 2.8 times the aggregate amount of payments made by HCR under the HCR Agreement, if not achieved on or prior to December 31, 2029. In the event of a change of control, Cara Royalty Sub will pay to HCR an amount equal to 2.8 times the aggregate amount of payments made by HCR less the total net amounts paid by Cara Royalty Sub to HCR as of the effective date of control. In certain situations, Cara Royalty Sub would not be obligated to pay the change of control payment to HCR. After the HCR Agreement expires, all rights to receive the Royalties return to Cara Royalty Sub. During the three and nine months ended September 30, 2024, approximately $0.7 million and $2.0 million, respectively, was repaid to HCR under the HCR Agreement.

Previous wording

annual net sales, as defined, of KORSUVA (difelikefalin) injection in the licensed territories. In the United States, CSL Vifor will promote KORSUVA (difelikefalin) injection in the dialysis clinics of FMCNA under a profit-sharing arrangement (subject to the terms and conditions of this agreement) based on net FMCNA clinic sales) and Vifor Fresenius Medical Care Renal Pharma Ltd. is entitled to 50% of such net profits, subject to potential adjustments in a calendar year based on certain conditions. During the fourth quarter of 2023, we entered into the HCR Agreement pursuant to which we sold our future royalties and milestone payments under this agreement to HCR (see “Royalty Purchase and Sale Agreement” above).

Current wording

We are eligible to receive from CSL Vifor commercial milestone payments in the aggregate of up to $440.0 million, all of which milestones are sales related. We are also eligible to receive tiered double-digit royalty payments based on annual net sales, as defined, of KORSUVA (difelikefalin) injection in the licensed territories. In the United States, CSL Vifor will promote KORSUVA (difelikefalin) injection in the dialysis clinics of FMCNA under a profit-sharing arrangement (subject to the terms and conditions of this agreement) based on net FMCNA clinic sales) and Vifor Fresenius Medical Care Renal Pharma Ltd. is entitled to 50% of such net profits, subject to potential adjustments in a calendar year based on certain conditions. During the fourth quarter of 2023, we entered into the HCR Agreement pursuant to which we sold our future royalties and milestone payments under this agreement to HCR (see “Royalty Purchase and Sale Agreement” above).

Previous wording

We are also obligated, pursuant to the Enteris License Agreement, to pay Enteris (1) milestone payments upon the achievement of certain development, regulatory and commercial milestones and (2) low-single digit royalty percentages on net sales of licensed products, subject to reductions in specified circumstances. Until the second anniversary of the entry into the Enteris License Agreement, we had the right, but not the obligation, to terminate our obligation to pay any royalties under the Royalty Buyout. We did not exercise our Royalty Buyout right and such right expired in August 2021. During the three and six months ended June 30, 2024 and 2023, no milestone payments or royalties were paid to Enteris by us in relation to the Enteris License Agreement.

Current wording

We are also obligated, pursuant to the Enteris License Agreement, to pay Enteris (1) milestone payments upon the achievement of certain development, regulatory and commercial milestones and (2) low-single digit royalty percentages on net sales of licensed products, subject to reductions in specified circumstances. Until the second anniversary of the entry into the Enteris License Agreement, we had the right, but not the obligation, to terminate our obligation to pay any royalties under the Royalty Buyout. We did not exercise our Royalty Buyout right and such right expired in August 2021. During the three and nine months ended September 30, 2024 and 2023, no milestone payments or royalties were paid to Enteris by us in relation to the Enteris License Agreement.

Previous wording

The MSA has an initial term ending December 31, 2024, and will automatically renew after the initial term for successive terms of two years each if there is a Product Agreement in effect, unless either party gives notice of its intention to terminate the MSA at least 18 months prior to the end of the then current term.

Current wording

The MSA had an initial term ending December 31, 2024, which automatically renewed after the initial term for successive terms of two years until December 31, 2026.

Previous wording

In December 2023, we entered into an agreement with Patheon to reimburse Patheon approximately $1.7 million for forecasted manufacturing commitments that are no longer needed due to the reduced demand expectations of KORSUVA in the United States. As of June 30, 2024, $0.2 million of the $1.7 million remained within accounts payable and accrued expenses on our Condensed Consolidated Balance Sheet. In connection with the agreement with Patheon, we agreed to schedule additional manufacturing commitments in 2024.

Current wording

In December 2023, we entered into an agreement with Patheon to reimburse Patheon approximately $1.7 million for forecasted manufacturing commitments that are no longer needed due to the reduced demand expectations of KORSUVA in the United States, all of which had been paid as of September 30, 2024.

Previous wording

Revenue from sales of KORSUVA injection in future periods is subject to uncertainties and will depend on several factors, including the success of our and our commercial partners’ commercialization efforts in the United States, the number of new patients adopting or switching to KORSUVA injection, patient retention and sustained demand, the number of physicians prescribing KORSUVA injection, the rate of monthly prescriptions, reimbursement from third-party payors including the U.S. government, and market trends. More specifically, in December 2021, CMS granted TDAPA to KORSUVA injection in the anti-pruritic functional category. TDAPA went into effect on April 1, 2022, for two years. On October 27, 2023, CMS published the final CY 2024 rule, which finalized the post-TDAPA add-on payment as proposed in the draft CY 2024 rule. Under the final rule, TDAPA drugs in existing functional categories will receive a post-TDAPA add-on payment set at 65 percent of the total trailing 12-months expenditure levels for the given renal dialysis drug or biological product. The post-TDAPA add-on payment will be applied to all ESRD PPS payments and paid for 3 years, adjusted annually. The add-on payments for KORSUVA injection commenced on April 1, 2024. The anticipated unfavorable CMS reimbursement codified in the final CY 2024 rule has resulted in a lack of sequential revenues growth for KORSUVA injection since its launch. For the three months ended June 30, 2024, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately negative $2.7 million, which resulted in our profit share amount of negative $1.4 million. The negative net sales reported by CSL Vifor was primarily due to

Current wording

Revenue from sales of KORSUVA injection in future periods is subject to uncertainties and will depend on several factors, including the success of our and our commercial partners’ commercialization efforts in the United States, the number of new patients adopting or switching to KORSUVA injection, patient retention and sustained demand, the number of physicians prescribing KORSUVA injection, the rate of monthly prescriptions, reimbursement from third-party payors including the U.S. government, and market trends. More specifically, in December 2021, CMS granted TDAPA to KORSUVA injection in the anti-pruritic functional category. TDAPA went into effect on April 1, 2022, for two years. On October 27, 2023, CMS published the final CY 2024 rule, which finalized the post-TDAPA add-on payment as proposed in the draft CY 2024 rule. Under the final rule, TDAPA drugs in existing functional categories will receive a post-TDAPA add-on payment set at 65 percent of the total trailing 12-months expenditure levels for the given renal dialysis drug or biological product. The post-TDAPA add-on payment will be applied to all ESRD PPS payments and paid for 3 years, adjusted annually. The add-on payments for KORSUVA injection commenced on April 1, 2024. The anticipated unfavorable CMS reimbursement codified in the final CY 2024 rule has resulted in a lack of sequential revenues growth for KORSUVA injection since its launch. For the three months ended September 30, 2024, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately $3.0 million, which resulted in our profit share amount of $1.3 million. For the nine months ended September 30, 2024, CSL Vifor recorded net sales of KORSUVA injection in the United States of approximately $2.1 million, which included negative net sales reported by CSL Vifor for the second quarter of 2024 primarily due to higher rebates and chargebacks due to price decreases on KORSUVA injection related to the expiration of TDAPA in April 2024. We expect no meaningful revenue contribution from KORSUVA injection post its TDAPA expiration.

Previous wording

In the third quarter of 2023, FMC decided to reallocate all remaining clinic level inventory within its network of clinics resulting in limited revenues in the fourth quarter of 2023 and the three months ended March 31, 2024 and no revenue in the three months ended June 30, 2024.

Current wording

In the third quarter of 2023, FMC decided to reallocate all remaining clinic level inventory within its network of clinics resulting in limited revenues in the fourth quarter of 2023 and the nine months ended September 30, 2024.

Previous wording

There was no commercial supply revenue recorded for the three months ended June 30, 2024. For the three months ended June 30, 2023, we recorded commercial supply revenue of $1.4 million, with associated COGS of $1.4 million. For the six months ended June 30, 2024 and 2023, we recorded commercial supply revenue of $0.6 million and $4.6 million, respectively, with associated COGS of $0.6 million for the 2024 period and $4.0 million for the 2023 period. We expect our COGS to be reflective of future KORSUVA injection sales.

Current wording

There was no commercial supply revenue recorded for the three months ended September 30, 2024. For the three months ended September 30, 2023, we recorded commercial supply revenue of $1.3 million, with associated COGS of $1.6 million. For the nine months ended September 30, 2024 and 2023, we recorded commercial supply revenue of $0.6 million and $5.8 million, respectively, with associated COGS of $0.6 million for the 2024 period and $5.6 million for the 2023 period. We expect our COGS to be reflective of future KORSUVA injection sales.

Previous wording

R&D activities have been central to our business model. Based on our recent announcement that we are discontinuing our NP program, we presently expect that our R&D expenses will significantly decrease in the future as we focus on exploring strategic alternatives to maximize shareholder value. However, it is difficult to determine with certainty the duration and completion costs in connection with the discontinuation of our studies in NP or future nonclinical and clinical studies of our current or any future product candidates, should we resume the development of any future product candidates, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval, should we resume the development of any future

Current wording

R&D activities have been central to our business model. Based on our recent announcement that we are discontinuing our NP program, we presently expect that our R&D expenses will significantly decrease in the future as we focus on exploring strategic alternatives to maximize shareholder value. However, it is difficult to determine with certainty the duration and completion costs in connection with the discontinuation of our studies in NP or future nonclinical and clinical studies of our current or any future product candidates, should we resume the development of any future product candidates, or if, when or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval, should we resume the development of any future product candidates. We may never succeed in achieving regulatory approval for oral difelikefalin or any future product candidates, should we resume the development of oral difelikefalin or any future product candidates.

Previous wording

In addition, the probability of success for future product candidates, should we resume the development of any future product candidates, will depend on numerous factors, including competition, manufacturing capability and commercial viability. In the future, should we resume the development of any future product candidates, we will determine which, if any, other programs to pursue and how much to fund each program in response to the scientific and clinical success of future product candidates, as well as an assessment of our future product candidates’ commercial potential.

Current wording

In addition, the probability of success for future product candidates, should we resume the development of any future product candidates, will depend on numerous factors, including competition, manufacturing capability and commercial viability. In the future, should we resume the development of any future product candidates, we will determine which, if any, other programs to pursue and how much to fund each program in response to the scientific and

Previous wording

We anticipate that our G&A expenses will decrease in the future as a result of our workforce reductions during the six months ended June 30, 2024. However, G&A expenses will continue to include costs related to remaining personnel, fees to outside consultants, lawyers, and accountants, as well as costs associated with our exploration of potential strategic alternatives, which could offset the decreases from workforce reductions. In addition, if any future product candidate obtains regulatory approval for marketing, should we resume the development of any future product candidates, we may incur expenses associated with building sales and marketing, commercial operations, and market access teams.

Current wording

We anticipate that our G&A expenses will decrease in the future as a result of our workforce reductions during the nine months ended September 30, 2024. However, G&A expenses will continue to include costs related to remaining personnel, fees to outside consultants, lawyers, and accountants, as well as costs associated with our exploration of potential strategic alternatives, which could offset the decreases from workforce reductions. In addition, if any future product candidate obtains regulatory approval for marketing, should we resume the development of any future product candidates, we may incur expenses associated with building sales and marketing, commercial operations, and market access teams.

Previous wording

Our license agreements with CSL Vifor provide full U.S. commercialization rights of KORSUVA injection to CSL Vifor under profit-sharing arrangements. Under these profit-sharing arrangements, in consideration of CSL Vifor’s conduct of the marketing, promotion, selling and distribution of KORSUVA injection in the United States, we pay a marketing and distribution fee to CSL Vifor based on the level of annual net sales. This fee as well as CSL Vifor’s

Current wording

Our license agreements with CSL Vifor provide full U.S. commercialization rights of KORSUVA injection to CSL Vifor under profit-sharing arrangements. Under these profit-sharing arrangements, in consideration of CSL Vifor’s conduct of the marketing, promotion, selling and distribution of KORSUVA injection in the United States, we pay a marketing and distribution fee to CSL Vifor based on the level of annual net sales. This fee as well as CSL Vifor’s COGS are deducted from product sales in calculating the net profits that are subject to the profit-sharing arrangement (see Note 12 of Notes to Condensed Consolidated Financial Statements, Collaboration and Licensing Arrangements, in this Quarterly Report on Form 10-Q).

Previous wording

In January 2024, we announced a workforce reduction of up to 50% of our employees in order to reduce our operating expenses and focus our efforts on development of oral difelikefalin in chronic pruritus associated with NP. On June 14, 2024, our Board of Directors approved a streamlined operating plan exploring strategic alternatives focused on maximizing shareholder value after we announced our decision to discontinue the clinical program in NP on June 12, 2024. Our decision to discontinue the clinical program in NP followed the outcome from the dose-finding Part A of the KOURAGE-1 study evaluating the efficacy and safety of oral difelikefalin for moderate-to-severe pruritus in adult patients with NP in which oral difelikefalin did not demonstrate a meaningful clinical benefit at any dose compared to placebo. Our decision was not related to any safety or medical issues, or negative regulatory feedback related to our NP program. In connection with the streamlined operating plan, our Board of Directors also approved a second reduction in our workforce by approximately 70%, which we substantially completed by June 30, 2024.

Current wording

In January 2024, we announced a workforce reduction of up to 50% of our employees in order to reduce our operating expenses and focus our efforts on development of oral difelikefalin in chronic pruritus associated with NP. On June 14, 2024, our Board of Directors approved a streamlined operating plan exploring strategic alternatives focused on maximizing shareholder value after we announced our decision to discontinue the clinical program in NP on June 12, 2024. Our decision to discontinue the clinical program in NP followed the outcome from the dose-finding Part A of the KOURAGE-1 study evaluating the efficacy and safety of oral difelikefalin for moderate-to-severe pruritus in adult patients with NP in which oral difelikefalin did not demonstrate a meaningful clinical benefit at any dose compared to placebo. Our decision was not related to any safety or medical issues, or negative regulatory feedback related to our NP program. In connection with the streamlined operating plan, our Board of Directors also approved a second reduction in our workforce by approximately 70%, which we substantially completed by June 30, 2024. As of the date of this filing, we have ten employees that are currently working for us.

Previous wording

We periodically analyze our inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value and write down such inventories as appropriate. In addition, our product is subject to strict quality control and monitoring which we perform throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, we record a charge to write down such unmarketable inventory to its estimated realizable value.

Current wording

We periodically analyze our inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value and write down such inventories as appropriate. In addition, our product is subject to strict quality control and monitoring which we perform throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or become obsolete due to expiration, we record a charge to write down such unmarketable inventory to its estimated realizable value. This inventory write-down charge is recognized separately on the Condensed Consolidated Statement of Comprehensive Loss for the three and nine months ended September 30, 2024.

Previous wording

Non-cash interest expense on liability related to sales of future royalties and milestone payments, which are received in conjunction with ex-U.S. sales of KORSUVA/Kapruvia under our agreements with CSL Vifor and Maruishi, consists of imputed interest on the carrying value of the liability and the amortization of the related issuance costs resulting from the HCR Agreement (see “Royalty Purchase and Sale Agreement” above). This non-cash interest expense is recognized separately on the Condensed Consolidated Statement of Comprehensive Loss for the three and six months ended June 30, 2024.

Current wording

Non-cash interest expense on liability related to sales of future royalties and milestone payments, which are received in conjunction with ex-U.S. sales of KORSUVA/Kapruvia under our agreements with CSL Vifor and Maruishi, consists of imputed interest on the carrying value of the liability and the amortization of the related issuance costs resulting from the HCR Agreement (see “Royalty Purchase and Sale Agreement” above). This non-cash interest expense is recognized separately on the Condensed Consolidated Statement of Comprehensive Loss for the three and nine months ended September 30, 2024.

Previous wording

There was no collaborative revenue recognized for the three months ended June 30, 2024 due to negative net sales reported by CSL Vifor during the period. We recognized collaborative revenue of $5.4 million for the three months ended June 30, 2023, and $0.8 million and $8.2 million for the six months ended June 30, 2024 and 2023, respectively. This change in collaborative revenue for both periods was related to our share of the profit from CSL Vifor’s sales of KORSUVA injection to third parties in the United States, which commercially launched in April 2022 (see Notes 12 and 13 of Notes to Condensed Consolidated Financial Statements,Collaboration and Licensing Agreementsand* Revenue Recognition*, respectively, in this Quarterly Report on Form 10-Q).

Current wording

We recognized collaborative revenue of $1.3 million and $2.5 million for the three months ended September 30, 2024 and 2023, respectively, and $2.1 million and $10.6 million for the nine months ended September 30, 2024 and 2023, respectively. This change in collaborative revenue for both periods was primarily related to our share of the profit from CSL Vifor’s sales of KORSUVA injection to third parties in the United States, which commercially launched in April 2022. The amount included in the nine months ended September 30, 2024 included negative profit share from negative net sales recorded by CSL Vifor for the second quarter of 2024 primarily due to higher rebates and chargebacks due to price decreases on KORSUVA injection related to the expiration of TDAPA in April 2024. Collaborative revenue for the three and nine months ended September 30, 2023 included $0.5 million that we earned in conjunction with the regulatory approval of KORSUVA injection in Japan for a milestone payment we earned in September 2023 from Maruishi that was allocated to the R&D services performance obligation under the Maruishi Agreement (see Notes 12 and 13 of Notes to Condensed Consolidated Financial Statements,Collaboration and Licensing Agreementsand* Revenue Recognition*, respectively, in this Quarterly Report on Form 10-Q).

Previous wording

There was no commercial supply revenue recognized for the three months ended June 30, 2024. We recognized commercial supply revenue of $1.4 million for the three months ended June 30, 2023, and $0.6 million and $4.6 million for the six months ended June 30, 2024 and 2023, respectively. This change in commercial supply revenue for both periods was related to our sales of KORSUVA injection to CSL Vifor, which commercially launched in April 2022.

Current wording

There was no commercial supply revenue recognized for the three months ended September 30, 2024. We recognized commercial supply revenue of $1.3 million for the three months ended September 30, 2023, and $0.6 million and $5.8 million for the nine months ended September 30, 2024 and 2023, respectively. This change in commercial supply revenue for both periods was related to our sales of KORSUVA injection to CSL Vifor, which commercially launched in April 2022.

Previous wording

We recognized royalty revenue of approximately $123,000 and $248,000 for the three and six months ended June 30, 2023, respectively, which was related to our royalties on the net sales of Kapruvia in Europe prior to October 1, 2023. Beginning on October 1, 2023, royalty revenue will no longer be recognized until we have fulfilled our obligations under the HCR Agreement (see “Royalty Purchase and Sale Agreement” above). As a result, there was no royalty revenue for the three and six months ended June 30, 2024.

Current wording

October 1, 2023. Beginning on October 1, 2023, royalty revenue will no longer be recognized until we have fulfilled our obligations under the HCR Agreement (see “Royalty Purchase and Sale Agreement” above). As a result, there was no royalty revenue for the three and nine months ended September 30, 2024.

Previous wording

There was no clinical compound revenue for the three months ended June 30, 2024 and 2023. We recognized clinical compound revenue of approximately $84,000 and $99,000 for the six months ended June 30, 2024 and 2023, respectively, which were related to sales of clinical compound to Maruishi.

Current wording

There was no clinical compound revenue for the three months ended September 30, 2024. We recognized clinical compound revenue of approximately $84,000 for the nine months ended September 30, 2024, and $66,000 and $165,000 for the three and nine months ended September 30, 2023, respectively, which were related to sales of clinical compound to Maruishi.

Previous wording

We recognized non-cash revenue of approximately $1.0 million and $1.6 million for the three and six months ended June 30, 2024, which represent royalty payments earned in conjunction with ex-U.S. sales of KORSUVA/Kapruvia under our agreements with CSL Vifor and Maruishi, which were sold to HCR under the HCR Agreement. There was no non-cash revenue recognized for the three and six months ended June 30, 2023.

Current wording

We recognized non-cash revenue of approximately $1.3 million and $2.9 million for the three and nine months ended September 30, 2024, which represent royalty payments earned in conjunction with ex-U.S. sales of KORSUVA/Kapruvia under our agreements with CSL Vifor and Maruishi, which were sold to HCR under the HCR Agreement. There was no non-cash revenue recognized for the three and nine months ended September 30, 2023.

Previous wording

We did not record COGS during the three months ended June 30, 2024 as there was no commercial supply revenue in the current period. We recorded COGS of $1.4 million for the three months ended June 30, 2023, and $0.6 million and $4.0 million for the six months ended June 30, 2024 and 2023, respectively, which were related to our commercial supply revenue for KORSUVA injection sales to CSL Vifor for these periods.

Current wording

There were no COGS recorded for the three months ended September 30, 2024 as there were no commercial sales during the period. We recorded COGS of $1.6 million for the three months ended September 30, 2023, and $0.6 million and $5.6 million for the nine months ended September 30, 2024 and 2023, respectively, which were related to our commercial supply revenue for KORSUVA injection sales to CSL Vifor for these periods.

Previous wording

For the six months ended June 30, 2024 compared to the six months ended June 30, 2023, the $14.2 million decrease in direct clinical trial costs and consultant services in support of clinical trials was primarily due to decreases related to the discontinuation of our oral difelikefalin atopic dermatitis program due to the clinical trial results announced in December 2023, the discontinuation of our oral difelikefalin program in advanced chronic kidney disease in January 2024, and decreases in other general costs associated with oral difelikefalin, partially offset by increases related to our former oral difelikefalin NP program, which was discontinued due to the clinical trial results announced in June 2024. The decrease in stock compensation expense is primarily related to the reductions in workforce in January 2024 and June 2024, resulting in no additional vesting of options and restricted stock units for those terminated as part of the January

Current wording

For the three months ended September 30, 2024 compared to the three months ended September 30, 2023, the $16.1 million decrease in direct clinical trial costs and consultant services in support of clinical trials was primarily due to decreases related to the discontinuation of our oral difelikefalin atopic dermatitis program due to the clinical trial results announced in December 2023, the discontinuation of our oral difelikefalin program in advanced chronic kidney disease in January 2024, the discontinuation of our oral difelikefalin NP program due to the clinical trial results announced in June 2024, and decreases in supportive studies and other general costs associated with oral difelikefalin. The decrease in stock compensation expense is primarily related to the reductions in workforce in January 2024 and June 2024, as well as additional workforce reductions during the three months ended September 2024. The decrease in other R&D

Previous wording

For the three months ended June 30, 2024 compared to the three months ended June 30, 2023, the $15.6 million decrease in direct clinical trial costs and consultant services in support of clinical trials was primarily due to decreases related to the discontinuation of our oral difelikefalin atopic dermatitis program due to the clinical trial results announced in December 2023, the discontinuation of our oral difelikefalin program in advanced chronic kidney disease in January 2024, and decreases in other general costs associated with oral difelikefalin, partially offset by increases related to our former oral difelikefalin NP program, which was discontinued due to the clinical trial results announced in June 2024. The decrease in stock compensation expense is primarily related to the reductions in workforce in January 2024 and June 2024, resulting in no additional vesting of options and restricted stock units for those terminated as part of the January 2024 workforce reduction, and a reversal of stock compensation expense for unvested stock options and restricted stock units that were forfeited in the current period as part of the June 2024 workforce reduction. The decrease in other R&D operating expenses for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily related to decreases in payroll and related costs, travel costs and other related conference costs.

Current wording

For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, the $30.3 million decrease in direct clinical trial costs and consultant services in support of clinical trials was primarily due to decreases related to the discontinuation of our oral difelikefalin atopic dermatitis program due to the clinical trial results announced in December 2023, the discontinuation of our oral difelikefalin program in advanced chronic kidney disease in January 2024, and decreases in supportive studies and other general costs associated with oral difelikefalin, partially offset by increases related to our former oral difelikefalin NP program, which was discontinued due to the clinical trial results announced in June 2024. The decrease in stock compensation expense is primarily related to the reductions in workforce in January 2024 and June 2024, as well as a few additional workforce reductions during the three months ended September 30, 2024, partially offset by performance-based restricted stock units that were achieved in March 2024. The decrease in other R&D operating expenses for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily related to decreases in payroll and related costs, travel costs and other related conference costs.

Previous wording

The following table summarizes our R&D expenses by program for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our R&D expenses by program for the three and nine months ended September 30, 2024 and 2023:

Previous wording

For the six months ended June 30, 2024 compared to the six months ended June 30, 2023, the decrease in professional fees and public/investor relations was primarily due to decreases in legal costs. The increase in stock compensation expense is primarily related to performance-based restricted stock units that were achieved during the six months ended June 30, 2024, partially offset by the reductions in workforce in January 2024 and June 2024, resulting in no additional vesting of options and restricted stock units for those terminated as part of the January 2024 workforce reduction, and a reversal of stock compensation expense for unvested stock options and restricted stock units that were forfeited in the current period as part of the January 2024 and June 2024 workforce reductions. The decrease in other G&A operating expenses for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was

Current wording

G&A expense was essentially flat between the three months ended September 30, 2024 and 2023. For the three months ended September 30, 2024 compared to the three months ended September 30, 2023, the decrease in stock compensation expense is primarily related to the reductions in workforce in January 2024 and June 2024, as well as additional workforce reductions during the three months ended September 2024. The increase in other G&A operating expenses for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was

Previous wording

For the three months ended June 30, 2024 compared to the three months ended June 30, 2023, the decrease in professional fees and public/investor relations was primarily due to decreases in legal costs. The decrease in stock compensation expense is primarily related to the reductions in workforce in January 2024 and June 2024, resulting in no additional vesting of options and restricted stock units for those terminated as part of the January 2024 workforce reduction, and a reversal of stock compensation expense for unvested stock options and restricted stock units that were forfeited in the current period as part of the June 2024 workforce reduction. The increase in other G&A operating expenses for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to our negative profit share amount recorded for CSL Vifor’s negative net sales for the second quarter of 2024, partially offset by decreases in payroll and related costs, travel costs and other related conference costs.

Current wording

For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, the decrease in professional fees and public/investor relations was primarily due to decreases in legal costs. The increase in stock compensation expense is primarily related to performance-based restricted stock units that were achieved in March 2024, partially offset by the reductions in workforce in January 2024 and June 2024, as well as additional workforce reductions during the three months ended September 30, 2024. The decrease in other G&A operating expenses for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily related to decreases in payroll and related costs, travel costs and other related conference costs, partially offset by our negative profit share amount recorded for CSL Vifor’s negative net sales for the second quarter of 2024 and $0.6 million due to Patheon for minimum manufacturing orders in 2024.

Previous wording

For the three months ended June 30, 2024, restructuring expenses were $2.6 million, which were related to the discontinuation of our oral program in NP, our exploration of strategic alternatives to maximize shareholder value, and the associated workforce reduction announced in June 2024. There were no restructuring expenses recorded during the three months ended June 30, 2023.

Current wording

For the three months ended September 30, 2024, restructuring expenses were $0.7 million, which were related to the additional workforce reductions in the third quarter of 2024. There were no restructuring expenses recorded during the three months ended September 30, 2023.

Previous wording

For the six months ended June 30, 2024, restructuring expenses were $5.0 million which were related to our strategic prioritization of NP in January 2024 and the resulting discontinuation of our NP program in June 2024, our exploration of strategic alternatives to maximize shareholder value, and the associated workforce reductions announced in January 2024 and June 2024, respectively. There were no restructuring expenses recorded during the six months ended June 30, 2023.

Current wording

For the nine months ended September 30, 2024, restructuring expenses were $5.7 million which were related to our strategic prioritization of NP in January 2024 and the resulting discontinuation of our NP program in June 2024, our exploration of strategic alternatives to maximize shareholder value, and the associated workforce reductions during the year. There were no restructuring expenses recorded during the nine months ended September 30, 2023.

Previous wording

For the six months ended June 30, 2024 compared to the six months ended June 30, 2023, the decrease in other income, net was primarily due to a decrease in interest income resulting from a lower balance in our portfolio of investments in 2024 as compared to 2023, partially offset by an increase in accretion income from our available-for-sale marketable securities in the 2024 period as compared to the prior period.

Current wording

For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, the decrease in other income, net was primarily due to a decrease in interest income resulting from a lower balance in our portfolio of investments in 2024 as compared to 2023, partially offset by an increase in accretion income from our available-for-sale marketable securities in the 2024 period as compared to the prior period.

Previous wording

For the three and six months ended June 30, 2024, we wrote down approximately $1.5 million of commercial supply inventory due to obsolescence.

Current wording

For the three and nine months ended September 30, 2024, we wrote down approximately $1.0 million and $2.5 million, respectively, of commercial supply inventory due to obsolescence.