Balance Sheet Components

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

6. Balance Sheet Components

Cash and Cash Equivalents

Cash and cash equivalents consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Cash	$	70,982	$	135,819
Commercial paper		22,942		—
Money market funds		22,016		19,881
U.S. government bonds		4,974		—
Total cash and cash equivalents	$	120,914	$	155,700

At September 30, 2023 and December 31, 2022, a total of $60.1 million and $92.5 million of the Company’s cash and cash equivalents were held outside of the U.S. in its foreign subsidiaries to be used primarily for its China operations, respectively.

Investments

The Company’s investments consist primarily of available-for-sale debt investments. The amortized cost, gross unrealized holding gains or losses, and fair value of the Company’s investments by major investments type are summarized in the tables below (in thousands):


	September 30, 2023
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
Corporate bonds	$	11,987	$	—	$	(77	)	$	11,910
Commercial paper		55,859		—		(1	)		55,858
U.S. government bonds		57,734		3		(46	)		57,691
Agency bonds		4,965		2		—			4,967
Total investments	$	130,545	$	5	$	(124	)	$	130,426

	December 31, 2022
	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
Corporate bonds	$	83,080	$	—	$	(1,072	)	$	82,008
Commercial paper		57,381		—		—			57,381
U.S. government bonds		112,547		5		(1,207	)		111,345
Agency bonds		11,690		—		(222	)		11,468
Asset-backed securities		2,484		—		(10	)		2,474
Foreign government bonds		5,007		—		(27	)		4,980
Convertible promissory note		1,000		—		—			1,000
Total investments	$	273,189	$	5	$	(2,538	)	$	270,656

The following table summarizes, for all available for sale securities in an unrealized loss position, the fair value and gross unrealized loss by length of time the security has been in a continual unrealized loss position (in thousands):


	September 30, 2023
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses
Corporate bonds	$	2,483	$	(8	)	$	9,427	$	(69	)	$	11,910	$	(77	)
U.S. government bonds		17,360		(4	)		8,960		(42	)		26,320		(46	)
Commercial paper		3,481		(1	)		—		—			3,481		(1	)
Total	$	23,324	$	(13	)	$	18,387	$	(111	)	$	41,711	$	(124	)

	December 31, 2022
	Less than 12 Months					12 Months or More					Total
	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses
Corporate bonds	$	6,738	$	(147	)	$	75,270	$	(925	)	$	82,008	$	(1,072	)
U.S. government bonds		22,326		(13	)		67,909		(1,194	)		90,235		(1,207	)
Agency bonds		—		—			11,468		(222	)		11,468		(222	)
Asset-backed securities		2,474		(10	)		—		—			2,474		(10	)
Foreign government bonds		—		—			4,980		(27	)		4,980		(27	)
Total	$	31,538	$	(170	)	$	159,627	$	(2,368	)	$	191,165	$	(2,538	)

At September 30, 2023, the available-for-sale investments had remaining contractual maturities of less than twelve months.

The Company periodically assesses whether the unrealized losses on its available-for-sale investments were temporary. The Company considers factors such as the severity and the reason for the decline in value and the potential recovery period and its intent to sell. For debt securities, the Company also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis, and (ii) the amortized cost basis cannot be recovered as a result of credit losses. Based on the results of its review, the Company did not recognize any impairment for its available-for-sale investments during the three and nine months ended September 30, 2023 and 2022.

Inventories

Inventories consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Raw materials	$	1,179	$	1,241
Work-in-progress		34,906		36,003
Finished goods		4,611		3,192
Total inventories	$	40,696	$	40,436

Accrued and Other Current Liabilities

Accrued and other current liabilities consisted of the following (in thousands):


	September 30, 2023		December 31, 2022
Preclinical and clinical trial accruals	$	34,670	$	57,780
API and bulk drug product price true-up		40,325		75,055
Litigation settlement		28,500		—
Payroll and related accruals		14,054		22,562
Accrued restructuring charge		4,694		—
Accrued co-promotion expenses - current		10,065		36,677
Roxadustat profit share to AstraZeneca		6,884		7,280
Property taxes and other taxes		7,950		7,691
Professional services		11,016		5,480
Current portion of liability related to sale of future revenues		5,860		—
Other		6,968		7,248
Total accrued and other current liabilities	$	170,986	$	219,773

The accrued liabilities of $40.3 million for API and bulk drug product price true-up as of September 30, 2023 resulted from changes in estimated variable consideration associated with the API shipments fulfilled under the terms of the Astellas Japan Amendment, the bulk drug product transferred under the terms of the Astellas Europe Agreement and the Astellas EU Supply Agreement, and the bulk drug product shipments to AstraZeneca under the terms of the AstraZeneca Master Supply Agreement. See the Drug Product Revenue, Net section in Note 2, Collaboration Agreements, License Agreement and Revenues, for details.

As of September 30, 2023, the accrued litigation settlement of $28.5 million was related to the Company’s agreement in principle with plaintiffs to settle the class action lawsuit. The Company maintains insurance that covers exposure related to the class action lawsuit. As the amount is fully recoverable under the Company’s insurance policies, the Company recorded a corresponding receivable in prepaid expenses and other current assets in the condensed consolidated balance sheet. The determination that the recorded receivables are probable of collection is based on the terms of the applicable insurance policies and communications with the insurers. See the Legal Proceedings and Other Matters section in Note 12, Commitments and Contingencies, for details.

On July 14, 2023, the Company approved a restructuring plan (the “Plan”) to lower the Company’s operating expenses. The Plan included a reduction to the Company’s U.S. workforce of approximately 32%. As a result, the Company recorded a total of $12.6 million non-recurring restructuring charge during the three months ended September 30, 2023, primarily consisting of notice period and severance payments, accrued vacation, and employee benefits contributions. During the three months ended September 30, 2023, total cash payments under the Plan was $7.9 million. The remaining accrued restructuring charge was $4.7 million as of September 30, 2023 and will be substantially paid out by early 2024. The Plan is in connection with the Company’s efforts to streamline operations to align with the Company’s business goals.