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 every Interactive Data File required to be submitted 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 such files). ☒ Yes☐ No 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.

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 ~~23, 2021~~29, 2022 was ~~69,749,569.~~71,193,352.


	March 31,			December 31,			March 31,			December 31,
	2021			2020			2022			2021
	(unaudited)						(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	68,548		$	32,297		$	40,577		$	49,978
Short-term investments		307,736			404,273			300,024			214,514
Accounts receivable, other		130			137
Accounts receivable, net								2,781			411
Accounts receivable from related party		10,012			32			29			43
Inventory								2,897			851
Prepaid expenses and other current assets		4,215			4,831			5,324			3,380
Total current assets		390,641			441,570			351,632			269,177
Property and equipment, net		33,117			25,160			31,482			32,269
Long-term investments		47,875			23,800			31,235			97,856
Operating lease right-of-use assets		26,017			26,911			24,592			24,806
Other assets		1,462			1,458			1,512			1,544
Total assets	$	499,112		$	518,899		$	440,453		$	425,652
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	10,926		$	12,875		$	5,423		$	6,746
Accrued and other current liabilities		21,156			19,794			25,547			26,358
Long-term debt, current		9,609			6,302			19,128			18,920
Deferred revenue from related party		13,039			12,587			18,709			10,993
Total current liabilities		54,730			51,558			68,807			63,017
Long-term debt, net		14,866			18,099			4,554			4,715
Non-current deferred revenue from related party		23,337			24,000			62,094			24,772
Non-current lease liabilities		44,112			38,671			46,062			46,830
Other non-current liabilities		1,063			958			217			198
Total liabilities		138,108			133,286			181,734			139,532
Commitments (Note 7)
Commitments (Note 7)
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding		0			0
Common stock, $0.001 par value, 200,000,000 shares authorized; 69,742,493 and 69,452,466 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		70			69
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and outstanding								0			0
Common stock, $0.001 par value, 200,000,000 shares authorized; 71,142,102 and 70,357,557 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively								71			70
Additional paid-in capital		876,017			870,788			916,224			903,646
Note receivable		(16	)		(16	)		(16	)		(16	)
Accumulated other comprehensive income (loss)		(14	)		114
Accumulated other comprehensive loss								(1,855	)		(483	)
Accumulated deficit		(515,053	)		(485,342	)		(655,705	)		(617,097	)
Total stockholders’ equity		361,004			385,613			258,719			286,120
Total liabilities and stockholders’ equity	$	499,112		$	518,899		$	440,453		$	425,652


	Three Months Ended March 31,						Three Months Ended March 31,
	2021			2020			2022			2021
Operating activities
Net loss	$	(29,711	)	$	(21,687	)	$	(38,608	)	$	(29,711	)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation		8,080			4,630			9,426			8,080
Depreciation of property and equipment		117			143			1,017			117
Non-cash lease expense		594			297			215			594
Non-cash interest expense, net		997			155			1,228			997
Changes in assets and liabilities:
Accounts receivable, other		7			23
Accounts receivable due from related party		(9,980	)		(15	)
Accounts receivable, net								(2,370	)		7
Accounts receivable from related party								14			(9,980	)
Inventory								(2,046	)		0
Prepaids and other current assets		583			(754	)		(2,162	)		583
Other assets		(4	)		69			32			(4	)
Accounts payable		1,201			1,042			(1,329	)		1,201
Operating lease liabilities		6,342			(321	)		(664	)		6,342
Other liabilities		418			(5,189	)		(960	)		418
Deferred revenue from related party		(211	)		(5,839	)		45,038			(211	)
Net cash used in operating activities		(21,567	)		(27,446	)
Net cash provided by (used in) operating activities								8,831			(21,567	)
Investing activities
Purchases of property and equipment, net		(10,880	)		(868	)		(224	)		(10,880	)
Purchases of investments		(95,278	)		(11,434	)		(91,498	)		(95,278	)
Maturities of investments		166,826			44,330			70,385			166,826
Net cash provided by investing activities		60,668			32,028
Net cash (used in) provided by investing activities								(21,337	)		60,668
Financing activities
Proceeds from exercise of stock options and employee stock purchase plan		2,163			14,797			6,231			2,163
Employees' tax withheld and paid for with restricted stock units		(5,013	)		(3,480	)
Borrowings under credit facility agreement, net of issuance costs		0			4,358
Net cash (used in) provided by financing activities		(2,850	)		15,675
Net increase in cash, cash equivalents and restricted cash		36,251			20,257
Employees' tax withheld and paid for restricted stock units								(3,126	)		(5,013	)
Net cash provided by (used in) financing activities								3,105			(2,850	)
Net (decrease) increase in cash, cash equivalents and restricted cash								(9,401	)		36,251
Cash, cash equivalents and restricted cash at beginning of period		33,377			40,259			51,058			33,377
Cash, cash equivalents and restricted cash at end of period	$	69,628		$	60,516		$	41,657		$	69,628
Supplemental disclosures of cash flow information
Cash paid for interest	$	509		$	407		$	488		$	509
Right-of-use assets obtained in exchange for lease obligations	$	(300	)	$	0		$	1		$	300
Purchases of property and equipment, net recorded in accounts payable and accrued liabilities	$	(2,807	)	$	(132	)	$	6		$	2,807

Description of Business

~~Description of Business~~

ChemoCentryx, Inc. (the Company) commenced operations in 1997. The Company is a fully integrated United States biopharmaceutical company focused on the development and commercialization of new medications targeting inflammatory disorders, autoimmune diseases and cancer. The Company discovered, developed and is now commercializing TAVNEOSÒ (avacopan) in the U.S. as an adjunctive treatment for adult patients with severe active anti-neutrophil cytoplasmic autoantibody-associated vasculitis (ANCA-associated vasculitis), specifically granulomatosis with polyangiitis (GPA) and microscopic polyangiitis (MPA), the two main forms of ANCA-associated vasculitis, in combination with standard therapy including glucocorticoids, and not for the elimination of glucocorticoids use. The Company’s principal operations are in the ~~United States~~U.S. and it operates in 1 segment.

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, ~~2020~~2021 Condensed Consolidated Balance Sheet was derived from audited financial statements. 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, ~~2020~~2021 filed with the Securities and Exchange Commission on March 1, ~~2021.~~2022.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (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.

For the three months ended March 31, 2022 and 2021, total revenue derived from the Company’s collaboration with Vifor (International) Ltd., and/or its affiliates, or collectively, Vifor, was 1.9% and 98.7%, respectively. Accounts receivable are typically unsecured and are concentrated within a few customers 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.

Product Sales, net

The Company sells TAVNEOS to a limited number of specialty pharmacies and a specialty distributor. These customers subsequently dispense TAVNEOS directly to patients or resell it to hospitals and certain pharmacies. The Company recognizes product sales when the customer obtains control of the Company’s product, which occurs typically upon delivery to the customer. Product sales to these customers are recorded net of reserves established for distributor service fees and prompt payment discounts as stated in agreements, estimates for product returns, government rebates, chargebacks and the Company’s co-pay assistance program for patients. The Company estimates these reserves using the expected value approach. The Company believes its estimated reserves require significant judgment and may adjust these estimates as it accumulates historical data and assesses other quantitative and qualitative factors. Differences from actual results and changes to these estimates will be reported in the period that the differences become known.

Cost of Sales

Cost of sales for product sales and product supply consists primarily of direct and indirect costs related to the manufacturing of TAVNEOS products sold, including third-party manufacturing costs, packaging services, freight, storage costs, allocation of overhead costs of employees involved with production and net sales-based royalties expense. The Company began capitalizing costs related to inventory in October 2021 upon the U.S. Food and Drug Administration (FDA) approval of TAVNEOS. Manufacturing costs associated with campaigns initiated prior to FDA approval were recorded as research and development expense. Accordingly, cost of sales in the near term will likely be lower than in later periods given the sales of pre-approval inventory will carry little to no manufacturing costs given such costs were previously expensed to research and development expense.

Inventory

The Company values its inventories at the lower-of-cost or net realizable value on a first-in, first-out (FIFO) basis. Inventories include the cost for raw materials, third party contract manufacturing and packaging services, and indirect personnel and overhead associated with production. The Company performs an assessment of the recoverability of inventory during each reporting period, and writes down any excess and obsolete inventories to their net realizable value in the period in which the impairment is first identified. If they occur, such impairment charges are recorded as a component of cost of sales in the consolidated statements of operations. The Company capitalizes inventory costs associated with products when future commercialization is considered probable and the future economic benefit is expected to be realized, which is typically when regulatory approval is obtained for a drug candidate. As such, the Company begins capitalizing costs as inventory when a drug candidate receives regulatory approval. Prior to regulatory approval, the Company recorded inventory costs related to drug candidates as research and development expense.

Comprehensive loss comprises net loss and other comprehensive loss. For the periods presented, other comprehensive loss consists of unrealized losseson the Company’s available-for-sale securities. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, there were 0sales of investments and therefore there were no reclassifications of comprehensive ~~income.~~ loss.

Recent Accounting Pronouncements

The Company has reviewed recent accounting pronouncements and concluded they are either not applicable to the business or that no material effect is expected on the consolidated financial statements as a result of future adoption.

Cash Equivalents, Restricted Cash and Investments

~~Cash Equivalents, Restricted Cash and Investments~~

The following table provides a reconciliation of cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows (in thousands):


	March 31,		December 31,		March 31,		December 31,
	2021		2020		2022		2021
Cash and cash equivalents	$	68,548	$	32,297	$	40,577	$	49,978
Restricted cash included in Other assets		1,080		1,080		1,080		1,080
Total cash, cash equivalents and restricted cash	$	69,628	$	33,377	$	41,657	$	51,058

Restricted cash as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 was held as collateral for stand-by letters of credit issued by the Company to its landlord in connection with the lease of the Company’s facility in San Carlos, California. See “Note 7. Commitments” for additional information on this lease.

The amortized cost and fair value of cash equivalents and investments at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows (in thousands):


	March 31, 2021									March 31, 2022
	Amortized		Gross Unrealized					Fair		Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Money market fund	$	62,830	$	0	$	0		$	62,830	$	37,331	$	0	$	0		$	37,331
U.S. treasury securities		113,345		36		0			113,381		115,369		1		(708	)		114,662
Non-U.S. government securities		11,902		0		(12	)		11,890		16,743		0		(180	)		16,563
Commercial paper		115,388		0		0			115,388		73,868		0		0			73,868
Asset-backed securities		32,172		3		(12	)		32,163		32,400		0		(212	)		32,188
Corporate debt securities		82,818		8		(37	)		82,789		94,734		14		(770	)		93,978
Total available-for-sale securities	$	418,455	$	47	$	(61	)	$	418,441	$	370,445	$	15	$	(1,870	)	$	368,590

Classified as:
Cash equivalents								$	62,830								$	37,331
Short-term investments									307,736									300,024
Long-term investments									47,875									31,235
Total available-for-sale securities								$	418,441								$	368,590


	December 31, 2021
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Money market fund	$	41,960	$	0	$	0		$	41,960
U.S. treasury securities		40,397		0		(160	)		40,237
Government-sponsored agencies		16,821		0		(56	)		16,765
Commercial paper		111,868		0		0			111,868
Asset-backed securities		39,988		0		(62	)		39,926
Corporate debt securities		103,779		7		(212	)		103,574
Total available-for-sale securities	$	354,813	$	7	$	(490	)	$	354,330

Classified as:
Cash equivalents								$	41,960
Short-term investments									214,514
Long-term investments									97,856
Total available-for-sale securities								$	354,330

Cash equivalents in the tables above exclude cash of ~~$5.7~~$3.2 million and ~~$2.2~~$8.0 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. All available-for-sale securities held as of March 31, ~~2021~~2022 had contractual maturities of less than two ~~years.~~years. There have been 0 significant realized gains or losses on available-for-sale securities for the periods presented. The Company applies the specific identification method to determine the cost basis of the securities sold. NaN available-for-sale securities held as of March 31, ~~2021~~2022 have been in a continuous unrealized loss position for more than 12 months. As of March 31, ~~2021,~~2022, unrealized losses on available-for-sale investments are not attributed to credit risk. 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 that an allowance for credit losses is unnecessary because the unrealized losses on certain of the Company’s marketable securities are due to market factors. To date, the Company has not recorded any impairment charges on marketable securities.

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.

Recurring Fair Value Measurements

The Company’s financial assets subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 (in thousands):



	March 31, 2021								March 31, 2022
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market fund	$	62,830	$	0	$	0	$	62,830	$	37,331	$	0	$	0	$	37,331
U.S. treasury securities		0		113,381		0		113,381		0		114,662		0		114,662
Non-U.S. government securities		0		11,890		0		11,890		0		16,563		0		16,563
Commercial paper		0		115,388		0		115,388		0		73,868		0		73,868
Asset-backed securities		0		32,163		0		32,163		0		32,188		0		32,188
Corporate debt securities		0		82,789		0		82,789		0		93,978		0		93,978
Total available-for-sale securities	$	62,830	$	355,611	$	0	$	418,441	$	37,331	$	331,259	$	0	$	368,590


	December 31, 2021
Description	Level 1		Level 2		Level 3		Total
Money market fund	$	41,960	$	0	$	0	$	41,960
U.S. treasury securities		0		40,237		0		40,237
Government-sponsored agencies		0		16,765		0		16,765
Commercial paper		0		111,868		0		111,868
Asset-backed securities		0		39,926		0		39,926
Corporate debt securities		0		103,574		0		103,574
Total available-for-sale securities	$	41,960	$	312,370	$	0	$	354,330

December 31, 2020

Description

Level 1

Level 2

Level 3

Total

Money market fund

$
30,139

$
0

$
0

$
30,139

U.S. treasury securities

0

176,685

0

176,685

Government-sponsored agencies

0

12,500

0

12,500

Commercial paper

0

140,364

0

140,364

Asset-backed securities

0

25,729

0

25,729

Corporate debt securities

0

72,795

0

72,795

Total available-for-sale securities

$
30,139

$
428,073

$
0

$
458,212

During the three months ended March 31, ~~2021,~~2022, there were 0 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.

Other Fair Value Measurements

The carrying amount and estimated fair value of financial instruments not recorded at fair value at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 were as follows (in thousands):


	March 31,				December 31,
	2022				2021
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Long-term debt, net (1)	$	23,682	$	25,170	$	23,635	$	25,046

March 31,

December 31,

2021

2020

Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value

Long-term debt, net ⁽¹⁾

$
24,475

$
25,522

$
24,401

$
25,332

(1)

Carrying amounts of long-term debt were net of unamortized debt discounts of $269 and $316 as of March 31, 2022 and December 31, 2021, respectively.

~~(1)~~

~~Carrying amounts of long-term debt were net of unamortized debt discounts of $525 and $599 as of March 31, 2021 and December 31, 2020, respectively.~~

The fair value of the Company's long-term debt is estimated using the net present value of future debt payments, discounted at an interest rate that is consistent with market interest rates, which is a Level 2 input.

Accrued and Other Current Liabilities

~~Accrued and Other Current Liabilities~~

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


	March 31,		December 31,
	2022		2021
Research and development related	$	11,441	$	11,309
Compensation related		4,974		8,350
Consulting and professional services		2,127		1,348
Current portion of operating lease liability		2,915		2,810
End of term charge on the long-term debt		1,196		1,151
Other		2,894		1,390
	$	25,547	$	26,358

Related-Party Transactions

Vifor

8.	~~Related-Party Transactions~~

~~Vifor~~

Vifor held ~~9,194,085~~5,194,085 shares of the Company’s common stock as of March 31, ~~2021.~~2022. The Company has collaboration agreements with Vifor: the Avacopan Agreements and the CCX140 Agreements (each as described below). See “Note 2. Summary of Significant Accounting Policies – Concentration of Credit Risk” for additional information on accounts receivable balance due from Vifor.

Avacopan Agreements

In May 2016, the Company entered into an exclusive collaboration and license agreement with 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 ~~ANCA~~ANCA-associated vasculitis and other rare diseases. The Avacopan Agreement also provided 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~~$85.0 million, comprising ~~$60.0~~$60.0 million in cash and ~~$25.0~~$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~~$7.50 per share.

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). In connection with this February 2017 amendment, the Company received a ~~$20.0~~$20.0 million upfront payment for the expanded rights. In June 2018, Vifor and the Company further expanded the Vifor territories under the Avacopan Agreement to provide Vifor with exclusive commercialization rights in China (the Avacopan Letter Agreement, and together with the Avacopan Agreement and the Avacopan Amendment, the Avacopan Agreements). 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. In consideration for the Avacopan Letter Agreement, the Company received a ~~$5.0~~$5.0 million payment for the expanded rights.

In December 2017, the Company achieved a ~~$50.0~~$50.0 million regulatory milestone when the European Medicines Agency (EMA) validated the Company’s conditional marketing authorization (CMA) application for avacopan for the treatment of ~~ANCA~~ANCA-associated vasculitis.

In February 2021, the Company achieved a ~~$10.0~~$10.0 million regulatory milestone when the Japanese NDA (JNDA) for ~~avacopan~~TAVNEOS in the treatment of ~~ANCA~~ANCA-associated vasculitis was filed with the Japanese Pharmaceuticals and Medical Device Agency (PMDA) by Vifor, through its sublicensee Kissei Pharmaceutical, Co., Ltd. (Kissei). In September 2021, the Japanese Ministry of Health, Labor and Welfare (MHLW) approved the JNDA for TAVNEOS for the treatment of patients with microscopic polyangiitis (MPA) and granulomatosis with polyangiitis (GPA), the two main forms of ANCA-associated vasculitis. As a result, the Company achieved a $20.0 million regulatory milestone. In November 2021, the EMA Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion recommending marketing authorization for the Company’s TAVNEOS.

In January 2022, the European Commission approved TAVNEOS in combination with a rituximab or cyclophosphamide regimen for the treatment of adult patients with severe active MPA or GPA. Accordingly, the Company achieved a $45.0 million regulatory milestone which the Company received in February 2022. Upon further achievement of certain regulatory and commercial milestones with ~~avacopan,~~TAVNEOS, the Company will receive additional payments of up to ~~$450.0~~$385.0 million under the Avacopan Agreements. In addition, the Company will receive royalties, with rates ranging from the low teens to the mid-twenties, on future potential net sales of ~~avacopan~~TAVNEOS by Vifor in the licensed territories.

The Company identified the following material promises under the Avacopan Agreements: (1) the license related to avacopan; (2) the development and regulatory services for the submission of the marketing authorization application (MAA); and (3) an exclusive option to negotiate a worldwide license agreement for CCX140, which expired in 2016. The Company considered that the license has standalone functionality and is capable of being distinct. However, the Company determined that the license is not distinct from the development and regulatory services within the context of the agreement because Vifor is dependent on the Company to execute the development and regulatory activities in order for Vifor to benefit from the license. As such, the license is combined with the development and regulatory services into a single performance obligation. The exclusive option related to CCX140 is a separate performance obligation and the Company determined that its transaction price is not material. As such, the transaction price under this arrangement is allocated to the license and the development and regulatory services.

As of March 31, ~~2021,~~2022, the transaction price of ~~$163.0~~$228.0 million comprised the following:

•

$78.0 million upfront payment under the May 2016 Avacopan Agreement. Of the total $85.0 million upfront payment received under the May 2016 Avacopan Agreement, $7.0 million was allocated to 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. The remaining $78.0 million was allocated to the transaction price under this arrangement;

•

$20.0 million upfront payment under the February 2017 Avacopan Amendment;

•

$50.0 million regulatory milestone payment achieved upon the validation of the Company’s CMA application by the EMA, for avacopan for the treatment of ANCA-associated vasculitis in December 2017;

•

$30.0 million regulatory milestone payments achieved upon the acceptance and the approval of the JNDA for TAVNEOS in the treatment of ANCA-associated vasculitis filed by Vifor, through its Japanese sublicensee Kissei with the PMDA in 2021;

•

$45.0million regulatory milestone payment achieved upon the European Commission approving TAVNEOS in combination with a rituximab or cyclophosphamide regimen for the treatment of adult patients with severe active MPA or GPA in 2022; and

•

$5.0 million non-refundable upfront payment under the Avacopan Letter Agreement.

The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

•

~~$20.0 million upfront payment under the February 2017 Avacopan Amendment;~~

•

~~$50.0 million regulatory milestone payment achieved upon the validation of the Company’s CMA application by the EMA, for avacopan for the treatment of ANCA vasculitis in December 2017;~~

•

~~$10.0 million regulatory milestone payment achieved upon the acceptance of the~~ ~~JNDA for avacopan in the treatment of ANCA vasculitis by Vifor, through its Japanese sublicensee~~ ~~Kissei~~ ~~with the PMDA~~ ~~in February 2021; and~~

•

~~$5.0 million non-refundable upfront payment under the Avacopan Letter Agreement.~~

The Company determined that the combined performance obligation will be performed over the duration of the contract, which began on the effective date of May 9, 2016 and ends upon completion of development and regulatory services. The Company uses a

cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize. The Company believes this is the best measure of progress because other measures do not reflect how the Company transfers its performance obligation to Vifor. In applying the cost-based input method of revenue recognition, the Company measures actual costs incurred relative to budgeted costs to fulfill the combined performance obligation. These costs consist primarily of third-party contract costs. Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligations.

For the three months ended March 31, 2022, the Company recognized $0.1 millionof collaboration and license revenue under the Avacopan Agreements, as compared to $9.9 million during the same period in 2021.

Avacopan Commercial Supply Agreement

In October 2020, the Company entered into a Manufacturing and Supply Agreement with Vifor (the Avacopan Commercial Supply Agreement). Under the Avacopan Commercial Supply Agreement, the Company ~~will supply~~supplies and ~~sell avacopan drug product~~sells TAVNEOS to Vifor and its sublicensees for commercial use outside of the United States. Vifor will purchase ~~avacopan drug product~~ TAVNEOS at a certain percentage mark up to the Company’s cost of goods, in accordance with the Avacopan Agreements. Vifor’s purchase of ~~avacopan drug product~~ TAVNEOS is subject to certain binding forecast periods. The Avacopan Commercial Supply Agreement will expire upon the termination of the Avacopan Agreements or under certain circumstances as specified in the Avacopan Commercial Supply Agreement. In connection with the Avacopan Commercial Supply Agreement, the Company also entered into a letter agreement with Vifor, pursuant to which the ~~$6.2~~$6.2 million previously received from Vifor under the CCX140 Agreement (discussed below) is creditable to Vifor’s purchase of ~~avacopan drug product. During the three months ended March 31, 2021, the Company recognized $0.8 million of collaboration and license revenue under the Avacopan Commercial Supply Agreement.~~TAVNEOS

. For the three months ended March 31, 2022 and 2021, ~~the Company~~no product supply revenue was recognized ~~$9.9 millionof collaboration and license revenue~~ under the Avacopan ~~Agreements, as compared to $4.5 million~~Commercial Supply Agreement.~~during the same period in 2020.~~

CCX140 Agreements

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 United States and China. CCX140 is an orally-administered inhibitor of the chemokine receptor known as CCR2. The Company retains marketing rights in the United States and China, while Vifor has commercialization rights in the rest of the world. Pursuant to the CCX140 Agreement, the Company is responsible for the clinical development of CCX140 in rare renal diseases and is reimbursed for Vifor’s equal share of such development cost. Under the terms of the CCX140 Agreement, the Company received a non-refundable upfront payment of ~~$50.0~~$50.0 million in 2017.

In June 2018, the Company and Vifor entered into a letter agreement to expand Vifor’s rights to include the right to exclusively commercialize CCX140 in China (the CCX140 Letter Agreement). In connection with the CCX140 Letter Agreement, the Company received a non-refundable payment of ~~$5.0~~$5.0 million. The Company and Vifor also entered into an amendment to the CCX140 Agreement (the CCX140 Amendment, and together with the CCX140 Agreement and the CCX140 Letter Agreement, the CCX140 Agreements) to clarify the timing of certain payments with respect to development funding of the CCX140 program by Vifor, and the Company received a non-refundable payment of ~~$11.5~~$11.5 million. The Company retains control of ongoing and future development of CCX140 (other than country-specific development in the licensed territories), and all commercialization rights to CCX140 in the United States.

The Company identified the following material promises under the CCX140 Agreements: (1) the license related to CCX140; and (2) the development and regulatory services for the submission of the MAA. The Company considered that the license has standalone functionality and is capable of being distinct. However, the Company determined that the license is not distinct from the development and regulatory services within the context of the agreement because Vifor is dependent on the Company to execute the development and regulatory activities in order for Vifor to benefit from the license. As such, the license is combined with the development and regulatory services into a single performance obligation.

As of March 31, ~~2021,~~2022, the transaction price of ~~$66.5~~$66.5 million comprised the following:

•

$50.0 million upfront payment under the CCX140 Agreement;

•

$11.5 million of CCX140 development funding by Vifor; and

•

$5.0 million non-refundable upfront payment under the CCX140 Letter Agreement.

•

~~$50.0 million upfront payment under the CCX140 Agreement;~~

•

~~$11.5 million of CCX140 development funding by Vifor; and~~

•

~~$5.0 million non-refundable upfront payment under the CCX140 Letter Agreement.~~

~~The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.~~

The Company determined that the combined performance obligation will be performed over the duration of the contract, which began on the effective date of December 22, 2016 and ends upon completion of development services. The Company uses a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize. The

Company believes this is the best measure of progress because other measures do not reflect how the Company transfers its performance obligation to Vifor. In applying the cost-based input method of revenue recognition, the Company measures actual costs incurred relative to budgeted costs to fulfill the combined performance obligation. These costs consist primarily of third-party contract costs. Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligations.

In May 2020, the Company announced topline data from a 46 patient Phase II dose-ranging trial in the orphan kidney disorder, primary Focal Segmental Glomerulosclerosis (FSGS), called the LUMINA-1 trial. In the study, CCX140 did not demonstrate a meaningful reduction in proteinuria relative to the control group after 12 weeks of blinded treatment. As such, CCX140 will not be further developed in FSGS. As a result, the Company reduced the total anticipated FSGS budgeted costs and the corresponding transaction price related to development funding under the CCX140 Agreement by ~~$47.2~~$47.2 million and recognized ~~$46.7~~$46.7 million of contract revenue during the three months ended June 30, 2020. In addition, ~~$6.2~~$6.2 million of deferred revenue previously received from Vifor under the CCX140 Agreements is creditable against Vifor’s purchases of ~~avacopan drug product~~TAVNEOS under the Avacopan Commercial Supply Agreement. 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, the Company would receive co-promotion rights for CKD in the United States.

~~For the three months ended March 31, 2021, the~~The Company fully recognized~~$0.3 million~~of collaboration and license revenue under the CCX140 Agreements in 2021. Accordingly, 0 revenue was recognized during the three months ended March 31, 2022 compared to ~~$1.4~~$0.3 millionduring the ~~same period in 2020. As of~~three months ended March 31, ~~2021, deferred revenue under the CCX140 Agreement was $0.5 million, representing the Company’s remaining estimated performance obligation under these agreements.~~2021.

The following table presents the contract assets and liabilities for all of the Company’s revenue contracts as of the following dates (in thousands):


	March 31,			December 31,			March 31,			December 31,
	2021			2020			2022			2021
Contract asset:
Accounts receivable	$	10,012		$	32		$	29		$	43
Contract liability:
Deferred revenue		(36,376	)		(36,587	)	$	(80,803	)	$	(35,765	)

During the three months ended March 31, ~~2021,~~2022, the Company recognized the following revenue as a result of changes in the contract asset and the contract liability balances (in thousands):


	Three Months Ended March 31,
	2022		2021
Revenue recognized in the period from:
Amount included in contract liability at the beginning of the period	$	0	$	10,211
Performance obligations satisfied (or partially satisfied) in previous periods	$	2,254	$	8,443

Three Months Ended
March 31,

2021

2020

Revenue recognized in the period from:

Amount included in contract liability at the
beginning of the period

$
10,211

$
5,840

Performance obligations satisfied (or partially
satisfied) in previous periods

$
8,443

$
0

Government Grant

9.	~~Government Grant~~

In September 2019, the Company was awarded a two-year ~~$1.0~~ $1.0 million grant from the orphan drug office of the U.S. Food and Drug Administration to support the clinical development of ~~avacopan~~TAVNEOS in patients with the rare kidney disease complement 3 ~~glomerulopathy. For~~glomerulopathy (C3G). The grant was extended for an additional four months in August 2021 and the grant revenue was fully recognized in 2021. Accordingly, 0 revenue was recognized during the three months ended March 31, ~~2021 and 2020,~~2022 compared to $0.1 million in the ~~Company recognized~~same period of 2021. ~~$0.1 millionand $0.2 million of grant revenue, respectively.~~As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, $~~0.1 million~~ 0and ~~$0.1 million~~$28,000 was recorded as accounts receivable, respectively.

10.

Stockholders’ Equity

~~10.~~

~~Stockholders’ Equity~~

Stock Options

During the three months ended March 31, ~~2021,~~2022, the Company had the following activities under its equity incentive plans:


		Available for Grant			Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance at December 31, 2021			5,641,782			6,767,895		$	19.14
	Shares authorized		0			0
	Granted (1)		(1,624,830	)		1,082,730			29.64
	Exercised (2)		0			(604,083	)		10.39
	Forfeited and expired		145,939			(145,939	)		41.27
Outstanding at March 31, 2022			4,162,891			7,100,603		$	21.03		6.22	$	74,672,588
Vested and expected to vest, net of estimated forfeiture at March 31, 2022						6,785,124		$	20.36		6.08	$	74,199,516
Exercisable at March 31, 2022						4,672,389		$	13.93		4.73	$	68,152,545

Available
for Grant

Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term (in years)

Aggregate
Intrinsic Value

Balance at December 31, 2020

3,170,577

7,114,225

$
14.61

Shares authorized

2,000,000

0

Granted ⁽¹⁾

(905,650
)

722,650

65.51

Exercised ⁽²⁾

80,960

(206,605
)

10.46

Forfeited and expired

159,448

(159,448
)

17.74

Outstanding at March 31, 2021

4,505,335

7,470,822

$
19.58

6.46

$
248,649,372

Vested and expected to vest, net of estimated forfeiture
at March 31, 2021

7,191,795

$
18.65

6.36

$
244,786,820

Exercisable at March 31, 2021

4,696,391

$
9.83

5.22

$
194,489,656

(1)

The difference between shares granted in the number of shares available for grant and outstanding options represents the RSUs and RSAs granted for the period with a 1.5 share ratio reduction to the reserve shares for each RSU or RSA grant in accordance with the amended and restated 2012 Equity Incentive Award Plan.

(2)

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

~~(1)~~

~~The difference between shares granted in the number of shares available for grant and outstanding options represents the RSUs and RSAs 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, ~~2021,~~2022, the activity for restricted stock is summarized as follows:

Shares

Weighted
Average
Grant-Date
Fair Value

Balance at December 31, 2020

420,030

$
34.73

Granted

183,000

65.86

Vested

(164,382
)

26.72

Canceled

0

0

Unvested at March, 31, 2021

438,648

$
50.72


	Shares			Weighted Average Grant-Date Fair Value
Balance at December 31, 2021		413,510		$	45.94
Granted		361,400			29.83
Vested		(199,484	)		43.62
Unvested at March 31, 2022		575,426		$	36.63

Stock-based Compensation

Total stock-based compensation expense was ~~$8.1~~$9.4 millionduring the three months ended March 31, ~~2021,~~2022, and ~~$4.6~~$8.1 million during the same period ended March 31, ~~2020.~~2021. As of March 31, ~~2021,~~2022, $~~55.2~~50.0 million, ~~$14.8~~$15.2 million and ~~$74,000~~ $0.1 millionof total unrecognized compensation expenses associated with outstanding employee stock options, unvested restricted stock, and the ESPP, net of estimated forfeitures, respectively, were expected to be recognized over a weighted-average period of ~~2.50, 1.88~~ 2.9, 2.8and ~~0.12~~0.1 years, respectively.

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

~~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, ~~2020,~~2021, filed with the Securities and Exchange Commission, or SEC, on March 1, ~~2021.~~2022.

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 anticipated impact of the ongoing pandemic of novel coronavirus disease 2019, or COVID-19, and its variants on our business, preclinical studies and clinical trials;

•

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;

•

the impact or outcome of putative shareholder class action or putative shareholder derivative litigation;

•

the global economic and political environments;

•

our financial performance; and

•

developments relating to our competitors and our industry.

•

~~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 anticipated impact of the novel coronavirus disease 2019, or COVID-19, pandemic on our business, preclinical studies, clinical trials and ability to commercialize any of our drug candidates;~~

•

~~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, including whether the U.S. Food and Drug Administration, or FDA, will act by the Prescription Drug User Fee Act, or PDUFA, target goal date for a decision of July 7, 2021 for the avacopan New Drug Application, or NDA;

•

~~the anticipated outcome of our Advisory Committee meeting with the FDA, currently scheduled for May 6, 2021;~~

•

~~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, ~~2020,~~2021, filed with the SEC on March 1, ~~2021.~~2022.

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® and~~ChemoCentryx®, the ChemoCentryx logo and TAVNEOSÒare our trademarks in the United States, the European Community, Australia and Japan. ~~EnabaLink®~~ EnabaLink®and ~~RAM®~~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 subsidiaries taken as a whole unless otherwise noted.

Overview

ChemoCentryx is a fully integrated United States biopharmaceutical company focused on the development and commercialization of new medications targeting inflammatory disorders, autoimmune diseases and cancer. We target the chemokine and chemoattractant systems to discover, develop and commercialize orally-administered therapies. In the U.S., we market TAVNEOSÒ (avacopan) as an adjunctive treatment for adult patients with severe active anti-neutrophil cytoplasmic autoantibody-associated vasculitis, or ANCA-associated vasculitis, specifically granulomatosis with polyangiitis, or GPA, and microscopic polyangiitis, or MPA, the two main forms of ANCA-associated vasculitis, in combination with standard therapy including glucocorticoids, and not for the elimination of glucocorticoid use.

In October 2021, we obtained regulatory approval and launched TAVNEOS in the U.S. for the treatment of an orphan disease called ANCA-associated vasculitis, leading to the recent grant of orphan drug marketing exclusivity for a period of seven years discussed further below. TAVNEOS also obtained regulatory approval in Japan for the treatment of patients with MPA and GPA in 2021. In January 2022, the European Commission approved TAVNEOS in combination with a rituximab or cyclophosphamide regimen for the treatment of adult patients with severe active GPA or MPA. TAVNEOS received marketing authorization in all member states of the EU, as well as in Iceland, Liechtenstein and Norway. Also, in January 2022, the FDA granted a seven-year orphan drug marketing exclusive approval for TAVNEOS which began on October 7, 2021, the date of approval of the NDA. We are required to assure the availability of sufficient quantities of TAVNEOS to meet the needs of patients to maintain exclusivity.

ANCA-associated vasculitis is a group of rare diseases that affect small-to-medium sized blood vessels in the patient’s body. It involves inflammation of the blood vessels, which reduces blood flow and can result in organ damage and failure, with the kidney as the major target, and is often fatal if not treated. While a patient’s genetics and environment are thought to be contributing causes of the disease, the exact cause is currently unknown.

The two most common sub-types of ANCA-associated vasculitis are GPA and MPA. In GPA, small areas of inflammation called “granulomas” develop inside parts of the body. GPA typically involves the kidneys, lungs, ears, nose and throat. If a patient has GPA they may be at risk for serious complications, such as hearing loss, kidney damage, skin scarring, or blood clots. MPA also affects the lungs and kidneys. However, unlike GPA, a patient’s ears, nose and throat are less likely to be affected, and there is no granuloma formation.

We plan to capitalize on TAVNEOS’s potential to address multiple disease areas in the coming years. We consider TAVNEOS to be a ‘Pipeline in a Drug.’ We plan to continue or initiate clinical development in additional rare diseases, including severe hidradenitis suppurativa, or HS, complement 3 glomerulopathy, or C3G, and lupus nephritis, or LN.

Our goal is to change treatment paradigms in orphan and rare disease; specifically targeting the chronic inflammatory pathway while avoiding immuno-suppression. Each of our drug candidates and our first commercial drug product, TAVNEOS, are designed to selectively block a specific chemoattractant ~~receptor, leaving the rest of the immune system intact. Our check point inhibitor~~receptor. Separately, in our cancer program, we use a novel, orally-administered drug candidate, CCX559, ~~is an exception,~~designed to inhibit programmed death-ligand 1/programmed death protein 1, or PD-L1/PD-1, which ~~targets PD-1/PD-L1. Our drug candidates~~we are small molecules, which are orally administered, and, if approved, could address unmet medical needs, including improved efficacy, and offer 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, our drug candidates may improve patient compliance.

We ~~are preparing~~developing for the ~~potential commercial launch~~treatment of ~~avacopan, an orally-administered selective complement 5a receptor inhibitor,~~a variety of cancers. Small molecule checkpoint inhibitors may have advantageous properties compared to approved monoclonal antibodies, such as better penetration into solid tumors, reduced immunogenicity, lack of Fc-mediated side effects, and the convenience of oral administration.

Highlights from our development pipeline include:

TAVNEOSÒ(avacopan):

•

We are also developing TAVNEOS for the treatment of severe HS. We reported initial topline data, including positive results in a subgroup analysis of patients with Hurley Stage III (considered to have severe HS) from the Phase II AURORA trial of TAVNEOS; however, the primary efficacy endpoint was not met in the overall study population. Pending interactions with regulatory agencies, we plan to advance TAVNEOS into Phase III clinical development for the treatment of severe HS in the second half of 2022.

•

We plan to develop TAVNEOS in additional complement-mediated renal indications, such as LN. We plan to initiate a clinical development program for TAVNEOS in LN in the second half of 2022, pending interaction with regulatory agencies.

•

We also reported initial topline data from the Phase II ACCOLADE trial of TAVNEOS for the treatment of patients with ~~anti-neutrophil cytoplasmic autoantibody-associated vasculitis, or ANCA vasculitis. In November 2019, we announced positive topline~~C3G. We plan to review data from the ~~pivotal Phase III ADVOCATE~~ACCOLADE trial with FDA in second half of ~~avacopan~~2022.

Immuno-Oncology

•

CCX559 is our orally-administered inhibitor for PD-L1/PD-1, which we are developing for the treatment of various cancers. This structurally novel small molecule displayed nanomolar potency and high selectivity for PD-L1. Results from in vitro studies suggested that CCX559 induced the dimerization and internalization of cell-surface PD-L1. CCX559, when orally administered in animal models, was observed to have anti-tumor activity, including the potential to induce complete responses. Safety pharmacology and toxicology studies in preclinical animal species supported the initiation of human trials in patients with ~~ANCA vasculitis. In February 2021, results from our~~advanced tumors. We initiated a Phase ~~III ADVOCATE trial were published as a peer reviewed journal article~~I dose escalation study of CCX559 in ~~The New England Journal of Medicine, or NEJM.~~

~~In September 2020, we announced that the FDA had accepted for review the avacopan New Drug Application, or NDA, for the treatment of ANCA vasculitis~~patients with advanced solid tumors in the ~~United States and had set July 7, 2021 as the Prescription Drug User Fee Act, or PDUFA, target goal date for the avacopan NDA. If the NDA is approved, we~~second quarter of 2021. We plan to ~~commercialize avacopan~~report initial data from this study in ~~the United States on our own. We also plan to commercialize avacopan internationally through our kidney health alliance with Vifor Fresenius Medical Care Renal Pharma Ltd.~~2022 and ~~its affiliates and sublicensees, or collectively, Vifor. In November 2020, Vifor announced that the Marketing Authorisation Application, or MAA, for avacopan~~initiate a Phase 1b/2 clinical study in the treatment of ANCA vasculitis was accepted for review (validated) by the European Medicines Agency, or EMA. In February 2021, Vifor and Kissei filed the Japanese NDA, or JNDA, for avacopan in the treatment of ANCA vasculitis with the Japanese Pharmaceuticals and Medical Device Agency, or PMDA. ~~Decisions on the MAA and JNDA filings are expected~~selected patient populations in the second half of ~~2021. Our pipeline includes the following programs:~~

~~Avacopan:~~

2022.

•

We are also developing avacopan for the treatment of severe (Hurley Stage III) hidradenitis suppurativa, or HS. In October 2020, we announced positive topline data in severe HS patients from the Phase II AURORA trial of avacopan. We plan to advance avacopan into a Phase III clinical trial for the treatment of severe HS in the second half of 2021.

•

In December 2020, we announced topline data from the Phase II ACCOLADE trial of avacopan for the treatment of patients with complement 3 glomerulopathy, or C3G. We plan to discuss the evidence of clinical benefit of avacopan in C3G with the FDA in 2021.

•

Based on the renal improvement results observed with avacopan treatment in both the ADVOCATE trial in ANCA vasculitis and the ACCOLADE trial in C3G, as measured by an increase in estimated glomerular filtration rate, we plan to develop avacopan in additional complement-mediated renal indications such as lupus nephritis, or LN. We plan to initiate a registrational clinical trial of avacopan for the treatment of LN in the second half of 2021.

~~Immuno-Oncology:~~

•

CCX559 is our orally-administered inhibitor for programmed death protein 1/programmed death-ligand 1, or PD-1/PD-L1, which we are developing for the treatment of various cancers. We plan to initiate a Phase I clinical trial of CCX559 in the first half of 2021.

Our Strategy

The key elements to our commercial and scientific strategy are to:

•

Commercialize TAVNEOS® (avacopan) in the United States using our own resources, where we believe a company of our size can effectively compete in rare disease markets. We have deployed a specialty sales force primarily targeting that subset of nephrologists and rheumatologists treating ANCA-associated vasculitis patients in the United States;

•

Continue to develop CCX559, our orally-administered inhibitor for PD-L1/PD-1 for various cancers;

•

Develop and commercialize TAVNEOS for additional indications, including C3G, severe HS, and additional complement-mediated renal indications, such as LN, if approved;

•

Develop our drug candidates and establish collaborations with pharmaceutical and biotechnology companies to further develop and market our drug candidates; and

•

Discover and develop new drug candidates.

•

Obtain regulatory approval of avacopan for the treatment of ANCA vasculitis in the United States on our own, and support our international commercialization partner Vifor and its Japanese sublicensee Kissei Pharmaceutical, Co., Ltd., or Kissei, in their regulatory approval applications;

•

Commercialize avacopan in the United States on our own, where we believe a company of our size can effectively compete in rare disease markets. If our avacopan NDA is approved by the FDA, we plan to deploy a specialty sales force primarily targeting that subset of nephrologists and rheumatologists treating ANCA vasculitis patients in the United States;

•

~~Develop and commercialize avacopan for additional indications, including C3G, severe HS, and additional complement-mediated renal indications such as LN;~~

•

~~Develop our other drug candidates and establish collaborations with pharmaceutical and biotechnology companies to further develop and market our drug candidates; and~~

•

~~Discover and validate new drug candidates.~~

As of March 31, ~~2021,~~2022, we had an accumulated deficit of ~~$515.1~~$655.7 million. We expect to continue to incur net losses as we continue to commercialize TAVNEOS in the United States, develop our drug candidates, expand clinical trials for our drug candidates currently in clinical development, and expand our research and development activities, ~~expand our~~organization 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.facilities. Significant capital is required to ~~launch~~commercialize a drug 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.

COVID-19

In December 2019, a disease caused by a novel strain of coronavirus, COVID-19, was identified in Wuhan, China. This virus ~~continues to~~has spread globally, ~~and has spread to nearly every country and region in the world,~~ including ~~those~~countries in which we have active clinical trial sites or contract manufacturing sites. The length of the pandemic and its related restrictions and their consequences for us remain subject to a number of risks and ~~uncertainties.~~uncertainties, including disease resurgence and variants. We experienced a delay in topline clinical data from our ongoing AURORA trial to the fourth quarter of 2020, due to COVID-19, impacting certain sites where the trial was being conducted. We do not currently anticipate any material delays in our ~~preparation for~~ commercial ~~readiness to launch avacopan for the treatment~~production of ~~ANCA vasculitis, if approved,~~TAVNEOS nor are we currently anticipating any material disruption in our clinical drug supply as a result of the pandemic. However, the pandemic continues to be unpredictable, and impacts may not be foreseeable or expected.

Critical Accounting Policies and Significant Judgments and Estimates

There have been no material changes in significant judgments and estimates for our critical accounting policies during the three months ended March 31, ~~2021,~~2022, 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, ~~2020,~~2021, filed with the SEC on March 1, ~~2021.~~2022.

Results of Operations

Revenue

We ~~have not generated any revenue from product sales. For~~launched TAVNEOS and began commercial sales during the periods presented, our revenues were derived from collaboration and license revenue related to the Avacopan Agreement, the Avacopan Commercial Supply Agreement and the CCX140 Agreement, in each case, as amended, and the related letter agreements.quarter ended December 31, 2021. Total revenue for the three months ended March 31, ~~2021,~~2022, as compared to the same period in the prior year, was as follows (in thousands):

Three Months Ended
March 31,

2021

2020

Collaboration and license revenue from
related party

$
10,223

$
5,855

Grant revenue

130

153

Total revenue

$
10,353

$
6,008

Dollar increase (decrease)

$
4,345

Percentage increase (decrease)

72
%


	Three Months Ended March 31,
	2022			2021
Product sales, net	$	5,353		$	—
Collaboration and license revenue from related party		106			10,223
Grant revenue		—			130
Total revenue	$	5,459		$	10,353
Dollar decrease	$	(4,894	)
Percentage decrease		(47	%)

WeFor the three months ended March 31, 2022, our revenue was primarily derived from TAVNEOS sales, as compared to the collaboration and license revenue generated in the same period of 2021 related to the Avacopan Agreements and the CCX140 Agreement, in each case, as amended, and the related letter agreements.

For the collaboration and license revenue, we use a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize. In applying the cost-based input method of revenue recognition, we measure actual costs incurred relative to budgeted costs to fulfill the combined performance obligation. These costs consist primarily ~~consist~~ of third-party contract costs. Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs as we complete our performance obligations.

The ~~increase~~decrease in total revenue from ~~2020~~2021 to ~~2021~~2022 for the three ~~month period~~months ended March 31 was attributable to ~~was primarily attributable to~~ the $10.0 million milestone received in 2021 from Vifor for the February 2021 acceptance of the ~~JNDA~~ ~~by the PMDA,~~Japanese NDA, for ~~avacopan~~TAVNEOS in the treatment of ~~ANCA vasculitis.~~ ~~In addition, we recognized $0.8 million~~ANCA-associated vasculitis, which subsequently led to the September 2021 Japanese NDA approval of ~~collaboration and license revenue related to sales of avacopan drug product to Vifor for anticipated commercial use outside~~TAVNEOS. The impact of the ~~United States. These increases were~~increase in transaction price of the Avacopan Agreements from the $45.0 million non-refundable regulatory milestone received upon TAVNEOS approval in Europe during the first quarter of 2022 was offset by the impact of an increase in the estimated underlying development budget (which also occurred in the quarter ended March 31, 2022 but was unrelated to the increase in the transaction price) and therefore is currently estimated to be recognized over a four year period, subject to adjustment from time to time, as performance obligations under the Avacopan Agreements are fulfilled. This overall decrease in revenue was partially offset by ~~a decrease~~U.S. TAVNEOS net sales in ~~revenue associated with the CCX140 Agreement, reflecting~~ ~~the decision to discontinue development of CCX140 in FSGS in the second quarter of 2020.~~2022.

Research and development expenses

Research and development expenses represent costs incurred to conduct basic research, 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 ~~month period~~months ended March 31, ~~2021,~~2022, as compared to the same period in the prior year, were as follows (in thousands):

Three Months Ended
March 31,

2021

2020

Research and development expenses

$
23,418

$
19,311

Dollar increase

$
4,107

Percentage increase

21
%


	Three Months Ended March 31,
	2022				2021
Research and development expenses		$	17,476			$	23,418
Dollar decrease		$	(5,942	)
Percentage decrease			(25	%)

The ~~increase~~decrease from ~~2020~~2021 to ~~2021~~2022 for the three ~~month periods~~months ended March 31 was primarily attributable to the manufacture of commercial drug supply which was accounted for as inventory in the first quarter of 2022 as compared to the same period of 2021 in which such costs were expensed in anticipation of the launch of ~~avacopan~~TAVNEOS for the treatment of ~~ANCA vasculitis and higher~~ANCA-associated vasculitis. Manufacturing costs associated with campaigns initiated prior to FDA approval were recorded as research and ~~drug discovery~~development expense. Lower Phase II related expenses due to the completion of the TAVNEOS AURORA Phase IIb clinical trial in patients with HS also

contributed to the decrease. These decreases were partially offset by higher expenses, including those associated with the development of CCX559, our orally-available small molecule checkpoint ~~(PD-1/PD-L1)~~(PD-L1/PD-1) inhibitor. These increases were partially offset by lower Phase II related expenses due to the completion of patient enrollment of the avacopan AURORA Phase IIb clinical trial in patients with HS and the discontinuation of further clinical development of CCX140 in FSGS in 2020.

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


	Three Months Ended March 31,				Three Months Ended March 31,
	2021		2020		2022		2021
Phase I	$	17	$	394	$	2,671	$	17
Phase II		4,048		7,945		3,102		4,048
Phase III		10,910		6,611		7,487		10,910
Research and drug discovery		8,443		4,361		4,216		8,443
Total research and development expenses	$	23,418	$	19,311	$	17,476	$	23,418

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, as we did with TAVNEOS, 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 drug products. Completion dates and completion costs can vary significantly for each drug candidate and are difficult to predict for each drug 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 may 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,~~TAVNEOS, CCX559 and CCX507.

~~General~~Selling, general and administrative expenses

Total selling, general and administrative expenses for the three months ended March 31, ~~2021,~~2022, as compared to the same period in the prior year, were as follows (in thousands):

	Three Months Ended March 31,
	2021			2020		Three Months Ended March 31,
General and administrative expenses	$	16,262		$	8,820
						2022				2021
Selling, general and administrative							$	26,011			$	16,262
Dollar increase	$	7,442					$	9,749
Percentage increase		84	%					60	%

~~General~~Selling, general and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation and travel expenses, in executive, finance, commercial, business and corporate development and other administrative ~~functions.~~functions, as well as costs associated with the launch and commercialization of TAVNEOS. Other selling, 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 ~~2020~~2021 to ~~2021~~2022 for the three month ~~periods~~period ended March 31 was primarily due to higher employee-related expenses and professional fees, including those associated with ~~our~~the U.S. launch and commercialization ~~planning efforts, and higher professional fees.~~ of TAVNEOS.

We anticipate that our selling, general and administrative expenses will increase substantially in the future primarily due to commercialization-related activities and personnel costs to support the ~~anticipated launch~~commercialization of ~~avacopan~~TAVNEOS as an adjunctive treatment for ~~the treatment of ANCA~~adult patients with severe active ANCA-associated vasculitis in the United States.

Other ~~income (expense),~~expense, net

Other ~~income (expense),~~expense, net primarily consists of interest income earned on our marketable securities and interest expense for our long-term debt. Total other ~~income (expense),~~expense, net for the three month period ended March 31, ~~2021,~~2022, as compared to the same period in the prior year was as follows (in thousands):


	Three Months Ended March 31,						Three Months Ended March 31,
	2021			2020			2022				2021
Interest income	$	305		$	984			$	222			$	305
Interest expense		(689	)		(548	)			(597	)			(689	)
Total other income (expense), net	$	(384	)	$	436
Total other expense, net								$	(375	)		$	(384	)
Dollar decrease	$	(820	)					$	(9	)
Percentage decrease		(188	%)						(2	%)

The decrease infrom total other ~~income (expense),~~expense, net from ~~2020~~2021 to ~~2021~~2022 for the three ~~month period~~months ended March 31 was primarily due to less interest expense and less interest income earned from our investment portfolio during the continued low interest rate environment during the current COVID-19 pandemic and increased interest expense due to additional borrowings under the Credit Facility and the Restated Credit Facility (as defined below), partially offset by interest income from higherlower cash and investment ~~balances.~~balances.

Liquidity and Capital Resources

As of March 31, ~~2021,~~2022, we had approximately ~~$425.2~~$372.9 million in cash, cash equivalents, restricted cash and investments. The following table shows a summary of our cash flows for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):


	Three Months Ended March 31,						Three Months Ended March 31,
	2021			2020			2022				2021
Cash provided by (used in)
Operating activities	$	(21,567	)	$	(27,446	)		$	8,831			$	(21,567	)
Investing activities	$	60,668		$	32,028			$	(21,337	)		$	60,668
Financing activities	$	(2,850	)	$	15,675			$	3,105			$	(2,850	)

Operating activities. Net cash ~~used in~~provided by operating activities was ~~$21.6~~ $8.8million for the three months ended March 31, ~~2021,~~2022, compared to ~~$27.4~~$21.6 million cash used for the same period in ~~2020.~~2021. This ~~decrease~~increase was primarily due to changes in working capital items.

Investing activities. Net cash used in or provided by investing activities for periods presented primarily relate to the purchase, sale and maturity of investments used to fund the day-to-day needs of our business. ~~Following our equity follow-on offering in June 2020, we invested the majority of our net proceeds received in short and long term investments.~~

Financing activities. Net cash ~~used in~~ provided byfinancing activities was ~~$2.9~~$3.1 million for the three months ended March 31, ~~2021,~~2022, compared to cash ~~provided~~used in financing activities of ~~$15.7~~$2.9 million for the same period in ~~2020. Net cash provided by financing activities for the three months ended March 31, 2020 included net proceeds of $4.4 million received under the Restated Credit Facility.~~2021. Net cash provided by financing activities for both periods presented included proceeds from the exercise of stock options and stock purchases from contributions to our amended and restated 2012 Employee Stock Purchase Plan, and cash used for tendered ChemoCentryx, Inc. common stock to satisfy employee tax withholding requirements upon vesting of restricted stock ~~units.~~units.

As of March 31, ~~2021,~~ 2022, we had borrowed $20.0 million under the ~~loan and security agreement, or~~ Credit Facility with Hercules Capital, Inc., or Hercules. We made interest-only payments through June 2021 and the first principal and interest payment on July 1, 2021. The Credit Facility was subsequently amended in July 2021 and December 2021 to extend the interest-only payment period through August 2022, at which point we will be obligated to repay the principal balance and interest on the advances in equal monthly installments through December 2022. In January 2020, we entered into ~~an amended and restated credit facility with Hercules, or~~ the Restated Credit Facility, which provides for borrowings of up to an additional $100.0 million in three tranches, subject to certain terms and conditions. As of March 31, ~~2021,~~2022, we had borrowed $5.0 million under the Restated Credit Facility. With the FDA approval of TAVNEOS in October 2021, the interest-only payment period and the principal balance repayment period was extended through March 1, 2023 and February 1, 2025, respectively. We are obligated to pay an end of

term charge of $1.3 million in December 2022. See “Note 6. Long-term Debt” in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information regarding our borrowings.

As of March 31, ~~2021,~~2022, we had approximately ~~$425.2~~$372.9 million in cash, cash equivalents, restricted cash and investments. We believe that our available cash, cash equivalents, restricted cash and investments will be sufficient to fund our anticipated level of operations and capital expenditures for at least 12 months following issuance of our financial ~~statement issuance date, April 30, 2021.~~statement. 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 continuing sales of TAVNEOS as an adjunctive treatment for adult patients with severe active ANCA-associated vasculitis;

•

the initiation, progress, timing and completion of preclinical studies and clinical trials for our drug candidates and potential drug candidates, including any delays as a result of the COVID-19 pandemic on our business, preclinical studies or clinical trials;

•

Vifor and any sublicensees’ ability to successfully commercialize and launch TAVNEOS and royalties therefrom;

•

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

•

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

•

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~~clinical trials;

•

the outcome, timing and cost of regulatory approvals;

•

delays that may be caused by regulatory timelines and outcomes;

•

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

•

the ~~contractual obligations~~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 and TAVNEOS;

•

the cost and effectiveness of sales, marketing and distribution functions; and

•

the extent to which we ~~reported~~acquire or invest in ~~our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 1, 2021.~~

~~Off-Balance Sheet Arrangements~~

~~We do not have any off-balance sheet arrangements (as defined by applicable SEC regulations) that are reasonably likely to have a current~~businesses, drug candidates or ~~future material effect on our financial condition, results of operations, liquidity, capital expenditures~~products or ~~capital resources, except warrants and stock options.~~

technologies.

Recent Accounting Pronouncements

See “Note 2. Summary of Significant Accounting Policies” in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for a full description of recently issued accounting pronouncements, including the respective expected dates of adoption and effects on our consolidated financial position and results of operations.10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

Our market risks at March 31, ~~2021~~2022 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, ~~2020,~~2021, filed with the SEC on March 1, ~~2021,~~2022, other than the following:

We are affectedby market risk exposure primarily through the effect of changes in interest rates on amounts payable under the Credit Facility and Restated Credit Facility. At March 31, ~~2021,~~2022, borrowings under the Credit Facility totaled $20.0 million with an interest rate of 8.05%. Advances under the Credit Facility bear an interest rate equal to the greater of (i) 8.05% plus the prime rate as reported from time to time in The Wall Street Journal, or Prime Rate, minus 4.75%, and (ii) 8.05%. We ~~are obligated to make~~made interest-only payments on our borrowings under the Credit Facility through June 2021 and the first principal and interest payment on July 1, 2021. The Credit Facility was subsequently amended in July 2021 ~~at which point we~~and December 2021 to extend the interest-only payment period through August 1, 2022, and will then ~~be obligated to~~ repay the principal balance and interest on the advances in equal monthly installments ~~after the interest-only period and continuing~~ through December 1, 2022.

In addition, borrowings under the Restated Credit Facility totaled $5.0 million at March 31, ~~2021~~2022 with an interest rate equal to the greater of (i) 8.50% plus the Prime Rate minus 5.25%, and (ii) 8.50%, which may be reduced upon the Company achieving certain cumulative net ~~avacopan~~TAVNEOS revenue levels. We are obligated to make interest-only payments on our borrowings under the Restated Credit Facility through ~~September~~February 1, ~~2022, at which point we~~2023, and will then ~~be obligated to~~ repay the principal balance and interest on the advances in equal monthly installments ~~after the interest-only period and continuing~~ through February 1, ~~2024.~~2025. If the total amounts outstanding under the Credit Facility and the Restated Credit Facility remained at this level for an entire year and the interest rates increased by 1%, our annual interest expense would increase by an

additional $250,000. See “Note 6. Long-term Debt” in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information regarding our borrowings.

Item 4. Controls and Procedures

~~Item 4.~~

~~Controls and Procedures~~

Conclusions Regarding the Effectiveness of Disclosure Controls and Procedures

As of March 31, ~~2021,~~2022, 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 Securities and Exchange Commission’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, ~~2021,~~2022, 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, ~~2021,~~2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. As a result of the COVID-19 pandemic, including the related stay-at-home and shelter-in-place orders mandated by state and local governments in which we operate, many of our employees have been working remotely since March 2020. As part of our Company’s transition to a temporary remote workforce, we took precautionary actions to re-evaluate our financial reporting process to provide assurance that we could report our financial results accurately and timely. We will continue to monitor and assess new potential impacts of the COVID-19 pandemic, including those related to any stay-at-home and shelter-in-place requirements, on the design and operating effectiveness of our internal controls going forward.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company and its Chief Executive Officer were named as defendants in two putative shareholder class actions filed on May 5, 2021, and June 8, 2021, in the U.S. District Court for the Northern District of California. These cases have been consolidated into the lead case, Homyk v. ChemoCentryx, Inc., No. 4:21-cv-03343-JST (N.D. Cal.) (the “Homyk action”). The Homyk action alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act in connection with statements regarding the New Drug Application, or NDA, for TAVNEOS, and the underlying Phase III clinical trial, seeking an award of damages, interest and attorneys’ fees. A lead plaintiff was selected on January 28, 2022, and a consolidated amended complaint was filed on March 28, 2022. The Company’s motion to dismiss these claims will be filed on May 19, 2022 and heard sometime after August 3, 2022, when the motion is fully briefed. In addition, the Company, the Board of Directors and certain of our officers were named as defendants in a putative shareholder derivative action filed on January 25, 2022, in the U.S. District Court for the Northern District of California, Napoli v. Schall, 3:22-cv-00499 (N.D. Cal) (the “Napoli action”). On March 11, 2022, the Court entered a stipulation staying the Napoli action until judgment is entered in the Homyk action. The Company plans to vigorously defend against both actions. Given the early stages of both cases, the Company is unable to estimate a reasonably possible range of loss, if any, that may result from either litigation.

~~Legal Proceedings~~

~~Not Applicable.~~

Item 1A. Risk Factors

~~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, ~~2020,~~2021, filed with the SEC on March 1, ~~2021.~~2022, except the following:

We are subject to a securities class action lawsuit and a shareholder derivative action, and could become involved in further
securities class action or derivative litigation in the future that could divert management’s attention and adversely affect our
business and could subject us to significant liabilities. If an unfavorable ruling were to occur, the litigation could have a material
adverse impact.

The stock markets have from time-to-time experienced significant price and volume fluctuations that have affected the market prices for the shares of biotechnology and pharmaceutical companies. These broad market fluctuations as well a broad range of other factors, including the realization of any of the risks described in the “Risk Factors” section of our Annual Report on Form 10‐K for the fiscal year ended December 31, 2021, may cause the market price of the shares of our common stock to decline. In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and pharmaceutical companies generally experience significant share price volatility. Litigation often is expensive and diverts management’s attention and resources, which could adversely affect our business. Any adverse determination in any such litigation or any amounts paid to settle any such actual or threatened litigation could require that we make significant payments. We are presently involved and may become involved in this type of litigation in the future. As of the date of this filing, a consolidated securities class action (Homyk v. ChemoCentryx, Inc., 4:21-cv-03343-JST (N.D. Cal.)) and a shareholder derivative action (Napoli v. Schall, 3:22-cv-00499 (N.D. Cal)) have been filed against us and/or certain of our officers and directors. The shareholder derivative action is stayed pending entry of judgment in the consolidated securities class action. Given the early stage of these cases, we are unable to estimate a range of potential loss. An unfavorable ruling in either lawsuit could have a materially adverse impact on us.

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

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

Not Applicable.

Item 3. Defaults Upon Senior Securities

~~Item 3.~~

~~Defaults Upon Senior Securities~~

Not Applicable.

Item 4. Mine Safety Disclosures

~~Item 4.~~

~~Mine Safety Disclosures~~

Not Applicable.

Item 5. Other Information

~~Item 5.~~

~~Other Information~~

Not Applicable.

Item 6. Exhibits

~~Item 6.~~

~~Exhibits~~

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

EXHIBIT INDEX


Exhibit Number		Description

10.1#		Amended and Restated 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.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)


#		Indicates management contract or compensatory plan.

~~SIGNATURES~~30

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: ~~April 30, 2021~~May 10, 2022		/s/ Thomas J. Schall, Ph.D.

		Thomas J. Schall, Ph.D. President and Chief Executive Officer (Principal Executive Officer)

Date: ~~April 30, 2021~~May 10, 2022		/s/ Susan M. Kanaya

		Susan M. Kanaya Executive Vice President, Chief Financial and Administrative Officer and Secretary ~~(Principal~~ (Principal Financial and Accounting Officer)

~~Date: April 30, 2021~~		~~/s/ Pui San Kwan~~

		~~Pui San Kwan~~ ~~Vice President, Finance~~ ~~(Principal Accounting Officer)~~

2931


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

835 Industrial Road, Suite 600 San Carlos, California	94070
(Address of Principal Executive Offices)	(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	CCXI	The Nasdaq Stock Market LLC


	Three Months Ended
	March 31,
	2022		2021
Options to purchase common stock, including purchases from contributions to ESPP		7,123		7,483
Restricted stock units		560		425
Restricted stock awards		15		14
Warrant to purchase common stock(1)		0		150
		7,698		8,072

	Three Months Ended March 31,
	2021		2020
Options to purchase common stock, including purchases from contributions to ESPP		7,483		8,467
Restricted stock units		425		419
Restricted stock awards		14		31
Warrants to purchase common stock		150		150
		8,072		9,067


	Amounts
Year ending December 31:
Remaining of fiscal year 2022	$	18,951
2023		1,979
2024		2,566
2025		455
Total minimum payments		23,951
Less: amount representing debt discount		(269	)
Present value of remaining debt payments		23,682
Less: current portion		(19,128	)
Non-current portion	$	4,554


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


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


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets – March 31, ~~2021~~2022 and December 31, ~~2020~~2021	3

	Condensed Consolidated Statements of Operations – Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	4

	Condensed Consolidated Statements of Comprehensive Loss – Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	5

	Condensed Consolidated Statements of Stockholders’ Equity – Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	6

	Condensed Consolidated Statements of Cash Flows – Three Months Ended March 31, ~~2021~~2022 and ~~2020~~2021	7

	Notes to Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2526

Item 4.	Controls and Procedures	2627

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	2728

Item 1A.	Risk Factors	2728

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2729

Item 3.	Defaults Upon Senior Securities	2729

Item 4.	Mine Safety Disclosures	2729

Item 5.	Other Information	2729

Item 6.	Exhibits	2729

EXHIBIT INDEX		2830

SIGNATURES		2931

	Common Stock					Additional Paid-In			Note			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount		Capital			Receivable			Income (Loss)			Deficit			Equity			Common Stock					Additional Paid-In			Note			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
Balance as of December 31, 2020		69,452,466		$	69	$	870,788		$	(16	)	$	114		$	(485,342	)	$	385,613
																					Shares			Amount		Capital			Receivable			Income (Loss)			Deficit			Equity
Balance as of December 31, 2021																						70,357,557		$	70	$	903,646		$	(16	)	$	(483	)	$	(617,097	)	$	286,120
Net loss		0			0		0			0			0			(29,711	)		(29,711	)		—			—		—			—			—			(38,608	)		(38,608	)
Unrealized loss on investments		0			0		0			0			(128	)		0			(128	)		—			—		—			—			(1,372	)		—			(1,372	)
Issuance of common stock under equity incentive plans and employee stock purchase plans		370,987			1		2,162			0			0			0			2,163
Issuance of common stock upon net exercise of warrant																						66,833			—		—			—			—			—			—
Issuance of common stock under equity incentive and employee stock purchase plans																						803,567			1		6,278			—			—			—			6,279
Repurchased shares upon vesting of restricted stock units for tax withholdings		(80,960	)		0		(5,013	)		0			0			0			(5,013	)		(85,855	)		—		(3,126	)		—			—			—			(3,126	)
Employee stock-based compensation		0			0		7,840			0			0			0			7,840			—			—		9,182			—			—			—			9,182
Compensation expense related to options granted to consultants		0			0		240			0			0			0			240			—			—		244			—			—			—			244
Balance as of March 31, 2021		69,742,493		$	70	$	876,017		$	(16	)	$	(14	)	$	(515,053	)	$	361,004
Balance as of March 31, 2022																						71,142,102		$	71	$	916,224		$	(16	)	$	(1,855	)	$	(655,705	)	$	258,719

	December 31, 2020
	Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value
Money market fund	$	30,139	$	0	$	0		$	30,139
U.S. treasury securities		176,625		60		0			176,685
Government-sponsored agencies		12,500		0		0			12,500
Commercial paper		140,364		0		0			140,364
Asset-backed securities		25,706		23		0			25,729
Corporate debt securities		72,764		38		(7	)		72,795
Total available-for-sale securities	$	458,098	$	121	$	(7	)	$	458,212

Classified as:
Cash equivalents								$	30,139
Short-term investments									404,273
Long-term investments									23,800
Total available-for-sale securities								$	458,212

	Amounts
Year ending December 31:
Remaining of fiscal year 2021	$	6,389
2022		14,666
2023		3,353
2024		592
Total minimum payments		25,000
Less: amount representing debt discount		(525	)
Present value of remaining debt payments		24,475
Less: current portion		(9,609	)
Non-current portion	$	14,866


	Operating leases			Operating leases
Year ending December 31:
Remaining of fiscal year 2021	$	4,344
2022		7,328
Remaining of fiscal year 2022				$	5,525
2023		7,528			7,535
2024		7,733			7,741
2025		7,944			7,952
2026					8,170
Thereafter		44,647			36,517
Total minimum payments		79,524			73,440
Less: interest		(29,148	)		(24,463	)
Less: future tenant improvement reimbursements		(4,818	)
Present value of lease liabilities	$	45,558		$	48,977

	Shares			Weighted Average Grant-Date Fair Value
Balance at December 31, 2020		420,030		$	34.73
Granted		183,000			65.86
Vested		(164,382	)		26.72
Canceled		0			0
Unvested at March, 31, 2021		438,648		$	50.72