Table of Contents

Index to Financial Statements

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 20202021

OR

Commission File Number 001-35420

ChemoCentryx, Inc.

(Exact name of Registrant as specified in its Charter)

Registrant’s telephone number, including area code: (650) (650) 210-2900

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ ☐No No ☒

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ ☐No No ☒

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

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

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter was approximately $1.9 billion,$387.1 million, based on the closing price of the registrant’s common stock on the Nasdaq Global Select Market of $57.54$13.39 per share.

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of February 22, 20212022 was 69,613,267.70,840,622.

Table of Contents

Index to Financial Statements

CHEMOCENTRYX, INC.

FORM 10-K — ANNUAL REPORT

For the Fiscal Year Ended December 31, 20202021

Table of Contents

i

Table of Contents

Index to Financial Statements

PART I

Forward-Looking Statements and Market Data

This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Annual Report on Form 10-K 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:

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 listed under “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Any forward-looking statement in this Annual Report on Form 10-K 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.

This Annual Report on Form 10-K also contains estimates, projections and other information concerning our industry, our business, and the markets for certain drugs, including data regarding the estimated size of those markets, their projected growth rates, the incidence of certain medical conditions, statements that certain drugs, classes of drugs or dosages are the most widely prescribed in the United States or other markets, the perceptions and preferences of patients and physicians regarding certain therapies and other prescription, prescriber and patient data, as well as data regarding market research, estimates and forecasts prepared by our management. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties,

2

Table of Contents

Index to Financial Statements

industry, medical and general publications, government data and similar sources. In particular, unless otherwise specified, all prescription, prescriber and patient data in this Annual Report on Form 10-K is from Datamonitor or

2

Table of Contents

Index to Financial Statements

Global Data. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

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

Unless the context requires otherwise, in this Annual Report on Form 10-K the terms “ChemoCentryx,” “we,” “us” and “our” refer to ChemoCentryx, Inc., a Delaware corporation, and our subsidiaries taken as a whole unless otherwise noted.

3

Table of Contents

Index to Financial Statements

Item 1. Business.

Overview

ChemoCentryx is aan integrated United States biopharmaceutical company focused on the developmentcommercializing and commercialization ofdeveloping new medications targetingfor inflammatory disorders,and autoimmune diseases and cancer. EachWe target the chemokine and chemoattractant systems to discover, develop and commercialize orally-administered therapies. In the U.S., we market TAVNEOS® (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.

2021 was a transformational year for ChemoCentryx. We became an integrated biopharmaceutical company. 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. TAVNEOS also obtained regulatory approval in Japan for the treatment of patients with MPA and GPA. The European Medicines Agency’s, or EMA, Committee for Medicinal Products for Human Use, or CHMP, also adopted a positive opinion recommending marketing authorization for TAVNEOS, leading to the recent approval for the use of TAVNEOS in the European Union in January 2022 for the treatment of adult patients with severe active GPA or MPA in combination with a rituximab or cyclophosphamide regimen.

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 indications, 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. TAVNEOS, our first commercial drug product, and each of our drug candidates isare designed to selectively block a specific chemoattractant receptor, leaving the rest of the immune system intact. Ourreceptor. Separately, in our cancer program, we use a novel, orally-administered drug candidatescandidate, CCX559, designed to inhibit programmed death protein 1/programmed death-ligand 1, or PD-1/PD-L1, which 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 for a potential commercial launch of avacopan, an orally-administered selective complement 5a receptor inhibitor,developing for the treatment of patients with anti-neutrophil cytoplasmic autoantibody-associated vasculitis, or ANCA vasculitis. In November 2019, we announced positive topline data froma 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 pivotal Phase III ADVOCATE trialconvenience of avacopan for the treatment of patients with ANCA vasculitis. 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 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 plan to commercialize avacopan 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. and its affiliates and sublicensees, or collectively, Vifor. In November 2020, Vifor announced that the Marketing Authorisation Application, or MAA, for avacopan in the treatment of ANCA vasculitis was accepted for review (validated) by the European Medicines Agency, or EMA, for which a decision oral administration.is expected in the second half of 2021.

Our pipeline includes the following programs:

Avacopan:

Immuno-Oncology

Our Strategy

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

4

Table of Contents

Index to Financial Statements

Recent Developments

TAVNEOSÒ(avacopan) is a prescription medicine that is used with other medications (such as cyclophosphamide, rituximab and/or glucocorticoids) to treat adults with severe active ANCA-associated vasculitis, specifically GPA and MPA. When neutrophils, a type of immune cell in the body, become activated, it leads to the production of a protein called complement 5a, or C5a. C5a attaches itself to a receptor called the C5a receptor, or C5aR, which is found on the surface of the neutrophils. The process plays a role in worsening the inflammation of the blood vessels in ANCA-associated vasculitis. Avacopan, the active ingredient in TAVNEOS, blocks the interaction between C5a and C5aR, blocking C5a-mediated neutrophil activation and migration. The precise mechanism by which avacopan exerts a therapeutic effect in patients with ANCA-associated vasculitis has not been definitively established.

In FebruaryOctober 2021, the U.S. Food and Drug Administration, or FDA, approved TAVNEOS, an orally administered selective C5aR inhibitor, as an adjunctive treatment for adult patients with severe active ANCA-associated vasculitis, specifically GPA and MPA, the two main forms of ANCA-associated vasculitis, in combination with standard therapy, including glucocorticoids. TAVNEOS does not eliminate glucocorticoid use.

TAVNEOS is the first FDA approved orally-administered inhibitor of C5aR. The approval in ANCA-associated vasculitis was supported by the results from ourof the pivotal Phase III ADVOCATE trial, which were highlighted in the February 2021 edition of avacopanThe New England Journal of Medicine.

We have built a commercial infrastructure in the United States to commercialize TAVNEOS in ANCA-associated vasculitis. Drug commercialization involves a strategic, complex multi-departmental effort to gain market access, enhance both patient and healthcare provider access and education, empower sales force readiness, prepare the supply chain, distribution networks and patient support programs to ensure the successful launch of a novel medicine such as TAVNEOS. We have hired our sales leadership team, our specialty field force, our medical affairs, marketing, market and payer access teams to support our commercial launch of TAVNEOS in the United States. After TAVNEOS was approved by the FDA on October 7, 2021, we launched TAVNEOS in the United States on October 18, 2021. We will initially focus on key prescribers in the rheumatology and nephrology area who primarily treat this disease. TAVNEOS is a limited-distribution specialty product available commercially to patients only through select specialty pharmacy providers.

We have developed TAVNEOS Connect, a patient support program designed to assist patients who are prescribed TAVNEOS. TAVNEOS Connect offers a wide range of support for patients to access TAVNEOS. The program provides support for eligible patients, including education, information, patient assistance and co-pay assistance for eligible patients.

Positive Committee for Medicinal Products for Human Use Opinion in the European Union and Regulatory Approval of TAVNEOSÒ (avacopan) in Japan

In September 2021, the Japanese Ministry of Health, Labor and Welfare, or MHLW, approved the Japanese NDA, or JNDA, filed by Vifor and Kissei for TAVNEOS for the treatment of patients with ANCA vasculitis were published asMPA and GPA.

In November 2021, the CHMP adopted a peer reviewed journal articlepositive opinion recommending marketing authorization for TAVNEOS. Following the CHMP’s positive opinion, the European Commission approved the use of TAVNEOS in The New England Journal of Medicine, or NEJM.

In February 2021, Vifor and Kissei filed the Japanese NDA, or JNDA, European Union in January 2022for avacopan in the treatment of ANCAadult patients with severe active GPA or MPA in combination with a rituximab or cyclophosphamide regimen.

Our Kidney Health Alliance with Vifor provides Vifor with exclusive rights to commercialize TAVNEOS in markets outside of the United States, and Vifor has granted Kissei Pharmaceutical Co., Ltd. an exclusive license to commercialize TAVNEOS in Japan.

5

Table of Contents

Index to Financial Statements

Highlights from our development pipeline include:

TAVNEOSÒ (avacopan):

Immuno-Oncology

Our Strategy

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

6

Table of Contents

Index to Financial Statements

Our Drug Candidate Pipeline

The following table summarizes our drug candidate pipeline:

Avacopan (CCX168)TAVNEOSÒ (avacopan) – Inhibition of Complement-Mediated Pathways in Orphan Diseases

The complement system is a group of proteins that work together to regulate aspects of host defense against bacteria and viruses, trigger inflammation, and remove debris from cells and tissues. The complement system must be carefully regulated so it targets only unwanted materials and does not attack the body’s healthy cells. In certain autoimmune diseases (including severe active ANCA-associated vasculitis, our first commercially approved indication for TAVNEOS and those indiseases for which we are engaged in clinical trials), components of the complement system have become dysregulated.

5

Table of Contents

Index to Financial Statements

InOur first commercially approved drug in our complement inhibition orphan disease program our lead drug candidate is avacopan. AvacopanTAVNEOS. TAVNEOS is a potential first-in-class, orally-administered molecule that employs a novel, highly targeted mode of action in the treatment of ANCAANCA-associated vasculitis and other complement-driven autoimmune and inflammatory diseases. AvacopanTAVNEOS precisely blocks a specific receptor (C5aR) for the pro-inflammatory complement system fragment known as C5a on destructive inflammatory cells such as blood neutrophils. AvacopanTAVNEOS thereby arrestsis believed to arrest the ability of those cells to do damage in response to C5a activation, which is known to be the driver of ANCAANCA-associated vasculitis and other complement-driven autoimmune and inflammatory diseases. Current therapies for such diseases typically include broad immunosuppression with high doses of glucocorticoids (steroids) such as prednisone or methylprednisone, which may cause significant illness and even death. AvacopanTAVNEOS therapy was designed to preventwith the goal of preventing or mitigating these outcomes. AvacopanTAVNEOS does not appear to affect formation of the C5b-9 terminal complement complex (membrane attack complex, or MAC,MAC), unlike the anti-C5-antibody,anti-C5-antibodies, eculizumab (Soliris®(Soliris®) and ravulizumab-cwvz (Ultomiris®). Therefore, we believe avacopan doesTAVNEOS should not increase the susceptibility to infections for which MAC is important in host defense.defense (encapsulated bacteria, including Neisseria meningitides). However, serious infections, including fatal infections, have been reported in patients receiving TAVNEOS. The most common serious infections reported in the TAVNEOS group were pneumonia and urinary tract infections. Moreover, there are two distinct receptors for C5a: the pro-inflammatory C5a receptor known as C5aR, the target of avacopan,TAVNEOS, and the anti-inflammatory C5a-like receptor, or C5L2, which plays an important role in homeostasis. Accordingly, precisely inhibiting C5a at the level of C5aR is thought to block the pro-inflammatory effects of C5a, while leaving the protective effects of C5L2 functional. AvacopanTAVNEOS does not bind into C5L2, thereby not interfering with the protective effects of C5L2.

We have successfully completed and reported positive topline clinical data from our pivotal Phase III clinical trial known as ADVOCATE in ANCA vasculitis. We have also reported positive toplineBased on the ADVOCATE data in Hurley Stage IIIconjunction with other non-clinical and clinical data, TAVNEOS was approved in the United States as an adjunctive treatment for adult patients from our Phase II clinical trial known as AURORAwith severe ANCA-associated vasculitis, specifically GPA and MPA, in HS after 12 weekscombination with standard therapy including glucocorticoids, and not for the elimination of glucocorticoid use and in Japan for the treatment as well as topline data from our Phase II clinical trial known as ACCOLADEof patients with MPA and GPA in C3G where avacopan demonstrated statistically significant improvement2021. Also in renal function as measured2021, the CHMP adopted a positive opinion recommending marketing authorization for TAVNEOS leading to approval by estimated glomerular filtration rate,the European Commission for the use of TAVNEOS in the European Union in January 2022 for the treatment of adult patients with severe active GPA or eGFR, compared to placebo over 26 weeks of blinded treatmentMPA in combination with a rituximab or cyclophosphamide regimen..

ANCA7

Table of Contents

Index to Financial Statements

ANCA-Associated Vasculitis

ANCAANCA-associated vasculitis is an orphan, severe, and often fatal autoimmune disease that is characterized by elevated levels of autoantibodies called anti-neutrophil cytoplasmic autoantibodies and by inflammation that can affect many different organ systems, and commonly involves the kidneys. ANCAOverall, ANCA-associated vasculitis affects approximately 40,000 to 100,000 people in the United States, with approximately 4,000 to 8,000 new cases each year; similarly, ANCAANCA-associated vasculitis affects approximately 50,000 to 100,000 people in Europe, with approximately 5,000 new cases each year.

ANCAANCA-associated vasculitis is currently treated with courses of immuno-suppressants (cyclophosphamide, or CYC,immunosuppressants [cyclophosphamide (CYC) or rituximab or RTX)(RTX)] combined with high-dose prednisone administration.administration, sometimes resulting in chronic steroid treatment. Complete remission is achieved in only 60-80% of patients and relapse is common. Following initial treatment, up to 30% of patients relapse within six to 18 months, and up to 50% of patients relapse within three to five years. Each relapse can lead to irreversible organ damage.

The current standard of care, or SOC, for ANCAANCA-associated vasculitis is associated with significant safety risks due to general immunosuppression including increased infection rates and dose-related increases in hematological and solid organ malignancies, as well as metabolic and other toxicities associated with glucocorticoids. First year mortality is approximately 11% to 18%, with the single greatest cause of this premature mortality being not disease related, but rather infection and other side effects that are thought largely to be a consequence of prednisone administration. The multiple adverse effects of acute and chronic prednisone treatment often required in the treatment plan are major causes of both short-term and long-term morbidity including the increased infection risk. Glucocorticoid therapy-related adverse events contribute significantly to patient care costs, as well as to the diminution of quality of life for patients.

Role of C5a and C5aR in ANCAANCA-Associated Vasculitis

Complement 5a, or C5a, acting through its receptor C5aR, sometimes called C5aR1 or CD88, is thought to play a pro-inflammatory role in ANCAANCA-associated vasculitis. Autoantibodies against neutrophil enzymes lead to the priming and activation of neutrophils and activation of the complement cascade. Activation of the complement cascade leads to production of C5a, one of the most potent pro-inflammatory mediators of the complement system. C5a, through binding to its receptor C5aR, induces expression of adhesion molecules and chemotactic migration of neutrophils and other white blood cells. These accumulating adhering neutrophils initiate an inflammatory cascade in the small blood vessels by secreting pro-inflammatory cytokines and chemoattractants that lead to necrotizing vasculitis.

6TAVNEOSÒ (avacopan) Phase III Clinical Trial in ANCA-Associated Vasculitis

We have successfully completed and reported positive clinical data from our pivotal Phase III clinical trial of TAVNEOS for the treatment of ANCA-associated vasculitis, known as the ADVOCATE trial. In this randomized, double-blind, double-dummy, controlled trial, we assigned patients with ANCA-associated vasculitis in a 1:1 ratio to receive oral TAVNEOS at a dose of 30 mg twice daily and prednisone-matched placebo or oral prednisone on a tapering schedule (over 20-weeks) and avacopan-matched placebo. All patients received background immunosuppressive therapy of either cyclophosphamide (followed by azathioprine) or rituximab.

Results were published in 2021 in the New England Journal of Medicine and are characterized in the Prescribing Information for TAVNEOS.

8

Table of Contents

Index to Financial Statements

Avacopan Phase III Clinical TrialTAVNEOSÒ (avacopan) Regulatory Matters in ANCAANCA-Associated Vasculitis

We have successfully completedIn October 2021, the U.S. Food and reported positive topline clinical data from our pivotal Phase IIIDrug Administration, or FDA, approved TAVNEOSÒ (avacopan), an orally administered selective C5aR inhibitor for the following indication and usage:

TAVNEOS is a C5aR antagonist indicated as an adjunctive treatment of adult patients with severe active ANCA-associated vasculitis, specifically GPA and MPA in combination with standard therapy including glucocorticoids. TAVNEOS does not eliminate glucocorticoid use.

As part of the FDA approval of the New Drug Application, or NDA, for TAVNEOS, we committed to conduct two postmarketing requirement studies, or PMRs, and one postmarketing commitment study, or PMC, with an agreed timetable of conduct. Specifically, in addition to regular active analysis of spontaneous postmarketing adverse events to assess safety risks, the FDA has implemented the following PMRs (under Section 505(o)(3) of the Federal Food, Drug, and Cosmetic Act, or FDCA, for TAVNEOS:

In addition, we and the FDA agreed to the following PMC:

Please see www.tavneos.com for the Full Prescribing Information including Medication Guide.

In September 2021, the Japanese Ministry of Health, Labor and Welfare, or MHLW, approved the Japanese NDA, or JNDA, filed by Vifor and Kissei for TAVNEOS for the treatment of ANCA vasculitis, known as the ADVOCATE trial. The ADVOCATE trial was a global, randomized, double-blind, active-controlled, double-dummy Phase III trial in 331 patients with ANCA vasculitis in 20 countries. Eligible patients were randomized to receive eitherMPA and GPA. 30 mg twice-daily oral doses of avacopan or a standard regimen of high-dose chronic prednisone. In addition, all patients received standard background therapy of either: (a) rituximab for 4 weeks; or (b) cyclophosphamide for 13 weeks followed by azathioprine/mycophenolate, evenly balanced between the avacopan and prednisone groups.

The ADVOCATE trial met both of its primary endpoints, demonstrating disease remission at 26 weeks and sustained remission at 52 weeks, as assessed by the Birmingham Vasculitis Activity Score (BVAS). Specifically, BVAS remission at week 26 was achieved in 72.3% of the avacopan treated patients vs. 70.1% of subjects in the prednisone group (p<0.0001 for non-inferiority). Sustained remission at 52 weeks was observed in 65.7% of the avacopan treated subjects vs. 54.9% in the prednisone group, achieving both non-inferiority and superiority to the prednisone group (p=0.007 for superiority of avacopan).

Additionally, results published in the NEJM also show that, compared to the prednisone group, avacopan treatment:

•Reduced the risk of vasculitis relapse by 54%; there was a 10.1% relapse rate in the avacopan group compared to 21.0% in the prednisone group.

•Demonstrated greater improvement in kidney function, with a mean increase from baseline to week 52 in eGFR of 7.3 mL/min/1.73 m² with avacopan therapy vs. an increase in eGFR of 4.1 mL/min/1.73 m² in the prednisone group, and the difference between groups was 3.2 mL/min/1.73 m² (95% CI, 0.3 to 6.1).

•Significantly lowered glucocorticoid toxicity, with avacopan therapy 39.7 vs. 56.6 in the prednisone group in the Glucocorticoid Toxicity Index, or GTI, Cumulative Worsening Score with a difference between groups of −16.8 points (95% CI, −25.6 to −8.0), and 11.2 with avacopan therapy vs. 23.4 for the prednisone group in the GTI Aggregate Improvement Score, with a difference between groups of −12.1 points (95% CI, −21.1 to −3.2).

•Led to greater improvement in health-related quality of life, measured by the Short Form 36 version 2 and the EuroQOL-5D-5L instrument (both Visual Analogue Scale and EQ Index), compared to the prednisone group.

Avacopan demonstrated favorable safety results in this serious and life-threatening disease, with fewer subjects having serious adverse events in the avacopan group than in the prednisone group.

Avacopan Regulatory Matters in ANCA Vasculitis

Based on the success of the avacopan clinical studies in ANCA vasculitis, we filed an NDA with the FDA in July 2020, which is currently under review by the FDA. The FDA has set July 7, 2021 as the PDUFA target goal date for the avacopan NDA. In November 2020, Vifor announced that2021, the MAACHMP adopted a positive opinion recommending marketing authorization for avacopanTAVNEOS. Following the CHMP’s positive opinion, the European Commission approved the authorization of the use of TAVNEOS in the European Union in January 2022 for the treatment of ANCA vasculitis was accepted for review (validated) by the EMA, for whichadult patients with severe active GPA or MPA in combination with a decision is expected in the second half of 2021. In February 2021, Vifor and Kissei filed the JNDA for avacopan in the treatment of ANCA vasculitis with the PMDA. We are supporting Vifor and Kissei with their applications for regulatory approval internationally.rituximab or cyclophosphamide regimen.

AvacopanTAVNEOS has been granted orphan drug designation by the FDA for the treatment of ANCA-associated vasculitides (granulomatosis with polyangiitis or Wegener’s granulomatosis), microscopic polyangiitis, and Churg-Strauss syndrome,eosinophilic granulomatosis with polyangiitis (Churg-Strauss syndrome), and by the EMA for treatment of microscopic polyangiitis and granulomatosis with polyangiitis, both forms of ANCAANCA-associated vasculitis. Orphan drug exclusivity was granted upon approval in those territories for the respective indications as approved by regulatory authorities.

9

Table of Contents

Index to Financial Statements

Complement 3 Glomerulopathy (C3G)

C3G disease is an ultra-rare disease of the kidney that is characterized by deposition of the complement fragment known as C3 in the glomeruli, or filtration units of the kidney, leading to inflammatory cell accumulation, potentially leading to significant kidney damage and eventual renal failure. The incidence rate of C3G is estimated

7

Table of Contents

Index to Financial Statements

at two to three per million people in the United States. The prevalence of C3G is estimated at approximately 1,000 to 3,800 patients in the United States and approximately 2,000 in Europe.

There is currently no approved effective standard therapy for C3G. Typically, patients receive one or more non-specific immunosuppressants. Without treatment, C3G may lead to kidney failure, and the current array of unapproved therapies at best only delays end stage renal disease, or ESRD. Kidney transplant is frequently the only option, and even after transplantation, the disease returns in a significant number of affected individuals.

Role of C5a and C5aR in C3G

While the disease name refers to complement 3, it is well known that the C5a receptor pathway, which is further downstream of C3 in the complement cascade and the target of avacopan,TAVNEOS, is an essential part of the disease causingdisease-causing pathology. Hence, C3 is a marker of more general complement activation.

AvacopanTAVNEOS® (avacopan) Phase II Clinical Trial in C3G

In December 2020, we reported initial topline clinical data from our Phase II clinical trial of avacopanTAVNEOS for the treatment of patients with C3G, known as the ACCOLADE trial.

The ACCOLADE trial is the largest,a randomized, blinded, placebo-controlled trial in C3G to date, having enrolled 57 patients with C3G, including both C3 Glomerulonephritis and Dense Deposit Disease. Patients received avacopanTAVNEOS 30 mg or matching placebo orally twice-daily. The placebo-controlled treatment period was 26 weeks (182 days).weeks. This will bewas followed by a 26 week26-week study period during which time all patients will receive avacopanreceived TAVNEOS 30 mg orally twice-daily. Thereafter, all patients will bewere followed for eight weeks (56 days) without study drug treatment.

The primary efficacy endpoint ofPhase II ACCOLADE trial has now completed. Data from the study was change from baseline to week 26 in the C3G Histologic Index for Disease Activity, comparing the changes in kidney histology from biopsy sections taken from patients characterized by elevated levels of C5b-9 complement markers in the blood at time of study entry (baseline). Biopsies, taken at baseline and after 26 weeks of treatment showed that the placebo group worsened by 38% on average in the C3G Activity Score while the avacopan group improved by 2% on average. This approximately 40% average difference between the two treatment arms did not constitute statistical significance due to the high patient to patient variability and small sample size. Comparison of the C3G Activity Score of all C3G subjects (comprising those with both elevated levels of C5b-9 as well as those with normal levels of C5b-9) yielded similar results: the placebo group worsened by 26% on average in the C3G Activity Score, while avacopan therapy resulted in an improvement of 6% on average.

Importantly, those patients who received avacopan experienced significant benefits in terms of kidney function and other parameters compared to those who received placebo. These benefits, assessed as pre-specified secondary endpoints, include:

1. Slowing of Fibrosis Progression

Avacopan therapy demonstrated evidence for a significant slowing of the progression of fibrosis as assessed by the C3G Histologic Index for Disease Chronicity. The placebo group overall exhibited a 26 percentage point higher change from baseline to Week 26 in the C3G Index for Disease Chronicity than avacopan (58% versus 32%, respectively) representing a worsening in disease chronicity. The mean change from baseline to week 26 was 1.6 for placebo versus 0.8 for avacopan (P<0.05) in all C3G subjects. This result is notable because published literature shows that each 1-unit increase in C3G Histologic Index for Disease Chronicity from baseline increases by 59% (P < 0.001) the risk of doubling of creatinine, progression to chronic kidney disease stage 5, ESRD requiring dialysis or transplantation, or death.

2. Improvement in Kidney Function

The avacopan group demonstrated a statistically significant improvement in eGFR from baseline to week 26. Overall, the eGFR in the avacopan group improved 5% on average from baseline while the placebo group worsened by 6% (P = 0.0221) in all C3G subjects. Renal improvement was particularly pronounced for C3G subjects with eGFR of < 60 mL/min/1.73 m² at baseline, as their eGFR on average increased relative to placebo by nearly 20% after 26 weeks (13% improvement for avacopan versus 6% worsening from baseline for placebo, P = 0.0199). This was equivalent to a mean increase of about 5 mL/min/1.73 m² on avacopan versus a decrease of 1.4 mL/min/1.73 m² in the placebo group. Significant improvement in eGFR in a blinded comparative setting over 26

8

Table of Contents

Index to Financial Statements

weeks has not been noted in C3G studies prior to this, but the improvement in eGFR with avacopan is reminiscent of a similar improvement seen with avacopan therapy in ANCA–associated vasculitis with renal dysfunction.

Other measures of kidney function include UPCR (proteinuria), where high UPCR is known to be associated with higher risk of ESRD in C3G as well as other renal diseases, and urinary MCP-1 creatinine ratio, a marker of glomerular inflammation.

In the ACCOLADE study, avacopan therapy was associated with a rapid reduction in UPCR (proteinuria). From baseline, a progressive proteinuria drop was seen in the avacopan group: at week 16 there was a 35% mean decrease in UPCR with avacopan versus a 1% decrease in the placebo group (P < 0.05), and at the end of 26 weeks UPCR was reduced by 26% in the avacopan group versus 14% in the placebo group.

Similar reductions were seen in urinary MCP-1 creatinine ratio in the avacopan group versus the placebo group throughout the 26-week treatment period, with the avacopan group consistently exhibiting lower levels of the kidney inflammation marker being shed in the urine. Avacopan also appeared safe and well-tolerated in patients with C3G.

In the ongoing phase of the study (after the 26 week blinded treatment period), all patients receive avacopan as part of an open label extension for a further 26 weeks, and are followed for an additional 8 weeks without study treatment. Data fromincluding the open label and follow up period will be analyzed and is expected to be presented during the second half of 2021.

Based on the data described above, reflecting results of a blinded therapy regimen which resulted in evidence of avacopan’s ability to improve renal function,periods are being well-tolerated in C3G patients to date, and the significant unmet medical need for C3G patients for whom there are no approved therapies to treat renal function decline, weanalyzed. We plan to complete an in-depth review of the study data to confirm our findings, and then discuss the evidence of clinical benefit of avacopan in C3Gresults with the FDA in 2021.2022.

Hidradenitis Suppurativa (HS)

HS is a chronic, inflammatory, debilitating skin disease characterized by recurrent, painful, nodules and abscesses, ultimately leading to the formation of draining fistulas (also known as sinus tracts) as well as scarring. The disease originates from inflammation and occlusion of the hair follicle. Apart from pain, the nodules may rupture, and often extrude a purulent, foul-smelling discharge leading to substantial social embarrassment for these patients. Due to its chronic nature and frequently occurring relapses of the skin lesions, HS has a great impact on the patient’s quality of life, deeply affecting social, working, and psychological aspects.

In the United States, the estimated prevalence of HS is 0.1%, of which we estimate 15% are severe(Hurley Stage III) patients (up to approximately 50,000 patients). In Europe, the number of affected patients is believed to be greater, with higher prevalence.

Depending on the severity of disease, the current SOC for HS patients includes topical, oral or intravenous antibiotic treatment, as well as surgery. Adalimumab, an anti-TNF-alpha monoclonal antibody, is the only drug indicated for the treatment of patients with moderate-to-severe HS. Two pivotal adalimumab trials showed that approximately 50% of the patients who were treated with adalimumab achieved an improvement in their skin lesion, as measured by the widely accepted Hidradenitis Suppurativa Clinical Response,, or HiSCR, assessment instrument. There remains a high unmet medical need, however, as a very large proportion of the patients with moderate-to-severe HS do not adequately respond to adalimumab or other therapies used in the SOC.

10

Table of Contents

Index to Financial Statements

Role of C5a and C5aR in HS

Neutrophils are believed to play an important disease-promoting role, as well as certain cytokines and mediators commonly found in autoimmune diseases, such as TNF-alpha, IL-17, IL-1 and others such as C5a. C5a promotes inflammatory mediators and is a strong activator of neutrophils. HS is a neutrophil-driven skin disease and C5a has been found activated and significantly elevated in plasma of HS patients, as compared to healthy controls.

Complement dysregulation and neutrophil activation have been implicated in the pathogenesis of HS. The presence of tunnels (subcutaneous cavities lined with squamous epithelium) is a feature of the moderate and severe forms of HS. C5aR is highly expressed on neutrophils and is a major driver of the pro-inflammatory functions.

Consistent with other reports, we found complement activation in HS skin lesions, but also observed elevated C5aR and C5a levels in severe HS skin lesions compared to mild/moderate HS lesions. C5aR-positive cells as well C5a-positive cells are increased (>2 fold by semi-quantitative measurements) within and surrounding tunnel epithelium in severe HS lesions. Also, greater numbers of C5a-positive cells are associated with tunnels that have thicker/irregularly-shaped epithelium and higher numbers of infiltrating cells. However, C5aR levels are not increased on circulating blood cells in HS patients, suggesting that tissue-localized C5a recruits C5aR-positive cells to the tunnels in severe HS.

These findings suggest C5a/C5aR signaling, resulting in leukocyte activation and skin destruction, is a major driver of tunnel development and disease progression in severe HS. The data provide a potential mechanistic basis for the clinical improvement seen with TAVNEOS in patients with severe HS patients in clinical trials.

With the role of C5a in HS, our C5aR inhibitor avacopanwe believe TAVNEOS could be effective in mediating the disease coursetreatment of HS. AvacopanTAVNEOS is a small molecule that is designed to be conveniently administered as an oral medication and, we believe, could present itself as advantageous over intravenous or subcutaneous injections treatments for this condition.

9

Table of Contents

Index to Financial Statements

AvacopanTAVNEOS® (avacopan) Phase IIbII Clinical Trial in HS

In November 2020, we reported positive initial topline clinical data in Hurley Stage III patients from our Phase II trial of avacopanTAVNEOS for the treatment of patients with HS, known as the AURORA trial.trial, although the primary efficacy endpoint was not met in the overall study population. The AURORA trial is a randomized, double-blind, placebo-controlled, three arm Phase IIbII trial in 398 subjectspatients with moderate HS (Hurley Stage II) orto severe HS, (Hurley Stage III), which were stratified evenly across the three treatment arms. SubjectsPatients were randomized 1:1:1 to a treatment of 10 mg avacopanTAVNEOS twice-daily, 30 mg avacopanTAVNEOS twice-daily or placebo for 12 weeks. SubjectsPatients treated with 10 mg or 30 mg twice-daily during the blinded, placebo-controlled 12-week treatment period will bewere followed for an additional 24-week, active treatment period during which they will continue to receivereceived the same dose regimen, either 10 mg or 30 mg avacopanTAVNEOS twice-daily. SubjectsPatients on placebo who completecompleted the blinded, placebo-controlled 12-week period will bewere re-randomized 1:1 to receive 10 mg or 30 mg avacopanTAVNEOS twice-daily during the 24-week active treatment period. Thereafter, subjects will bepatients were followed without study drug for eight weeks before they exit the study.

The primary endpoint of HiSCR was assessed for 10 mg twice daily, or BID, and 30 mg BID dosing regimens of avacopan against placebo after 12 weeks of treatment. InWe plan to discuss the combined study population of both moderate HS plus severe HS, no statistical significant difference was achieved at either dose level compared to placebo, although a numerical improvement was noted at the 30mg BID dose. Importantly, avacopan 30mg BID demonstrated a statistically significant higher response than placebo in Hurley Stage III HS patients.

An effect with avacopan was noted in Hurley Stage III patients across other secondary endpoint assessed to date. Numerically favorable reductions for avacopan were observed in International HS Severity Score, as well as reduction in abscesses and inflammatory nodules, draining fistula, and abscess count at week 12 (all % change from baseline to week 12), relative to placebo.  

Avacopan demonstrated a favorable safety profile. Treatment emergent adverse events, or TEAEs, of all types by week 12 were observed to be fewer in the avacopan groups (48.5%) than with placebo (55%). The majority of TEAEs were related to underlying HS and were mild to moderate. Serious TEAEs were observed in 2.3% of placebo patients vs. 1.5% on avacopan.

We expect to report topline data from the completedPhase II AURORA trial (followingwith regulatory agencies in 2022, with the 24-weeks of treatment period and further eight week period without study drug) in 2021.  

Based on the results of the AURORA trial to date, we plan to advance avacopanTAVNEOS into Phase III clinical development for the treatment of severe HS.HS in second half of 2022.

Avacopan Commercialization Strategy

We are currently building a commercial infrastructure in the United States to commercialize avacopan in ANCA vasculitis. If approved, we plan to initially focus on key prescribers in the rheumatology and nephrology area who primarily treat this disease. In anticipation of our potential approval, we have hired our commercial leadership team and are now focused on building a specialty field force of approximately 75 professionals.

In territories outside of the United States, our partner Vifor would be responsible for the commercialization of avacopan.

Kidney Health Alliance with Vifor

In May 2016, we entered into a collaboration and license agreement with Vifor, which we refer to as the Avacopan Agreement, to commercialize avacopanTAVNEOS for orphan renal diseases in Europe and certain other markets. In connection with the Avacopan Agreement, we received a non-refundable upfront payment of $85.0 million, comprising $60.0 million in cash and $25.0 million in the form of an equity investment to purchase 3,333,333 shares of our common stock at a price of $7.50 per share. In February 2017, we and Vifor entered into the Avacopan Amendment to expand the licensed territory to include all markets outside the United States and China and we

11

Table of Contents

Index to Financial Statements

received an additional $20.0 million upfront cash commitment. Upon achievement of certain regulatory and sales based milestones with avacopan,TAVNEOS, we will receive additional payments under this agreement. In addition, we will receive royalties, with rates ranging from the teens to mid-twenties, on future potential net sales of avacopanTAVNEOS by

10

Table of Contents

Index to Financial Statements

Vifor in the licensed territories. In December 2017, we achieved the first regulatory milestone under the Avacopan Agreement in the amount of $50.0 million, following the EMA’s validation of the conditional marketing authorization, or CMA, application for avacopanTAVNEOS for the treatment of patients with ANCA associated vasculitis. In June 2018, we and Vifor entered into the Avacopan Letter Agreement to further expand the Vifor territories under the Avacopan Agreement to provide Vifor with exclusive commercialization rights in China and we received a $5.0 million payment for the expanded rights. We retain control of ongoing and future development of avacopanTAVNEOS (other than country-specific development in the licensed territories) and all commercialization rights to avacopanTAVNEOS in the United States. In October 2020, we entered into a manufacturing and supply agreement with Vifor. Under this agreement, we will supply avacopanTAVNEOS bulk drug product to Vifor for Vifor’s commercial use outside of the United States. In February and September 2021, we achieved additional regulatory milestones upon the acceptance of JNDA filing and the approval of TAVNEOS in Japan for the treatment of patients with MPA and GPA, which under the Avacopan Agreement triggered total payments of $30.0 million.

Under a prior development and commercialization agreement with Glaxo Group Limited, or GSK, an affiliate of GlaxoSmithKline, which ended in 2013, we are subject to reverse royalties to GSK of 3% on annual worldwide net sales of avacopan,TAVNEOS, not to exceed $50.0 million in total royalties.

In December 2016, we entered into a second collaboration and license agreement with Vifor, which we refer to as the CCX140 Agreement, pursuant to which we granted Vifor exclusive rights to commercialize CCX140, an inhibitor of the C-C chemokine receptor known as CCR2, in rare renal diseases in markets outside the United States and China. We are responsible for the clinical development of CCX140 in rare renal diseases, while sharing the cost of such development with Vifor. In connection with the CCX140 Agreement, we received a non-refundable upfront commitment totaling $50.0 million and are eligible to receive additional payments upon the achievement of certain regulatory and sales basedsales-based milestones, as well as tiered double-digit royalties on potential net sales of CCX140 in the licensed territories. Under the CCX140 Agreement, Vifor retains an option to solely develop and commercialize CCX140 in more prevalent forms of chronic kidney disease, or CKD. In June 2018, we and Vifor entered into the CCX140 Letter Agreement to further expand the Vifor territories under the CCX140 Agreement to provide Vifor with exclusive commercialization rights in China and we received a non-refundable $5.0 million payment for the expanded rights. Additionally, in June 2018, we and Vifor entered into an amendment to the CCX140 Agreement, which we refer to as the CCX140 Amendment, to clarify the timing of certain payments with respect to development funding of the CCX140 program by Vifor, and we received a non-refundable payment of $11.5 million. We retain 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.

In May 2020, we announced that the results of Phase II clinical trial known as LUMINA-1 of CCX140 for the treatment of primary Focal Segmental Glomerulosclerosis, or FSGS. In the trial, 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. Should Vifor later exercise the CKD option, we would receive co-promotion rights in CKD in the United States.

Early Stage

12

Table of Contents

Index to Financial Statements

Early-Stage Drug Candidates

Immuno-OncologyImmuno-oncology

Anti-PD-1 and anti-PD-L1 monoclonal antibody therapies have emerged as front-line treatment for several cancers. In such cancers, the interaction of PD-L1 on cancer cells with PD-1 on T cells prevents the T cells from attacking the cancer cells. Accordingly, blocking the interaction of PD-L1 with PD-1 can prevent cancer cells from evading the immune system. We have further optimized our unique class of investigational human PD-L1 small molecule inhibitors. Our lead drug candidate, CCX559, possesses high oral bioavailability and has exhibited a desirable safety profile.bioavailability. CCX559 also exhibited activity in blocking the PD-1/PD-L1 interaction in multiple biochemical and cell-based assays. Non-clinical data suggest that CCX559 prevented the PD-1/PD-L1 interaction by inducing dimerization of the PD-L1 protein.

In animal tumor models, CCX559 potently inhibited tumor growth with the activity being similar to a clinically-proven anti-human PD-L1 antibody. antibody, which was used as a positive control for the experiments. Non-clinical data for CCX559 supported the initiation of human trials in patients with advanced tumors.

In 2021, we initiated a Phase 1 clinical trial for CCX559. This is a Phase 1, first-in-patient, multicenter, open-label, dose-escalation study with a starting dose of 30 mg once a day. The primary objectives are safety/tolerability, as well as pharmacokinetic, or PK, assessments aimed at determining doses for future Phase 2 studies. Secondary objectives include pharmacodynamic, or PD, assessments of immune cell activation in patient peripheral blood samples, as well as anti-tumor effects. This study incorporates a screening period, treatment period, end of treatment visit, safety follow-up visit, and long-term follow-up. After obtaining written informed consent, patients will complete a screening visit within 28 days prior to Day 1. The treatment period will encompass 21-day cycles with the first cycle as the dose-limiting toxicity, or DLT, observation period. For PK, intensive blood sampling will be done on day 1 and day 21 of the first cycle; additional samples will be collected on select days throughout the 21-day treatment cycles. PD analyses will be performed on selected blood draws in the first three cycles. We plan to report initial data from this study in 2022.

We believe CCX559, if successfully developed and approved, could provide a valuable orally dosed alternative to the current antibody-based PD-1/PD-L1 therapeutics. We plan to advance CCX559 into a Phase I clinical trial in the first half of 2021.

Other Inflammatory and Autoimmune Diseases

InflammatoryInflammatory Bowel Disease, or IBD, (Crohn’s Disease and Ulcerative Colitis) and CCR9

IBD refers to two diseases – Crohn’s disease and ulcerative colitis – both characterized by inflammation of the gastrointestinal tract. Crohn’s disease can cause inflammation in any part of the digestive tract but often affects the

11

Table of Contents

Index to Financial Statements

tail end of the small intestine. Ulcerative colitis is inflammation of the large intestine. Both Crohn’s disease and ulcerative colitis are chronic and recurring inflammatory conditions. Researchers believe that these conditions occur when the body’s inflammatory cells become over-reactive and mount a destructive inflammatory response. Current treatments for IBD include steroids, 5-aminosalicylic acids, immunosuppressive therapies, such as azathioprine or biologic agents such as TNF-α inhibitors and integrin inhibitors, such as the anti-α4β7 antibody, vedolizumab, and when all else fails, surgery.

CCX507 is our second generation, orally-administered investigational inhibitor of the chemokine receptor known as CCR9, under development for the treatment of IBD. CCX507 builds on our expertise in the area of CCR9 inhibitors and IBD. CCX507 is designed to be selective for CCR9 relative to all other chemokine receptors, orally bioavailable, and has an excellentproduced favorable preclinical safety profile.data. CCX507 has shown greater potency towards CCR9 than vercirnon, our first generation CCR9 inhibitor, in non-clinical studies. We completed Phase I clinical development, which identified an oral dose regimen of CCX507 that was safe and well-tolerated, and effectively blocked CCR9 on circulating leukocytes. Additionally, preclinical data of CCX507 in combination with an anti-α4β7 antibody or anti-TNFα antibody showed that combined treatment reduced the severity of colitis better than monotherapy with either drug alone. We plan to move CCX507 forward to Phase II clinical trials, either by ourselves or with a strategic partner.

13

Table of Contents

Index to Financial Statements

Th17 Driven Diseases and CCR6

One of the most intriguing areas of current research in immunology involves a relatively recently discovered type of helper T cells known as Th17 cells. There is a large amount of preclinical and clinical data that implicate Th17 cells, as well as Interleukin 17, or IL-17, in the development of a large number of autoimmune diseases, including psoriasis, rheumatoid arthritis, asthma, and multiple sclerosis.

Activated Th17 cells isolated from chronically inflamed human tissues produce high levels of TNF-α and other cytokines. A hallmark of Th17 cells is that they express high levels of the chemokine receptor known as CCR6, which is not found on Th1 and Th2 cells. High levels of the CCR6 chemokine ligand, CCL20, have been found in psoriatic skin, in rheumatoid arthritis joint biopsies, and in asthmatic lungs.

We believe that these are potential therapeutic opportunities for a CCR6 inhibitor. We have produced several unique CCR6 inhibitor leads,identified a clinical development candidate, which are now being optimized through medicinal chemistry approaches andis undergoing further evaluation infinal preclinical pharmacology models.testing.

We have shown in preclinical models that an orally bioavailable, small molecule investigational inhibitor of the chemokine receptor known as CCR6 confersconferred protection against IL17-mediated inflammation. We have generated potent orally bioavailableinvestigational CCR6 inhibitors designed to be potent and orally-bioavailable that inhibitinhibited CCL20-mediated chemotaxis of both human and mouse CCR6-positive cells. The utility of CCR6 inhibition was tested in preclinical models of psoriasis, and demonstrated that animals treated with our CCR6 inhibitor were protected against imiquimod induced skin thickening. Histological analysis of the skin confirmed the protective effect of our CCR6 inhibitor compared to an aqueous vehicle control and significantly reduced ear-thickening induced by intradermal injections of Interleukin 23, or IL-23, a cytokine that is important for the terminal differentiation and pathogenicity of Th17 cells.

The potential mechanism of action for CCR6 inhibitors is different from other therapeutics targeting IL-17, because inhibition of CCR6 disrupts the recruitment of infiltrating leukocytes into the epidermis upon skin damage, thereby protecting against epidermal hyperplasia, or an abnormal increase in the number of cells on the skin. Thus, pharmacological inhibition of CCR6 with an orally bioavailable small molecule inhibitor mitigates IL-17-driven inflammation in psoriasis models, and its distinct mechanism of action suggests it may offer additional efficacy when added to current SOC.

We presented data from in vivo models of psoriasis with a selective orally-administered CCR6 inhibitor. Genetically modified mice demonstrate that psoriatic lesions do not progress in mice lacking chemokine receptor CCR6. CCL20, the only known chemokine ligand for CCR6, is highly expressed in psoriatic plaques. Our potent, orally bioavailable small-molecule inhibitor of CCR6 ameliorated skin inflammation in the IL-23 and imiquimod induced models of psoriasis, and in the IL-36 induced model representative of rare form of psoriasis referred to as generalized pustular psoriasis. CCR6 antagonists present a novel therapeutic approach to treating multiple forms of psoriasis.

Intellectual Property

Our commercial success depends in part on our ability to obtain and maintain proprietary protection for our drug candidates, novel biological discoveries, screening and drug development technology and other know-how, to operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary

12

Table of Contents

Index to Financial Statements

rights. Our policy is to seek to protect our proprietary position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business. We also rely on trade secrets, know-how, continuing technological innovation and potential in-licensing opportunities to develop and maintain our proprietary position.

As for the pharmaceutical products we develop and commercialize, as a normal course of business, we intend to pursue composition-of-matter patents, where possible, manufacturing, salts and polymorphs, dosage, combinations and formulation patents, as well as method of use patents on novel indications for known compounds. We also seek patent protection with respect to novel biological discoveries, including new targets and applications as well as adjuvant and vaccine candidates. We have also pursued patents with respect to our proprietary screening and drug development processes and technology. We have sought patent protection, either alone or jointly with our collaborators, as our collaboration agreements may dictate.

14

Table of Contents

Index to Financial Statements

As of December 31, 2020,2021, our patent estate, on a worldwide basis, included approximately 9531,028 issued or allowed patents and approximately 525587 pending patent applications. This includes approximately 144169 issued or allowed patents and 8696 patent applications pending for avacopan, 51TAVNEOS, 60 issued or allowed patents and 2422 patent applications pending for CCX507, our lead drug candidate in the CCR9 program, 411 issued or allowed patents and 5386 pending patent applications in our PD-1/PD-L1 program, and 29 issued or allowed patents and 3121 patent applications pending for our CCR6 program.

Avacopan, our lead drug candidate in the C5aR program, is covered by an issued patent in the United States covering the composition-of-matter of avacopanTAVNEOS and pharmaceutical compositions thereof, which will expire in 2031 (not including patent term extension that may be available to extend the term of the patent). Avacopan is also covered by an additional issued patent covering the composition-of-matter of avacopanTAVNEOS in the United States with an expiration date of 2029. Corresponding patents covering the composition of matter of avacopanTAVNEOS have issued in 51 foreign countries, with an expiration date of 2029 (not including a supplementary protection certificate or other patent extension opportunities that may be available to extend the term of the patent), and are pending in seven other foreign countries. We have issued patents in the United States and 24 other countries covering certain synthetic methods related to making avacopan,TAVNEOS, which are anticipated to expire in 2035 (not including any possible patent term extension). Corresponding patent applications covering certain synthetic methods related to making avacopanTAVNEOS are pending in 13 jurisdictions that, if issued, are anticipated to expire in 2035. More recent patent application filings in the avacopanTAVNEOS family are directed towards specific therapeutic indications, formulations, and certain solid forms, which, if issued, are anticipated to expire between 2037 and 2041.

CCX507, our lead drug candidate in the CCR9 program, is covered in part by two issued patents in the United States covering the composition-of-matter of CCX507 that will each expire in 2033 (not including patent term extension that may be available to extend the term of the patent). Corresponding patent applications have been filed in foreign jurisdictions and are at various stages of prosecutions or have issued. We also have a granted United States patent covering certain methods of use of CCX507, which will expire in 2035 (not including patent term extension that may be available to extend the term of the patent), with corresponding patent applications pending in foreign countries. Nonetheless, the actual protection afforded by a patent varies on a product by productproduct-by-product basis, from country to country and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent.

In addition to patents, we rely upon unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators, employees and consultants and invention assignment agreements with our employees. We also have confidentiality agreements or invention assignment agreements with our commercial partners and selected consultants. These agreements are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership of technologies that are developed through a relationship with a third party.

Our commercial success will also depend in part on not infringing upon the proprietary rights of third parties. It is uncertain whether the issuance of any third partythird-party patent would require us to alter our development or commercial strategies, or our drugs or processes, obtain licenses or cease certain activities. Our breach of any license agreements or failure to obtain a license to proprietary rights that we may require to develop or commercialize our future drugs may have a material adverse impact on us. If third parties prepare and file patent applications in the United States that also claim technology to which we have rights, we may have to participate in interference proceedings in the U.S. Patent and Trademark Office, or USPTO, to determine priority of invention.

13

Table of Contents

Index to Financial Statements

Competition

We compete in the pharmaceutical, biotechnology and other related markets that address ANCAANCA-associated vasculitis, HS, C3G, LN and other renal diseases, IBD, rheumatoid arthritis, psoriasis, other autoimmune diseases and inflammatory disorders, and cancer. We face significant competition from many pharmaceutical and biotechnology companies that are also researching and selling products designed to address these markets. Many of our competitors have materially greater financial, manufacturing, marketing, research, and drug development resources than we do. Large pharmaceutical companies in particular have extensive expertise in preclinical and clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies.technologies. These organizations may also establish exclusive collaborative or licensing relationships with our competitors.

15

Table of Contents

Index to Financial Statements

It is possible that our competitors will develop and market drugs that are less expensive and more effective than our drug candidates, or that will render our drug candidates obsolete. It is also possible that our competitors will commercialize competing drugs before we or our partners can launch any drugs developed from our drug candidates.

Avacopan,TAVNEOS, our C5aR inhibitor, ifwhich has been approved for marketing by the FDA, or other regulatory agenciesthe EMA and the PMDA for the treatment of ANCAANCA-associated vasculitis, might compete with current treatments, such as prednisone, CYC, RTX, azathioprine, methotrexate, and mycophenolate mofetil. If avacopanTAVNEOS is approved for marketing by the FDA or other regulatory agencies for the treatment of C3G, avacopanTAVNEOS might compete with treatments that are in development. If avacopanTAVNEOS were approved for the treatment of HS, it would potentially compete with adalimumab (Humira®(Humira®) or other anti-TNF-alpha antibodies which physician sometimes prescribe off-label for the treatment of HS.

Many of these currently approved treatments have notable and common adverse events including liver and bone marrow toxicity, renal toxicity, pneumonitis, immunosuppression, allergic reactions, autoimmune diseases and infections.

We expect that competition among any of our drugs approved for sale will be based on various factors, including drug safety and efficacy, prevalence of negative side effects, reliability, ease of administration, availability, approved labeling, price, insurance coverage and reimbursement status and patent position. We believe that our ability to compete depends largely upon our ability to research, develop and commercialize our existing and future drug candidates. Further, we need to continue to attract and retain qualified personnel, obtain patent protection, develop proprietary technology or processes and secure sufficient capital resources for the substantial time period between technological conception and commercial sales of drugs. Our ability to compete will also be affected by the speed at which we are able to identify and develop, conduct clinical testing and obtain regulatory approvals of our drug candidates. Potential competitors may develop treatments that are more effective and/or safer than our drug candidates or that would make our technology and drug candidates obsolete or non-competitive.

Established pharmaceutical companies that currently sell or are developing drugs in our markets of interest include, but are not limited to AbbVie, Alexion, Amgen, AstraZeneca (including Alexion, now AstraZeneca Rare Disease), Aurinia, Bayer, Biogen, Elan, GlaxoSmithKline, Johnson & Johnson, Mallinckrodt, Merck, Merck Serono, Novartis, Pfizer, Travere, Roche/Genentech, Sanofi, Sarfez, Takeda and Teva. In addition, in some instances we may face competition from companies that sell generic versions of approved drugs that are part of the current SOC. Many or all of these established competitors are also involved in research and drug development regarding various chemokine receptors. Pharmaceutical and biotechnology companies which are known to be involved in chemokine and chemoattractant research and related drug development include, but are not limited to, Pfizer, GlaxoSmithKline, Bristol-Myers Squibb, Merck, Takeda, Sanofi, Incyte, AstraZeneca (including Alexion, now AstraZeneca Rare Disease), Allergan, Appellis, Omeros, InflaRx, X4 Pharmaceuticals, Mitsubishi Tanabe, Biolinerx, Akari Therapeutics and UCB Pharma, among others. These companies and others also compete with us in recruiting and retaining qualified scientific and management personnel, and in acquiring technologies complementary to, or necessary for, our programs.

Manufacturing

Avacopan,TAVNEOS® (avacopan) as well as our other drug candidates, are manufactured using commonly used chemical synthetic and engineering processes using readily available or made to order raw materials. We rely on contract manufacturing organizations, or CMOs, for all of our requirements of raw materials, drug substance and drug product for our commercial, clinical and nonclinical activities for our portfolio, and we have entered into commercial manufacturing agreements with some of our CMOs to support avacopan commercialization. the commercialization of TAVNEOS. We expect to continue to rely on contract manufacturers for the manufacture of clinical and commercial supplies of our compounds.

14

Table of Contents

Index to Financial Statements

We are commercializingcommercialized an oral capsule formulation of avacopan.TAVNEOS. We currently rely on single source suppliers, including for avacopanTAVNEOS active pharmaceutical ingredient, or API, which is manufactured by Hovione LLC, and for avacopanTAVNEOS drug product, which is manufactured by Patheon Pharmaceuticals Inc. To decrease the risk of an interruption to our drug supply, we intend to maintain a safety stock of certain materials to help avoid delays in production, but we do not know whether such stock will be sufficient. In addition, while we currently have only one

16

Table of Contents

Index to Financial Statements

commercial manufacturer for avacopan APITAVNEOS drug substance and drug product, we have identified potential second sources and are working to establish additional sources of commercial supply. There is no guarantee as to if or when we may establish such additional sources or whether they will be adequate in all circumstances we may encounter.

For clinical supply, we purchase quantities of our drug candidates from our contract manufacturers pursuant to purchase orders that we place with them. If we were unable to obtain sufficient quantities of drug supply or receive raw materials in a timely manner, or secure the manufacturing and release of drug product by the contract manufacturer, we could be required to delay our ongoing clinical trials as we seek, engage and enable alternative manufacturers, which would be costly and time-consuming.

Government Regulation

The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing and distribution of drugs. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, export and import of our drug candidates.

In the United States, the FDA regulates drug products under the Federal Food, Drug, and Cosmetic Act and the FDA’s implementing regulations. If we fail to comply with applicable FDA or other requirements at any time during the drug development process, clinical testing, the approval process or after approval, we may become subject to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution. Any FDA or Office of Inspector General, or OIG, enforcement action could have a material adverse effect on us.us, including the cost of defense, settlement, exclusion or a Corporate Integrity Agreement. The process required by the FDA before our drug candidates may be marketed in the United States generally involves the following:

The testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our drug candidates will be granted on a timely basis, if at all.

17

Table of Contents

Index to Financial Statements

Once a pharmaceutical drug candidate is identified for development, it enters the preclinical testing stage. Preclinical studies include laboratory evaluations of drug chemistry, formulation and stability, as well as studies to evaluate toxicity in animals. The results of the preclinical studies, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND application.IND. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial, including concerns that human research subjects will be exposed to unreasonable health risks. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Submission of an IND may result in the FDA not allowing the clinical trials to commence or not allowing the clinical trials to commence on the terms originally specified in the IND. A separate submission to an

15

Table of Contents

Index to Financial Statements

existing IND must also be made for each successive clinical trial conducted during drug development, and the FDA must grant permission, either explicitly or implicitly by not objecting, before each clinical trial can begin.

Clinical trials involve the administration of the investigational drug to human subjects under the supervision of qualified investigators. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be used. Each protocol must be submitted to the FDA as part of the IND. An independent institutional review board, or IRB, for each medical center proposing to conduct a clinical trial must also review and approve a plan for any clinical trial before it can begin at that center and the IRB must monitor the clinical trial until it is completed. The FDA, the IRB, or the sponsor may suspend or discontinue a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk. Clinical testing also must satisfy extensive GCP requirements, including the requirements for informed consent.

All clinical research performed in the United States in support of an NDA must be authorized in advance by the FDA under the IND regulations and procedures described above. However, a sponsor who wishes to conduct a clinical trial outside the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND. If a foreign clinical trial is not conducted under an IND, the sponsor may submit data from the clinical trial to the FDA in support of an NDA so long as the clinical trial is conducted in accordance with GCP, and so long as the FDA is able to validate the data from the study through an onsite inspection if necessary. We have open INDs in the United States for avacopan, CCX140, and CCX872. All of our clinical trials are designed to comply with FDA regulatory requirements so that the data from all trials can be used to support a regulatory filing in the United States. Other planned studies with avacopan and CCX507 will likely include the United States and Europe, and potentially other geographies.

Clinical Trials

For purposes of NDA submission and approval, clinical trials are typically conducted in three sequential phases, which may overlap or be combined.

In some cases, the FDA may condition approval of an NDA on the sponsor’s agreement to conduct additional clinical trials to further assess the drug’s safety and effectiveness after NDA approval. Such post-approval clinical trials are typically referred to as Phase IV clinical trials.

Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the drug and finalize a process for manufacturing the drug in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the drug candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final drug product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the drug candidate does not undergo unacceptable deterioration over its shelf life.

1618

Table of Contents

Index to Financial Statements

New Drug Applications

The results of preclinical studies and of the clinical trials, together with other detailed information, including extensive manufacturing information and information on the composition of the drug, are submitted to the FDA in the form of an NDA requesting approval to market the drug for one or more specified indications. The FDA reviews an NDA to determine, among other things, whether a drug is safe and effective for its intended use. Under the PDUFA guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission. This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision.

The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. Under the PDUFA guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission. This review typically takes twelve months from the date the NDA is submitted to FDA because the FDA has approximately two months to make a “filing” decision. The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.

Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.

The FDA may refer the application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. The FDA may deny approval of an NDA if the applicable statutory and regulatory criteria are not satisfied, or it may require additional clinical data or an additional Phase III clinical trial. Even if such data are submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. Data from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret data. Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including Phase IV clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a risk evaluation and mitigation strategy, or REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval.

Once the FDA approves an NDA, or supplement thereto, the FDA may withdraw the approval if ongoing regulatory requirements are not met or if safety problems are identified after the drug reaches the market. Where a withdrawal may not be appropriate, the FDA still may seize existing inventory of such drug or request a recall of any drug already on the market. In addition, the FDA may require testing, including Phase IV clinical trials and surveillance programs to monitor the effect of approved drugs which have been commercialized. The FDA has the authority to prevent or limit further marketing of a drug, including withdrawal of a product, based on the results of these post-marketing programs.programs

Expedited Development and Review Programs

A sponsor may also seek approval of its drug candidates under programs designed to accelerate the FDA’s review and approval of NDAs. For instance, a sponsor may seek fast track product designation from the FDA designation of afor the drug candidate as a “fast track product.”candidate. Fast track products are those productsdesignation may be available for drug candidates intended for the treatment of a serious or life-threatening disease or condition and which demonstrate the potential to address unmet medical needs for such disease or condition. If fast track designation is obtained, the FDA may initiate review of sections of an NDA before the application is complete. This “rolling review” is available if the applicant provides and the FDA approves a schedule for submission to the FDA of the remaining information. In some cases, products studied for their safety andaddition, fast track designation provides

1719

Table of Contents

Index to Financial Statements

sponsors more frequent meetings with FDA to discuss the drug’s development plan, and more frequent communication from FDA about such things as the design of the proposed clinical trial and use of biomarkers.

In addition, drug candidates may be eligible for breakthrough therapy designation if the drug is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Breakthrough therapy designation provides all of the benefits of fast track designation, but provides for more intensive FDA guidance on efficient drug development.

In some cases, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that are shown to provide a meaningful therapeutic benefit over existing treatments may be approved on the basis of either a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. Approvals of this kind, referred to as accelerated approvals, typically include requirements for appropriate post-approval Phase IV clinical trials to validate the surrogate endpoint or otherwise confirm the effect of the clinical endpoint.

In addition, the Food and Drug Administration Safety and Innovation Act, or FDASIA, which was enacted and signed into law in 2012, established a category of drugs referred to as “breakthrough therapies.” A sponsor may seek FDA designation of a drug candidate as a “breakthrough therapy” if the drug is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Breakthrough therapy designation provides all of the benefits of fast track designation, but provides for more intensive FDA guidance on efficient drug development.

Drug candidates designed to prevent, diagnose, or treat serious diseases or conditions may also be eligible for “priority review,” or review within a six-month timeframe from the date an NDA for a new molecular entity is accepted for filing, if a sponsor shows that its drug candidate, if approved, would provide a significant improvement in safety or effectiveness over existing therapies.

Fast track designation, breakthrough therapy designation, accelerated approval, and priority review do not change the standards for approval, but may expedite the development or approval process. When appropriate, we intend to seek fast track designation, accelerated approval, breakthrough therapy designation and priority review, as applicable, for our drug candidates. Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

Orphan Drug Designation

In the United States, under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition. Such diseases and conditions are those that affect fewer than 200,000 individuals in the United States, or if they affect more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug available in the United States for these types of diseases or conditions will be recovered from sales of the drug. Orphan drug designation must be requested before submitting an NDA. If the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by that agency. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, but it can lead to financial incentives, such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers.

If a drug that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the drug is entitled to orphan drug marketing exclusivity for a period of seven years. Orphan drug marketing exclusivity generally prevents the FDA from approving another application, including a full NDA, to market the same drug or biological product for the same indicationdisease or condition for seven years, except in limited circumstances, including if the FDA concludes that the later drug is safer, more effective or makes a major contribution to patient care. For purposes of small molecule drugs, the FDA defines “same drug” as a drug that contains the same active chemical entity and is intended for the same use as the drug in question. A designated orphan drug may not receive orphan drug marketing exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. Orphan drug marketing exclusivity rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.

1820

Table of Contents

Index to Financial Statements

The criteria for designating an orphan medicinal product in the European Union, or EU, are similar in principle to those in the United States. Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as orphan if (i) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (ii) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify investment; and (iii) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000. Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication. The application for orphan designation must be submitted before the application for marketing authorization. The applicant will receive a fee reduction for the marketing authorization application if the orphan designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted.

The ten-year market exclusivity in the EU may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same indication at any time if:

Post-Approval Requirements

Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA and other government agencies, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, pricing and transfer of value reporting, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. There also are continuing, annual program user fee requirements for any marketed products.

The FDA may impose a number of post-approval requirements as a condition of approval of an NDA. For example, the FDA may require post-marketing testing, including Phase IV clinical trials, and surveillance to further assess and monitor the product’s safety and effectiveness after commercialization.

As part of the FDA approval of the NDA for TAVNEOS, we committed to conduct two PMR studies and one PMC, with an agreed timetable of conduct.

In addition to regular active analysis of spontaneous adverse events to identify risks, FDA has implemented the following PMRs (under Section 505(o)(3) of the FDCA) for TAVNEOS:

21

Table of Contents

Index to Financial Statements

In addition, we and the FDA agreed to the following PMC:

Drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP requirements and impose reporting and documentation requirements upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance.compliance.

Once an approval of a drug is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things:

19

Table of Contents

Index to Financial Statements

The FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for such promotional activities as direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activitiescommunications involving the Internet. A company can makemay only those claims relating to safetypromote a product for the patient population and efficacy that are approved by the FDA.indication for which an approval has been granted. Failure to comply with these requirements can result in adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may generally prescribe legally available drugs for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not typically regulate the behavior of physicians in their choice of treatments. The FDA does, however, impose stringent restrictions on manufacturers’ promotional communications regarding off-label use.use.

Healthcare Reform

In March 2010, the Patient ProtectionUnited States, there have been and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively known as the Affordable Care Act, was signed into law. The Affordable Care Act substantially changes the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry. The Affordable Care Act containedwe expect there will continue to be a number of provisions, including those governing enrollment in federal healthcare programs, reimbursementlegislative and regulatory changes and fraud and abuse, which have impacted existing government healthcare programs and resulted in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reportinghealthcare system in ways that could affect our future revenues and feedback program. Additionally,profitability and the Affordable Care Act:

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act. For example, the Tax Cuts and Jobs Act of 2017, or the Jobs Act, was enacted, which, among other things, removed penalties for not complying with the individual mandate to carry health insurance. On December 14, 2018, a U.S. District Court Judge in Texas ruled that the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Jobs Act. On December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court’s decision that the individual mandate was unconstitutional but remanded the case back to the District Courthealthcare system, some of which are intended to determine whethercontain or reduce the remaining provisionscosts of the Affordable Care Act are invalid as well. On November 10, 2020, the U.S. Supreme Court heard oral arguments over the constitutionality of the individual mandatemedical products and whether the rest of the Affordable Care Act can be severed if theservices.

2022

Table of Contents

Index to Financial Statements

mandate is unconstitutional. It is unclear how these decisions, subsequent appeals, if any, or other effortsFor instance, there have been judicial, executive and Congressional challenges to challenge, repeal or replacecertain aspects of the Affordable Care Act, will impactor ACA, since it was signed into law in March 20210. On June 17, 2021, the lawU.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the Supreme Court’s decision, President Biden had issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or our business.the ACA.

OtherRecent legislative changes have been proposed and adopted since the Affordable Care Act was enacted. These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments, will remain in effect through 20292030, with the exception of a temporary suspension from May 1, 2020 through July 1, 2022 (with a 1% payment reduction from April 1 to June 30, 2022), unless additional Congressional action is taken. In January 2013, American Taxpayer Relief Act of 2012, or the ATRA, was enacted, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Recently, there has also been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed drug products, in part informed by the current atmosphere of mounting criticism of prescription drug costs in the United States, which has resulted in several Congressional inquiries and proposed bills designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologiesmethodologies. We expect there will continue to be legislative and regulatory proposals to change the healthcare system in ways that could impact our ability to sell TAVNEOS profitably, as governmental oversight and scrutiny of pharmaceutical companies is increasing. We anticipate that the U.S. Congress, state legislatures, and regulators may adopt or accelerate adoption of new healthcare policies and reforms intended to curb healthcare costs, such as federal and state controls on reimbursement for drugs (including under Medicare, Medicaid and commercial health plans), new or increased requirements to pay prescription drug products. Therebates and penalties to government health care programs, and additional pharmaceutical cost transparency policies that aim to require drug companies to justify their prices through required disclosures. For example, measures have been introduced in Congress, such as the “Build Back Better Act,” would, among other things, impose caps on prescription drug prices and would require manufacturers to negotiate drug pricing with the government and impose rebates triggered by price increases that outpace inflation under Medicare Part B and Part D. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material adverse effect on our potential customers and accordingly, our financial operations.

There likely will continue to be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of health care. We cannot predict the initiatives that may be adopted in the future or their full impact, on our businessparticularly in light of the Affordable Care Actcurrent presidential administration and U.S. Congress. The continuing efforts of the government, insurance companies, managed care organizations and other new lawspayors of healthcare services to contain or reduce costs of health care may adversely affect:

Further, changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial. In light of widely publicized events concerning the safety risk of certain drug products, regulatory authorities, members of Congress, the Governmental Accounting Office, medical professionals and the general public have raised concerns about potential drug safety issues. These events have resulted in the recall and withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and establishment of risk management programs that may, for instance, restrict distribution of drug products or require safety surveillance and/or patient education. The increased attention to drug safety issues may result in a more cautious approach by the FDA to clinical trials and the drug approval process. Data from clinical trials may receive greater scrutiny with respect to safety, which may make the FDA or other regulatory authorities more likely to terminate or suspend clinical trials before completion, or require longer or additional clinical trials that may result in substantial additional expense and a delay or failure in obtaining approval or approval for a more limited indication than originally sought.

23

Table of Contents

Index to Financial Statements

Third-Party Payor Coverage and Reimbursement

Although none of our drug candidates has been commercialized for any indication, if they are approved for marketing, commercialCommercial success of our drug candidates will depend, in part, upon the availability of coverage and reimbursement from third-party payors at the federal, state, and private levels. Government payor programs, including Medicare and Medicaid, private health care insurance companies, and managed-care plans have attempted to control costs by limiting coverage and the amount of reimbursement for particular procedures or drug treatments. The U.S. Congress and state legislatures from time to time propose and adopt initiatives aimed at cost-containment. Ongoing federal and state government initiatives directed at lowering the total cost of health care will likely continue to focus on health care reform, the cost of prescription pharmaceuticals and on the reform of the Medicare and Medicaid payment systems. Examples of how limits on drug coverage and reimbursement in the United States may cause reduced payments for drugs in the future include:

Some third-party payors also require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse health care providers who use such therapies. In order to secure coverage, a company may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the drug product, in addition to the costs required to obtain FDA or other comparable marketing approvals. Nonetheless, drug products may not be considered medically necessary or cost effective. A decision by a third-party payor not to cover a drug product could reduce physician utilization and have a material adverse effect on sales, results of operations and financial condition. Additionally, a payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage and reimbursement for the drug product, and the level of coverage and reimbursement can differ significantly from payor to payor. Even if favorable coverage and reimbursement status is attained for a drug product, less favorable coverage policies and reimbursement rates may be implemented in the future.

Outside the United States, reimbursement of drug products is subject to governmental control in many countries. Pricing negotiations with governmental authorities can extend well beyond the receipt of regulatory approval for a drug product and may require conduct a clinical trial that compares the cost effectiveness of our drug products to other available therapies. The conduct of such a clinical trial could be expensive and result in delays in commercialization efforts. Third-party payors are challenging the prices charged for drug products and services, and many third-party payors limit reimbursement for newly-approved drug products. Recent budgetary pressures in many EU countries are also causing governments to consider or implement various cost-containment measures, such as price freezes, increased price cuts and rebates. If budget pressures continue, governments may implement additional cost-containment measures. Cost-control initiatives could decrease the price we might establish for products that we may develop or sell, which would result in lower product revenues or royalties payable to us. There

21

Table of Contents

Index to Financial Statements

can be no assurance that any country that has price controls or reimbursement limitations for drug products will allow favorable reimbursement and pricing arrangements for any of our drug products.

While we cannot predict whether any proposed cost-containment measures will be adopted or otherwise implemented in the future, the announcement or adoption of these proposals could have a material adverse effect on our ability to obtain adequate prices for our drug candidates and operate profitably.

Other Healthcare Laws and Regulations

We are also subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in which we conduct our business. The laws that may affect our ability to operate include:

2224

Table of Contents

Index to Financial Statements

International Regulation

In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our future drugs. Whether or not we obtain FDA approval for a drug, we must obtain approval of a drug by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the drug in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

Under the European Economic Area, or EEA (which is comprised of the 28 member states of the European Union plus Norway, Iceland and Liechtenstein), regulatory systems, marketing authorizations may be submitted either under the Centralized, Mutual Recognition, Decentralized or national EEA member state procedures. The Centralized Procedure provides for the grant of a single marking authorization that is valid for all member states of the EEA. The Mutual Recognition Procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marking authorization may submit an application to the remaining Member States. Under the Decentralized Procedure, if the product has not received a marketing authorization in any EEA member state at the time of application, the applicant can file an application to various EEA member states (choosing once as the so-called reference member states) of its choice which will be reviewed and approved simultaneously by them.

In addition to regulations in Europe and the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial distribution of our future drugs.

Human Capital Management

Employees

As of December 31, 2020,2021, we had 133178 full-time employees, 4453 of whom hold Ph.D.s, M.D.s or both. Of our total workforce, 8378 employees are engaged in research and development, and 50100 employees in selling, general and administrative, which includes our commercialization personnel. We have no collective bargaining agreements with our employees and we have not experienced any work stoppages nor are we aware of any employment circumstances that are likely to disrupt work at any of our facilities. We believe that our relations with our employees are good.good; however, companies like ours have experienced challenges in recruiting and retaining employees given industry competition and circumstances related to COVID-19.

Turnover

We continually monitor employee turnover rates as our success depends upon retaining our highly trained personnel. We believe the competitive combination of compensation and career growth have helped increase employee tenure and reduce voluntary turnover.

Diversity and Inclusion

Diversity and inclusion are priorities for us. We believe that a rich culture of inclusion and diversity enables us to create, develop and fully leverage the strengths of our workforce.

Human Resources, Hiring and Professional Development

23

Table of Contents

Index to Financial Statements

The development, attraction and retention of employees is critical to our success. We work diligently to attract the best talent from a diverse range of sources in order to meet the current and future demands of our business. We leverage both formal and informal programs to identify, foster and retain top talent. We are piloting increased flexibility to promote employee satisfaction, recruitment and retention.

Business Ethics

Our Code of Business Conduct and Ethics ensures that our conduct of business is consistent with the highest standards of business ethics. Our Code of Business Conduct and Ethics serves as a critical tool to help employees recognize and report unethical conduct, while preserving our culture of excellence. Our board of directors, management and staff are provided with training regarding our Code of Business Conduct and Ethics. We also have appropriate commercial compliance policies and procedures and a compliance program aligned to the OIG’s elements of an effective compliance program guidance.

Recent Developments26

Table of Contents

Index to Financial Statements

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 spread globally and has spread to nearly every country and region in the world, including those 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. 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 avacopanproduction of TAVNEOS for the treatment of ANCA vasculitis, if approved, 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.

About ChemoCentryx

We commenced operations in 1997. Our principal offices are located at 850 Maude Avenue, Mountain View, California 94043,835 Industrial Ave, Suite 600, San Carlos, CA 94070, and our telephone number is (650) 210-2900. Our website address is www.chemocentryx.com. The information contained in, or that can be accessed through, our website is not part of this Annual Report on Form 10-K. We have two wholly owned inactive subsidiaries, ChemoCentryx Limited, organized under the laws of the United Kingdom and ChemoCentryx Ireland Limited, organized under the laws of Ireland.

Available Information

We file electronically with the Securities and Exchange Commission, or SEC, our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. We make available on our website at www.chemocentryx.com, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is www.sec.gov. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only.

2427

Table of Contents

Index to Financial Statements

Item 1A. Risk Factors.

The following section includes the most significant factors that may adversely affect our business and operations. You should carefully consider the risks and uncertainties described below and all information contained in this Annual Report on Form 10-K before deciding to invest in our common stock. If any of the following risks actually occur, our business, financial condition, results of operations and growth prospects would likely be materially and adversely affected. In that event, the trading price of our common stock could decline, and you could lose all or part of your investment.

Summary of Risk Factors

An investment in us is subject to a number of risks, including risks related to our financial position and capital requirements, risks related to the discovery, development and regulatory approval of our product candidates, risks related to our reliance on third parties, risks related to commercialization of our product candidates, risks related to our business operations and industry, risks related to intellectual property and risks related to making an investment in our securities. The following list summarizes some, but not all, of these risks. Please read the information in the following section entitled in its entirety for a more thorough description of these and other risks.