Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. ☐

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

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, as of ~~October 31, 2019~~April 30, 2020 was ~~58,268,567.~~

	September 30,			December 31,			March 31,			December 31,
	2019			2018			2020			2019
Assets
Current assets:
Cash and cash equivalents	$	35,922		$	28,088		$	59,436		$	39,179
Short-term investments		135,011			148,896			124,255			133,607
Accounts receivable, other								153			176
Accounts receivable from related party		—			2,058			15			—
Prepaid expenses and other current assets		1,586			2,342			2,810			1,400
Total current assets		172,519			181,384			186,669			174,362
Property and equipment, net		1,588			1,536			2,746			2,154
Long-term investments		34,867			—			5,140			29,454
Operating lease right-of-use assets		1,993			—			1,407			1,704
Other assets		1,354			390			1,340			1,409
Total assets	$	212,321		$	183,310		$	197,302		$	209,083
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	937		$	966		$	2,371		$	1,532
Accrued and other current liabilities		17,597			12,969			14,811			19,806
Deferred revenue from related party		36,819			50,461			40,764			37,742
Total current liabilities		55,353			64,396			57,946			59,080
Long-term debt, net		19,762			19,689			24,178			19,786
Non-current deferred revenue from related party		73,889			84,100			54,234			63,095
Other non-current liabilities		1,455			387			783			1,122
Total liabilities		150,459			168,572			137,141			143,083
Commitments (Note 7)
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding		—			—			—			—
Common stock, $0.001 par value, 200,000,000 shares authorized; 58,253,140 and 50,652,238 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		58			51
Common stock, $0.001 par value, 200,000,000 shares authorized; 61,792,661 and 60,234,784 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively								62			60
Additional paid-in capital		475,869			389,398			511,571			495,624
Note receivable		(16	)		(16	)		(16	)		(16	)
Accumulated other comprehensive income (loss)		409			(198	)
Accumulated other comprehensive income								217			318
Accumulated deficit		(414,458	)		(374,497	)		(451,673	)		(429,986	)
Total stockholders’ equity		61,862			14,738			60,161			66,000
Total liabilities and stockholders’ equity	$	212,321		$	183,310		$	197,302		$	209,083

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2019			2018			2020			2019
Revenue:
Collaboration and license revenue from related party	$	10,581		$	8,975		$	26,081		$	33,543		$	5,855		$	8,327
Grant revenue														153			—
Total revenue		10,581			8,975			26,081			33,543			6,008			8,327

Operating expenses:
Research and development		18,096			15,135			51,074			47,636			19,311			15,354
General and administrative		6,116			5,373			17,187			14,781			8,820			5,501
Total operating expenses		24,212			20,508			68,261			62,417			28,131			20,855
Loss from operations		(13,631	)		(11,533	)		(42,180	)		(28,874	)		(22,123	)		(12,528	)
Other income (expense):
Interest income		1,311			1,066			3,850			2,471			984			1,121
Interest expense		(542	)		(423	)		(1,631	)		(778	)		(548	)		(542	)
Total other income, net		769			643			2,219			1,693			436			579
Net loss	$	(12,862	)	$	(10,890	)	$	(39,961	)	$	(27,181	)	$	(21,687	)	$	(11,949	)
Basic and diluted net loss per common share	$	(0.22	)	$	(0.22	)	$	(0.71	)	$	(0.55	)	$	(0.35	)	$	(0.23	)
Shares used to compute basic and diluted net loss per common share		58,205			50,341			56,219			49,579			61,295			52,395

Common Stock

Additional
Paid-In

Note

Accumulated
Other
Comprehensive

Accumulated

Total
Stockholders'

Shares

Amount

Capital

Receivable

Income (Loss)

Deficit

Equity

Balance as of June 30, 2019

58,209,745

$
58

$
472,661

$
(16
)

$
353

$
(401,596
)

$
71,460

Net loss

—

—

—

—

—

(12,862
)

(12,862
)
Unrealized gain on investments

—

—

—

—

56

—

56

Issuance of common stock under equity
incentive and employee stock purchase plans

43,395

—

269

—

—

—

269

Employee stock-based compensation

—

—

2,856

—

—

—

2,856

Compensation expense related to options
granted to consultants

—

—

83

—

—

—

83

Balance as of September 30, 2019

58,253,140

$
58

$
475,869

$
(16
)

$
409

$
(414,458
)

$
61,862

	Common Stock					Additional Paid-In			Note			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount		Capital			Receivable			Income (Loss)			Deficit			Equity
Balance as of December 31, 2019		60,234,784		$	60	$	495,624		$	(16	)	$	318		$	(429,986	)	$	66,000
Net loss		-			-		-			-			-			(21,687	)		(21,687	)
Unrealized loss on investments		-			-		-			-			(101	)		-			(101	)
Issuance of common stock under equity incentive plans		1,645,869			2		14,797			-			-			-			14,799
Repurchased shares upon vesting of restricted stock units for tax withholdings		(87,992	)		-		(3,480	)		-			-			-			(3,480	)
Employee stock-based compensation		-			-		4,374			-			-			-			4,374
Compensation expense related to options granted to consultants		-			-		256			-			-			-			256
Balance as of March 31, 2020		61,792,661		$	62	$	511,571		$	(16	)	$	217		$	(451,673	)	$	60,161

Common Stock

Additional
Paid-In

Note

Accumulated
Other
Comprehensive

Accumulated

Total
Stockholders'

Shares

Amount

Capital

Receivable

Income (Loss)

Deficit

Equity

Balance as of December 31, 2018

50,652,238

$
51

$
389,398

$
(16
)

$
(198
)

$
(374,497
)

$
14,738

Net loss

—

—

—

—

—

(39,961
)

(39,961
)
Unrealized gain on investments

—

—

—

—

607

—

607

Issuance of common stock through Equity
   Distribution Agreement, net of issuance
   costs (Note 9)

6,491,196

6

73,270

—

—

—

73,276

Issuance of common stock under equity
   incentive and employee stock purchase plans

1,217,325

1

5,836

—

—

—

5,837

Repurchased shares upon vesting of restricted
   stock units for tax withholdings

(107,619
)

—

(1,174
)

—

—

—

(1,174
)
Employee stock-based compensation

—

—

8,359

—

—

—

8,359

Compensation expense related to options
   granted to consultants

—

—

180

—

—

—

180

Balance as of September 30, 2019

58,253,140

$
58

$
475,869

$
(16
)

$
409

$
(414,458
)

$
61,862

	Common Stock					Additional Paid-In			Note			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount		Capital			Receivable			Income (Loss)			Deficit			Equity
Balance as of December 31, 2018		50,652,238		$	51	$	389,398		$	(16	)	$	(198	)	$	(374,497	)	$	14,738
Net loss		-			-		-			-			-			(11,949	)		(11,949	)
Unrealized gain on investments		-			-		-			-			194			-			194
Issuance of common stock through Equity Distribution Agreement, net of issuance costs		6,491,196			6		73,270			-			-			-			73,276
Issuance of common stock under equity incentive plans		690,100			1		2,851			-			-			-			2,852
Repurchased shares upon vesting of restricted stock units for tax withholdings		(107,619	)		-		(1,174	)		-			-			-			(1,174	)
Employee stock-based compensation		-			-		2,662			-			-			-			2,662
Compensation expense related to options granted to consultants		-			-		40			-			-			-			40
Balance as of March 31, 2019		57,725,915		$	58	$	467,047		$	(16	)	$	(4	)	$	(386,446	)	$	80,639

Common Stock

Additional
Paid-In

Note

Accumulated
Other
Comprehensive

Accumulated

Total
Stockholders'

Shares

Amount

Capital

Receivable

Loss

Deficit

Equity

Balance as of June 30, 2018

50,309,988

$
50

$
381,923

$
(16
)

$
(237
)

$
(352,822
)

$
28,898

Net loss

—

—

—

—

—

(10,890
)

(10,890
)
Unrealized gain on investments

—

—

—

—

48

—

48

Issuance of common stock under equity
incentive and employee stock purchase plans

118,519

—

614

—

—

—

614

Employee stock-based compensation

—

—

2,617

—

—

—

2,617

Compensation expense related to options
granted to consultants

—

—

185

—

—

—

185

Balance as of September 30, 2018

50,428,507

$
50

$
385,339

$
(16
)

$
(189
)

$
(363,712
)

$
21,472

Common Stock

Additional
Paid-In

Note

Accumulated
Other
Comprehensive

Accumulated

Total
Stockholders'

Shares

Amount

Capital

Receivable

Loss

Deficit

Equity

Balance as of December 31, 2017

48,837,060

$
49

$
368,553

$
(16
)

$
(119
)

$
(289,200
)

$
79,267

Net loss

—

—

—

—

—

(27,181
)

(27,181
)
Adoption of ASC Topic 606, Revenue from
   Contracts with Customers

—

—

—

—

—

(47,331
)

(47,331
)
Unrealized loss on investments

—

—

—

—

(70
)

—

(70
)
Issuance of common stock under equity
   incentive and employee stock purchase plans

1,671,032

1

9,290

—

—

—

9,291

Repurchased shares upon vesting of restricted
   stock units for tax withholdings

(79,585
)

—

(473
)

—

—

—

(473
)
Employee stock-based compensation

—

—

7,246

—

—

—

7,246

Compensation expense related to options
   granted to consultants

—

—

723

—

—

—

723

Balance as of September 30, 2018

50,428,507

$
50

$
385,339

$
(16
)

$
(189
)

$
(363,712
)

$
21,472

	Nine Months Ended September 30,						Three Months Ended March 31,
	2019			2018			2020			2019
Operating activities
Net loss	$	(39,961	)	$	(27,181	)	$	(21,687	)	$	(11,949	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		8,539			7,969			4,630			2,702
Depreciation of property and equipment		413			371			143			141
Amortization of right-of-use assets		803			—			297			239
Non-cash interest income, net		(1,394	)		(714	)		155			(436	)
Changes in assets and liabilities:
Accounts receivable, other								23			—
Accounts receivable due from related party		2,058			50,754			(15	)		1,891
Prepaids and other current assets		756			(1,164	)		(754	)		(1,778	)
Other assets		116			137			69			180
Accounts payable		(29	)		(824	)		1,042			327
Other liabilities		2,659			3,053			(5,510	)		(1,443	)
Deferred revenue from related party		(23,853	)		(656	)		(5,839	)		(8,160	)
Net cash provided by (used in) operating activities		(49,893	)		31,745
Net cash used in operating activities								(27,446	)		(18,286	)
Investing activities
Purchases of property and equipment, net		(465	)		(755	)		(868	)		(46	)
Purchases of investments		(189,404	)		(173,739	)		(11,434	)		(75,235	)
Sales of investments		4,967			—			—			4,967
Maturities of investments		165,770			108,050			44,330			65,170
Net cash used in investing activities		(19,132	)		(66,444	)
Net cash provided by (used in) investing activities								32,028			(5,144	)
Financing activities
Proceeds from issuance of common stock		73,276			—			—			73,276
Proceeds from exercise of stock options and employee stock purchase plan		5,837			9,291
Proceeds from exercise of stock options								14,797			2,573
Employees' tax withheld and paid for restricted stock units		(1,174	)		(473	)		(3,480	)		(1,174	)
Borrowings under credit facility agreement, net of issuance costs		—			9,975			4,358			—
Net cash provided by financing activities		77,939			18,793			15,675			74,675
Net increase (decrease) in cash, cash equivalents and restricted cash		8,914			(15,906	)
Net increase in cash, cash equivalents and restricted cash								20,257			51,245
Cash, cash equivalents and restricted cash at beginning of period		28,088			40,020			40,259			28,088
Cash, cash equivalents and restricted cash at end of period	$	37,002		$	24,114		$	60,516		$	79,333
Supplemental disclosures of cash flow information
Cash paid for interest	$	1,317		$	426		$	407		$	422
Right-of-use assets obtained in exchange for lease obligations ⁽¹⁾	$	2,796		$	—		$	—		$	1,301
Purchases of property and equipment, net recorded in accounts payable							$	(132	)	$	—

ChemoCentryx, Inc. (the Company) commenced operations in 1997. The Company is a ~~clinical-stage~~ biopharmaceutical company focused on ~~developing~~the development and commercialization of new medications targeted at inflammatory disorders, autoimmune diseases and cancer. The Company’s principal operations are in the United States and it operates in one segment.

The financial information filed is unaudited. The Condensed Consolidated Financial Statements included in this report reflect all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for the fair statement of the results of operations for the interim periods covered and of the financial condition of the Company at the date of the interim balance sheet. The December 31, ~~2018~~2019 Condensed Consolidated Balance Sheet was derived from audited financial statements. The results for interim periods are not necessarily indicative of the results for the entire year or any other interim period. The Condensed Consolidated Financial Statements should be read in conjunction with the Company’s financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 filed with the Securities and Exchange Commission on March ~~11, 2019.~~10, 2020.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

The Company invests in a variety of financial instruments and, by its policy, limits the amount of credit exposure with any one issuer, industry or geographic area.

Accounts receivable are typically unsecured and are concentrated in the pharmaceutical industry and government sector. Accordingly, the Company may be exposed to credit risk generally associated with pharmaceutical companies and government funded entities. The Company has not historically experienced any significant losses due to concentration of credit risk.

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents.

Diluted net loss per share is computed by dividing net loss attributable to common stockholders by the sum of the weighted-average number of common shares outstanding and dilutive common stock equivalent shares outstanding for the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants, (ii) vesting of restricted stock units (RSUs) and restricted stock awards (RSAs), and (iii) the purchase from contributions to the 2012 Employee Stock Purchase Plan (the ESPP), (calculated based on the treasury stock method), are only included in the calculation of diluted net loss per share when their effect is dilutive.

For the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019, ~~and 2018,~~ the following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

Comprehensive loss comprises net loss and other comprehensive income (loss). For the periods presented, other comprehensive income (loss) consists of unrealized gains and losses on the Company’s available-for-sale securities. For the ~~nine~~three months ended ~~September 30,~~March 31, 2020, there were no sales of investments and therefore there were no reclassifications of comprehensive loss. For the three months ended March 31, 2019, amounts reclassified from accumulated other comprehensive income (loss) to net loss for unrealized gains (losses) on available-for-sale securities were not significant, and were recorded as part of other income, net in the Condensed Consolidated Statements of Operations. ~~For the three months ended September 30, 2019 and three and nine months ended September 30, 2018,~~ ~~there were no sales of investments and therefore there were no reclassifications~~.

The Company determines if an arrangement includes a lease at inception. Operating leases are included in operating lease right-of-use (ROU) assets, accrued and other current liabilities and other non-current liabilities on the Company’s Condensed Consolidated Balance Sheets. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses the incremental borrowing rate based on the information available at lease commencement date in determining the present value of future payments. The operating lease ROU asset also excludes lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise any such options. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The Company has elected not to apply the recognition requirements for short-term leases. For lease agreements with lease and non-lease components, the Company generally accounts for them separately.

In ~~February~~June 2016, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842). The new standard requires the Company to recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. On January 1, 2019, the Company adopted this new standard using the modified retrospective approach in accordance with Leases – Targeted Improvements (ASU No. 2018-11). The Company elected the package of practical expedients permitted under the transition guidance within ASU No. 2018-11, which among other things, allowed the Company to carry forward the historical lease classification of those leases in place as of January 1, 2019. Results for the three and nine months ended September 30, 2019 are presented under Topic 842. Prior period amounts have not been adjusted and continue to be reported in accordance with the Company’s historical accounting under previous lease guidance, ASC Topic 840, Leases (Topic 840).

~~The impact of the adoption of Topic 842 on the accompanying Condensed Consolidated Balance Sheet as of January 1, 2019 was as follows (in thousands):~~

~~In June 2016, the FASB~~ issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments. The new standard replaces the incurred loss impairment methodology under the current standard with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company ~~will be~~is required to use a forward-looking expected credit loss model for accounts receivable and other financial instruments. Credit losses relating to available-for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The new standard ~~will be~~became effective for the Company on January 1, ~~2020, with early~~2020. The Company’s adoption ~~permitted~~ on January 1, 2019. The Company is currently evaluating the impact of the adoption of this standard on its financial statements and does not expect the adoption of this accounting guidance to have a material impact on the consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718). The new standard simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The Company adopted this new standard on January 1, 2019. The adoption of this accounting guidance2020 did not have a material impact on the consolidated financial statements.

In August 2018, the SEC adopted amendments to certain disclosure requirements in Securities Act Release No. 33-10532, Disclosure Update and Simplification. These amendments eliminated, modified, or integrated into other SEC requirements certain disclosure rules. Among the amendments was the requirement to present an analysis of changes in stockholders’ equity in the interim financial statements included in quarterly reports on Form 10-Q. The analysis, which can be presented as a footnote or separate statement, is required for the current and comparative quarter and year-to-date interim periods. The amendments became effective for the Company in its interim financial statements for the quarter ended March 31, 2019. The adoption of these SEC amendments did not have a material effect on the Company’s financial position, results of operations, cash flows or stockholders’ equity.

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

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

Restricted cash as of ~~September 30, 2019~~March 31, 2020 was held as collateral for stand-by letters of credit issued by the Company to its landlord in connection with the lease of the Company’s facility in San Carlos, California. See “Note 7. Commitments” for additional information of this lease.

The amortized cost and fair value of cash equivalents and investments at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were as follows (in thousands):

	September 30, 2019								March 31, 2020
	Amortized		Gross Unrealized				Fair		Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses		Value		Cost		Gains		Losses			Value
Money market fund	$	32,547	$	—	$	—	$	32,547	$	58,649	$	—	$	—		$	58,649
U.S. treasury securities		29,969		56		—		30,025		28,077		241		—			28,318
Commercial paper		18,408		—		—		18,408		15,915		—		—			15,915
Asset-backed securities		28,439		52		—		28,491		15,089		42		(4	)		15,127
Corporate debt securities		92,615		301		—		92,916		70,097		26		(88	)		70,035
Total available-for-sale securities	$	201,978	$	409	$	—	$	202,387	$	187,827	$	309	$	(92	)	$	188,044

Classified as:
Cash equivalents							$	32,509								$	58,649
Short-term investments								135,011									124,255
Long-term investments								34,867									5,140
Total available-for-sale securities							$	202,387								$	188,044

	December 31, 2018									December 31, 2019
	Amortized		Gross Unrealized					Fair		Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Money market fund	$	22,073	$	—	$	—		$	22,073	$	30,353	$	—	$	—		$	30,353
U.S. treasury securities		23,013		—		(13	)		23,000		40,245		47		—			40,292
Commercial paper		45,683		—		—			45,683		12,429		—		—			12,429
Asset-backed securities		29,127		—		(34	)		29,093		25,436		50		—			25,486
Corporate debt securities		55,228		—		(151	)		55,077		84,605		225		(4	)		84,826
Total available-for-sale securities	$	175,124	$	—	$	(198	)	$	174,926	$	193,068	$	322	$	(4	)	$	193,386

Classified as:
Cash equivalents								$	26,030								$	30,325
Short-term investments									148,896									133,607
Long-term investments																		29,454
Total available-for-sale securities								$	174,926								$	193,386

Cash equivalents in the tables above exclude cash of ~~$3.4~~$0.8 million and ~~$2.1~~$8.9 million as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively. All available-for-sale securities held as of ~~September 30, 2019~~March 31, 2020 had contractual maturities of less than two years. There have been no significant realized gains or losses on available-for-sale securities for the periods presented. The Company applies the specific identification method to determine the cost basis of the securities sold. No significant available-for-sale securities held as of ~~September 30, 2019~~March 31, 2020 have been in a continuous unrealized loss position for more than 12 months. As of ~~September 30, 2019,~~March 31, 2020, unrealized losses on available-for-sale investments are not attributed to credit ~~risk and are considered to be temporary.~~risk. The Company believes that it is more-likely-than-not that investments in an unrealized loss position will be held until maturity or the recovery of the cost basis of the investment. The Company believes ~~it has no other-than-temporary impairments~~that an allowance for credit losses is unnecessary because the unrealized losses on ~~its~~certain of the Company’s marketable securities ~~because it does not intend~~are due to ~~sell these securities and it believes it is not more likely than not that it will be required to sell these securities before the recovery of their amortized cost basis.~~market factors. To date, the Company has not recorded any impairment charges on marketable ~~securities related to other-than-temporary declines in market value.~~securities.

The Company determines the fair value of financial assets and liabilities using three levels of inputs as follows:

Level 1—Inputs which include quoted prices in active markets for identical assets and liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 (in thousands):


	September 30, 2019								March 31, 2020
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market fund	$	32,547	$	—	$	—	$	32,547	$	58,649	$	—	$	—	$	58,649
U.S. treasury securities		—		30,025		—		30,025		—		28,318		—		28,318
Commercial paper		—		18,408		—		18,408		—		15,915		—		15,915
Asset-backed securities		—		28,491		—		28,491		—		15,127		—		15,127
Corporate debt securities		—		92,916		—		92,916		—		70,035		—		70,035
Total assets	$	32,547	$	169,840	$	—	$	202,387	$	58,649	$	129,395	$	—	$	188,044

	December 31, 2018								December 31, 2019
Description	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Money market fund	$	22,073	$	—	$	—	$	22,073	$	30,353	$	—	$	—	$	30,353
U.S. treasury securities		—		23,000		—		23,000		—		40,292		—		40,292
Commercial paper		—		45,683		—		45,683		—		12,429		—		12,429
Asset-backed securities		—		29,093		—		29,093		—		25,486		—		25,486
Corporate debt securities		—		55,077		—		55,077		—		84,826		—		84,826
Total assets	$	22,073	$	152,853	$	—	$	174,926	$	30,353	$	163,033	$	—	$	193,386

~~During the nine months ended September 30, 2019, there were no transfers between Level 1 and Level 2 financial assets.~~ When the Company uses observable market prices for identical securities that are traded in less active markets, the Company classifies its marketable debt instruments as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs. The Company corroborates non-binding market consensus prices with observable market data using statistical models when observable market data exists. The discounted cash flow model uses observable market inputs, such as LIBOR-based yield curves, currency spot and forward rates, and credit ratings.

The carrying amount and estimated fair value of financial instruments not recorded at fair value at ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019 were as follows (in thousands):

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

In December ~~28,~~ 2017, ~~(the Closing Date),~~ the Company entered into a Loan and Security Agreement, with Hercules Capital, Inc. (Hercules) ~~which the Company amended in December 2018,~~, pursuant to which term loans in an aggregate principal amount of up to $50.0 million ~~(the~~(as amended, the Credit Facility) were available to the ~~Company in three tranches, subject to certain terms and conditions.~~ Company. As of ~~September 30, 2019,~~March 31, 2020, the Company had borrowed $20.0 million under the Credit Facility, with an interest rate of 8.05% per annum and the remaining available amount had expired.

Advances under the Credit Facility bear an interest rate equal to the greater of either (i) 8.05% plus the prime rate as reported from time to time in The Wall Street Journal (the Prime Rate) minus 4.75%, and (ii) 8.05%. ~~At September 30, 2019, the interest rate on the outstanding borrowings under the Credit Facility was 8.30%. For advances made under the first and second tranches, the~~The Company will make interest-only payments through July 1, 2021, and will then repay the principal balance and interest on the advances in equal monthly installments ~~after the interest-only period~~ and continuing through December 1, 2022.

The Company may prepay advances under the Credit Facility, in whole or in part, at any time, subject to a prepayment charge equal to: (a) 1.5% of the amount so prepaid, if such prepayment occurs during the second year following the Closing Date; and (b) 1.0% of the amount so prepaid, if such prepayment occurs after the second year following the Closing Date. The Credit Facility is secured by substantially all of the Company’s assets, excluding intellectual property.

In addition, Hercules has the right to participate, in an amount up to $2.0 million, in any subsequent equity financing broadly marketed to multiple investors in an amount greater than $20.0 million. The Credit Facility also includes customary affirmative restrictions on the payment of dividends and negative covenants, and events of default, the occurrence and continuance of which provide Hercules with the right to demand immediate repayment of all principal and unpaid interest under the Credit Facility, and to exercise remedies against the Company and the collateral securing the Credit Facility. The Company was in compliance with all loan covenants for all periods presented.

The Company will pay an end-of-term charge for each tranche it draws down, which will occur on the earliest of (i) the applicable tranche maturity date; (ii) the date that the Company prepays all of the outstanding principal under such tranche in full, or (iii) the date the loan payments are accelerated due to an event of default. For the first and second tranches, the end of term charge ~~will be $0.9 million and $0.3 million, respectively.~~of $1.3 million.

On January 8, 2020, the Company entered into an Amended and Restated Loan and Security Agreement (the Amended Loan Agreement) with Hercules, which amended and restated the agreement between the parties, and pursuant to which an additional term loan in an aggregate principal amount of up to $100.0 million (the Restated Credit Facility) is available to the Company at its discretion in three tranches. The first tranche of the Restated Credit Facility of up to $40.0 million would be available to the Company through December 15, 2020, of which $20.0 million would be available upon submission of the avacopan New Drug Application (NDA) for the treatment of patients with anti-neutrophil cytoplasmic auto-antibody associated vasculitis (ANCA vasculitis). The second tranche of up to an additional $30.0 million would be available to the Company through December 15, 2021 upon NDA approval of avacopan for the treatment of ANCA vasculitis. The third tranche of up to an additional $30.0 million would be available through December 15, 2022, subject to certain conditions.

Under the Restated Credit Facility, the Company had borrowed $5.0 million from the first tranche with an interest rate of 8.50% per annum as of March 31, 2020. Advances under the Restated Credit Facility bear an initial interest rate equals to the greater of either (i) 8.50% plus the Prime Rate minus 5.25%, and (ii) 8.50%, which may be reduced upon the Company achieving certain cumulative net avacopan revenue levels. For advances under the Restated Credit Facility, the Company will make interest only payments through September 1, 2022 and will then repay the principal balance and interest on the advances in equal monthly installments through February 1, 2024. Upon satisfaction of certain conditions, the interest-only payment period and the principal balance repayment period may be extended. In addition, the Company will pay an end of term charge of 7.15% of the aggregate amount of the advances under the Restated Credit Facility.

The Company paid a commitment charge of 1% of the advances made under the ~~Credit Facility,~~Amended Loan Agreement, with a minimum charge of $162,500 ~~paid on~~for the ~~Closing Date.~~Credit Facility and a minimum charge of $520,000 for the Restated Credit Facility. Also, the Company reimbursed Hercules for costs incurred related to the ~~Credit Facility~~Amended Loan Agreement. These charges were recorded as discounts to the carrying value of the loan and are amortized over the term of the loan using the effective interest method.

In addition, the Company may prepay advances under the Amended Loan Agreement, in whole or in part, at any time, subject to a prepayment charge that ranges from 1.0% to 2.0%, depending on the timing of the prepayment. The Amended Loan Agreement is secured by substantially all of the Company’s assets, excluding intellectual property. The Amended Loan Agreement also includes customary loan covenants, with which the Company was in compliance for all periods presented.

In connection with the Amended Loan Agreement, the Company also entered into a Right to Invest Agreement with Hercules, pursuant to which Hercules shall have the right to participate, in an amount up to $3.0 million, in any subsequent equity financing broadly marketed to multiple investors in an amount greater than $30.0 million.

As of ~~September 30, 2019,~~March 31, 2020, the Company had outstanding borrowings under the ~~Credit Facility~~Amended Loan Agreement of ~~$19.8~~$24.2 million, net of discounts of ~~$0.2~~$0.8 million. Future minimum principal payments, which exclude the end of term charge, related to the Restated Credit Facility as of ~~September 30, 2019~~March 31, 2020 are as follows (in thousands):

As described further in “Note 2. Summary of Significant Accounting Policies”, the Company adopted Topic 842 as of January 1, 2019. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

In May 2004, the Company entered into a noncancelable operating lease for its current office and primary research facility located in Mountain View, California. The Company received a discounted lease rate during the first year of the agreement. In August 2012, the Company entered into an amendment to the lease agreement for the same facility to extend the term through April 2019. In April 2017, the Company entered into a second amendment to the lease agreement for the same facility to extend the term of the lease through April 2020. In May 2019, the Company entered into a third amendment to the lease agreement for the same facility to extend the term of the lease through April 2021.

The balance sheet classification of the Company’s operating lease liabilities was as follows (in thousands):

The component of lease costs, which was included in operating expenses in the Company’s Condensed Consolidated Statements of Operations, was as follows (in thousands):

Cash paid for amounts included in the measurement of lease liabilities for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020 was ~~$940,000~~$375,000 and was included in net cash used in operating activities in the Company’s Condensed Consolidated Statements of Cash Flows.

Future minimum lease payments under all noncancelable operating leases as of ~~September 30, 2019~~March 31, 2020 are as follows (in thousands):

As of ~~September 30, 2019,~~March 31, 2020, the weighted-average remaining lease term was ~~1.6~~1.1 years and the weighted-average operating discount rate used to determine the operating lease liability was 11.0%.

In July 2019, the Company entered into a ten-year operating lease for a 96,463 square foot facility in San Carlos, California to replace its current headquarters located in Mountain View, California, for which the lease expires in April 2021. Upon execution of the lease agreement, the Company provided the landlord an approximately $1.1 million security deposit in the form of a letter of credit. Subject to certain conditions pursuant to the lease, the Company anticipates the lease commencement date to occur in the third quarter of 2020 and monthly rent payments to begin in the second quarter of 2021. Following a six month period of discounted rent, the Company will pay an initial annual base rent at a rate of approximately $6.5 million, which is subject to scheduled 3% annual increases, plus certain operating expenses. The Company has been provided a tenant improvement allowance of $15.4 million plus an additional allowance of up to $4.8 million for the same. If the additional allowance is provided, such amount will be repaid by the Company as additional rent in equal monthly payments at a rate of 7% per annum through the initial term of the lease. The Company has the right to sublease the facility, subject to landlord consent. The Company also has the option to extend the lease for five years.

Vifor held 10,676,825 shares of the Company’s common stock as of ~~September 30, 2019.~~March 31, 2020. The Company has collaboration agreements with Vifor: the Avacopan Agreements and the CCX140 Agreements (each as described below). See “Note 2. Summary of Significant Accounting Policies – Concentration of Credit Risk” for additional information on accounts receivable balance due from Vifor.

In May 2016, the Company entered into an exclusive collaboration and license agreement with Vifor pursuant to which the Company granted Vifor exclusive rights to commercialize avacopan in Europe and certain other markets (the Avacopan Agreement). Avacopan is the Company’s lead drug candidate for the treatment of patients with ~~anti-neutrophil cytoplasmic auto-antibody associated~~ANCA vasculitis ~~(AAV)~~ and other rare diseases. The Avacopan Agreement also provided Vifor with an exclusive option to negotiate during 2016 a worldwide license agreement for one of the Company’s other drug candidates, CCX140, an orally-administered inhibitor of the chemokine receptor known as CCR2. In connection with the Avacopan Agreement, the Company received a non-refundable upfront payment of $85.0 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 the Company’s common stock at a price of $7.50 per share.

In February 2017, Vifor and the Company expanded the Vifor territories under the Avacopan Agreement to include all markets outside the United States and China (the Avacopan Amendment). In connection with this February 2017 ~~arrangement,~~amendment, the Company received a $20.0 million upfront payment for the expanded rights. In June 2018, Vifor and the Company further expanded the Vifor territories under the Avacopan Agreement to provide Vifor with exclusive commercialization rights in China (the Avacopan Letter Agreement, and together with the Avacopan Agreement and the Avacopan Amendment, the Avacopan Agreements). The Company retains control of ongoing and future development of avacopan (other than country-specific development in the licensed territories) and all commercialization rights to avacopan in the United States. In consideration for the Avacopan Letter Agreement, the Company received a $5.0 million payment for the expanded rights.

Upon achievement of certain regulatory and commercial milestones with avacopan, the Company will receive additional payments of up to $460.0 million under the Avacopan ~~Agreement.~~Agreements. In addition, the Company will receive royalties, with rates ranging from the low teens to the mid-twenties, on future potential net sales of avacopan by Vifor in the licensed territories. In December 2017, the Company achieved a $50.0 million regulatory milestone when the European Medicines Agency (EMA) validated the Company’s ~~Conditional~~conditional marketing authorisation (CMA) application for avacopan for the treatment of ~~AAV.~~ANCA vasculitis.

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

As of ~~September 30, 2019,~~March 31, 2020, the transaction price of $153.0 million consists of the following:

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

The Company determined that the combined performance obligation will be performed over the duration of the contract, which began on the effective date of May 9, 2016 and ends upon completion of development and regulatory services. The Company uses a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize. The Company believes this is the best measure of progress because other measures do not reflect how the Company transfers its performance obligation to Vifor. In applying the cost-based input method of revenue recognition, the Company measures actual costs incurred relative to budgeted costs to fulfill the combined performance obligation. These costs consist primarily of third-party contract costs. Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligations.

For the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, the Company recognized ~~$8.8~~$4.5 million ~~and $20.9 million~~of of collaboration and license revenue under the Avacopan Agreements, ~~respectively,~~ as compared to ~~$7.6 million and $28.8~~$6.6 million during the same ~~respective periods~~period in ~~2018.~~2019.

In December 2016, the Company entered into a second collaboration and license agreement with Vifor pursuant to which the Company granted Vifor exclusive rights to commercialize CCX140 (the CCX140 Agreement) in markets outside the United States and China. CCX140 is an orally-administered inhibitor of the chemokine receptor known as CCR2. The Company retains marketing rights in the United States and China, while Vifor has commercialization rights in the rest of the world. Pursuant to the CCX140 Agreement, the Company is responsible for the clinical development of CCX140 in rare renal diseases and is reimbursed for Vifor’s equal share of such development cost. Vifor retains an option to solely develop and commercialize CCX140 in more prevalent forms of chronic kidney disease (CKD). Should Vifor later exercise the CKD option, the Company would receive co-promotion rights for CKD in the United States. Under the terms of the CCX140 Agreement, the Company received a non-refundable upfront payment of $50.0 million in 2017.

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

Upon achievement of certain regulatory and commercial milestones with CCX140, the Company will receive additional payments of up to $625.0 million under the CCX140 ~~Agreement.~~Agreements. In addition, the Company will receive tiered royalties, with rates ranging from ten to the mid-twenties, on net sales of CCX140 in the licensed territories.

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

As of ~~September 30, 2019,~~March 31, 2020, the transaction price of ~~$113.6~~$113.7 million consists of the following:

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

The Company determined that the combined performance obligation will be performed over the duration of the contract, which began on the effective date of December 22, 2016 and ends upon completion of development and regulatory services. The Company uses a cost-based input method to measure proportional performance and to calculate the corresponding amount of revenue to recognize. The Company believes this is the best measure of progress because other measures do not reflect how the Company transfers its performance obligation to Vifor. In applying the cost-based input method of revenue recognition, the Company measures actual costs incurred relative to budgeted costs to fulfill the combined performance obligation. These costs consist primarily of third-party contract costs. Revenue is recognized based on actual costs incurred as a percentage of total budgeted costs as the Company completes its performance obligations. For the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, the Company recognized ~~$1.8~~$1.4 million ~~and $5.2 million~~ of collaboration and license revenue under the CCX140 Agreements, ~~respectively,~~ as compared to ~~$1.5 million and $4.8~~$1.7 million during the same ~~respective periods~~period in ~~2018.~~2019.

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

During the three ~~and nine~~ months ended ~~September 30, 2019,~~March 31, 2020, the Company recognized the following revenue as a result of changes in the contract asset and the contract liability balances (in thousands):

In September 2019, the Company was awarded a two-year $1.0 million grant from the orphan drug office of the U.S. Food and Drug Administration to support the clinical development of avacopan in patients with the rare kidney disease complement 3 glomerulopathy. The Company recognized $0.2 million of grant revenue during the three months ended March 31, 2020. As of March 31, 2020, $0.2 million was recorded as accounts receivable.

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the Company had the following activities under its equity incentive plans:

Available
for Grant

Shares

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term (in years)

Aggregate
Intrinsic Value

Balance at December 31, 2018

1,708,516

10,720,200

$
8.39

Shares authorized

2,000,000

—

Granted ⁽¹⁾

(2,220,663
)

1,990,842

11.20

Exercised ⁽²⁾

107,619

(915,355
)

6.01

Forfeited and expired ⁽³⁾

767,863

(761,196
)

7.60

Outstanding at September 30, 2019

2,363,335

11,034,491

$
9.15

6.21

$
4,735,997

Vested and expected to vest, net of estimated forfeiture
at September 30, 2019

10,686,306

$
9.10

6.12

$
4,713,658

Exercisable at September 30, 2019

7,396,982

$
8.65

4.91

$
4,087,458

		Available for Grant			Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Balance at December 31, 2019			2,192,545			9,287,901		$	9.44
	Shares authorized		2,000,000			-
	Granted ⁽¹⁾		(824,790	)		607,390			45.15
	Exercised ⁽²⁾		87,992			(1,478,951	)		10.01
	Forfeited and expired		-			-			-
Outstanding at March 31, 2020			3,455,747			8,416,340		$	11.92		6.94	$	240,862,192
Vested and expected to vest, net of estimated forfeiture at March 31, 2020						8,079,662		$	11.58		6.86	$	233,639,679
Exercisable at March 31, 2020						4,892,989		$	8.40		5.59	$	155,495,372

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, the activity for restricted stock is summarized as follows:

Total stock-based compensation expense was ~~$2.9 million and $8.5~~$4.6 million during the three ~~and nine~~ months ended ~~September 30, 2019, respectively,~~March 31, 2020 and ~~$2.8 million and $8.0~~$2.7 million during the same ~~periods~~period ended ~~September 30, 2018, respectively.~~March 31, 2019. As of ~~September 30, 2019, $18.4~~March 31, 2020, $32.1 million, ~~$2.5~~$8.5 million and ~~$31,000~~$75,000 of total unrecognized compensation expenses associated with outstanding employee stock options, unvested restricted stock, and the ESPP, net of estimated forfeitures, were expected to be recognized over a weighted-average period of ~~2.57, 1.33~~2.55, 1.96 and 0.12 years, respectively.

In December 2018, the Company entered into an Equity Distribution Agreement (EDA), pursuant to which the Company may offer and sell, from time to time, shares of the Company’s common stock, par value $0.001 per share, having an aggregate offering price of up to $75.0 million. For the nine months ended September 30, 2019, the Company sold 6,491,196 shares of its common stock pursuant to its EDA for net proceeds of $73.3 million. These sales fully exhausted the amount available under the EDA. Accordingly, no further sales will be made under the EDA.

The following discussion and analysis should be read in conjunction with our financial statements and accompanying notes included in this Quarterly Report on Form 10-Q and the financial statements and accompanying notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, filed with the Securities and Exchange Commission, or SEC, on March ~~11, 2019.~~10, 2020.

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,” “aim,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “potential” or “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those included in “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, filed with the SEC on March ~~11, 2019.~~10, 2020.

Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, industry and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. For all forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

ChemoCentryx® and the ChemoCentryx logo are 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 Quarterly Report on Form 10-Q belongs to its respective holder.

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

ChemoCentryx is a biopharmaceutical company ~~developing~~focused on the development and commercialization of new medications targeted at inflammatory disorders, autoimmune diseases and cancer. Each of our drug candidates is designed to selectively block a specific chemoattractant receptor, leaving the rest of the immune system intact. Our drug candidates 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.

In ~~2016,~~November 2019, we ~~executed on~~announced positive topline data from the pivotal Phase III ADVOCATE trial of avacopan, our ~~strategy to form~~lead drug candidate that is an ~~alliance~~orally-administered selective complement 5a receptor inhibitor, for the treatment of patients with ~~a partner that could provide upfront fees and milestone payments to support~~anti-neutrophil cytoplasmic antibody-associated vasculitis, or ANCA vasculitis. The ADVOCATE trial compared avacopan with the clinical development of our two leading drug candidates, avacopan and CCX140, to registration and pay us royalties upon sales in international markets, while we develop our own commercial infrastructure to sell directly in the United States.

~~To help communicate the~~ ~~breadth of our drug discovery platform, we have segmented our pipeline into early stage and late stage drug candidates.~~

We have chosen to focus initially on orphan indications, where drug candidates tend to enjoy a faster path to market and better reimbursement. Our leading drug candidates address areas of clear unmet need, where the currentcurrently used glucocorticoid (most commonly prednisone) active comparator containing standard of care, or SOC. Subjects in both study arms received background therapy with rituximab or cyclophosphamide. The trial met both of its primary endpoints, showing that avacopan therapy without the need for daily prednisone could achieve disease remission at 26 weeks and sustained remission at 52 weeks, as assessed by the Birmingham Vasculitis Activity Score, or BVAS. BVAS remission at week 26 in the avacopan treated subjects was numerically superior and statistically non-inferior to the prednisone active comparator SOC ~~is insufficient to halt progression~~control group, where BVAS remission was achieved in 72.3% of the avacopan treated subjects vs. 70.1% of subjects in the prednisone active comparator SOC control 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 active comparator SOC control group, achieving both non-inferiority and superiority to prednisone active comparator SOC (p=0.0066 for superiority of avacopan). Reduction in overall burden of disease ~~and/or where today’s treatment options come~~management and improvement in quality of life was also demonstrated through key secondary endpoints, including improved kidney function and reduction of adverse events and illnesses associated with ~~serious side effects,~~steroids, such as ~~those~~prednisone.

We plan to file a New Drug Application, or NDA, with the U.S. Food and Drug Administration, or FDA, in mid-2020 and, if the NDA is approved, to commercialize avacopan in the United States on our own and internationally through our kidney health alliance with Vifor Fresenius Medical Care Renal Pharma Ltd. and its affiliates and sublicensees, or collectively, Vifor. We are also developing avacopan in other indications, including complement 3 glomerulopathy, or C3G, and hidradenitis suppurativa, or HS.

Our next most advanced drug candidate is CCX140, an orally-administered inhibitor of the C-C chemokine receptor known as CCR2. CCX140 is being developed for focal segmental glomerulosclerosis, or FSGS, a rare renal disease characterized by progressive proteinuria (excess protein in the urine) and impaired renal function. We have two ongoing Phase II clinical trials to evaluate CCX140 for the treatment of primary or genetic FSGS, the LUMINA trials, with the LUMINA-1 trial for patients with sub-nephrotic proteinuria, and the LUMINA-2 trial for patients with nephrotic syndrome, for which ~~accompany~~there are currently no FDA-approved treatments. We expect to report topline data from the ~~prolonged use~~LUMINA-1 trial in the second quarter of ~~steroids:~~ 2020 and the LUMINA-2 trial in the second half of 2020.

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

Avacopan (formerly CCX168) is our lead drug candidate. It is a potential first-in-class, orally-administered molecule that employs a novel, highly targeted mode of action in the treatment of ANCA vasculitis and other complement-driven autoimmune and inflammatory diseases. ANCA vasculitis is an ~~orally-administered complement inhibitor targeting the C5a receptor, or C5aR,~~orphan, severe, and ~~is being developed for orphan diseases, including (i) anti-neutrophil cytoplasmic auto-antibody associated vasculitis, or AAV, a devastating~~often fatal autoimmune disease that ~~damages blood vessels~~is characterized by elevated levels of autoantibodies called anti-neutrophil cytoplasmic autoantibodies and ~~can lead to kidney failure, pulmonary failure and damage to other tissues; (ii) complement 3 glomerulopathy, or C3G,~~ ~~a debilitating disease~~by inflammation that can ~~lead~~affect many different organ systems, and commonly involves the kidneys. ANCA vasculitis affects approximately 40,000 to 75,000 people in the United States, with approximately 4,000 new cases each year; similarly, ANCA vasculitis affects approximately 50,000 to 100,000 people in Europe, with approximately 5,000 new cases each year.

We have successfully completed and reported positive topline clinical data from our pivotal Phase III clinical trial of avacopan for the treatment of ANCA vasculitis, known as the ADVOCATE trial. ADVOCATE was a randomized, double-blind, active-controlled worldwide clinical trial which enrolled 331 patients with newly diagnosed or relapsing ANCA vasculitis at over 200 sites in the United States, Canada, Europe, Australia, New Zealand and Japan. The aim of the trial was to assess the safety and efficacy of avacopan in inducing and sustaining remission in patients with ANCA vasculitis.

Avacopan has been granted orphan drug designation by the FDA for the treatment of ANCA vasculitis and by the European Medicines Agency, or EMA, for the treatment of microscopic polyangiitis and granulomatosis with polyangiitis, both forms of ANCA vasculitis. Based on the success of the avacopan clinical studies in ANCA vasculitis, we plan to file an NDA with the FDA in mid-2020 and will support our alliance partner, Vifor, with their filing of applications for regulatory approval internationally.

We plan on building a commercial infrastructure and deploying an appropriately sized specialty field force in the United States to commercialize avacopan in ANCA vasculitis. We expect that our future field force will focus primarily on a subset of rheumatologists and nephrologists who treat this disease. In territories outside of the United States, our partner Vifor would be responsible for the commercialization of avacopan.

Additionally, we launched a registration-supporting clinical trial, the ACCOLADE trial, to study avacopan for the treatment of patients with C3G. C3G is an ultra-rare disease of the kidney ~~failure~~;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 ~~(iii) moderate~~eventual renal failure. The prevalence of C3G is estimated at two to ~~severe hidradenitis suppurativa,~~three per million people or approximately 800 patients in the United States and approximately 2,000 in Europe. We expect to report topline data from the ACCOLADE trial in the second half of 2020.

We also initiated a large placebo-controlled Phase IIb clinical trial, the AURORA trial, for the treatment of patients with moderate-to-severe HS. HS is a chronic, ~~inflammatory,~~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.

~~Avacopan has been granted orphan drug designation by the U.S. Food~~ The disease originates from inflammation and Drug Administration, or FDA, for the treatment of AAV and C3G and by the European Medicines Agency, or EMA, for the treatment of C3G and microscopic polyangiitis and granulomatosis with polyangiitis, both forms of AAV. Additionally, avacopan was granted PRIority MEdicines, or PRIME, designation from the EMA, ~~to expedite its clinical development, and to potentially accelerate its marketing authorization.~~

~~Following completion of two randomized, placebo controlled Phase II clinical trials in patients with AAV, in which avacopan was well-tolerated and provided effective steroid-free control~~occlusion of the ~~disease, we launched~~hair follicle. Apart from pain, the ~~ADVOCATE Phase III trial in December 2016. The FDA~~nodules may rupture, and ~~the EMA concurred with the design~~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 ~~study. ADVOCATE is~~skin lesions, HS has a ~~randomized, double-blind two-arm study which enrolled 331 patients at over 200 sites in~~great impact on the patient’s quality of life, deeply affecting social, working, and psychological aspects. In the United States, ~~Canada,~~the estimated prevalence of moderate-to-severe HS is up to 200,000 patients. In Europe, ~~Australia, New Zealand and Japan. Patient enrollment~~the number of ~~the ADVOCATE Phase III trial was completed in September 2018 and we expect~~affected patients is believed to ~~report topline data from this trial in the mid-to-late fourth quarter of 2019. Additionally, we launched a registration-supporting clinical trial to study avacopan for the treatment of patients~~be greater, with ~~C3G, the ACCOLADE trial, and initiated a large placebo-controlled Phase IIb clinical trial, the AURORA trial, for the treatment of patients with moderate to severe HS.~~higher prevalence. We expect to report topline data from ~~both~~AURORA trial in the ~~ACCOLADE and AURORA trials in~~third quarter of 2020.

Our second drug candidate in the orphan disease space is CCX140, an ~~orally-administered~~ inhibitor of the chemokine receptor known as ~~CCR2, has been in development for diabetic nephropathy, or DN,~~CCR2. CCX140 is an orally-administered small molecule that is highly potent and a ~~form~~selective inhibitor of ~~chronic kidney disease, or CKD, and is now being developed for focal segmental glomerulosclerosis, or FSGS, a rare renal disease characterized by progressive proteinuria, excess protein in~~ the ~~urine, and impaired renal function.~~chemokine receptor known as CCR2. CCX140 has been granted orphan drug designation by the FDA for the treatment of focal segmental glomerulosclerosis, or FSGS.

~~A global Phase II clinical trial of CCX140 in patients with DN met its primary endpoint by demonstrating~~ FSGS is a histologic lesion that CCX140 given orally once daily added to a SOC renin-angiotensin-aldosterone system inhibitor treatment resulted in a statistically significant reduction in proteinuria, beyond that achieved with SOC alone,is associated with the ~~most pronounced effect shown~~clinical presentation, in ~~the patients with highest levels~~children or adults, of ~~proteinuria. Based on the safety~~proteinuria, nephrotic syndrome and ~~efficacy data related to reduction in proteinuria observed in the Phase II trial in DN, we launched~~progressive renal insufficiency. We have two ongoing Phase II clinical trials to evaluate the ~~LUMINA trials,~~use of CCX140 for the treatment of primary or genetic FSGS that are known as the LUMINA trials, with the LUMINA-1 trial for patients with sub-nephrotic range proteinuria and the LUMINA-2 trial ~~being~~ for patients with nephrotic ~~range proteinuria and the LUMINA-1 trial being for patients with sub-nephrotic proteinuria,~~syndrome, for which there are currently no FDA-approved treatments. Patient enrollment of LUMINA-1 was completed in August 2019, and we expect to report topline data in the ~~first half~~second quarter of 2020.

In May 2016, we announced a partnership, which we refer to as the Avacopan Agreement, with ~~Vifor (International) Ltd., and/or its affiliates, or collectively, Vifor, a European-based world leader specializing in kidney disease.~~Vifor. While under this agreement we retained all rights to avacopan in the United States and China, we granted Vifor exclusive commercialization rights to avacopan in Europe and certain other international markets. In December 2016, we entered into an additional agreement with Vifor, which we refer to as the CCX140 Agreement, relating to CCX140, our other late stage drug candidate. Under the CCX140 Agreement, we again retained all rights to CCX140 in the United States and China and we granted Vifor exclusive worldwide commercialization rights to CCX140 outside of the United States and China. In February 2017, we announced a further agreement with Vifor that harmonized the geographic commercialization rights underlying the agreements for both drug candidates, which we refer to as the Avacopan Amendment. In June 2018, we entered into additional agreements with Vifor to further expand Vifor’s exclusive commercialization rights to include China under the Avacopan Agreement, ~~(the~~or Avacopan Letter ~~Agreement)~~Agreement, and ~~the~~ CCX140 Agreement, ~~(the~~or CCX140 Letter ~~Agreement).~~Agreement.

We have secured ~~$215~~$215.0 million in upfront cash and milestone payments pursuant to our agreements with Vifor and are eligible for additional substantial milestone payments. Through our alliance, we maintain the commercialization rights to avacopan and CCX140 in the United States, and also retain control of the clinical development programs for orphan renal disease. Vifor gained the exclusive commercialization rights for all other international markets, and is obligated to pay us tiered royalties, with percentage rates ranging from ten to the mid-twenties, on potential net sales.

At a future time defined in the CCX140 Agreement, Vifor has an option to solely develop and commercialize CCX140 in more prevalent forms of chronic kidney disease, or CKD. Should Vifor later exercise the CKD option, we would receive co-promotion rights for CKD in the United States, and we estimate that the clinical development and registration process for CKD would end at approximately the same time as ~~Orphan Drug~~orphan drug exclusivity.

While we have focused initially on kidney and dermatological diseases,, our ~~target-specific~~target-specific and selective approach designed to stop the spread of inflammatory disease-inducing cells shows promise in other disease areas. Over time we plan to bring forward drug candidates to treat a range of inflammatory and autoimmune disorders, as well as cancer, where our drug candidate CCX872 has shown promise in a Phase Ib trial for advanced pancreatic cancer. We expect that our ability to do so will grow as we increase our scale and to the extent that we start to earn revenues and royalties from the commercialization of our late stage kidney disease franchise.

~~Since~~We have incurred significant losses since commencing our operations in ~~1997, our efforts have focused on research, development and the advancement of our drug candidates into and through clinical trials. As a result, we have incurred significant losses.~~1997. We have funded our operations primarily through the sale of convertible preferred and common stock, contract revenue under our collaborations, government contracts and grants and borrowings under loan and equipment financing arrangements.

As of ~~September 30, 2019,~~March 31, 2020, we had an accumulated deficit of ~~$414.5~~$451.7 million. We expect to continue to incur net losses as we develop our drug candidates, expand clinical trials for our drug candidates currently in clinical development, expand our research and development activities, expand our systems and facilities, seek regulatory approvals and engage in commercialization preparation activities in anticipation of FDA approval of our drug candidates. In addition, if a product is approved for commercialization, we will need to expand our organization. Significant capital is required to launch a product and many expenses are incurred before revenues are received. We are unable to predict the extent of any future losses or when we will become profitable, if at all.

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, as of April 2020, has spread to nearly every country and region in the world, including those in which we have active clinical trial sites. While the length of the pandemic and its related restrictions and their consequences on the Company remain subject to a number of risks and uncertainties, as a result of the completion of certain clinical work and collection of certain blinded endpoint data prior to the start of the crisis, we are not currently expecting any material delays in when we intend to report topline clinical data from our ongoing clinical trials. Similarly, we do not currently anticipate any material delays in the timing for our planned NDA submission for avacopan for the treatment of patients ANCA vasculitis or in our preparation for commercial readiness, nor are we currently anticipating any material disruption in our clinical drug supply as a result of the pandemic.

~~We adopted~~ There~~Accounting Standards Codification Topic 842,~~ ~~Leases,~~ ~~on January 1, 2019, resulting in changes to our accounting policies for leases. There~~ have been no material changes in significant judgments and estimates for our critical accounting policies during the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, as compared to those disclosed in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, filed with the SEC on March ~~11, 2019.~~10, 2020.

We have not generated any revenue from product sales. For the periods presented, our revenues were derived from collaboration and license revenue related to the Avacopan Agreement and the CCX140 Agreement, in each case, as amended, and the related letter agreements. Total revenue for the three ~~and nine month periods~~months ended ~~September 30, 2019,~~March 31, 2020, as compared to the same periods in the prior year, was as follows (in thousands):

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

The ~~increase~~decrease in revenue from ~~2018~~2019 to ~~2019~~2020 for the three month period was primarily attributable to ~~a higher proportion of~~lower costs incurred ~~relative to budget for the avacopan program. The decrease in revenue for the nine month period was primarily~~ due to the full enrollment of the avacopan ADVOCATE Phase III pivotal trial in ~~2018.~~2018 and the CCX140 LUMINA-1 Phase II clinical trial in 2019.

Research and development expenses represent costs incurred to conduct basic research, ~~the~~ discovery and development of novel small molecule therapeutics, development of our suite of proprietary drug discovery technologies, preclinical studies and clinical trials of our drug candidates. We recognize all research and development expenses as they are incurred. These expenses consist primarily of salaries and related benefits, including stock-based compensation, third-party contract costs relating to research, formulation, manufacturing, preclinical study and clinical trial activities, laboratory consumables, and allocated facility costs. Total research and development expenses for the three ~~and nine month periods~~months ended ~~September 30, 2019,~~March 31, 2020, as compared to the same ~~periods~~period in the prior year, were as follows (in thousands):

The ~~increases~~increase from ~~2018~~2019 to ~~2019~~2020 for the three ~~and nine~~ month ~~periods were~~period was primarily attributable to patient enrollment of the avacopan AURORA Phase IIb clinical trial in patients with HS, professional fees associated with the preparation of submitting an NDA for avacopan for the treatment of ANCA vasculitisand ~~the two CCX140 LUMINA Phase II clinical trials in patients with FSGS,~~higher research and drug discovery expenses, partially offset by decreases in ~~research and drug discovery expenses. For~~expenses due to the ~~nine month period, expenses for~~full enrollment of the avacopan ADVOCATE Phase III pivotal trial ~~also decreased~~ in ~~2019 as~~2018 and the ~~study was fully enrolled~~CCX140 LUMINA-1 Phase II clinical trial in ~~2018.~~2019.

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

We track development expenses that are directly attributable to our clinical development candidates by phase of clinical development. Such development expenses include third-party contract costs relating to formulation, manufacturing, preclinical studies and clinical trial activities. We allocate research and development salaries, benefits or indirect costs to our development candidates and we have included such costs in research and development expenses. All remaining research and development expenses are reflected in “Research and drug discovery” which represents early stage drug discovery programs. Such expenses include allocated employee salaries and related benefits, stock-based compensation, consulting and contracted services to supplement our in-house laboratory activities, laboratory consumables and allocated facility costs associated with these earlier stage programs.

At any given time, we typically have several active early stage research and drug discovery projects. Our internal resources, employees and infrastructure are not directly tied to any individual research or drug discovery project and are typically deployed across multiple projects. As such, we do not maintain information regarding these costs incurred for our early stage research and drug discovery programs on a project specific basis. We expect our research and development expenses to increase as we advance our development programs further and increase the number and size of our clinical trials. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time consuming. We or our partners may never succeed in achieving marketing approval for any of our drug candidates. The probability of success for each drug candidate may be affected by numerous factors, including preclinical data, clinical data, competition, manufacturing capability and commercial viability. Our strategy includes entering into additional partnerships with third parties for the development and commercialization of some of our independent drug candidates.

The successful development of our drug candidates is highly uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each drug candidate and are difficult to predict for each product. Given the uncertainty associated with clinical trial enrollments and the risks inherent in the development process, we are unable to determine the duration and completion costs of the current or future clinical trials of our drug candidates or if, or to what extent, we will generate revenues from the commercialization and sale of any of our drug candidates. We anticipate we will make determinations as to which programs to pursue and how much funding to direct to each program on an ongoing basis in response to the scientific and clinical success of each drug candidate, as well as ongoing assessment as to each drug candidate’s commercial potential. We will need to raise additional capital or may seek additional strategic alliances in the future in order to complete the development and commercialization of our drug candidates, including avacopan, CCX140 and CCX872.

Total general and administrative expenses for the three ~~and nine month periods~~months ended ~~September 30, 2019,~~March 31, 2020, as compared to the same ~~periods~~period in the prior year, were as follows (in thousands):

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation and travel expenses, in executive, finance, business and corporate development and other administrative functions. Other general and administrative expenses include allocated facility-related costs not otherwise included in research and development expenses, legal costs of pursuing patent protection of our intellectual property, and professional fees for auditing, tax, and legal services.

The ~~increases~~increase from ~~2018~~2019 to ~~2019~~2020 for the ~~three and nine month periods were~~three-month period was primarily due to higher employee-related expenses, including those associated with our commercialization planning efforts, and higher professional fees.

We anticipate that our general and administrative expenses will increase substantially in the future primarily due to pre-commercial activities and personnel costs to support the potential launch of avacopan for the treatment of ~~AAV~~ANCA vasculitis in the United States.

Other income, net primarily consists of interest income earned on our marketable securities. Total other income, net for the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2019,~~March 31, 2020, as compared to the same ~~periods~~period in the prior year, was as follows (in thousands):

The ~~increases~~decrease in total other income, net from ~~2018~~2019 to ~~2019~~2020 for the three ~~and nine~~ month ~~periods were~~period was primarily due to ~~increased~~decreased interest income resulting from ~~higher cash and investment balances and~~lower rate of return on the investment portfolio in ~~2019, partially offset by~~2020 and increased interest expense due to additional borrowings under the ~~loan and security agreement, or~~ Credit Facility ~~with Hercules Capital, Inc., or Hercules.~~and the Restated Credit Facility (as defined below).

As of ~~September 30, 2019,~~March 31, 2020, we had approximately ~~$206.9~~$189.9 million in cash, cash equivalents, restricted cash and investments. The following table shows a summary of our cash flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~ (in thousands):

Operating activities. ~~Net~~Net cash used in operating activities was ~~$49.9~~$27.4 million for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, compared to ~~net cash provided by operating activities of $31.8~~$18.3 million for the same period in ~~2018.~~2019. This decrease was primarily due to a higher net loss and changes in working capital ~~items driven by the receipt of a $50.0 million~~ ~~milestone payment in connection with the Avacopan Agreement, a $10.0 million upfront commitment under the~~ Avacopan Amendment, a $10.0 million of aggregate payments under the June 2018 Avacopan Letter Agreement and the CCX140 Letter Agreement and a $11.5 million payment for CCX140 development funding by Vifor in the 2018 period.items.

Investing activities. Net cash provided by or used in investing activities ~~was $19.1 million~~ for ~~the nine months ended September 30, 2019, compared to $66.4 million for the same period in 2018. The use of cash was~~periods presented primarily ~~related~~relate to the ~~purchases, sales~~purchase, sale and ~~maturities~~maturity of investments used to fund the day-to-day needs of our business. Following the March 2019 issuance of common stock through our Equity Distribution Agreement, or EDA, with Piper Jaffray & Co., we invested the majority of our net proceeds received in short and long-term investments. For the same period in 2018, the use ofWe expect cash used in investing activities ~~presented represents the investment of funds received under the Avacopan Agreement,~~in 2020 to increase substantially as ~~amended, and the related letter agreements.~~we plan to build out our new headquarters in San Carlos, California. See “Note 7. Commitments” for a detailed discussion.

Financing activities.Net cash provided by financing activities was ~~$77.9~~$15.7 million for the ~~nine~~three months ended ~~September 30, 2019,~~ March 31, 2020, compared to ~~$18.8~~$74.7 million for the same period in ~~2018.~~2019. Net cash provided by financing activities for the ~~nine~~three months ended ~~September 30,~~March 31, 2020 included net proceeds of $4.4 million received under the Restated Credit Facility.Net cash provided by financing activities for the three months ended March 31, 2019 included net proceeds of $73.3 million from the issuance of common stock under ~~the EDA.~~an equity distribution agreement, which is now exhausted. Net cash provided by financing activities for both periods presented included proceeds from the exercise of stock options ~~and stock purchases from contributions to our 2012 Employee Stock Purchase Plan,~~ and cash used for tendered ChemoCentryx, Inc. common stock to satisfy employee tax withholding requirements upon vesting of restricted stock units.

~~In December 2017,~~As of March 31, 2020, we ~~entered into~~had borrowed $20.0 million under the loan and security agreement, or Credit Facility, with Hercules Capital, Inc., or Hercules. In January 2020, we entered into an amended and restated credit facility with Hercules, or the Restated Credit Facility, which ~~provided~~provides for borrowings of up to ~~$50.0~~an additional $100.0 million in three tranches, subject to certain terms and conditions. ~~Through September 30, 2019,~~As of March 31, 2020, we had borrowed ~~$20.0~~$5.0 million under the Restated Credit Facility and the remaining $30.0 million of available borrowings expired as of September 30, 2019. We intend to use the net proceeds from the Credit Facility for general corporate purposes, which may include the repayment of debt and working capital. ~~We were in compliance with all loan covenants as of September 30, 2019.~~Facility. See “Note 6. Long-term Debt” in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information regarding our borrowings.

As of ~~September 30, 2019,~~March 31, 2020, we had approximately ~~$206.9~~$189.9 million in cash, cash equivalents, restricted cash and investments. We believe that our available cash, cash equivalents and investments will be sufficient to fund our anticipated level of operations for at least 12 months following our financial statement issuance date, ~~November 4, 2019.~~May 11, 2020. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Our future capital requirements are difficult to forecast and will depend on many factors, including:

~~There~~Except for the additional borrowing of $5.0 million under the Restated Credit Facility in March 2020, there have been no material changes outside the ordinary course of our business to the contractual obligations we reported in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, filed with the SEC on March ~~11, 2019, other than as set forth below.~~

In May 2019, we entered into a third amendment to the existing lease agreement for our current headquarters in Mountain View. In July 2019, we entered into a new lease agreement (the Lease) in San Carlos, California to replace our current headquarters located in Mountain View, California.10, 2020. See “Note ~~7. Commitments”~~6. Long-term Debt” in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for ~~details of the amendment and the Lease.~~ additional information regarding our borrowings.

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

Our market risks at ~~September 30, 2019~~March 31, 2020 have not changed significantly from those discussed in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, filed with the SEC on March ~~11, 2019,~~10, 2020, other than the following:

We are affected by market risk exposure primarily through the effect of changes in interest rates on amounts payable under the Credit Facility and Restated Credit Facility. At March 31, 2020, borrowings under the Credit Facility totaled $20.0 million with an interest rate of 8.05%. Advances under the Credit Facility bear an interest rate equal to the greater of (i) 8.05% plus the prime rate as reported from time to time in The Wall Street Journal, or Prime Rate, minus 4.75%, and (ii) 8.05%. ~~We are affected by market risk exposure primarily through the effect of changes in interest rates on amounts payable under the Credit Facility. At~~ ~~September~~ ~~30, 2019, borrowings under the Credit Facility totaled $20.0 million with an interest rate of 8.30%.~~ We are obligated to make interest-only payments on our borrowings under the Credit Facility through July 1, 2021, at which point we will then be obligated to repay the principal balance and interest on the advances in equal monthly installments after the interest-only period and continuing through December 1, 2022. In addition, borrowings under the Restated Credit Facility totaled $5.0 million at March 31, 2020 with an interest rate equal to the greater of (i) 8.50% plus the Prime Rate minus 5.25%, and (ii) 8.50%, which may be reduced upon the Company achieving certain cumulative net avacopan revenue levels. We are obligated to make interest-only payments on our borrowings under the Restated Credit Facility through September 1, 2022, at which point we will then be obligated to repay the principal balance and interest on the advances in equal monthly installments after the interest-only period and continuing through February 1, 2024. If the ~~amount~~total amounts outstanding under the Credit Facility and the Restated Credit Facility remained at this level for an entire year and the interest ~~rate~~rates increased by 1%, our annual interest expense would increase by an additional ~~$200,000~~.$250,000. See “Note 6. Long-term Debt” in the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Quarterly Report on Form 10-Q for additional information regarding our borrowings.

As of ~~September 30, 2019,~~March 31, 2020, management, with the participation of our Disclosure Committee, performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial and Administrative Officer, to allow timely decisions regarding required disclosures.

Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective. Based on this evaluation, our Chief Executive Officer and Chief Financial and Administrative Officer concluded that, as of ~~September 30, 2019,~~March 31, 2020, the design and operation of our disclosure controls and procedures were effective.

There has been no change in our internal control over financial reporting during the three months ended ~~September 30, 2019,~~March 31, 2020, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors included in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, filed with the SEC on March ~~11, 2019,~~10, 2020, except the following:

WeThe outbreak of the novel coronavirus disease 2019, or COVID-19, could adversely impact our business, manufacturing operations, preclinical studies and clinical trials.

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, as of April 2020, has spread to nearly every country and region in the world, including those in which we have active clinical trial sites. The outbreak and government measures taken in response have also had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, has spiked, while demand for other goods and services, such as travel, has fallen. In response to the spread of COVID-19 and in accordance with direction from state and local government authorities, we have limited the number of essential staff in our corporate headquarters. As the COVID-19 pandemic continues to spread around the globe, we may ~~become subject to third parties’ claims alleging infringement~~experience disruptions that could severely impact our business, manufacturing operations, preclinical studies and clinical trials, including:

The COVID-19 pandemic continues to rapidly evolve. The extent to which the COVID-19 pandemic may impact our business, including our manufacturing operations, preclinical studies, clinical trials and financial condition, will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as ~~expert opinion. Our analysis of these issues, including interpretation~~the ultimate geographic spread of the ~~relevance or~~disease, the ~~scope~~duration of claims in a patent or a pending application, determining applicability of such claims to our proprietary technologies or drug candidates, predicting whether a third party’s pending patent application will issue with claims of relevant scope,the pandemic, travel restrictions and determining the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our drug candidates. We do not always conduct independent reviews of pending patent applications and patents issued to third parties.

~~Additionally, patent applications~~social distancing in the United States and ~~elsewhere are typically published approximately 18 months after~~other countries, business closures or business disruptions and the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Certain United States applications that will not be filed outside the United States can remain confidential until patents issue. In addition, patent applicationseffectiveness of actions taken in the United States and elsewhere can be pending for many years before issuance, or unintentionally abandoned patents or applications can be revived. Furthermore, pending patent applications that have been published can, subjectother countries to ~~certain limitations, be later amended in a manner that could cover~~contain and treat the disease.

To the extent the COVID-19 pandemic adversely affects our technologies, our drug candidates or the use of our drug candidates. These applications may later result in issued patents, or the revival of previously abandoned patents, that will prevent, limit or otherwise interfere with our ability to make, use or sell our products. As a result, we may be unaware of third-party patents that may be infringed by commercialization of our drug candidates, and cannot be certain that we were the first to file a patent application related to a drug candidate or proprietary technology. In addition, identification of third-party patent rights that may be relevant to our technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims.

In addition to infringement claims against us, third parties may challenge or infringe upon our existing or future patents. Proceedings involving our patents or patent applications or those of others could result in adverse decisions regarding the patentability of our inventions relating to our drug candidates, and/or the enforceability, validity or scope of protection offered by our patents relating to our drug candidates. Even if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing these proceedings, which could have a material adverse effect on us. Or, 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 to determine the priority of invention. We may also become involved in similar opposition proceedings in the European Patent Office regarding our intellectual property rights with respect to our products and technology.

The cost to us of any intellectual property litigation or other proceedings could be substantial. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Discovery proceedings in the United States might lead to the disclosure of some of our proprietary confidential information. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Intellectual property litigation and other proceedings may also absorb significant management and technical staff’s time which may materially and adversely impact our financial positionbusiness and results of ~~operations.~~operations, it may also have the effect of heightening many of the other risks described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 10, 2020.

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

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


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

850 Maude Avenue Mountain View, California	94043
(Address of Principal Executive Offices)	(Zip Code)


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


PART I. FINANCIAL INFORMATION		Page

Item 1.	Financial Statements (Unaudited)	3

	Condensed Consolidated Balance Sheets – ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018~~2019	3

	Condensed Consolidated Statements of Operations – Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	4

	Condensed Consolidated Statements of Comprehensive Loss – Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	5

	Condensed Consolidated Statements of Stockholders’ Equity – Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	6

	Condensed Consolidated Statements of Cash Flows – ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2020 and 2019 ~~and 2018~~	87

	Notes to Condensed Consolidated Financial Statements	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2119

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2826

Item 4.	Controls and Procedures	2827

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	2928

Item 1A.	Risk Factors	2928

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3029

Item 3.	Defaults Upon Senior Securities	3029

Item 4.	Mine Safety Disclosures	3029

Item 5.	Other Information	3029

Item 6.	Exhibits	3029

EXHIBIT INDEX		3130

SIGNATURES		3231

	Nine Months Ended September 30,				Three Months Ended March 31,
	2019		2018		2020		2019
Options to purchase common stock, including purchases from contributions to ESPP		11,059,464		10,816,005		8,466,444		11,073,806
Restricted stock units		402,261		473,687		419,409		374,352
Restricted stock awards		41,332		37,713		30,896		27,278
Warrants to purchase common stock		150,000		150,000		150,000		150,000
		11,653,057		11,477,405		9,066,749		11,625,436

	September 30,				December 31,
	2019				2018
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Long-term debt, net ⁽¹⁾	$	19,762	$	20,149	$	19,689	$	19,847

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

			Adjustments
	December 31, 2018		Due to the Adoption of Topic 842		January 1, 2019
Balance Sheet
Assets:
Operating lease right-of-use assets	$	—	$	1,301	$	1,301

Liabilities:
Operating lease liabilities:
Accrued and other current liabilities ⁽¹⁾		12,969		955		13,924
Other non-current liabilities ⁽²⁾		387		346		733

	Amounts			Amounts
Year ending December 31:
Remaining of fiscal year 2019	$	—
2020		—
Remaining of fiscal year 2020				$	—
2021		6,381			6,389
2022		13,619			14,666
2023					3,353
2024					592
Total minimum payments		20,000			25,000
Less: amount representing debt discount		(238	)		(822	)
Present value of remaining debt payments		19,762			24,178
Less: current portion		—			—
Non-current portion	$	19,762		$	24,178

	Operating leases			Operating leases
Year ending December 31:
Remaining of fiscal year 2019	$	376
2020		1,659
Remaining of fiscal year 2020				$	1,284
2021		579			579
Total minimum payments		2,614			1,863
Less: interest		(232	)		(115	)
Present value of lease liabilities	$	2,382		$	1,748

	Three Months Ended September 30, 2019		Nine Months Ended September 30, 2019			Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Revenue recognized in the period from:
Amount included in contract liability at the beginning of the period	$	10,581	$	25,910		$	5,840	$	8,160
Performance obligations satisfied (or partially satisfied) in previous periods	$	1,632	$	(2,155	)	$	-	$	(896	)

	Shares			Weighted Average Grant-Date Fair Value		Shares			Weighted Average Grant-Date Fair Value
Balance at December 31, 2018		467,632		$	8.47
Balance at December 31, 2019							399,823		$	10.54
Granted		229,821			11.54		217,400			46.59
Vested		(247,193	)		8.32		(166,918	)		9.27
Canceled		(6,667	)		10.86		-			-
Unvested at September 30, 2019		443,593		$	10.10
Unvested at March 31, 2020							450,305		$	28.42

Exhibit Number		Description

10.1†		~~Lease~~Amended and Restated Loan and Security Agreement, dated ~~July 31, 2019,~~as of January 8, 2020, by and between the Registrant and ~~ARE-SAN FRANCISCO NO. 63, LLC.~~Hercules Capital, Inc.

10.2		Right to Invest Agreement, dated as of January 8, 2020, by and between the Registrant and Hercules Capital, Inc.

10.3#		Amended and Restated Non-Employee Director Compensation Policy.

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following information from the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2019,~~March 31, 2020, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Loss, (iv) Condensed Consolidated Statements of Cash Flows, and (v) the Notes to Condensed Consolidated Financial ~~Statements.~~Statements

# †		Indicates management contract or compensatory plan. Portions of this exhibit have been omitted pursuant to Item 601 (b)(10)(iv) of Regulation S-K.

		CHEMOCENTRYX, INC.

Date: ~~November 4, 2019~~May 11, 2020		/s/ Thomas J. Schall, Ph.D.

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

Date: ~~November 4, 2019~~May 11, 2020		/s/ Susan M. Kanaya

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

Date: ~~November 4, 2019~~May 11, 2020		/s/ Pui San Kwan

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