Akebia Therapeutics, Inc. (AKBA) Earnings Call Transcript & Summary

Thank you very much and welcome to the Morgan Stanley 18th Annual Global Healthcare Conference. I'm one of the biotech analysts here. My name is David Lebowitz. Before I get going, I'm going to go through the requisite disclosures. Please note that this webcast is for Morgan Stanley's clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. And with that, I'm happy to welcome to the Virtual Healthcare Conference, from Akebia Therapeutics, specifically from the team, we have with us the CEO and President, John Butler. Glad to have you. I guess to start, if you could give a brief introduction to the company and I guess your overall mission.

Sure. David, again, thank you very much for the invitation. It's a pleasure to be here. Akebia, we're a biopharma company and our purpose is to better the life of each person impacted by kidney disease. We are a commercial organization with one commercial product on the market, Auryxia, which is 2 indications, hyperphosphatemia for dialysis patients and iron deficiency anemia for the non-dialysis population. About just over $30 million in revenue this past quarter. We also have a product in -- or just completed Phase III development, vadadustat. And I think we'll talk a lot about that Phase III program. In May, we announced top line data from our dialysis study, INNO2VATE, which was outstanding data, very clean, very pristine, very consistent. And just 2 weeks ago, we announced data from our non-dialysis study, PRO2TECT. Once again, the efficacy data was extremely consistent with what we've seen in the past, met our expectations in every way. The MACE data didn't meet the primary safety endpoint of nonmateriality for MACE at a level of 95% confidence interval of 1.25. That being said, as we've analyzed the data, looking at the prospective analyses, we really do see a path forward for vadadustat in the non-dialysis population and are planning a pre-NDA meeting and an NDA filing -- pre-NDA meeting before the end of the year.

Thanks for that top-level discretion. I guess we'd probably start right with that recent data from the INNO2VATE trial. The trial didn't -- made it -- it was successful in efficacy, but was not successful on MACE. And the -- I guess in a lot of respects, the grander market opportunity for the HIF class was seen as being in the nondialysis population. How does the fact that you were unable to succeed in MACE affect the application process?

So it's a great question. There's a lot to unpack there. So it was the PRO2TECT program, it was a nondialysis program and that's where we missed the primary safety endpoint. As I said, the INNO2VATE data, the dialysis data, was very clean, very clear. And once again, we've only shown top line data for both and we are hoping to present the data in much more detail at the ASN meeting, assuming ASN accepts us for a presentation. And that's just about 5 weeks away. So these are all conversations that are much easier to have with a fuller view of the data. But as we look at that, it's important to recognize a couple of things. One, the dialysis population, dialysis market in the U.S., is a $2 billion market today. So it is a very substantial market. Again, we have very clean, clear data that has -- gives great clinical rationale for using the product in the dialysis population. And we think we are well set up commercially with the commercial organization already in place, with partnership with Otsuka and Vifor and the reimbursement system from CMS called TDAPA, Transitional Drug Add-On Payment Adjuster (sic) [ Adjustment ], that really creates a great incentive for dialysis providers to use a new innovative therapy. So the dialysis market alone is a very, very important and substantive opportunity that we think we're really well-positioned for. Nondialysis is a great market opportunity, $3-plus billion in the U.S. Again, as you see the data at ASN, hopefully folks agree that we have a path forward albeit not as straightforward if you hit your primary safety endpoint, right? I mean that clearly makes life easier. But when you look at these prospective analyses and you look at the analyses that we build around it, we still think we have a great opportunity in nondialysis.

Understand you certainly can't go into the details of the data. What types of -- I guess what aspects of the data do you see, as being on the top level, intriguing that at least give you a sense that there is potential moving forward?

So again, we're sticking with disclosure around top line data. But as we said, we have the things that we -- the analyses that we are excited about and we think kind of give us the path forward were all prospectively defined in our SAP. We think that's absolutely critical to having a path forward for this. Now what we talked about is that we have done multiple geographic and other patient subpopulation analyses that are what these prospective analyses are, that give us that confidence. We stratified the study by geography as well as heart-failure score and above-or-below-10 as a baseline hemoglobin. And it's within those -- we stratified that, so you can look at each of those as kind of a study-within-a-study. And this is where we kind of are generating that data that says this makes sense, we have a path forward. Now we've got kind of the next 5 weeks and we're doing it for the last few, to say why and answer that question and build those analyses, which will be post-hoc analyses, but build those analyses to explain that data and give the path forward.

So ultimately, when you do a submission for vadadustat, it will be one submission, if I'm not mistaken. And that one submission includes all the data from both the INNO2VATE and the PRO2TECT trials. How do you expect the agency will look at it? Will they look at it as 2 distinct data sets? Will they want to look at it as a pooled data set? And if they do want to look at it pooled and say they do have similar controls, is that something that can statistically be done in a reasonable way?

Yes. It's a great question. So it's important to clarify, it is one NDA. And basically, this is not a verbatim, but we will ask for an indication for vadadustat to treat the anemia of chronic kidney disease, period. Now the FDA could look at the data and decide, and this would be a labeling negotiation, right, could decide, well we see the clarity around the dialysis population but we don't see it in nondialysis. We don't think that will be the case but that could happen. Then it's a label negotiation, right? They would give us an indication that said, vadadustat to treat the anemia of chronic kidney disease in patients on dialysis. And whether -- the people have asked, well does it make sense to just file for dialysis and separately file for nondialysis? You said it, David, you have to present them all of the data anyway and they're going to review all of the data. So there's really no downside in not asking for both patient populations and their indication and we think the data supports it. And again, if the agency disagrees, that comes out in your labeling discussion. Now what's important that you also referenced is, you're going to be submitting all of your data to the FDA, including the raw data. And particularly when it's an issue of safety versus efficacy, efficacy, how you've designed it and kind of just how you designed it. But with safety, there's a lot more latitude to look across populations across studies. They will cut the data 10 ways to Sunday and understand the safety of the product, the risk-benefit for the product. So we've talked for years now that we designed INNO2VATE and PRO2TECT very similarly to allow for a very easy statistical analysis across all of the studies. There are certainly different patient populations and will be looked at as such, but you also have to look at the totality of the data. And when we talk about the totality of the data, that is looking at -- in total, you have something close to 7,400 patients in this program. And we think looking across that data, looking at the clarity on INNO2VATE, looking at PRO2TECT, including these subanalyses -- prospective subanalyses, this in combination says that this product can be used safely in the nondialysis population broadly and the NDA should be approved.

So with that in mind, when you look at the safety data from INNO2VATE and from PRO2TECT, it seemed directionally -- while it was a noninferior for INNO2VATE, directionally, it was slightly in favor of vadadustat. And then it flipped the other direction when it came to PRO2TECT. What -- are there aspects between these 2 populations that are sufficiently different to warrant those divergent results? Or is it more of a statistical anomaly?

Well I was clearly surprised by these results as well. So when we saw how consistent the INNO2VATE data was, clearly we had an expectation for PRO2TECT. That being said, you looked at different patient populations for a reason. I mean there are precedents where you saw success in the dialysis population and not in the nondialysis population. If you go back and look at Omontys, the long-acting ESA from Affymax, they did MACE studies in dialysis population and the nondialysis population and showed a clearly positive result in dialysis and a very negative result in nondialysis and the FDA labeled them for dialysis alone. So it has been -- it certainly has been seen before. Dialysis patients, are they that different? It's hard to imagine that they are. Dialysis patients are being seen 3 times a week versus much less frequently for nondialysis patients. Particularly the nondialysis patients we had in the study, their GFRs are very low. If your hemoglobin is below 10, which it needed to be to enroll, almost by definition, you're a stage IV patient or later. And so these are the sicker patients. In some way, getting dialysis manages your disease better because you're getting dialyzed 3 times a week. So all of that being said -- I mean this is why FDA wanted us to look at this as 2 different populations. When we look at the data -- the analyses that we talked about, we actually don't see that level of difference in some very, very important ways. And it will be a much easier conversation to have post the presentation at ASN.

It makes sense. I guess when you look forward at the -- with the HIF class in general, certainly, it's demonstrated the efficacy needed. I guess what is the compelling argument that you would say when both you and competitors go out and try to essentially dethrone a therapy that's been standard of care for nearly 20 years?

Yes. Yes. It's -- particularly, if we think about the INNO2VATE data and dialysis, particularly, maybe a more important question is, you say, well you're giving this to patients during dialysis, it's easy to give an ESA. But you look at the consistency of the result that we see across that study population, albeit noninferiority, but when you look at the consistency and you look at what physicians are looking for, how they tie attributes of the product to potential safety concerns, well you look at -- they're looking for physiologic EPO levels. They're looking to avoid excursions of hemoglobin above 13 where they feel they put their patients at more risk. They want to manage hemoglobin within the target range without the cycling, the ups and downs of hemoglobin that they frequently see. That's something that we're able to demonstrate in INNO2VATE and quite frankly in PRO2TECT as well, though we haven't presented all of the efficacy data, just the top line results. Everything has been consistent in what we've seen throughout. So we think that will create a compelling reason. When you layer on the fact that the CMS has created an environment where they want to see innovation incorporated into dialysis care, and dialysis providers will have the opportunity to do that under TDAPA with the HIFs, we think that will create a very compelling argument there. In nondialysis, of course, it's much more straightforward, right? You have an oral product where today, with an IV product, very few patients are really treated chronically or at all, frankly. And with a once-a-day oral product, we think that alone will give an incredible incentive for physicians to use the product.

Would you say that in the nondialysis population, the primary reason why ESAs are not as desired is because it's -- because of the way it's administered? Or because they consider these patients, since they're earlier stage in their CKD, maybe they don't take the risk with respect to the tolerability safety profile warrants it in all the patients?

Yes. It's a great question. And it's a combination. So the guidelines, the KDIGO guidelines that physicians generally follow to treat patients have said, don't treat a patient until their hemoglobin is below 10. And once they're below 10, the patient knows they're feeling more fatigue. The physician would like to treat them. They don't always and sometimes that's because of safety concerns. They don't see the nondialysis patients as frequently. But also there's an undercurrent of how it's reimbursed. And because the drug is an injectable drug and it's reimbursed under the medical benefit rather than the drug benefit, they have to get a prior auth any time they'll have to use the product, right? So it's incredibly inconvenient. The office don't like stocking the drug anymore, frequently will send patients to an infusion center. Patient comes in, their hemoglobin is 9. They give them a shot of Aranesp. They come back 3 months later, their hemoglobin's 10.1. They'd like to continue to treat that patient. They can't get reimbursement for that next injection because the patient's hemoglobin is above 10. So when you think about being reimbursed under the drug benefit, it's much more straightforward for the physician. You probably will still have the prior authorization to have that hemoglobin below 10, but then you'll write a prescription with a number of refills and get the patient into the target range and keep them there. And that's just much easier for the physician. And how you're using vadadustat on a daily basis, with -- where you're stabilizing HIF, increasing EPO, managing their hemoglobin but then maintaining them in the target range more effectively I think will be an important -- it demonstrates safety for the physician but it also is just much more convenient for the physician as well and the patient for that matter.

You do have other studies underway. You have the FO2RWARD-2 trial and the TRILO2GY trial. What will those trials tell us? And how can they help the application?

So the application really will be supported by INNO2VATE and PRO2TECT. I mean that is -- there are 20 other studies that were done also to support the product and the regulatory filing. FO2RWARD, we'll have data before the end of the year. We do expect to have top line data. We expect to have that data for the filing. But this is more of a marketing study. We're looking at a number of different kind of options trying to create dosing regimens and things like that to make the physicians' life easier. In INNO2VATE and PRO2TECT, you had a very rigid dosing schedule for vadadustat. Everyone started at 300 milligrams and there was a set schedule for when you could titrate. And we wanted to create a study, again, much more of a marketing study, but it allows physicians more freedom for how they'll manage hemoglobin. I think that will be important, ultimately, commercially. 3-times-weekly dosing is also critical in the dialysis population. And we've demonstrated that in Phase II that we can do 3-times-weekly dosing with vadadustat. But we want that in the label. We want to demonstrate that in a much broader way. And so we have one study that's ongoing now, looking at 3-times-weekly dosing and are planning a couple more to have -- to generate the number of patients -- amount of patient exposure that we need to have it in the label. So 3-times-weekly dosing won't be in the label at launch but the data will be available. So the dialysis centers will -- or the chains will have data to understand how to switch patients over. And what's critical, when you look at dialysis care and you look at how care is moving from the center, and there's incentive to move more and more to home dialysis, peritoneal dialysis, in those settings, once-daily dosing is most convenient. In the dialysis center, 3-times-weekly is convenient. What we hope to offer with vadadustat and expect to offer is the flexibility to do either. And ultimately, we think that will be critical in the market.