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

All right. Thanks again for tuning into the JPMorgan Healthcare Conference. I'm Eric Joseph, senior biotech analyst. Our next presenting company is Akebia Therapeutics. And here to tell us a little bit about the company is CEO, John Butler. Before I hand it over for the presentation, I just want to remind folks on the webcast that they can submit a question, and I'm happy to ask on your behalf, by just clicking the Ask a Question icon. With that, John, thanks for sharing some of your time with us this afternoon.

Eric, thank you. Thanks so much for the invitation, and thanks to everyone for joining us today. Before I start, I want to remind everyone that I'm going to be making forward-looking statements. So please refer to our SEC filings for more information. And if you're following along with the slides, I'm starting on Slide 3. So I'm very, very pleased to be able to give you an update on Akebia's progress today and really talk about Akebia's strength as a company. And I believe that our strength is something that's actually not very well appreciated by the Street. And I think there are a number of things that lead me to believe in Akebia's strength. First and foremost, we have a crystal clear strategic focus. We are a purpose-driven company whose purpose is to better the life of each person impacted by kidney disease. That clear strategic focus really allows us to focus as a business and has led to, I think, demonstrated excellent execution. And that execution is assisted by strong, very committed partners. And the bedrock of it all is great Nobel Prize winning science. And that has really allowed us to carry significant momentum into 2021. So on the next slide, we're going to be spending most of the presentation talking about vadadustat. Our HIF-PHI for treating the anemia of chronic kidney disease. But I think it's important to take a step back for a moment and look at the entire company. We are a fully integrated company selling a growing product for kidney patients in Auryxia. We have a commercial organization selling that product, who are now poised to add a second product to their bag, which will give us tremendous financial leverage. But also, these are folks who are calling on people prescribing Auryxia today, who'll be the same prescribers for vadadustat when it's approved. And that will give us the opportunity to speed that launch as well. It's important to recognize that we're already a 2 product company. Vadadustat with the brand name VAFSEO has been approved in Japan. And our partner, Mitsubishi Tanabe, is off to a great start with that product. We hope that's a leading indicator for the U.S. launch of the product as well. And we're doing all of this from a strong financial base as well. So let's get into talking about vadadustat. So the next slide. Anemia is a serious disease. It has significant consequences for patients, quality of life consequences that we're all aware of, the fatigue that they feel. But there are significant clinical consequences also, increased progression of end-stage kidney disease, increased cardiovascular disease, hospitalization, even mortality. So it's a disease that physicians want to treat. And it's a very prevalent disease. There are over 5 million patients in the U.S. diagnosed with the anemia of chronic kidney disease. We'll focus most of the presentation on the more than 500,000 dialysis patients, who have chronic kidney disease, who are being treated for anemia. On the next slide, you'll see that we really think that vadadustat can have a significant impact on this disease. And physicians are interested in incorporating it into their treatment paradigm. This is an innovative mechanism of action. When you speak to physicians, they are incredibly excited about the opportunity to use a new product to treat anemia in their patients. I've been at Akebia for over 7 years, so a number of American Society of Nephrology meetings. And each year, you see the excitement for HIFs grow. The meeting, which was virtual last October, you can -- you really saw significant numbers of presentations on HIF. And as we've spoken to physicians after, there's a real interest in prescribing these products when they're available. If for no other reason that they're convenient oral dose, it is much easier to prescribe an oral product to a patient. And that's something that really captures them beyond the differentiated mechanism of action. And when we do bring the product to market, it will be with a very robust set of data, more than 8,000 patients across the development program for vadadustat. So physicians will be able to prescribe the product with confidence. On the next slide, when we plan to introduce vadadustat, we plan to position this as a potential new oral standard of care for anemia in CKD patients on dialysis. And we believe the INNO2VATE data supports that positioning. So why? Why do we feel we can position it that way? Well, when you talk to physicians about what matters to them in a new treatment option for anemia. These are the things that they say. One, I want a product that has a physiologic level of EPO, not an excessive level of EPO. I want to avoid excursions of hemoglobin. I want to be able to manage hemoglobin within the range without having to worry about excursions above, that's associated with risk. And I want to see a slow and deliberate increase and a manageable increase in hemoglobin as well. We think the data from INNO2VATE, our studies in dialysis patients support those conclusions and those desires from physicians. So I'm going to spend some time now talking about the INNO2VATE data. And INNO2VATE again was our program studying vadadustat in the dialysis population. And it consisted of 2 different studies, 1 in prevalent patients, 1 in incident dialysis patients, new to dialysis patients. And these were open-label, active control, noninferiority studies, looking at efficacy and cardiovascular safety for the product. So on the next slide, we'll look first at the efficacy results. And as you can see, this was a study of almost 4,000 patients. So a very robust study. The most important message on the efficacy side was that we hit both our primary and our key secondary efficacy endpoints in the study for both the prevalent population as well as the incident population. So we were able to increase hemoglobin levels, and we're able to maintain those hemoglobin levels over time versus darbepoetin. As you look at the graph, you also see is -- particularly in the bottom graph of the incident population, you see a very gradual rise in hemoglobin levels. And as you look at the arrow bars, you see that we didn't have the same number of excursions beyond the target hemoglobin range that you saw with darbepoetin. We think those are very important efficacy points for physicians as we bring the product to market. Of course, people were very focused on the cardiovascular safety. So the next slide, we review that. And the way we've described the study in the past and it really holds is the data was clear, it was consistent, and it was very compelling. The primary safety endpoint was non-inferiority for major adverse cardiovascular events or MACE, which was defined as all-cause mortality, nonfatal MI and nonfatal stroke. And whether you looked at MACE, you looked at expanded MACE, which included hospitalization for heart failure and thromboembolic events, not related to dialysis access, or you looked at cardiovascular MACE or you looked at cardiovascular mortality or you looked at all-cause mortality, you saw a consistent result, clear noninferiority versus darbepoetin. And that held, if you looked at prevalent versus incident patients, if you looked at geographies, if you looked at other subpopulations. So just an extremely consistent, straightforward result for vadadustat from a cardiovascular safety perspective. When you look at the next slide and you look at overall safety, once again, you see incredible balance across the study. Even though this was an open-label study and investigators knew who was getting the investigational drug, you see great balance across the safety. We couldn't be more pleased with the results from vadadustat and INNO2VATE. So what next? Well, now we're talking about execution again. We presented or reported the positive top line results in May of last year. In October of last year, we had our presentation of the data at the American Society of Nephrology Meeting. About a week after ASN, we had our pre-NDA meeting, which was a very constructive meeting with the FDA. We have the first publication from INNO2VATE of our methods publication in the Nephrology Dialysis and Transplantation Journal in November of last year. So what's ahead? Well, we think publication is extraordinarily important. So we are working towards a publication of the INNO2VATE data. It is obviously not within our control when the data will be published. But it was submitted some time ago, and we're hoping it will be published sooner rather than later this year. The most important thing we're working on as a company with -- closely with our partner, Otsuka, is on the NDA filing. And we will do that as early as possible this year. What's most important to us is a high-quality filing. But people didn't take a break over the holidays. People are working incredibly hard at Akebia and at Otsuka to submit a high-quality submission -- regulatory submission to the FDA. Now we're responsible for the NDA filing, and that will come first, but we're working very closely with our partner, Otsuka. They will be responsible for the MAA filing for Europe. Once again, we're working very closely together on that, but the MAA filing will come after the NDA filing. Now before I move on to the next slide, I'd be remiss if I didn't talk for a moment about the launch of vadadustat, VAFSEO, by our partner, Mitsubishi Tanabe in Japan. They launched the product in August. It was launched for both dialysis and non-dialysis patients. And it's still early days. But in the third quarter, we reported $400,000 of royalty income, which exceeded our expectations. And all of the feedback we get from our partner is that they're very pleased with how the launch is going. Again, I hope this is a leading indicator for how -- what we'll see as we enter other markets. Based on the conversations I've been having with physicians, and we've been having at Akebia, I hope that will be the case, and I expect that, that will be the case. Just a little more information on the Japanese launch. Our royalty rate is from 13% to 20% tiered. And we have about just short of $200 million. I think it's $190 million of milestone payments that we're still eligible for. So we're really excited about what Japan can yield. So if we go to the next slide, let's talk a little bit about the U.S. market in dialysis. Dialysis is a $2 billion market opportunity, a very significant market opportunity. It is a market where about -- just over 550,000 patients are being treated for dialysis, and 90% of them are treated for anemia. It's a unique market based on the reimbursement. The dialysis reimbursement or the reimbursement for vadadustat as a treatment for anemia will be part of the prospective payment system or the bundled payment system, which means dialysis providers, while they're focused on providing excellent care for patients, they're also focused on delivering as consistent care as they can to control their costs as much as they can. So that means you see clinical protocols driving care within the dialysis sector. So you have to approach the market in a somewhat unique way, and we'll talk a little bit more about that. The other newer factor that you're seeing within the dialysis market is a real focus and shift to treating patients at home. And I think that's going to be accelerated by the COVID crisis that we've gone through. Dialysis patients being among the most at-risk patients having to come to a dialysis center 3 times a week, significant risk for infection. So this movement to home, it's about 12% to 15% of patients today, but that's a very quick growing area and an area where I think vadadustat can play a significant role. So with vadadustat, we've developed a go-to-market strategy that positions the product for rapid adoption across up to 60% of dialysis patients. Let me talk a little bit more about that. Convenient oral dosing, once-a-day oral dosing for dialysis patients will really be the ideal treatment paradigm for the home patient. We are also working on 3 times weekly dosing studies now. We've done 1 small Phase II study that showed you can dose vadadustat 3 times a week, patients come to dialysis 3 times a week. Our partner, Otsuka, is leading a trial called MODIFY that will give us the first data and 3 times a week, and we are starting a second larger trial called FOCUS. We'll have that data available in time for launch. So what we'll have is the option for physicians, for dialysis providers, for patients to dose either daily or 3 times a week. That's our expectation. Now CMS also recognized that under a bundled payment system, it's very difficult for a provider to incorporate new innovative therapies. So they designed the transitional drug add-on payment adjuster policy or TDAPA. And what TDAPA does is it pays dialysis providers for 2 years on an ASP basis outside of the dialysis bundle payment. This gives providers a significant incentive to understand and incorporate innovative therapies into their treatment paradigm. We think that is going to have an -- give us an opportunity to significantly accelerate the launch of vadadustat. And finally, we -- a number of years ago, we went into an agreement with Vifor Pharma, a distribution agreement, where vadadustat will be the only HIF product that Vifor can sell into their partner Fresenius Kidney Care for use in their patients. So Fresenius treats about 40% of the dialysis population. We expanded that agreement to include the other small and medium-sized dialysis providers. So we think that, that distribution agreement and Vifor's reach will help us get into up to 60% of the dialysis market quite quickly. And of course, as I mentioned earlier, we already have a commercial presence within the dialysis centers. Our commercial folks, our sales folks are selling Auryxia there today. They have those relationships, and we think that's important for accelerating that access as well. So if you move to the next slide, I've been talking a lot about the United States. We have a wonderful partner in Otsuka where we share profit 50-50 in the U.S. in addition to our Vifor relationship. But there's significant opportunities in the international markets as well. I've talked about Japan and our partnership with Mitsubishi Tanabe. But in addition to that, we have a more traditional licensing relationship with Otsuka in Europe where we have tiered royalties up to 30%. We're very excited about the opportunity in Europe. And in other markets like Latin America, we actually maintain the rights ourselves, and we're in the process of assessing the regulatory path for these markets. So the U.S. is a huge market opportunity. We're excited about it, but there are significant other revenue opportunities ahead for us also. So 2021 is an exciting year for us. Our focus as a company is clearly on preparing for the launch of vadadustat. First and foremost, it's filing or submitting the NDA to the FDA, which we will do as soon as possible this year, followed by the MAA for Europe. Auryxia is still a growing product. We're excited about it, and it's helping patients, and our commercial team is absolutely focused on that and continuing to develop those relationships that will assist in the launch of vadadustat. That -- those are our focuses from a portfolio perspective. We also want to continue to grow the company. The clearest area is that vadadustat has the potential to be used in other indications as well. We are selectively assessing those indications and look forward to coming back and talking about other areas where we believe we can use vadadustat. For example, through an investigator IND, vadadustat is being investigated today with the University of Texas in the ARDS complication of COVID-19. They just announced today that the Department of Defense granted a $5 million grant to them to expand that study. And so we're excited about the data that, that might yield. But that's just 1 area of potential growth for the company. And of course, beyond that, we're looking to see where else we can add products, either from a business development perspective or through our research group to bring innovative products to patients. And at the end of the day, that's what every 1 of the 380 people working at Akebia are focused on. We're focused on our purpose to bring innovation and improve the life of each person impacted by kidney disease. I look forward to continuing to update you all in the future. Thank you.

Okay. Great. Thanks, John. Maybe just a couple of questions on Q&A. First, related to the sort of the regulatory process here with vadadustat. I guess, maybe just talk to sort of gating steps to an NDA submission early this year. And what's the latest expectation in potentially applying a PRV voucher through -- via Vifor to the application?

Yes. So from a gating perspective, the PRO2TECT data, our non-dialysis data, only just came to us in early September. So -- and that was top line data. So it's a long way from top line data to a full clinical study report, and post a pre-NDA meeting to incorporate that guidance into filing. So that is, in all likelihood, I mean, the gating item is on the clinical side. Tremendous amount of work, we'll be filing with multiple API and drug product manufacturers as well to reduce any kind of risk there. And there's a tremendous amount of work in putting all of that together. And as I mentioned, for us, it's less about timing or less about speed and more about the quality of the application. And if it takes us a few more weeks to improve the quality of the application, that's what we're going to do. But we're working very hard to get that done as quickly as possible with the highest quality possible. And so from a PRV perspective, we still have the option to use the PRV. That's something that will have to be done in agreement between Vifor, ourselves and Otsuka. And as long as we have that option, we'll keep that option, and we'll report out as appropriate.

Okay. Okay. I guess, given the -- you kind of highlighted the comparison on safety in -- the safety data in the INNO2VATE study. I'm just curious, I guess, coming out of -- sorry, recent medical meeting, what the incremental position of feedback has been like, I guess, in reaction to that top line PRO2TECT data, whether sort of that kind of missing noninferiority is an all-cause to concern in the dialysis patient population.

Yes. Let me be as clear as I can be about this. And we -- I focus the presentation on INNO2VATE because dialysis is such a clear path for us, right? And I think from a Wall Street perspective, that's been lost. And I think there is its perspective that there's a carryover between dialysis and non-dialysis. And frankly, whether it's from a regulatory perspective or a physician perspective, we don't believe that, that's the case. Every interaction we've had with the regulatory authorities, with the FDA, they treat these as 2 separate populations. They have precedent where they've approved product for dialysis where they had a negative MACE outcome in the non-dialysis population. So first and foremost, the most important message, I think, for me to deliver here is we feel very confident about our path forward in dialysis. Your question was more about physician reaction, and that's incredibly important as well. And beyond ASN, we've obviously had multiple conversations with KOLs and thought-leading physicians around the entire data package. And not only is there not really a carryover at all from the outcomes of PRO2TECT to INNO2VATE or non-dialysis to dialysis, as they review the PRO2TECT data, and we talked about -- we missed the primary safety endpoint. That's clear, and that's something that we have to address in our filings. But we also talked about the U.S. patients where we treated from 10 to 11 and how there wasn't an elevated cardiovascular risk there. Now when you look at patients in ex U.S. sites, who are treated and managed to a 10 to 11 hemoglobin, they didn't have an elevated risk. And the elevated risk was only seen vis-à-vis darbepoetin in the higher -- patients at higher hemoglobin levels but it actually wasn't an increased risk of vadadustat. It was more a lower risk that was seen with darbepoetin. So when they see the data kind of fully presented, not only does it not impact their perspective on dialysis, they're actually still very excited about using the product in non-dialysis. Of course, the best thing to do is publish so people can see all of the data. And I'm pleased to say we've submitted PRO2TECT for publication. Obviously, we've just submitted it, so that will take some time. And we're really looking forward to seeing INNO2VATE in press.

Okay. Okay. Great. I guess just following up on the launch of VAFSEO in Japan, I guess, where -- do you have a sense of what segments -- what CKD segments you're seeing pull-through it? And I think it's approved for both non-dialysis and dialysis settings. Yes. Do you have a sense of where the greatest pull-through is in share at this point, actually?

It's a great question. Yes, I just don't have a lot of insight yet into that. I mean, it's early days. We haven't seen the fourth quarter data yet. As you said, it was -- we were approved on the same day as the GSK product, both approved for both dialysis and non-dialysis. So the first products approved for non-dialysis patients. It's a much more competitive market in Japan because you don't need the MACE data, you have at least 4 products that are approved now. And so I -- we have a good sense of where it's being used today. I think as we report our year-end results, hopefully, we'll have gotten more qualitative, not quantitative info from Mitsubishi. But it is available for both patient populations. And if the physicians in Japan are consistent with what we hear from U.S. physicians and European physicians, they have a desire to use it in both populations.

I guess, having learned something or -- yes, learned something from the results from PRO2TECT, is there any potential that you might revisit the opportunity in another study or obviously, you put your best foot forward in the NDA submission. But I guess, if it comes back unfavorably, would you sort of look to revisit it?

Well, I think it's way too early to consider that. We are -- again, as we talked about the data, we think that there is a clear path for us there. We look forward to having that discussion with the FDA. They've made it clear that it's a review issue. I think it's best for us to have that discussion directly with the agency, and they'll give us the feedback. Hopefully, agreeing that there's a positive risk benefit, and patients will benefit from this product. And if not, they'll give us feedback on what we might need. But as you say, we're putting our best foot forward here.

All right. All right. I think we'll leave it there for time. Thanks, John, for joining us this afternoon. Thanks, everybody, for joining via the webcast.

Thanks, Eric. Thank you, everyone.