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

Good afternoon, and thanks again for joining the 40th Annual JPMorgan Healthcare Conference. I'm Eric Joseph, senior biotech analyst with the firm. Our next presenting company is Akebia Therapeutics, and it's my pleasure to welcome John Butler, CEO, to talk to us a little bit about the company. There is a Q&A session after the presentation. Feel free to make questions, and I'll work them in where appropriate. With that, John, thanks for sharing some of your time with us this afternoon.

Eric, thank you so much for the invitation. It really is a pleasure to be here to have the opportunity to talk to you today about Akebia, where we really are a purpose-driven company, and our purpose is to better the life of each person impacted by kidney disease. I just want to remind everyone that I'm going to be making forward-looking statements. So please refer to our SEC filings for more information. Now I'll start on Slide 3 of the presentation. Now obviously, 2022 is going to be a very exciting year for Akebia. And I'm going to spend most of the time today talking about what's right in front of our faces, and that's vadadustat in its PDUFA date of March 29. It's so exciting for us to have the opportunity to launch the potential first-in-class product. The first-in-class oral HIF-PHI for the treatment of anemia due to chronic kidney disease. It's something that obviously we've been working on for many, many years, and we're excited to get this close to the finish line. But I'd also like to talk about the established foundation of the company because it's that foundation that really is going to be the reason that we believe we can be successful with vadadustat. And I'll spend a little bit of time talking about the leadership team with just deep kidney expertise. The fact that we have a fully integrated company today, we have a commercial organization that has these relationships with physicians who prescribe vadadustat today. We have a product in the market that we're really proud of and excited about. And these are the things that we think will set us up for a successful vadadustat launch. I wish I had more time to talk about our future. Opportunities like expanding the indications for vadadustat, new programs like praliciguat, where we expect to start a Phase II this year in FSGS and some of our other HIF-based research as well. But I think that most of the focus is on vadadustat. That's probably where we'll spend most of our time. And across all of this, we're doing all of this from a position of financial strength with over $200 million in the bank as of our last financial reporting in September of last year. So on the next slide, where are we today? Today, we are already serving the kidney disease market with Auryxia. And Auryxia is the product with 2 indications, hyperphosphatemia and iron deficiency anemia. And I am extraordinarily proud of the performance of our commercial team and the performance of Auryxia in a very, very difficult market over the last couple of years with COVID. As of Q3, we did $100 million in net product revenue last year. Our commitment was to grow versus 2020. We're clearly on track to do that. We believe the product can continue to grow in 2022. When you look at the impact that COVID has had on the dialysis population, it's been incredibly devastating. The -- if you look at the phosphate binder market, almost all patients need to control their phosphorus if they're on dialysis. We've seen a 9% decrease in the phosphate binder market in 2021 alone. If you look at -- and this is what really is striking about the Auryxia performance. If you go back to 2018, that's an important date because that's when we lost coverage for iron deficiency anemia for Auryxia. So the focus has been on hyperphosphatemia. Over that period of time, the total phosphate binder market declined by 8%. And Auryxia prescriptions have grown by 30%. This is really a testament to the compelling product profile that Auryxia offers to physicians. But importantly, it's also a testament to our U.S. nephrology-focused sales organization -- commercial organization. They have done a magnificent job. And this is the same team that will lead the vadadustat opportunity as we launch later this year. So let's talk a little bit more on the next slide about that opportunity in anemia of chronic kidney disease. So there are 37 million people in the U.S. who have chronic kidney disease today. And anemia is a very common complication of CKD. The dialysis-dependent opportunity is the one we'll spend most of our time talking about. There are over 0.5 million patients receiving dialysis. Over 90% of them are diagnosed with anemia and are generally treated with an ESA. The nondialysis opportunity is a very significant market opportunity. One, we're hoping to have the opportunity to help patients as well. In the nondialysis-dependent patients, as your kidney disease progresses, you're more likely to have anemia and you're more likely to be diagnosed. When you look just in the diagnosed patient population in non-dialysis, it's 1.3 million to 1.4 million patients. So when you look at the total U.S. patient population with anemia, we're closing in on 2 million patients today who are diagnosed and need treatment today. And they need treatment because on the next slide, you'll see that the clinical burden is significant. This starts with what you know about anemia, which is the reduced quality of life. Patients being tired, unable to work effectively, et cetera. But it's also been related to the progression of cardiovascular disease, the progression of kidney disease as well, as well as up to an including hospitalization and mortality. So there's significant consequences to anemia and there's also significant unmet needs as well. And on the next slide, we review some of those. In the dialysis-dependent population, anemia is very well recognized. Most patients are treated with the product, but not with a product with ESAs, but not always well controlled. Many patients do not achieve hemoglobin into the target range. Now on the nondialysis patients, many fewer patients are actually treated. It's inconvenient to treat patients with an injectable drug. There's concerns about that route of administration. There's concerns about safety. Patients are less likely to even be diagnosed with anemia. And there are significant shortcomings with the current standard of care. The injectable administration is inconvenient certainly for the nondialysis population in a growing number of patients for the home dialysis population as well. And it's also associated with hemoglobin overshoots, which is significant for physicians and these super elevated levels of EPO, which is also associated with safety risk for physicians. So one of the questions I get most frequently from investors is, is there really an unmet need? The physicians recognize that HIFs can have an impact, particularly in the dialysis population. And there's no question that they do. And if you look at the next slide, for a number of slides here, I'm going to be referencing market research data from Spherix Global Insights. Spherix is an independent market research firm that does excellent work in the kidney disease space. And each quarter, they publish a report on what nephrologists are thinking about anemia treatment as well as every other treatment. But we'll reference some of those independent results here. And do physicians look and believe that improving anemia treatment is something that they want to achieve and they shoot for? And you can see from these verbatims that they want more patients to be able to access a treatment for anemia. They want the hemoglobins to increase in a gradual way. They want to keep them in the target range. They don't want to give infusions if they don't have to. They don't want to use excessive amounts of ESA. They don't want superphysiologic levels of EPO. These are all things that physicians are looking for today. And on the next slide, you'll see we believe this is something that we can help to deliver with vadadustat. It is a potentially first-in-class oral HIF-PHI for the treatment of anemia due to chronic kidney disease in adult patients. This is an innovative mechanism of action. An oral drug designed to stimulate endogenous EPO production. The science won the Nobel prize. Physicians are excited about the opportunity to try this product. It is something that they've been learning more about over the years and looking forward to. And they're particularly interested in the fact that they'll be able to deliver a convenient oral dose for patients. A once-a-day oral product really has the opportunity to change treatment for these patients. So if you look at the next slide, I'll give you an update on where vadadustat is today. The product is already approved in Japan under the trade name VAFSEO treating both dialysis and nondialysis patients. I mentioned earlier, our U.S. NDA was filed last -- at the end of last March, and our PDUFA date is coming up in just over 2 months. Additionally, our partner, Otsuka, filed the MAA with the EMA last October. So that's another catalyst that we're expecting before the end of this year. So we're in an active review, obviously, with the FDA at this point with a PDUFA date at the end of March. To date, the FDA has consistently communicated to us that they currently don't plan to hold an advisory committee meeting for vadadustat. And the way to think about vadadustat in the market and why we'll spend most of our time on dialysis is the base case that we are working towards is approval in the dialysis-dependent patient population, which is a $2 billion market with an opportunity to truly disrupt care for patients there. We still believe we have the data to support an approval in nondialysis, but we're looking at that as an upside opportunity, and I'll talk more about that as we go through the presentation. So as you look at the next slide that gives an overview of our Phase III data. This was a very robust Phase III program, over 7,500 patients treated across a number of different programs. And in our dialysis data, our core data, we met the primary and secondary efficacy endpoints and the primary, safety MACE endpoint. In the nondialysis population, once again, we clearly showed the efficacy meeting primary and secondary efficacy endpoints, but we missed the primary safety endpoint for MACE. And while we do believe that an analysis of the data shows that there is a path forward for nondialysis, we think it's safest to think about that as a potential upside. Now the data is readily available for you to review. The 2 core manuscripts are published in the New England Journal of Medicine, but we've had multiple other publications and presentations to show this very robust data set. But what are the key clinical takeaways from the Phase III data. These are really the opportunities to differentiate versus the ESAs. First and foremost, we were able to increase hemoglobin in a predictable controlled manner. We minimized hemoglobin overshoots. We maintained EPO within the physiologic range and had many fewer dose adjustments than the ESA comparator. Ease of use is something that's very important to physicians, and we clearly demonstrated that with vadadustat. So on the next slide, the question that I get from investors all the time is, is there an unmet need? Are physicians going to use vadadustat in particularly when you think about their dialysis patients? And from the Spherix data, 84% of nephrologists believe that there's an opportunity to improve anemia outcomes in dialysis with HIF-PHIS. Now that percentage increases to 90% when you look at the nondialysis population. But whichever way you look at it, physicians are excited and anxious for the opportunity to use vadadustat in patients on dialysis and not on dialysis. So as we focus just on that dialysis population, once again from the Spherix data, when it looks at intent to prescribe, over 90% of patients -- excuse me, over 90% of physicians, nephrologists intend to prescribe HIF-PHIs to their hemodialysis and peritoneal dialysis patients. This is before our commercial organization has even started to detail the product, obviously. So physicians are anxious to use the product. And once again, when they're asked, what percentage of patients they'll use the product for? 30% to 40% of patients who are being treated with ESAs in hemodialysis and home dialysis, they expect to treat with the HIF. Again, before the product is even approved. So we feel like we're going into a market that is very well primed and anxious to try new options for their patients. But you have to recognize on the next slide, Slide 14 that the dialysis market is a very unique market. That really does lend itself even more significantly to vadadustat's quick adoption and growth. Now over 80% or about 80% of patients are treated by 2 dialysis organizations: DaVita or Fresenius. And there's a bundled payment system, which influences the way dialysis providers approached treatment. Because of this bundled payment system, they look to drive consistent protocols for treatment across as much of the patient population as possible. And so 85% of patients have been treated in the dialysis center with 15% of patients now in a home dialysis setting and growing. Now that bundled payment doesn't really create the opportunity for -- to incorporate significant innovation into the treatment of patients. CMS recognized that and created this TDAPA reimbursement mechanism. This is a transitional drug add-on payment adjustment. This is an add-on payment that CMS has created on top of the dialysis bundle payment to incentivize the use of innovative medicines and that payments available for 2 years after the TDAPA designation. Now with our PDUFA date on March 29, we believe it's about a 6-month process to secure the HiFX code and TDAPA designation. So we expect that TDAPA coverage would begin about October 1, 2022. And that's when the real adoption of the product would start to occur. Now I've mentioned home dialysis a couple of times. It's about 15% of the market today, but it's the fastest-growing segment. And CMS is creating more and more payment models to encourage the growth of that segment. When you think about how COVID spread within a dialysis center, the idea of getting patients out of that center dialyzing at home makes perfect sense. So the opportunity to deliver a product for anemia as a once-a-day oral product, it's the lowest hanging fruit that we have within the dialysis population. But also unique to vadadustat, if you look at the next slide, are the partnerships that we have that we think will also encourage quick adoption within the dialysis providers. That's particularly our relationship with Vifor Pharma. And Vifor Pharma has a relationship with Fresenius Medical Care, where products are available through the Fresenius-Vifor relationship are generally adopted at Fresenius. Now Fresenius is a health care provider if they can use any product that they want. But if you use Mircera, the long-acting ESA as an example, after 9 months -- 9 months after the introduction of Mircera from Vifor, Fresenius had converted about 90% of their patients. So we think that this is a significant opportunity for us to very quickly penetrate the dialysis market in the U.S. Our partner, Otsuka, as I mentioned earlier, has filed in Europe. And again, the -- we expect an approval late this year or early next. And as we move through approvals in the U.S. and Europe, we can begin to unlock value in other markets like Latin America where Akebia retains the full rights. So we're very, very excited about where we are with vadadustat. Today, really on the precipice of a potential launch and potential first-in-class in the anemia of chronic kidney disease in the dialysis population. And just in the last couple of seconds, we are excited about opportunities outside of the anemia CKD as well. There is a study that's ongoing and investigator-sponsored study, looking at vadadustat in the acute respiratory distress syndrome associated with COVID-19 is being done by UTHealth. They have over 400 patients enrolled in the study. They got a $5 million grant from the Department of Defense. So this has been a very efficient way for us to develop significant data in a very important next potential indication for vadadustat. So in conclusion, we're excited about the upcoming PDUFA date. We are getting ready to secure broad reimbursement and TDAPA reimbursement for the product. We continue to focus on the growth of Auryxia. That's our foundation. We expect that product to continue to grow in 2022. We're looking for opportunities to advance vadadustat beyond the anemia of chronic kidney disease, and I look forward to later in the year talking to you about our new products like praliciguat that we expect to introduce and start Phase II studies in the future. Thanks very much. And Eric, I'll turn it back to you for questions.

Great. Thanks, John. So I guess the first question is, as we think about a potential approval and launch of vadadustat. How -- can you just speak to how the sales force sizing? Are you appropriately sized today given Auryxia to effectively launch vadadustat? I guess, is the first question. And then secondly, in the U.S. where you are, I believe, copromoting with Otsuka, can you just sort of distinguish what's being led by -- what efforts are being led by Akebia versus Otsuka in terms of market access promotion and the like?

Sure, important questions. Thanks, Eric. So for the dialysis indication, the commercial footprint we have today, we think, is absolutely adequate for that. Clearly, investments in brand building, but no investments in infrastructure. We will -- that sales organization that's there with Auryxia today, we'll be able to cover that very, very well. If we are able to secure the indication for the non-dialysis population, there's probably some incremental increase that would be necessary organizationally, but it's -- it would really be very, very incremental to that. Now our relationship with Otsuka in the U.S. is a profit-sharing relationship. So we share the commercial expenses 50-50. But again, with the dialysis-only indication, we really can handle that. So the Otsuka organization won't need to be involved in the commercialization of that. They'll still be a partner in decision-making and the like, but we'll be able to handle the commercialization ourselves, which, of course, makes it in a very efficient -- from a spending standpoint. If we do have the nondialysis indication, we want more horsepower, we have that Otsuka organization that we can tap into if we need to do that. So it's kind of the best of all worlds for us.

Okay. Okay. A question from the portal here, which is just asking for a little bit of bonafides with respect to your regulatory team, right, and the type of prior regulatory experience they have and their interactions with the cardio renal division at FDA previously kind of known to be a little bit tough. What gives you confidence in an approval outcome, ultimately, at least in the dialysis population?

Yes. Look, we have an outstanding regulatory team, led by our Chief Medical Officer, Steve Burke, who's worked with the cardiorenal division for 20-plus years. Our Senior VP of Regulatory, Ian Hunt is ex-GSK, ex-AZ, highly experienced, not just with the FDA, but globally. This is a review that's been ongoing now for some time. Obviously, we won't get into any detail there, but it's been a robust review back and forth, and we're pleased that FDA is digging deep into the entire data package.

Okay. Okay. How about from a manufacturing CMC standpoint, have they done manufacturing site inspections at this point? Can you speak to that?

So the indication -- the site inspections that they've indicated that they need to do, they've completed at this point. It doesn't mean they wouldn't add something later, but we don't think there'll be any issues there.

Okay. Okay. Okay. I mean, the -- you have the guidance that they don't anticipate holding an AdCom prior to the PDUFA. Any other shoes that might drop, there will be a decision on the 29th of March as opposed to a potential extension?

Our -- the way that the review is progressing now, that's absolutely our expectation. The FDA, they can call us next week and decide that they want to have an AdCom and we'll then prepare for an AdCom. But think based on the way the discussions have gone, I think it's comfortable to assume that there won't be one at this point.

Okay. Got it. You highlighted the arrangement with Vifor. Any impact to that relationship, updates that relationship that you anticipate following into acquisition is that you have visibility on that front?

Yes, they were acquired. They announced an acquisition by CSL late last year. And in my communications, I haven't spoken to the CSL folks, but my communications with the CEO at Vifor, this relationship that they have that Vifor has with Fresenius is an important part of that acquisition and the breadth of offerings that they have for kidney patients is an important part of that acquisition. And vadadustat's pretty central to that. So all indications that we have are that they see us all certainly very aware of vadadustat and the progress we're making, and we don't anticipate any sort of impact at all. As a matter of fact, this is something that was really central to what their thesis was when they made that decision to buy.

In your interactions with nephrologists kind of coming away from the most recent ASN meeting and also kind of updates from the competitive landscape. Are there contracts being made between vadadustat and daprodustat and particularly the -- kind of curious to know what impact dosing schedule, right, whether it's synchronous or asynchronous with dialysis has a differentiating -- resonates differently with nephrologists and their likelihood to use either product?

Yes. So I would say that right now, generally speaking, and I think the search research also reflects this that physicians don't have significant differentiation of the products in mind. I think that roxadustat now has kind of moved to the side a bit. And daprodustat presented their data. They were published in New England Journal. I think that -- when you look at their data vis-a-vis vadadustat, you see a lot of parallels between them. And we certainly obviously don't have a commercial presence out there differentiating the products. So there isn't an opportunity really for physicians to think differently. They still think about the class in general in a lot of ways. Obviously, we'll work towards changing that once the product is approved. And when you think about dosing schedule, and obviously, daprodustat presented data that you can dose 3 times weekly. We have 2 studies that are ongoing now to demonstrate that as well. Modify, which our partner, Otsuka, is running, will be the first to read out focus study that we're running, the larger study is now fully enrolled. And our goal is to work as quickly as possible to file a supplemental NDA so that, that 3x weekly dosing is in our label, assuming, of course, that the data is as we expect, and you're able to do that.

Apologies if I missed it, but with FOCUS fully enrolled, do you have a sense of when you would be reading out. I guess, how is that -- just what's the length of the endpoint of that -- of the FOCUS study?

Yes. We have a -- that's a 12-month study. So we'll be looking at data points there, but we haven't really guided on when to expect data from that yet. We just completed enrollment at the end of last year.

Okay. Got it. Got it. The TDAPA vehicle, you spent some time talking about sort of how it's an incentivized uptake of the product and how you plan to leverage it, timing with which it could come on board. I guess looking after that, sort of forecast out 2 years, right, outside of what's been a lot of time period there. What are the strategies to kind of sustain the penetration once you get a foothold leverage by leveraging to TDAPA?

Yes. And it's important -- it's a very important question, Eric. I mean, we've got -- I mean, this is a contracting situation, right? So we'll be after approval in March, obviously, looking for that contracting relationship with Fresenius and DaVita will be, I think, important milestones for you to check on us as we approach that TDAPA designation and the real launch of the product in October. But you've got to create a partnership in those contracts that go beyond the TDAPA time period. So we -- again, we've been in this business for a long time. We think we understand the nature of the dialysis providers business and how things are changing, how the shifts are going towards the continuum of care and that's keeping patients at home. And when you look at having product like Auryxia that will then be added to, we expect the dialysis bundle in 2025. We think there are a lot of levers that we can pull to create win-wins for Akebia and the dialysis providers. And of course, we'll rely on the Vifor relationship, which is a long-term relationship with Fresenius, which we think can ensure long-term adoption in that segment of the market.

Okay. Okay. Great. Well, I think we'll leave it there for questions. I want to thank you again, John, for your time this afternoon. Really appreciate it. And thanks, everybody, for tuning into the session.

Thanks for the invitation. Happy New Year.

Same to you.