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

Good day, and thank you for standing by. Welcome to the Akebia Corporate Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker today, Ms. Mercedes Carrasco, Senior Director, Investor and Corporate Communications. Ms. Carrasco, please go ahead.

Thank you, Chris. Welcome, and thank you for joining the call this morning. Today, Akebia announced that we have received a written response from the Office of New Drugs of the FDA regarding our formal dispute resolution regarding the complete response letter received in March 2022 for vadadustat. Today, we will discuss the response, next steps in the regulatory process and provide a general business update related to vadadustat. Please note that a press release was issued earlier today, Tuesday, May 30, detailing the response, and that release is available on the Investors section of our website. For your convenience, a replay of today's call will also be available on our website after we conclude. Speaking today, we have John Butler, Chief Executive Officer; Dave Spellman, Chief Financial Officer; Dr. Steven Burke, our Chief Medical Officer; and Ian Hunt, Senior Vice President of Regulatory Affairs, are also on the line and available for questions. I'd like to remind everyone that this call includes forward-looking statements. Each forward-looking statement on this call is subject to risks and uncertainties that could cause actual results to differ materially from those described in these statements. Additional information describing these risks is included in the press release that we issued on May 30, as well as in the Risk Factors and Management Discussion and Analysis section of our most recent annual and quarterly reports filed with the SEC. The forward-looking statements on this call speak only to the original date of this call, and except as required by law, we do not undertake any obligation to update or revise any of these statements. With that, I'd like to introduce our CEO, John Butler.

Thanks, Mercedes, and thanks, everyone, for joining us today. It's an exciting day for Akebia. Actually, it's been an exciting week, which began last week with the approval of Vafseo in the U.K., bringing the approval count to 33 countries. By midweek, we had announced the signing of a tremendous partner in Europe with Medice and now we have a clear path forward to resubmit the NDA for a potential approval of vadadustat in the U.S. This is an extremely positive step towards our purpose to better the lives of people impacted by kidney disease. While our appeal was denied, the letter from the Office of New Drugs, or OND, of the FDA outlined a straightforward path for resubmitting our NDA. As suggested in the letter, we plan to request the Type A meeting followed by resubmission of our NDA. And ultimately, we look forward to potentially making vadadustat available for CKD patients on dialysis in the United States. The letter was a very comprehensive and thoughtful review by Dr. Stein, Director of the Office of New Drugs, but let me summarize the key points that will inform a resubmission. There are 2 points that we've been focused on with the FDA, Vascular Access Thrombosis, or VAT, and Drug-Induced Liver Injury, or DILI. Now let me take them one at a time. First, VAT. The complete response letter cited an increased risk of VAT, driven by an imbalance in time to first event. We believe the fact that the number of occurrences of VAT is the same in the 2 arms, and that there is no imbalance in downstream consequences of VAT are important considerations in the assessment. Now to clarify our position, we shared several analyses of the data to support our conclusions during the FDR process. While not dismissing the potential safety signal, the FDR response letter indicated that the extent of the increase in potential risk is not large, and in the end, it may be a reasonable conclusion that the increase in VAT events can be managed as a labeling issue. We agree with this position. Second, the issue of DILI. The CRL noted the potential for an increased risk of DILI with vadadustat. The basis of this concern is largely a single case of serious DILI seen in our Phase II program and other assessments by the FDA liver safety team. The CRL raised the concern that monitoring in clinical use, if the drug was to be approved, would be less uniformly implemented when the product is commercially available than it was in the clinical trials. It's apparent from the FDR response letter that the OMV did a very comprehensive review of all of the data as well as its own analyses and concluded that while there is a signal for DILI, it appears to be modest in intensity and potentially manageable with appropriate monitoring. The O&D also acknowledged our comment that dialysis patients already undergo rigorous routine monitoring. So any monitoring in the label is likely to be implemented. During the FDR process, we provided data that showed absence of a DILI signal in the post-marketing experience in Japan, where tens of thousands of patients have received the drug over the past 2-plus years. The OND noted that a robust analysis of this data would be helpful for the division to review on the resubmission of our NDA to assess the risk of DILI. The OND concluded the letter by outlining the additional analyses for VAT and DILI that we should include in the resubmission of our NDA. There was no suggestion of the need for new clinical data in the letter. The letter did suggest that we request a Type A meeting with the division to assure alignment on the resubmission. We plan to request the Type A meeting and we'll do so as soon as possible. After the Type A meeting, we plan to move quickly to resubmit the NDA. We expect to resubmit this year. The exact timing within the year could be influenced by the Type A meeting. Given that we're submitting data that was not in the original NDA, our expectation is that our resubmission would undergo a 6-month review. Upon a potential approval, we intend to have drug commercially available quickly and after the TDAPA application process, the product would be widely available for patients. Again, we're extremely pleased that the letter has outlined a path for resubmission and our team is already hard at work. Now let's shift to what we believe to be the commercial opportunity. First, I'd like to start with some of the unique dynamics of the commercial dialysis space. Dialysis patients are a unique patient population in the U.S. from a payment perspective. The drugs used in this population are paid for as part of a bundled payment made to the providers. That bundled payment includes the current standard of care, the ESA treatment used to manage anemia. To quantify, we estimate that approximately 88% of the nearly 550,000 patients on dialysis are treated with an ESA for anemia. In an effort to promote innovative drug use, CMS years ago passed the transitional add-on payment adjustment, or TDAPA, that vadadustat would be eligible for approximately 6 months after approval. This payment would cover the cost of the oral HIF and as vadadustat would be a replacement for ESA provides additional incentive for providers to use vadadustat as the ESA cost is already captured in the bundled payment. Now we also have a unique collaboration with Vifor CSL that provides access to up to 60% of the dialysis market through existing Vifor CSL relationship. Recall that Vifor CSL has a relationship with Fresenius Kidney Care for the procurement of therapeutic products used in their network. And vadadustat would be made available through this collaboration. We believe our unique understanding of the dialysis market, partnered with Vifor CSL, would put us in a strong position for success. Now our collaboration with Vifor CSL is a profit share, where we retain approximately 2/3 of the profit from vadadustat net of certain prespecified costs with Vifor CSL keeping the remaining 1/3. As a reminder, last year, when we were originally preparing for launch, we were in a position where we have to further split our 2/3 profit with our former partner, Otsuka. As a result of regaining our rights in the U.S. from our former partner, our economics are double what they were last year. So to summarize, if vadadustat is approved, we believe we're uniquely set up for success in 60% of the market where we retained 2/3 of the economics within the Vifor CSL channel, and for the other 40% of the market, we would retain 100% of the economics of any sales. Beyond the straight economics, we'd like to remind you of the unique features of vadadustat in this market. Based on its being once daily, it could be ideal for use of home patients, which is the fastest-growing segment of dialysis market. Also, assuming approval, we plan to pursue an SNDA to potentially include 3x weekly data in our label based on the recently released positive FOCUS study. Now lastly, from a cash perspective. We're excited that we've completed the recent European partnership with Medice and added the upfront as well as our internal expectations of royalties, commercial milestones and resources for manufacturing support to our internal cash model. Importantly, we believe that today, we have the right scale and ability to support a resubmission, potential approval and launch within our current operating plan. While we may choose to incur modest additional costs to ensure a successful launch and supply chain rebuild, our prior cash guidance remains. I did want to recognize our new partner in Europe and Australia. In Medice, we have found a partner that has deep expertise in nephrology. And importantly, they understand the very specific country-by-country nuances of the dialysis market. We're confident that they share our commitment to Vafseo and we both believe in its medical and commercial potential. Now with that, I'll open the line for questions and ask Dave Spellman, Dr. Burke and Ian Hunt to join us.

[Operator Instructions] Our first question will come from Allison Bratzel of Piper Sandler.

Congrats on the update. So I guess just first, can you frame for us any gating factors to resubmission topics that need to be worked out or addressed at the upcoming Type A meeting? And just your overall confidence that FDA will find the resubmission approval and dialysis without the generation of additional clinical data?

Ally, thanks so much for the question. So framing, we've already been at work on the resubmission. A lot of it is an update of the safety data, and we had studies like FOCUS that we'd have to add that data. Very importantly for this, the OND focused on that how supportive the Japanese experience would be towards confirming the low level of daily risk and the fact that tens of thousands of patients that have been exposed there and have not seen any DILI signal is incredibly important. So there are some analyses we'll need to do of that data. And we think that that's maybe the single gating item, but it's -- that certainly won't take us very long. The Type A meeting, have to put together a briefing book for that, where we'll ask the questions, the Type A meeting is granted in 30 days. So it will happen reasonably quickly. It's possible that the division could ask for particular analyses of that data or other VAT analyses, et cetera, that might influence the speed of the submission, but we're getting ready to go as quickly as we can. I think as soon as we have that Type A meeting completed, we'll know exactly, we'll be able to give a much tighter timeline. But clearly, be this year, but obviously, we'll be moving as early this year as possible.

Great. That's helpful. And then just a follow-up on FDA's conclusion that the increase in vascular access thrombosis can be a labeling issue. I mean, just looking at the vadadustat label, it already includes the Black Box warning from these and calls out vascular access thrombosis. I mean, should it be our base case assumption that vadadustat label would look materially different? Or that, I guess, maybe more broadly that this or the DILI monitoring will be a major point of differentiation as DOPPS and dialysis centers do implement HIF products going forward?

I think that the -- looking at the vadadustat label and the VAT black box that already exists there, I would expect that would be similar if not the same. And it's too early to say on the DILI monitoring. But again, this is not something that -- given the amount of monitoring that dialysis patients already undergo, I can't imagine that there's anything in that monitoring that might be differentiating or certainly a negative. Steve, I don't know if you want to add a comment to that. I mean, you spent a lot of time talking to the nephrologist.

No, I agree. The monitoring should be easy to implement, and we'll burden the care -- the patients, it's really routine. Honestly, we'll see as we go through the process, but I doubt there'll be anything that would be substantively different than what you see in the vadadustat label.