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

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

Thank you, and welcome to Akebia's conference call to discuss the approval of Vafseo, vadadustat, tablets. Please note that a press release was issued yesterday, Wednesday, March 27, and that release is available on the Investors section of our website. For your convenience, a replay of today's call will be available on our website after we conclude. Joining me today, we have John Butler, Chief Executive Officer; Dr. Steven Burke, Chief Medical Officer; and Nicholas Grund, Chief Commercial Officer. 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 March 27 as well as in the Risk Factors and Management Discussion and Analysis section of our most recent annual report filed with the SEC. The forward-looking statements on this call speak only as 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 to all of you for joining us today. This is a very special moment for Akebia. To our current and former employees, our Board members, consultants, partners and advisers; I'm thinking of all of you and I'm so grateful for the role you played in getting us to this day. But most significantly, this is a very important day for patients. As I can now announce the approval of Vafseo, as a treatment for anemia due to chronic kidney disease in adults who've been receiving dialysis for at least 3 months. When we received the CRL for vadadustat almost 2 years ago, there were not many people who believed we would be here today. But this team at Akebia did believe. We believed in this product, and we believed in each other. We're a purpose-driven company, driven by a desire to improve the lives of people impacted by kidney disease. We're also a company who lives by our values, such as commitment, transparency, collaboration, integrity and tenacity. All of these were on full display over the past 2 years. It took an unrivaled display of tenacity to get to this day. We are also so fortunate to collaborate with outstanding partners like Mitsubishi Tanabe, our partner in Japan. They were incredibly gracious in supporting our team to generate the data needed for our NDA resubmission last September. I can't thank them enough for their partnership. Now with an approval, the next question is what about the label. We are pleased with the label and believe it will support a very successful launch. Dr. Steve Burke, who led the team through the FDA process and who continues to identify opportunities to demonstrate Vafseo's potential benefit for patients, will review details of the label in just a moment. We recognize that an approval is just the first step. Now we have to execute a successful launch. May I say if you were impressed by the tenacity and drive of our team that they demonstrated in getting the product approved, expect the same or more from our commercial and medical affairs efforts as we deliver on Vafseo's launch. Our ultimate goal is for Vafseo to be oral standard of care for dialysis patients. We believe that we can achieve this if we do 3 things well. First, drive demand from prescribing physicians. Our research suggests prescribers are compelled by the unique Nobel prize-winning mechanism behind Vafseo. We need to harness that perspective into a desire to prescribe. Second, we must effectively contract the dialysis providers to deliver on the value opportunity created by CMS for new innovations through the TDAPA reimbursement. Dialysis is a unique business. We understand that, and we understand that we have to approach our launch with those unique dynamics in mind in order to be successful. And finally, third, we have to continue to generate clinical data to identify additional areas of potential benefit for patients, demonstrating that commitment to our product as well as the providers, prescribers and patients is critical to our long-term success. We are a part of this community. On this call, you will hear from our new Chief Commercial Officer, Nick Grund, who will outline the plan for the launch of Vafseo. And we will provide time lines associated with key milestones. He'll talk about the efforts that we believe will shape the market for a successful launch upon TDAPA designation. For now, I'd like to turn the call over to Dr. Steven Burke, our Chief Medical Officer. Steve?

Thank you, John. Good morning, everyone. The approval of Vafseo marks a meaningful clinical advancement for the treatment of anemia for dialysis patients and their caregivers. The approval was based on a combination of data generated in global trials as well as post-marketing safety data from tens of thousands of patients in Japan, and it marks the successful culmination of the collective efforts of many people. The achievement is a testament to the tenacity of our clinical and regulatory teams. I want to congratulate and thank all the investigators, especially the co-chairs of our executive steering committee of our Phase III trials, Drs. Glenn Chertow and Kai-Uwe Eckardt as well as all the site coordinators and patients who participated. We're especially grateful for our collaboration with our partner, Mitsubishi Tanabe, who collect the Japanese post-marketing safety data that was included in our NDA resubmission. Let me reiterate our indication. Vafseo is approved for the treatment of anemia due to CKD in adults who have been receiving dialysis for at least 3 months. For patients on dialysis, anemia may be associated with many adverse clinical outcomes. The current standard of care for treating anemia in dialysis patients is erythropoiesis-stimulating agents or ESAs, which are dosed intravenously at the dialysis center. Vafseo works differently. Built upon Nobel Prize winning science, Vafseo activates hypoxia-inducible factor or HIF by blocking HIF-prolyl hydroxylases. In low-oxygen environment, the body produces endogenous erythropoietin or EPO, and promotes iron utilization by activating the HIF pathway. The data supporting the new drug application and approval showcase Vafseo's differentiation and its potential to become a new oral standard of care. Vafseo maintained EPO levels within the normal physiologic range while increasing hemoglobin in a predictable and controlled manner, and its utilization resulted in less need for dose adjustments compared to ESAs and fewer hemoglobin excursions above the target range. I believe the Vafseo's label will be favored -- will be viewed favorably by prescribers. We're pleased with the simple dosing regimen. The starting dose is 300 milligrams orally once daily, and the dose is adjusted if necessary every 4 weeks in increments of 150 milligrams using the lowest dose necessary to reduce the need for red blood cell transfusions. Prescribers are instructed to monitor hemoglobin levels at least monthly and measure ALT, AST and bilirubin prior to the initiation of Vafseo and monthly for the first 6 months and if clinically indicated thereafter. As expected, the Vafseo label includes warnings. The box warning for Vafseo is nearly identical to that of the ESAs and the other approved HIF activators. Other warnings, including those for hypertension, seizures, gastrointestinal erosions and malignancy are similarly included on ESA labels or as class labeling for HIF activators. The most common adverse drug reactions were hypertension and diarrhea. The label describes potential drug interactions and how to manage them, including the timing of Vafseo dosing in relation to iron supplements and phosphate binders and modified starting and maximum daily doses for certain statins. Our label is not burdened with any warning language related to the risk of hospitalization or heart failure, unlike other HIF activators. We're happy with the label. We will pursue label expansion in patients who are new to dialysis, meaning on dialysis for less than 3 months and then nondialysis-dependent patients as well as an alternate 3 times per week dosing regimen for in-center hemodialysis patients that could optimize adherence. We look forward to interacting with the FDA Division of nonmalignant hematology to identify potential paths forward to expanding Vafseo utilization. I would like now to turn the call over to our Chief Commercial Officer, Nicholas Grund, to review our launch plans and commercial opportunity.

Thanks, Steve. Good morning, folks. I began my journey with Akebia in January, at an opportune time to join a team that was well into preparations. The Akebia team is filled with passion and purpose to help patients with chronic kidney disease. We are progressing nicely in the 3 key areas of awareness and advocacy, sales deployment and pricing and access. We expect to hit the ground running in what we believe will be a very thoughtful and effective launch. I'll note that we already have sufficient product supply manufactured in anticipation of launch, and I'll walk through the market opportunity for Vafseo in the U.S. as well as our launch plan over the coming year. We estimate the market to be comprised of approximately 500,000 patients who are receiving dialysis and being treated for anemia. We believe that many of these 500,000 patients will be candidates for Vafseo therapy. Vafseo demonstrated that it can be effectively utilized to treat a broad range of dialysis patients with anemia. And in our discussions with the physicians, they confirmed that they are looking for a product that can be utilized in a broad set of dialysis patients with anemia. We believe that our label differentiation support this broad prescribing. For example, we believe the lack of a warning related to the higher risk of hospitalization in patients with a history of heart failure means that the 40% of patients with a history of heart failure, if switched from ESA, will most likely be prescribed Vafseo versus daprodustat. Additionally, early in the launch will be focused on patient populations, that our market research told us, are most top of mind for physicians when they think about Vafseo's value proposition. This includes the approximately 80,000 patients who are receiving home dialysis who can avoid in-center ESA injections and the approximately 150,000 patients who are suboptimally controlled on high-dose ESAs. We will expand to other patient types as physicians gain experience with Vafseo. As you imagine, reimbursement coverage is critically important to the early success of Vafseo. Of the 500,000 addressable patients, approximately 36% or 180,000 patients will have enhanced access to Vafseo because their dialysis provider is eligible to receive TDAPA payments from CMS, which are paid on top of the existing dialysis bundled payment. So these patients represent an immediate area of focus for our commercial organization. As Medicare Advantage plans begin to cover Vafseo, we'll see increased utilization in these patients as well. Medicare Advantage plans represent approximately 40% or about 195,000 patients. Our commercial organization is comprised of 35 key account managers supported by a full wraparound operations team. A vast majority of our key account managers have significant experience in the interworking of dialysis centers and how to navigate this complex care setting. Supporting their effort is a dedicated national accounts team working directly with dialysis organizations' leadership to create meaningful programs that help drive utilization. Furthermore, our leadership team and members of our Board have deep experience and extensive relationships within dialysis care organizations making Akebia a leading, fully integrated pharmaceutical company in this segment. Another strong tailwind to this launch is our CSL Vifor collaboration, which will be responsible for contracting and distribution services to up to 60% of the dialysis market through their existing relationships such as Fresenius Kidney Care and a large majority of the small to midsized dialysis organizations. In these centers, Akebia will be eligible to keep 2/3 of the profit associated with Vafseo sales and Vifor will keep 1/3 of the profit. Akebia sales teams will be calling on this segment as well as the 40% of the remaining market where CSL Vifor does not have a presence and where Akebia will retain 100% of the economics. Now let's get a bit more granular about what we plan to do over the coming year. After careful analysis, we have decided to make Vafseo available to the market in January 2025 to coincide with its expected TDAPA designation. We plan to file for TDAPA sometime in mid-Q2, and we will officially launch Vafseo in January. As a reminder, TDAPA designation is assigned 6 months post application filing acceptance, which is only completed once per quarter. We expect that our TDAPA application to be accepted in July, our Vafseo specific HCPCS code to be assigned in October and TDAPA designation in January. At launch, we expect the product will be reimbursed and widely available and accessible to patients with rapid adoption expected as providers can begin to realize the TDAPA economics. This is a change from our previous strategy to file for TDAPA immediately upon approval. Our rationale is predicated on several factors. First, dialysis organizations need at least 6 months to establish treatment protocols with new agents. During this time, Akebia and its partner will be contracting with dialysis organizations and supporting DOs with Medicare engagement to solidify reimbursement pathways beyond TDAPA. Another benefit of the January 2025 launch is the potential to drive preferential selection of the newest HIF activator. Further, we believe there is an advantage to leverage ongoing work at dialysis organizations as they prepare for phosphate binders to transition from Medicare Part D to the [indiscernible] environment, also currently anticipated for January 2025. As you know, TDAPA was designed to incentivize the use of innovative products. We understand these incentives. And over the next 9 months, we'll contract with DOs that will encourage patient access, utilization and growth. During this time, we lay the framework and we believe that we can be more successful upon launch to drive demand and ultimately better capitalize on the market opportunity. Lastly, we have a whole set of congresses and trade shows where we plan to introduce Vafseo to the healthcare professionals that culminate at the American Society of Nephrology's Kidney Week, Annual Meeting plan to be held from October 24 through 27 in San Diego, ahead of Vafseo's official market entry. In summary, throughout 2024, our entire team will be working with the goal to position Vafseo as the next standard of care with prescribers by educating them on the advantages of Vafseo and of once daily oral dosing. We will also be building broad accessibility to our drug across the payer universe, representing various insurance types. While we are not disclosing the Vafseo list price today, we are broadly thinking in terms of aligning our product price with the significant value we believe is offered by our brand. We expect to provide regular updates on our contracting progress and will share a list price by midyear. I'll now turn it back to John.

Thanks, Nick and Steve. We are highly energized for the Vafseo launch as well as embarking on the next steps in the overall growth of our company. The combination of Vafseo's label with Akebia's significant experience and long-standing relationships with the key players in the dialysis ecosystem gives me confidence that we could capture a significant value in the $1 billion target market in dialysis patients. Today, we celebrate the approval of Vafseo for dialysis patients, but we are not done. Now that we have approval, we will explore opportunities to expand the Vafseo label to include 3 times per week dosing. We also believe that Vafseo could play an important role in managing anemia due to CKD in patients not on dialysis. Our commitment to all those impacted by kidney disease will fuel our efforts to explore label expansion strategies and we will engage with the FDA on a potential path forward. Now that strategy, particularly around the nondialysis patient population, will confirm many critical near-term decisions like initial WAC pricing for Vafseo. We'll provide updates on pricing and potential label expansion in the next few months. As we think about Akebia's bright future, I'm pleased to acknowledge that we're moving forward from an extremely strong financial position. With continued contributions from AURYXIA, cash generated by our recently completed ATM and access to other funding through our recent debt facility from BlackRock, including the $8 million we are now eligible to access, we believe that Akebia is financed to execute the Vafseo launch and fund our current operating plan for at least the next 2 years. And with that, let's open the line for questions.

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

Congratulations to you and the whole team on this approval. I have a couple on the label specifically. So the first one, just on the label restriction of patients who have been on dialysis for at least 3 months, do you have any visibility on FDA's decision to include that? I know daprodustat has similar language, but I'm just hoping you could talk to, one, does this matter for uptake? And two, is there a path for moving that language, particularly as you pursue the predialysis indication? And I have a couple of follow-ups.

Sure. Thanks, Ally. So as we talked about it, knowing that this was in the daprodustat label, we certainly were expecting. As we've said, we didn't believe and we don't believe that it's warranted language, but we certainly were expecting this as idea of class labeling matters, but -- to the FDA. But let me ask Steve to give more color on that.

Yes, we -- this came up very late in the NDA review process, literally days before the label was finalized. And given that we didn't have a chance to really debate that with FDA, I feel we have data that shows that it is okay, safe and effective to use in this population, but it's currently not in the label, and so we'll have to reengage with FDA now to try to get that changed.

And Nick maybe you can talk about the commercial.

Absolutely. Yes. There are roughly 500,000 patients on dialysis that are eligible for the product. And this includes only about 125,000 that are new to dialysis annually and they'll be eligible in 3 months. And so when you think about that, it's a relatively small percentage of the overall population, and that's kind of 6% to 7% and we have a lot of potential patients put on therapy that are already in front of mind to physicians when they think about Vafseo. Those are the 80,000 patients on home dialysis and 150,000 patients on high-dose ESAs. And so we'll be starting there. As physicians become more comfortable, we will be expanding to the broader population.

So as Steve said, we're going to talk to FDA about removing that language. We do believe we have data to support that. But in the meantime, we have lots of patients to target for the product. So we're prepared to launch.

Okay. Got it. That's helpful. And then just on the liver monitoring requirements. Just -- can you talk to how that's going to be viewed by providers and dialysis organizations. I guess it's our sense that dialysis patients receive frequent enough monitoring that it's not going to be a major burden in practice. But any color there would be helpful.

Steve, do you want to talk about that?

Steve again. No, I've talked to the dialysis organizations. They don't view this as a barrier whatsoever. As you mentioned, the patients are getting at a minimum monthly blood draws, including the red-top tube, which is used for the same test. So it's really just a check box and isn't perceived as a burden at all. It's kind of a nothingburger.

Yes, this was -- we were very pleased with this language. We think it makes sense.

Okay. Got it. And then maybe just last on the pilot programs, particularly at [indiscernible]. Can you just give us a sense on the expected size and scope and gating factors to initiation and just whether those can include the 3 times weekly dose regimen before that's added to the label?

Yes. So Ally, so we're still working with the dialysis providers on the path that they want to follow when it comes to that. And certainly, look, we think that there are lots and lots of physicians who are interested in taking anemia care out of the dialysis center and are really interested in the daily dose. We recognize the 3 times weekly dose is going to be important as well. So we want to work with the dialysis providers on what makes sense for them. Steve sort of indicated, I mean, these conversations have already begun but we'd like to further them before we put any stakes in the ground around size or scope.

And our next question will come from the line of Ed Arce with H.C. Wainwright.

Let me add my congratulations to the team and everyone. I know this is a long and difficult path and delighted to see this approval this morning. Firstly, I wanted to ask -- sure, I wanted to ask about the decision to delay the full launch to January of next year around the TDAPA designation and I know up until very recently, that was discussed as an October 2024 event. I wanted to ask if you could review that time line again for us? And then secondly, I think you said, or perhaps Dr. Burke said, about 40% of the patients in your total addressable market would be those that have the risk of hospitalization due to heart failure and thus would be prime targets for Vafseo. I just wanted to confirm that number. And then lastly, the number that is, within the first 3 months of dialysis, what proportion is that of the 500,000. I missed that number before.

Sure, Ed. So thank you again for your congratulations. I appreciate it. It has been a heck of a road and feels really good to be here today. So to answer the last question first, 0.5 million dialysis patients on anemia treatment, there are about 125,000 new patients each year. You can see the mortality rate in the dialysis population is high. And as we said, there are 125,000 new patients, those 125,000 are still candidates for Vafseo after 3 months of therapy based on the label. So -- and the heart failure number is, just over 40% of dialysis patients have a history of heart failure, not necessarily active heart failure, but a history of heart failure. And in the daprodustat label, there is a warning for increased risk of hospitalization for heart failure. So that is, we think, a significant area of differentiation. We certainly didn't see any increased risk in our data, and that's not a warning in our label. So as Nick mentioned, when you're switching someone from an ESA that we think that's an easy choice for physicians to avoid that kind of risk. And then the TDAPA question. So pass it to Nick for some comments on that. But we were -- it obviously was a very thoughtful decision, and as I said up front, dialysis is very unique, and you need to take advantage of the opportunities that are presented. And you only have a TDAPA designation for 2 years and having the market ready to move extremely quickly upon that designation is incredibly important. And that really was what fueled our decision here. And we think this actually increases the value of the product even though you can see that 3 months later before we start to generate revenue, we think we can generate it faster and be more successful. But maybe, Nick, you can walk through some of the detail there.

Yes. Thanks for the question. And so when we think about this TDAPA period and then a move from October to January, I think about it in terms of time, right? How much time does it take to shape a market to be successful? First, John mentioned a couple of times is, in there, dialysis organizations are preparing. They're understanding the label of the product. They are, in some cases, getting experience of the product and their writing protocols, and that takes some time for them to understand the benefits and risks associated with any product, not just Vafseo. Second, contracting. Those contracting processes typically take around 6 months, but we want to make sure that all dialysis organizations are contracted with prior to launch. And so making sure that, that accessible patient population has enhanced access and support from a dialysis organization perspective to be able to immediately put patients on therapy. The last piece, binders in the bundle. Riding the coattails of the preparations they're doing should allow us easier access. The dialysis organizations are negotiating with Medicare Advantage plans to try and gain access for payments for binders and for products that are TDAPA eligible, like Vafseo, allowing them to do that without [indiscernible] -- forcing ourselves against that. It was felt that riding the coattails is better than trying to create something unique during that time. And the last one, Ed, to be honest with you, launching product in the fourth quarter with that dead time between Thanksgiving and Christmas, you don't get the maximum efforts realized through your field efforts, et cetera, et cetera. Because, frankly, physicians are on holidays, sometimes reps are on holidays. And lastly, patients are sometimes on holidays as well.

Yes, I think it's such a great point. And the idea of really coming out strong at the ASN meeting at the end of October, beginning of November and then having the product available at the beginning of January is going to work for us very well. And this idea of there's going to be a lot of focus on moving the binders into the bundle. And we've talked about that as an opportunity for AURYXIA, but it's a real effort for the dialysis providers. And trying to get them to focus on us, I think it would end up being something of a lost quarter. And that's a lost quarter. There's only 2 full years of TDAPA, so it's a very thoughtful decision, but one that we think is going to maximize the value of the asset.

Great. That's really helpful. Makes sense. And then maybe just one last one, if I could. I know you said you're not looking to disclose the list price today. But just wondering if you could perhaps just qualitatively discuss pricing with respect to daprodustat as a comparable, is that still a number that makes sense? Or would you expect to see, especially now with the label, something of a significant premium above that.

I'll ask Nick to address that.

Yes, I'm probably going to be a little bit broader in my discussion of price than just your question, but I'll try and answer it as we go through here because price is one of those things where I'll call it, there's very few experts, but there's a whole bunch of people with an opinion. And so as we thought about it, we thought about what is the value Vafseo brings to the marketplace? How broad is the label? How does the label look in terms of the population that's addressable, et cetera? And then we also factored in our commitment to increasing the value of the product through potentially at TIW additions to the label, perhaps there's a nondialysis patient population that we're still going to be able to address. And so really, we had to bake in some of those future values that will enhance for the product into our pricing considerations for today. The second thing we thought about was the environment, as John has mentioned, [indiscernible] expect this TDAPA window was created by CMS to really encourage the use of innovative products. And therefore, making sure you know how TDAPA works, how ASP is calculated and how to structure contracts with dialysis organizations to be able to maximize that 8 quarters of opportunity. Remember, this is an entirely contracted business with dialysis organizations. And so your list price is one thing, but also that contract structure getting to a net price, I think, is frankly the more important question in pipe pricing. And so when we think about those contracts, we want to make sure that we are creating contracts that allow maximum access for patients, but also look to drive volume and growth. And what that really means is as volume goes up, price comes down. And so as we think about that kind of contract structure, we believe we can set up structures within our contract to be able to help the product become the next oral standard of care. And so with that, I'll stop and maybe there's a follow-up in that.

Yes. And we know how important pricing is. But what Nick said, this is a contracting business. And we're just starting the contract, so -- and the contracting. But we really are positioning for an oral standard of care. That means you have to have price concessions as their volume grows. And ultimately, post-TDAPA, you have to get closer to ESA pricing. I will say one thing, just to help everyone, as I think about all the analyst models that are out there, we're not guiding on pricing. There's a little difference between them. They're all directionally correct. So I don't think there has to be significant differences or significant changes based on the way we're thinking about price today.

Our next question comes from the line of Julian Harrison with BTIG.

Congratulations on this excellent news. I'm curious how important you think having a post-TDAPA carve out in the bundle as your initial launch efforts? Does this maybe separate you from other CKD launches in the dialysis setting that maybe had more reimbursement risk after their TDAPA periods?

That's a great question, Julian. Thanks for bringing that up. So as we've talked about how important TDAPA is to our -- the success, that idea of bringing in new innovation, there's a payment outside the bundle, you're able to really drive, but we have to think long term about this, and that includes post TDAPA . That's why, to Ed's question, I talked about pricing post TDAPA, we really do have to look towards ESA. The key difference for us versus other -- particularly one other product that was a TDAPA product, is anemia management. As we've said, 90% of patients are on therapy for anemia management and there are significant dollars in the bundle today. So we are not working in a KORSUVA, very few patients were treated, and there was no money in the bundle. It just made the post-TDAPA period virtually impossible for them. So we think we have a good set up today, one, we understand and we can work with them. At the same time, CMS sets this TDAPA policy to drive innovation, innovation isn't a 2-year thing. Innovation goes on beyond and we believe that there has to be a way to incorporate that innovation into therapy longer term, both for Vafseo and for other TDAPA products. So as we've talked about the community organization, Kidney Care Partners, that we're a member of, I had been Chair of that organization. And one of our key initiatives is to change that innovation payment and have something available beyond TDAPA. So that's lengthening TDAPA, adding dollars that follow the patient post TDAPA. Those are the things that could have really made a difference for KORSUVA. We are building our business plan to be successful in the environment we have today. If we're able to be part of the conversation that legislatively makes a change through CMS, that's all upside for us, from a pricing perspective, hopefully, and from a penetration perspective. But we're not counting on that. We don't need that to be successful long term.

This will conclude today's question-and-answer session. I'll now turn the call back over to John Butler for closing remarks.

Thank you very much, operator. And let me close with again thanking our team and our partners. We've all waited a long time to deliver Vafseo to patients on dialysis. Executing on a successful launch starts today. I'll look forward to updating you on our progress in the near future. Thanks, everyone.

And this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.