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

Hello, everyone. My name is Alex Buckley from the Healthcare Investment Banking Group at JPMorgan. And it's my pleasure today to introduce John Butler, CEO of Akebia Therapeutics. There will be some time at the end for questions. But in the meantime, let me pass over to John.

Alex, thank you so much, and I appreciate the invitation to discuss Akebia with everyone today. I'm always excited to talk about Akebia, particularly today. Akebia is a company that is mission-focused. And our mission is to better the lives of people impacted by kidney disease. And I think we're well on our way as a company to doing that. And I just want to remind you before I begin that I'm going to be making forward-looking statements. So please refer to our SEC filings for more information. I think this is a great place to start. Our first Vafseo vadadustat shipments were 1 week ago today on January 9. This has been an incredible effort from an incredible number of people to bring this product to market. people who are at Akebia now and were at Akebia previously. And honestly, over the last 2 years, I think we describe as more of a fight to get this product to be available to patients. So it's incredibly gratifying to be able to talk to you today about the launch of Vafseo in the U.S. And I think we'll spend a lot of time this morning talking about the launch of Vafseo, but I think that is a central part, but only one part of the reason that Akebia is such an interesting and compelling investment. The dialysis business is a $1 billion market opportunity, a very substantive market that we believe we're on the cusp of disrupting with Vafseo, bringing a new way of treating anemia to patients. But beyond the dialysis market, the nondialysis market is even larger. It's a multiple of the dialysis market. And we are now pursuing label expansion for Vafseo into that late-stage CKD population. We'll talk a lot about that process here today. So just alone, those 2 things are incredibly compelling for the company. But we have more than that. We have -- we've really developed this expertise in the company around HIF biology, and we're really the only company pursuing HIF-PHIs, pro hydroxylase inhibitors as a therapeutic solution. And we're really starting to see the fruits of that as we have the first products of that internal research that we're now bringing into the clinic and expect the first to enter the clinic in 2025. And these are assets that are both in kidney disease, and we're excited that we're also starting to look for opportunities outside of kidney disease in rare diseases that are significant unmet medical needs. And finally, we're doing all of this from a position of financial strength. Our cash on hand and our cash from operations will fund our current operating plan for at least the next 2 years. And just to be clear, we're talking about the voice trial, we're talking about the NDD trial during the presentation today, our new products going into the clinic. We consider all of those as part of our operating plan, and we believe that our cash on hand and the sales of both Auryxia and Vafseo will allow us to move forward with all of those programs for at least the next 2 years. So let's jump into talking about the launch. Again, it feels like it was a long time coming. As you know, we had FDA approval in March of last year, but we're in dialysis. Dialysis is a very unique market with a particularly unique reimbursement system. And that reimbursement system creates incredible opportunity for us over the next 2 years. We needed to secure this transitional drug add-on payment or TDAPA payment, which we received in October of last year, and it kicked in January 1 of this year. And then, of course, we talk about this 9 months that we've been working to get to the place where we're launching the product. I'll tell you, we use that 9 months incredibly effectively. And one of the things we need, we need access. You need access and to get access in dialysis, you need contracts in place with the dialysis provider. That's just step one. But it's the most important step is to get that contract in place. And we're incredibly proud to say that we have nearly 100% of U.S. dialysis patients who are being treated at a dialysis provider where we have a contract for them to be able to access Vafseo. We signed the last contract with a major provider just at the end of last week. I truly appreciate their partnership and making sure we were able to stand up here today and talk about the level of access that we have. As I said, that's only step one. You've got to put protocols in place and you've got a pull through from the physician perspective with our commercial organization. Obviously, with the contracts signed last Friday, we're just starting that protocol process now. But for all the others, we signed earlier, we have those protocols in place and the commercial organization is excited and active. The first prescriptions having been written just Monday of this week. So I'm going to step back for just a second. We can say, here's this great execution that we've done. I mean everything we said we were going to do this year in 2024, we've done, and we're proud of that. But some people ask, and I've heard this question, well, but people have been using ESAs in dialysis for the last 30 years, what's the opportunity for Vafseo? And it's significant. And I think nephrologists, and you see from my research, nephrologists agree it's significant. I'll start with the fact that simply 25% of patients just do not achieve the hemoglobin target that is -- that physicians want for them. There are about 20% of patients that you'd consider true hyporesponders to ESAs, they have higher hospitalization rates. They have higher 1-year mortality rates. Physicians are always concerned when they have to increase the dose of ESAs, it's well known that there's increasing MACE risk as ESA doses increase. And of course, for the home population, who don't want to come into the dialysis center to get an injection, an injectable product is suboptimal. And once a day oral product is ideal for that population. And for all of these reasons, this is why more than 2 out of 3 nephrologists say there is clearly an unmet need for a new treatment for anemia. And let me talk a little bit about how we're positioning Vafseo in the market. And to be clear upfront, we're not positioning Vafseo for a niche opportunity for -- just for your home patients, just for your high-dose ESA patients. That may be where they start. But to be clear, we're positioning Vafseo as an opportunity to create a new standard of care for patients with anemia due to CKD. And frankly, our expectation is that it will be a new standard of care for all patients with anemia due to CKD. Today, we're focused on dialysis. The basis of that positioning, that focus is around this new mechanism of action. This HIF PHI mechanism of action, this Nobel Prize winning science. Why is this different? It stimulates the body's natural response to hypoxia. In other words, it's a much more physiologic way to manage anemia. It enhances the body's natural production of EPO. When you give an ESA, you're giving a super physiologic dose of that protein, you're seeing spikes in EPO levels. When we measure EPO in our studies, you hardly see a change in EPO levels, yet you see that hemoglobin response. When you need to make red blood cell, it's not just about EPO, it's also about iron. The HIF mechanism, you also activate iron mobilization, again, a more physiologic approach to managing anemia. So what does that mean? It means hemoglobin is controlled, the levels increase over time. It's a more gradual increase. It allows you to get patients in the range and keep them in the target range. We saw fewer overshoots patients stayed in the range of 10 to 11. This is what physicians are looking for. And they're looking for it in an area where they can use, it's a simple titration of the drug, fewer dose modifications. Never underestimate the power of a product that can make a physician's life easier. These physicians spend a tremendous amount of time, frankly, tinkering with the ESA dose to keep people within the target range. We saw in our studies fewer dose modifications and it's a simple titration and it allows patients to stay within the target range, all in a convenient oral dose for patients. So we think there's a very strong value proposition for Vafseo for the dialysis patient. So you want to become standard of care, but you do have to start somewhere. Physicians have to say, where is it? I want to initially use this product? There are 2 areas that have come to the fore, and we've been talking about this for some time. And I think as we're out in the field, we're seeing that play through. Out of the 0.5 million dialysis patients in the U.S. who have or treated for anemia, the home patient is, I think, the #1 area that we hear from physicians that they want to use to patients. It's just clear to them that they hear patients complain about having to come into the center maybe a couple of times a month to get a shot. And the idea that they can write them a prescription and have them take that at home once a day is very attractive for the physician and for the patients. There's about 80,000 patients of the 500,000 and it's a very fast-growing segment of the dialysis market. Now the second area is maybe even more intriguing. And this is the higher dose ESA patients, which we estimate to be about 150,000 of those dialysis patients. As I mentioned earlier, physicians are concerned when they have to continually increase the dose of ESAs to achieve a hemoglobin response. They don't want to increase that risk, and they're looking for another option. So there's a really strong clinical rationale for why they want to use a product like Vafseo in the patients who have higher -- or a higher dose of ESA. But there's also a significant reason from the dialysis operators perspective that those patients are ideal. Remember, dialysis is a capitated environment. For a fee-for-service patient, they get $274 a month. About $16 of that is what, on average, they pay for an ESA. If a patient is on an ESA dose that's 2 or 3x higher, they could be spending $40 or $50 on ESA alone. And they still have to provide dialysis 3 times a week and still only get $274. So the idea that these high-dose ESA patients could get Vafseo where it's reimbursed outside of that bundle on an ASP basis is very, very attractive for dialysis providers. And as I said, fundamentally, and it's incredibly important, there's a strong clinical rationale for why those patients make sense. So I talked about our operational execution. It has been on point for the last 9 months. We talked about, from a commercial standpoint, 2 things we needed to do, sort of mom and apple pie, create access and drive demand. And we've done that over the last 9 months. Again, we are -- I think, the first TDAPA drug that has entered the market with 100% of patients covered by a contract with a dialysis provider. And we say nearly 100% because there are some patients that may be dialyzed in a hospital in a long-term care facility but virtually all of the patients are covered by the contracts we have in place or the GPO contracts for dialysis providers. We established a price -- remember, when we talked about pricing first, we talked about how we're thinking about not just dialysis but non-dialysis as well. At a starting dose of $15,500 annually, this creates a significant opportunity for Akebia and a significant opportunity for the dialysis patients, and it's clearly supported by the value that the product brings, we secured that TDAPA reimbursement. And we had -- this is the first time in my career. I've been doing this in an awfully long time. You do not have the opportunity to talk about a product from its approval for 9 months before a physician actually has to write a prescription. And our commercial and medical team has really taken advantage of that opportunity to educate physicians and prepare them to prescribe. In the time since the approval, we've had over 20,000 interactions with potential customers for the product. So again, the team has just done a magnificent job of execution. And what has that translated into? This is nephrologists feedback from market research we did towards the end of last year on would they be willing to prescribe and in what time frame would they be willing to prescribe? And this is a cumulative look and you can see that by the time you get out to 12 months, virtually 99% of physicians are willing to prescribe Vafseo. And you can see that, that ramp-up is quite significant as well. And I have to say, market research never translates into what happens in the market. But I also have to say, I have never started with numbers this high before. that this level of interest is this significant, even if half of these physicians do what they say they're going to do, we're going to have an unbelievable launch of this product, and we're incredibly excited about that. As I said, we're in day 4 today now of physicians actually being able to write prescriptions for patients. So we certainly don't want to get out over our skis as they say. But the feedback that we're getting from the field is incredibly exciting for all of us who are here today talking to you. I've been talking over the last 9 months about 3 legs of the stool. There's driving demand, there's contracting. And the third is continuing to build evidence. And the centerpiece of that desire to build evidence is the voice trial. And the voice trial is a study we're doing in collaboration with U.S. Renal Care and Dr. Geoff Block. And this is a very important outcomes trial targeting 2,200 patients to enroll. The endpoints are all-cause mortality, all-cause hospitalization. 2,200 patients gives us the power if we show a 10% reduction in hospitalization that, that would be a significant reduction. That is how you become standard of care is to build evidence like that. And we're excited about that opportunity to deliver on that promise. One of the things I wanted to point out here is that Dr. Block started to enroll this study just after Thanksgiving. So maybe the very beginning of December. As of last Friday, he already had 650 subjects enrolled in the study. That is an outstanding performance. And again, I think this is an important clinical study, but I think it just generally speaks to the interest level in the product. And I just got a report this morning that he's now consented. And this is 4 days later, he's now consented 865 subjects for this study. Again, I mean, Dr. Block is an amazing trialist, but this really speaks, I think, to the interest that clinicians have in understanding where Vafseo can make a difference for patients. So we believe that we are incredibly well positioned in the dialysis market, and we're excited about delivering on that opportunity. But I want to spend a significant amount of time now talking about our opportunity to capitalize on a significantly larger market in the nondialysis population. You've seen me present this slide before, anemia is simply not optimally managed in CKD non-dialysis patients. If patients start dialysis with a hemoglobin that's below 10 or below 9, they have a significantly higher mortality rate. And the graph on the left, I think, is stunning. At 3 months, they have a higher mortality rate, at 6 months they have a higher mortality rate, at 12 months, they have a higher mortality rate. When they start dialysis, their anemia is managed. But if you start dialysis with anemia, you never catch up. You never catch up and these patients have poor outcomes. Physicians understand this risk. They understand this consequence, yet this is data that comes from Spherix outside market research. This is actually chart review data. So it's actual use of the product. You see over the years, the use of ESAs is actually declining in this patient population, even though physicians understand this significant risk. Why is it declining? Well, patients simply don't want to give themselves a shot. They don't want to come in for an injection. But more significantly is this frustration that physicians have with using ESAs. The way ESA's labels are written, it's basically rescue therapy. And that's how payers are managing it. a patient comes in, has a hemoglobin below 10, they can give them a shot of ESA. They come back in the following month. If their hemoglobin is 10.1 or 10.2 or 10.5, they can't get another shot. They have to wait until their hemoglobin drops below 10. Basically, the label and the way that payers haven't used, it creates this hemoglobin instability, this up and down of hemoglobin, which is actually a risk factor for increased cardiovascular risk. So physicians recognize that maybe treating patients that way is doing more harm than good. And so they wait until the hemoglobin is below even 8 we see sometimes that that's where they'll start using the product. They understand the risk, but they feel like the solution may not actually be helping the patient. And that's why they're so excited about the opportunity that Vafseo can present for them. This is more research from Spherix and to focus you on the middle panel, they asked nephrologists about their agreement with the statement that their treatment of anemia in CKD NDD will increase substantially if HIF-PHI are FDA approved. 87% of patients -- of physicians agree that their use will increase substantially. 57% strongly agree with that statement. That's an amazing number, but not surprising when you look at their frustration with using ESAs. And even where they do use an ESA in 6 months, 2/3 of them said, "Well, they will have their patients switched within 6 months. Frankly, that's the less important market. It's that market of patients who are not being treated today in NDD that's so critical for patient care and it's an incredible business opportunity for Akebia as well. I spent the first 10 minutes of this presentation talking about dialysis. Dialysis is a $1 billion market opportunity where we believe Vafseo can be standard of care. It's an incredibly important market for us. It's about 500,000 dialysis patients who are anemic. If you look at the Stage 4 and Stage 5, so later-stage CKD patients, there's about 550,000 who are anemic. So about the same size as the dialysis market. But because you don't have this bundled payer, you have a significantly different opportunity. Remember, we've talked in the past about how once we get through TDAPA, the average price per patient in dialysis will be about $2,500. Remember, our WACC price is about $15,500 for the starting dose. The average dose from the PROTECT study in nondialysis patients would be about $20,000 a year. Even when you take your normal gross to net discounts and take a discount for compliance as well, you're still talking about an opportunity that's maybe 4 to 5x as large. We have to pursue this because patients need it. But the opportunity here from a business perspective for Akebia is incredibly massive. And so why do we think we can take advantage of that opportunity? If you recall, the PROTECT study or non-dialysis Phase III, we missed that primary safety endpoint of MACE. I just want to remind everyone that the U.S. population we stratified on geography. So it was a stratified population, it was a prespecified analysis. We were treating U.S. patients with a different hemoglobin target of 10 to 11, which is the target here in the U.S. And when you analyze that population, which was 1,700 patients, about half of the study, you saw no increased MACE risk. And treatment of nondialysis is homogeneous within the U.S. When you get dialysis anywhere in the world, once you get to dialysis, you're basically treated very, very similarly. Nondialysis is not the same. We saw very significant differences in way patients were treated outside of the U.S. in the nondialysis study. The FDA is regulating for U.S. patients. And in the U.S. patients we didn't see that increased MACE risk. But we still have to answer that broader question. So we've engaged with the FDA on this, and I'm very encouraged by the way, the FDA is approaching this and correspondence with the company, they acknowledge an unmet need for safer and orally available therapies to treat anemia due to CKD in certain nondialysis patients, and we're focusing on those Stage 4 and 5 later-stage nondialysis patients. Orally available therapies, the only orally available therapy in development today for the non-dialysis population is Vafseo. So we submitted a protocol to the FDA. We received their feedback on that protocol. We're incorporating that feedback as appropriate. But the design is an outcome study. We're expecting to begin the study by the middle of this year. This is going to be 1,500 U.S. patients, Stage 4 and 5 CKD not on dialysis. Very importantly, the comparator in this study is going to be a standard of care. There will be a significant number of patients on an ESA. But when you look at those chart reviews, and you see how few patients are actually treated, that's what physicians want to understand. They want to understand how this product will perform vis-a-vis standard of care. What that also does is it allows us to enroll this trial much more quickly and in a much more cost-effective manner. So we're excited to get this study started by the middle of the next year -- of this year, sorry, the middle of 2025, and we look forward to updating you on that. This study is an incredibly important study, but I do want to point out that it will only be one part of a very robust data package that the FDA will have to approve this product for the nondialysis population. We have the U.S. protect study, which is 1,700 patients, 1,500 patients in this study, there will be over 3,000 or 3,200 U.S. patients, non-dialysis patients treated as part of a clinical program. On top of that, the drug will be available in the U.S. for dialysis for at least 2 years, maybe more. And for nondialysis patients in Japan, they'll have 5 years of in-market experience by the time they're reviewing this data. So we feel very, very confident in the strength, the robustness of the data package that will support the nondialysis market opportunity and the regulatory review. So hopefully, you're as excited as we are about the opportunity, both in dialysis for Vafseo as well as in nondialysis. I'm going to spend -- someone's excited. I'm going to spend just 2 minutes talking about our pipeline. I think most of the focus from investors, it will be on how we execute the launch. We are very focused on that as well and look forward to giving you updates on it. We're excited about our pipeline. And we think later this year, we'll -- once we have a couple of quarters of revenue under our belt, we'll do a more in-depth look at our pipeline. But as I mentioned at the beginning of the talk, we've really developed an expertise in HIF biology. We have a very small discovery research team who have been incredibly productive, and the fruits of that labor is really coming to the clinic now. AKB-9090 will be the first product from our own internal research that enters the clinic. We expect by the end of this year. We think the first indication will be cardiac surgery-associated AKI but we still may choose ARDS, high unmet medical need as a first indication. We're actually planning, and I believe it will be starting very soon a Phase IIa study with vadadustat in collaboration with University of Texas in ARDS to prove that the mechanism works in that disease. 9090 is probably a better compound than vadadustat to move forward and certainly will have a longer patent life. But we'll really prove that you can use a HIF PHI for ARDS. I'm really excited about the compound that's following right behind AKP-10108. This is our first true foray into areas outside of kidney disease. This is a rare disease, retinopathy of prematurity, where there's no approved treatment today. And we're looking at a preventative treatment. Babies born prematurely, this is the leading cause of blindness. And the idea this disease is all about oxygen. And managing that with the HIF-PHI makes sense. Our preclinical data is incredibly impressive. This is behind 9090, so it won't be in the clinic this year, but we're obviously moving this forward as quickly as we can, and we're excited to update you on it more in the future. And when you look at all of these opportunities, I think very conservatively saying this is at least a $5 billion set of opportunities here within the U.S. And obviously, we look forward to telling you more about that. So here we are in January of '25. Our transformation as a company begins -- began really Monday of this week as physicians were able to write prescriptions for Vafseo product that the company has been working on for many years, and we believe can truly disrupt the care of patients with anemia on dialysis and that's what we'll be talking to about this year. Executing the Vafseo U.S. commercial launch, initiating the Phase III trial in non-dialysis by the middle of this year, fully enrolling the voice trial at the rate that Dr. Block is going, that will happen quickly and then updating you on the advances of our pipeline as well. And we look forward to talking to you over the course of the year about all of these catalysts. And with that, I think we'll move to Q&A. I have in the room with me as well, Erik Ostrowski, our CFO, CBO; Nick Grund, our Chief Commercial Officer; and Steve Burke, our Chief Medical Officer, to help me with the Q&A. And Alex, we get started?

Yes. Great. Thanks, John. So if you just want to raise your hand and there's a mic going around. Otherwise, I have some on the screen to get us started.

Maybe to start, John, do you have any other early feedback you can share from prescribers?

Nick, do you want to take that?

Yes. Thanks so much. Yes, 4 days in our day 4 today, our field team has been out there early in quarter 4, we started moving away from broad-based education to patient identification. And that patient identification we're in the populations that John previously went through, the home patient, the high-dose ESA patient. And so the sales team was effectively filling the funnel with patients identified for start in early January. And what we're seeing is those physicians you told us they were going to start patients are starting patients. We don't love to take 4 days and draw a straight line, but we're really, really encouraged by the first 4 days of the launch.

Yes. I mean I think Nick pointed out that we took our commercial -- remember, we had a commercial organization in place already. So this is incredibly important to getting that launch to go quickly. I mean, I've used in previous presentations the analogy of the coiled spring that we were kind of compressing over the course of the last 9 months. We took all of our commercial organization and took them off of focusing on Auryxia our phosphate binder and 100% on Vafseo over the last quarter of the year to fill that funnel as Nick pointed out. And we are 3 or 4 days in. So I don't know whether the spring is fully sprung yet. But we're actually quite encouraged. And I think it was absolutely the right decision to have them focus on Vafseo.

Excellent. And what gives you confidence in a path for approval in the non-dialysis patient population?