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

All right. Hello, everyone, and welcome to H.C. Wainwright's Fourth Annual Kidney Conference. My name is Matthew Caufield. I'm a senior biotech analyst here at H.C. Wainwright. We next welcome Akebia Therapeutics, and we're glad to welcome Nick Grund, Chief Commercial Officer at Akebia. So welcome, Nick. Great to see you this morning.

Thanks for having me.

Yes, of course. Maybe to start off, could you provide a brief overview of Akebia and its commercial products for CKD patients that are on dialysis?

Yes, absolutely. Akebia is a fully integrated biotech company. We got founded in 2007. We've got two commercial products. Importantly, we've got a sales team that has deep renal experience. We've got an R&D team that's demonstrated the ability to develop compounds and bring them through to clinical studies and eventually approval. And we've got a pipeline of early-stage assets. Importantly, we're focused on really bettering the lives of people with kidney disease. As there are two assets, two assets is our Auryxia first off, it's about a 10-year-old phosphate binder. The first indication is for the control of serum phosphorus in those patients that are on dialysis. Its second indication is for iron deficiency anemia in adult patients in nondialysis. So not our first road show with anemia. There's about a 90% overlap between Auryxia physicians and Vafseo physicians, target physicians. And that brings us to Vafseo. We launched Vafseo back in January. It's indicated for the treatment of anemia due to chronic kidney disease in adult patients receiving dialysis. It's an oral HIF PHI, a new mechanism of action. It stands for hypoxia-inducible factor prolyl hydroxylase inhibitor, so a mouth fill. Really quickly, that mouth fill really means that it stimulates the body's natural response to hypoxia, which enhances the body's natural production of erythropoietin to control anemia.

No, that's great. So considering that kidney patients can otherwise rely on erythropoietin stimulating agents or ESAs and iron supplementation therapy, for example, what do you think are the greatest unmet needs facing CKD patients based on standard of care that they've been accustomed to?

Yes, Matt, you'd be surprised. ESA agents have been on the market 30 years. And despite this, nearly 25% of patients are struggling to hit their hemoglobin targets and falling in and out of the range. And despite this large percentage of patients not quite getting to goal, there's been very little innovation in this area until Vafseo. Nearly 30% of those patients who are on ESAs on high doses of ESAs. With those higher doses of ESAs come increased risks of major cardiovascular events. Additionally, as an oral therapy, patients can conveniently take Vafseo at home, which is ideal, particularly for those patients who are getting their dialysis at home. And so though broadly indicated, those two populations, which physicians think of first, represent about 40% of the dialysis patients.

That's very helpful. I mean to kind of drill in a little bit more to what you described. So Vafseo is unique as an oral tablet. You mentioned it's the HIF-PH inhibitor as sort of a novel mechanism of action, treating anemia, CKD dialysis patients. Are there any other main points? Or can you discuss a little further the relevance of this differentiation within the CKD market?

Yes. Thanks. It's really interesting. When you give an ESA, you see large spikes in hemoglobin with a reduction and then they give the next dose. It's another large spike in hemoglobin and a reduction. With Vafseo, given its unique mechanism of action, you really see really small changes in EPO over time. And that lower level of EPO changes results in a gentle rise in hemoglobin for those anemia patients. Secondly, since it's working upstream from where ESAs work, we also note that we're seeing iron mobilization, which may be linked to more efficient use of iron is important for creating red blood cells. And in the pivotal INNO2VATE study that led to our approval, it demonstrated also lower dose titrations for the product. So you're not having to titrate patients as often, which is a benefit to the clinic staff.

Absolutely, and being oral. I mean I think that's a very helpful therapy as well. So you mentioned Vafseo launched commercially very recently back in January of this year. Maybe you could tell us a little bit of how the launch has progressed. Any early trends you're observing among uptake, enthusiasm, kind of where things stand for the initial launch stages?

Yes. So we're still working to close out Q2. So really, when I look at the first quarter of launch, we launched back in January. Overall, super pleased with how the initial launch of Vafseo. When I think about a launch, I think about kind of breadth and depth of physicians writing. Breadth is how many are writing and over 640 had written Vafseo in the first quarter of launch, which is super good. Most of those physicians are within U.S. Renal Care. They were the fastest to move. We have great advocacy at U.S. Renal Care. But certainly, expanding beyond U.S. Renal Care is important. The second I think about is depth of prescribing. That's the number of prescriptions of physician writes. And on average, in Q1, we saw about 12 prescriptions per physician. That range was super broad. We have still folks in the, we'll call it, trial phase, 1 to 5 prescriptions. But on the other side of that spectrum, we have physicians that are over 100 prescriptions, which is really tending towards full adoption. And so obviously, full adoption is where we want to get to. But that 12 would demonstrate there still -- most folks are still in what I'll call the trial and early adoption phase as opposed to complete adoption.

Understood. So that kind of parlays into the next question. We know uptake in the kidney space has some nuances. Can you talk a little bit about the path from initial small and midsized dialysis organizations? I know you mentioned U.S. Renal Care and how that can progress ultimately into the large dialysis organizations or the LDOs. That's kind of a unique component to the kidney space.

Yes, you used kind of two words that are often put with dialysis, nuanced and unique, right? And so when we think about the dialysis space, though it is unique, it's actually unfolding really closely to how we thought about it. As we thought about the launch, we always anticipated that the small to midsized dialysis organizations would go first. They would be faster through the launch process. That segment is about 150,000 dialysis patients. So a large segment, but they were going to move, move faster. And we saw that U.S. Renal Care being the most -- they are the third largest dialysis organization with about 36,000 patients. So not small by any means, but certainly not the size of an LDO. An LDO or a large dialysis organization, roughly 200,000 or above, that's Fresenius and DaVita, they go a little bit slower. They've got more systems to integrate. They've got more decision-making layers between top to bottom. And certainly, while we expect -- we expect it in Q1 to be small to midsize, that to fuel our growth into Q2. We anticipate in the second half of the year, LDOs will start to become more -- a major player in that second half growth.

That's great. Another important component to therapy adoption and access in the kidney space is the TDAPA component. Can you explain how that factor plays into the launch, patient access and the time frames related to that and how that's impacted initial launch?

Yes. TDAPA, another unusual nuance of dialysis. So it stands for transitional drug add-on payment adjustment. And really what it is, is, first, the drug has to qualify for TDAPA, which Vafseo has done. And it is under the prospective payment system, which applies to all the ESRD products. And why they developed TDAPA CMS was they were worried that having one flat bundled rate per session would disincentivize dialysis organizations for giving innovation a try. And so what they did is they set up this reimbursement mechanism known as TDAPA that really calls for a payment in addition to their bundled rate. So it's a payment they receive for qualifying drugs in addition to that bundle rate. And it really is there to incentivize folks to figure out how to operationalize innovation into normal treatment. It lasts about two years. After that, there's a whole convoluted mechanism of what happens for the next three, et cetera, et cetera. But the long and short of it is to be successful, not only do you have to have good economics during TDAPA, you have to provide dialysis organizations with certainty post TDAPA around pricing. And we've done that. We've contracted and worked with dialysis organizations to have their price post TDAPA be at approximately the standard ESA price at about $2,500 a year. Importantly, while that is a price reduction from our initial starting dose price of about $15,500 per year, this is a $1 billion market at $2,500 per year. So obviously, to be successful, we need to do that to provide that predictability.

Understood. Could you tell us a little bit more about the upcoming pilot program for Vafseo with the large dialysis organizations? What expectations could look like for that development? I know you just mentioned the second half '25 kind of overall for the LDOs. Can you tell us a little bit more about sort of that evolution there?

Yes. That's kind of we've talked about. We've had one of the LDOs is going to be doing a pilot program. One of the reasons that LDOs take a little bit longer is sometimes they want to test the myriad of systems that they have in order to operationalize a new product. And so one of the large LDO is going to initiate a pilot in Q3. It's a substantial size pilot between 75 and 200 clinics. If you think about 200 clinics, the third largest dialysis provider has about 700 clinics in total. So 200 is pretty sizable. It's what they call an operational pilot. They're not there to prove safety or efficacy. They're really there to test the system. Can a doctor prescribe it? Does the patient get that prescription delivered to their home? Does the system indicate there's a refill? Does it help them control formulary of which patients have reimbursement for the product. So pretty much nuts and bolts of kind of how you get a new product prescribed to a patient. Since it is an operational pilot, we're thinking two to three months long for which they'll open up Vafseo use more broadly. And so certainly, moving from 75 to 200 clinics to over 200,000 patients is a massive opportunity for us, and we're likely to see that opening up in quarter 4 of this year.

Excellent. Maybe if we could just change gears briefly to the other approved product, Auryxia or ferric citrate. So that's used for hyperphosphatemia, as you mentioned, that's kind of the primary indication. With that product losing exclusivity in March, what's the best way to think about sales in the near term and then kind of transitioning to focusing on Vafseo moving forward?

Yes. When we think about Auryxia, frankly, we're really pleased with how Auryxia has done. It lost exclusivity back in March. And at that time, the authorized generic launched. And so there's one generic, the authorized generic on the marketplace today. But what we've seen from Vafseo -- from Auryxia is really strong clinical demand for the branded product. That's one due to its strong clinical profile. Physicians are well aware around what Auryxia can do for their patients, but it's also the economic value proposition that we had in our contracting broadly with DOs. When we think about Auryxia, while we're really pleased with having that revenue, it could change at any moment. A second generic can enter that marketplace, which would have that market change really quickly. And so internally here, we're really conservative for how we think about it. And so every day that goes by is a day that we view as upside for the product historically. And so as we look to the future, we're not hedging Auryxia. We're not keeping Auryxia revenue front of mind, if you will, in terms of what we do to be successful as a company. The only thing I'll say, Matt, is Auryxia, with over 10 years of experience allowed us to foray into Vafseo. We no longer promote Auryxia despite its strong sales in quarter 1. And so we are 100% focused on Vafseo.