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

Thanks so much, everyone, again, for joining us for the second day of our Guggenheim Emerging Outlook: Biotech Summit. I'm Vamil Divan, one of the Biopharma Analysts here at Guggenheim. Next up in this room, we have the Akebia Therapeutics team. Next to me, we have John Butler, the CEO; Steve Burke, the CMO; and then Erik Ostrowski, the CFO and CBO at the end of the stage. So thanks so much for making the trip and joining us at our conference. Maybe just to kick things off, John, for those less familiar with the Akebia story, as stories have evolved a little bit over the last couple of years. Maybe just an overview on how -- where things stand with the company, then we'll dive into the programs.

It sounds good. First, Vamil, thanks so much for the invitation to be here. It really is a pleasure. So Akebia is a purpose-driven company, and our purpose is to better the lives of people impacted by kidney disease. We have 2 commercial products: Auryxia, which is the phosphate binder, which we have been enjoying the revenue stream from Auryxia as it nears the end of its life. We're obviously most excited, and I think we'll spend a lot of time talking about Vafseo, which is our HIF-PHI to treat anemia in chronic kidney disease patients on dialysis. And we are about a year into launch going through the challenges of the dialysis market. But clearly, we feel on track to make this product standard of care to treat anemia in these patients. And we're really excited now that more attention is being paid to our pipeline as well. And just in December, we announced kind of the initiation, if you will, of our rare kidney disease pipeline, which has 2 products, initially 4 indications, possibly many more to come, but praliciguat, which we just started a Phase II study in FSGS. And in December, we in-licensed AKB-097 from Q32 Bio. And in the second half of this year, we'll be starting a Basket study in 3 different rare kidney disease indications. And then we have early-stage pipeline as well. So very clear strategic focus and a lot of exciting things in the near term.

Okay. No, that's great. Obviously, a lot going on now. So let's talk about Vafseo and the initial sort of uptake you've been seeing. Maybe you can just talk about kind of the dynamics you've seen over the last few quarters and kind of how we should expect the 2026?

Sure. So the -- we launched last January and had very, very strong initial uptake of the product. We were really quite excited about what we were seeing. We knew that dialysis -- dialysis has such a unique -- it's a unique market, right? Because it's not just getting the physician to prescribe the product and they go to the retail pharmacy and they get it, right? You've got -- it's very protocolized. It's very controlled by the dialysis providers themselves. So the physicians can really only use what's available through the dialysis provider. And so some like U.S. Renal, where we had the initial uptake, clear clinical advocacy and understood the business side of the reimbursement, this TDAPA, this transitional drug reimbursement that we have for Vafseo last year in this. And others like DaVita moves more slowly as they tend to do. The challenge that we had last year beyond the moving slowly was that -- remember, Vafseo is a once-a-day oral product. For 30-plus years, they've been managing anemia by giving people a shot in the chair. And what we saw was what is normal when you give Vafseo because it's one starting dose is that many patients will see a dip in their hemoglobin initially, you titrate them up and the drug works beautifully. Get patients in the range, you keep them in the range. People who are committed to that, really love the outcomes that they're seeing. But it was so new for -- particularly for the nurses, the anemia managers, sending patients home with a bottle of drug to take, they would see that initial dip and they would immediately take people off the drug. So we saw a much higher discontinuation rate than we expected to see. So you're putting all these new patients on, but they're coming out at the bottom of the funnel. So we put a number of things in place to work on that and really did start to have an impact. Steve and the clinical team had done work looking at 3 times weekly dosing for the drug also, though it's not in our label, we do expect to have a conversation with the FDA about it. But at U.S. Renal first and a number of the others, they've made the decision to go to this TIW dosing. So they can -- basically, what that means is they give the drug to the patient while they're in the chair. So it's observed dosing, they know they're getting compliance. They see the dip. They know it's not because the patient is not taking the drug. And early days, they just started this process late last year. But in the first centers that made that change where before you had upwards of 30% of the patients never got a second prescription in patients who were given this observed dosing regimen, that in the first month was less than 10% who didn't get that second. So we're really encouraged by what we're seeing there. And at the end of the day, we left 2025 with access to about 275,000 patients. So we -- over the course of '25, we broadened the access. Now they're figuring out how to use it. Still a lot of wood to chop, but we're really happy with what we're seeing. And then we have more data coming to support the long-term growth of the product to make this standard of care for these patients.

And then one quick follow-up on that, just in terms of the dosing. Is that something you would look to get in the actual label? Or is it more just communication?

Most definitely. I mean that's a conversation we have to have with the FDA. We have 2 studies ongoing now, one that we're the sponsor of and one that we're -- that's a collaborative study with U.S. Renal, VOCAL and VOICE. Both of those studies use TIW dosing. So VOCAL, particularly where we're the sponsor, we think that's an important data set. We already have 2 studies, MODIFY and FO2CUS that use TIW dosing to support a label. But the assumption is now that VOCAL will be done by the end of this year. Why -- you go to talk to the FDA about it, they'll say, well, we want to see the results of that study. So why not wait until you see the results of that study. So -- and then VOICE, which is over 2,000 patients, we certainly will be able to share those results. We're not the sponsor of the study. So it would be a little bit different, but FDA would want to see that as well. And that study will read out early next year. So I think it will be -- it will really be at that point that we have that conversation again in the label. And again, I mean, these physicians and dialysis providers are making the decision to do that TIW dosing because they can control the patients and guarantee that compliance. So they're doing it without it being in the label.

And maybe just following up on VOICE and VOCAL. So obviously, data coming in the next year or so here. Just your level of confidence? And what -- maybe talk about the design and kind of what you expect to see out of those?

Sure. Maybe, Steve, you can talk about -- the VOICE.

The VOCAL study, which we're doing with DaVita, where we're the sponsor, we should get that data by the end of the year. And I expect to see excellent hemoglobin control. We're comparing ourselves to Mircera, which is a long-acting ESA. So we expect to see, just like we saw in the FOCUS trial, excellent hemoglobin, great stability, less need for rescue therapies, less hemoglobin variability. And there's an important sub-study associated with VOCAL where we're taking patients who are looking at their red blood cell phenotypes. We've seen previously that red blood cells made under the influence of Vafseo are larger. They have more hemoglobin and have a less distribution of [ widths ], which is a good thing. So we're doing a study looking at proteomics, metabolomics, lipidomics, membrane fluidity, resistance to oxidative stress, kind of things that matter in terms of red blood cell phenotypes.

And this is really demonstrating that this more physiologic approach to managing anemia it matters, right? You're not just getting hemoglobin, right? You're getting a better red blood cell, and that matters. And Steve and I just came back from a sales meeting in Arizona or talking to the folks there. Steve and I worked together at Genzyme on Renagel and Renvela. And the playbook is kind of the same. I mean this was -- you bring this new product in, you had to continue to generate data to demonstrate to physicians why this is different. And we have that now. And we presented data just at the ASN meeting an analysis from our big Phase III study looking at using a new statistical technique, this Win-Odds technique. And we showed that there was a statistically significantly lower risk of dying or being hospitalized using Vafseo versus darbepoetin, long-acting ESA. So is -- that's the kind of data that gets physicians excited about using it. We have to get that published, then you get it in the hands of your medical folks and communicated. So long term -- and we are taking the long-term view here. This is a $1 billion market for ESAs today in dialysis. We expect to be standard of care over time. And that's standard of care is 50% plus 1. And so that's a $500-plus million opportunity for us. And we're very confident given the data we've seen and the data that's coming that we'll get there.

The VOICE trial, the 2,100-plus patients we're studying at U.S. Renal, it's a randomized comparison against Epogen, which is a short-acting ESA. And the primary endpoint for that study is this composite endpoint of death and hospitalization rate using the Win ratio. And that study completed enrollment last June, and we will lock a database by the end of this year and present results early in 2027. So we're very optimistic. The primary endpoint is non-inferiority for that endpoint, but then it flips to superiority. And based on what we've seen from FOCUS and other TIW data that we have, this should be a very good chance we could show some real benefits along the lines of all-cause mortality and hospitalization.

Okay.

And those hospitalization rates that we'll be looking at in the VOICE study are very important to the DOs from an economic perspective. I mean, first and foremost, we're looking to show clinical benefits to patients, but the DOs do share in a portion of the hospitalization cost for patients. So if we can show obviously a reduction in those costs versus the standard of care, we think that increases the economic...

Okay. Makes sense. So one quick more on the Vafseo side. So you had some updates late last year around the nondialysis population with the conversation with the FDA. You sort of suggested there might be some specific subgroups that you maybe we all have some potential in. Maybe you can talk about the latest conversations you've had with the FDA or your thoughts around that?

Sure. Yes. I mean we continue to follow up with the FDA on the nondialysis population, a once-a-day oral product that makes perfect sense there, large population, real high need. Physicians want to use it there. They still want to use it there regardless of our conversations with the FDA. And at the end of the day, in October, we had a Type C meeting, and they -- while we had thought we had been having very productive conversations, at the end of the day, they really wanted us to redo the PROTECT trial, which was 3,000-plus patients in 5 years. And from an economic timing perspective, it just didn't make sense for us to do that. Now while we were in that meeting, we did talk about other subpopulations that they -- that truly have a need where the benefit would outweigh their perceived risk. And we're continuing to engage with them on that. We think any opportunity to get this drug to patients is worth pursuing. Given their approach, we're being very conservative about how we think about that. I mean I'm -- we were very disappointed in their approach to this. But -- so that's why we're kind of focusing on, look, we have the drug approved in dialysis. It's a huge market opportunity. Physicians want to use it in nondialysis. Will they will they decide to do that as they get experience in dialysis? I'm 100% sure they will. They talk about it to me every time I talk to them. It's just a matter of them having to go through the process of getting a medical exception and getting it reimbursed. But we do expect some non-promoted use in the nondialysis population. And anything we can do to demonstrate and add those populations to the label help provide evidence for physicians on that.

Okay. All right. So let me shift to the pipeline. So you obviously brought in a couple of assets that you touched in the beginning. Maybe just before we get into the details, just the decision to do this and kind of why these assets look interesting?

Yes. Look, I mean, we -- as I said at the beginning, we're a purpose-driven company that's focused on kidney disease. So when you think about building out a company, rare kidney is perfect opportunity for a company of Akebia's side, right? -- size. So we in-licensed praliciguat from a company Cyclerion back in 2021. They had generated data in diabetic kidney disease. We wanted to be sure it worked. We thought targeting FSGS, and Steve can talk about this, made a ton of sense for us. But we wanted to do some preclinical work to make sure that was the case. We had a bump in the road when we got the CRL, we kind of -- we had to focus on the dispute resolution and getting Vafseo approved. And then there were some issues from Cyclerion and getting us API for the product, which kind of worked out fine for us. But we're very excited about that product in FSGS, and we initiated that Phase II in just in December. We dosed the first patients. And then in December also, we in-licensed AKB-097 from Q32. And this is a tissue-targeted complement inhibitor, and Steve can talk about that as well. And we'll be starting a Basket study in the second half of the year, looking at IgAN, C3G and lupus nephritis. And we think this can be really an incredibly important product for treating these diseases, very much able to be differentiated from the complement inhibitors that are out there today.

Okay. Okay. Great. So maybe let's talk about [ placebo ] FSGS. Maybe just mechanistic rationale to pursue this and maybe just more broadly, FSGS, a lot of activity there around the space. How are you seeing the competitive dynamics and the market evolving there?

Yes, sure. Praliciguat is a small molecule. It binds to something called soluble guanylate cyclase and it stimulates that to make cyclic GMP. That's the second messenger for nitric oxide. And what it's doing is stimulating good things. So it's very beneficial to the podocyte, which is a specialized cell in the glomerulus that's the main barrier to protein getting into your urine. It's also anti-inflammatory, antifibrotic. So when we acquired the product, they had already had a very extensive package of nonclinical studies in kidney disease models and in vitro, in vivo, et cetera. So we were looking for a disease that progressed rapidly to end-stage kidney disease. And we thought about IgAN, and we thought about FSGS. We thought FSGS made the most sense because there's less crowded space. And so we did ourselves models of FSGS in rodents, in rats. And we saw excellent activity in the models that would predict benefits in patients. I'd say the biggest benefit was in reducing scarring in the glomerulus, which is fundamentally what FSGS is. So yes, then we went back and we looked at the diabetic kidney disease data to see were patients getting to what you would consider to be like a complete remission for this condition. And using urine albumin creatinine ratio from the diabetes study, we were able to sort of project what we would see for urine protein creatinine ratios, which is now becoming the standard endpoint for FSGS trials. So it looked very encouraging. So I'm very bullish about that trial. And yes, we're going to do a randomized, double-blind, placebo-controlled trial in about 60 patients. Half will get placebo for 6 months, half will get praliciguat. And at that 6-month period, the placebo patients will be able to cross over to praliciguat. And the primary endpoint is reduction in UPCR.

Yes. And when should we expect to see that?

We haven't guided on timing. We really wanted to kind of see how the enrollment goes before we get over our skis too far. We got the first patient started to enroll last year. So we're happy with how we're going. But as you said, it is a more competitive space. So we want to see what the dynamics there just from a patient enrollment perspective will be. It is -- FSGS is a very heterogeneous disease, right? I mean it's biopsy diagnosed. So the idea of kind of multiple products being able to be successful in that space where different patients will benefit from different products. polypharmacy will probably make sense for patients with FSGS, not every FSGS patient will be -- not everyone, but they'll be unique. So we think even though there are more products in development in that space, praliciguat has a unique profile that really can be quite successful. I mean you see when the FDA, which they did with IgAN, right, they define a clear regulatory path, which they've done now, we think, with FSGS as well, it really does encourage more innovation in the space, and we think we're kind of at the forefront of that.

They're really highlighting this. Obviously, IgAN has been a great success, but leveraging this another rare renal.

That's right. That's right.

And then in terms of just maybe for this trial, you mentioned very heterogeneous population. Are there certain patient subgroups that you're focused on here? How are you trying to get at?

We're focusing on primary FSGS and/or FSGS attributable to a genetic mutation. We're excluding secondary FSGS, like morbid obesity or people on certain types of medications, kind of the playbook that other companies have followed in the past.

Okay. Okay. No, that's great. So I look forward to seeing progress there and the data. So maybe on 097, you're taking a Basket trial approach we've seen other companies look at. Talk about that mechanism and kind of what indications are you most excited about there?

Yes. I think it's a really unique molecule. It's a fusion protein. So it's a monoclonal antibody that recognizes C3D, which is a breakdown product of C3. And on the back end, there are 2 tails of Factor H molecules. Factor H is a negative regulatory complement inhibitor. So it binds to the C3 and the C5 convertases of the alternative pathway and dissociates them and degrades them. So it will be administered either subcutaneously, which is the primary route of administration or you could give it intravenously. It will go to the sites where complement is being activated, where C3 is being degraded to C3D. So it's taking the complement inhibitor right to the site where the disease is. And so you don't get the systemic complement inhibition you get with other agents that are on the market today. They all have boxed warnings because of this side effect. You're much more likely to get a serious -- potentially fatal bacterial infection, and we don't expect to have that with this product. Also use a lower dose. And so we think it ultimately will be amenable to have an auto-injector once a week or once every 2 weeks. So we think we'll get the best of both worlds. We'll get the great efficacy of a drug like pegcetacoplan, but with a better administration schedule.

And without the box warning.

And without the box warning.

Okay. And in terms of indication, patient population, where are you sort of most focused?

We're focused on the rare kidney diseases, but there are other conditions where complement activation is localized. You probably wouldn't develop a drug like this for PNH or something that's affecting the entire body because you have to give a much larger dose and sort of undermine the benefits of this product.

So Q32 had a protocol basically agreed with the FDA on looking at IgAN, C3G and lupus nephritis. We thought the fastest path to get into the clinic was to follow that protocol as closely as possible. So that's what Steve's team is working on now. And the nice thing about a Basket trial is you can look at data kind of as you go. So we expect to start the study in the second half of the year. And with this one, we are kind of saying we'll have data in 2027 to start to share.

Okay. Okay. Great. So maybe then just rounding up the discussion here, the cash position for the company right now and kind of how you see your runway?

Yes, we have a strong balance sheet, $166 million in cash as of the end of Q3, and we've guided we have at least 2 years of cash runway.

Okay. And then as we sort of bring it all together, how would you lay out sort of the key catalysts, key event investors focus on for the next 12 months?

Well, I think people are clearly going to keep looking for at the Vafseo launch. I mean that is thing one, right? I mean that is the engine that fuels the development pipeline as well, right? So people will look at our progress there and get -- kind of see that inflection. And then it will be -- we initiated the PRALI study, getting 097 into the clinic. 9090, which we didn't talk about at all, which is a HIF compound from our own research, we will start a Phase I in healthy volunteers. We're targeting AKI associated with cardiac surgery as a first indication, but we'll start that study and have it completed before the end of this year. And as I said, 097 data, you'll start to get next year. And then as we've talked about earlier in the half hour here, the VOCAL study will read out before the end of this year and VOICE early next. So if you look at the next 12 months, from a clinical catalyst perspective, you've got very important readouts that will going to confirm the ability of [indiscernible] to become standard of care in this market, and you'll really start to see the fruits of our pipeline as well. So it's going to be a very, very exciting 12 months for the company.

Okay. All right. Why don't leave it there. We only got a minute left anyway. So thanks again so much for coming. A lot of interesting events coming up. We look forward to following the progress.

Vamil, thanks for the invitation.

Great. Appreciate it. Thank you.