Akebia Therapeutics, Inc. ($AKBA)

Welcome, everybody, to the Leerink Partners Global Healthcare Conference. My name is Roanna Ruiz. I'm one of the senior biotech analysts here at Leerink. And it's my pleasure to host Akebia Therapeutics. With me, I have CEO, John Butler; and CFO, Erik Ostrowski. So thanks so much for joining me today. I hope you're doing well.

Thanks for the invitation.

Yes. Great. So for people in the audience who might be new or visiting the story, I wanted to just ask you to walk us through the main focus areas for your overall capital allocation strategy, some of your top clinical and commercial goals for the next couple of years. Can you just frame like how is this year setting up?

Sure. So as a commercial company with a pipeline, we really thoughtful how we go about spending our money. But strategically, we have 3 key strategic areas. First is our commercial product, Vafseo, it's to drive that standard of care. So in addition to the commercial investments that we make there, we also have a number of Phase IV/IIIb type trials ongoing now also, which we think will generate the kind of data you need to become standard of care, and I'm sure we'll talk more about that. Second is build on our commitment to kidney disease. We are very much a kidney disease company, and I see that continuing for the future. And that's building out our pipeline, first of all, AKB-097, 9090 in acute kidney injury. And then the third, which is by far the smallest bucket of spend is to build the future beyond kidney disease. And right now, that's things like the investigation of vadadustat in ARDS that we're doing with UT Health to really prove the mechanism, 10108 in retinopathy of prematurity, where we have tox work going on now, small investments, but potentially really meaningful business areas.

Yes. I hear you. That's interesting. And then maybe to dig into the lead commercial product, Vafseo, because that's where I got a lot of questions recently. So just thinking about targeting the dialysis segment and pursuing and also the fact that you pursued nondialysis for a little bit, too. Could you just talk about what's the value creation strategy for Vafseo going forward? Where do you see it going this year?

Yes. So Vafseo, which is our HIF-PH inhibitor for anemia in chronic kidney disease patients on dialysis. This is a product that, as I referenced before, we believe is going to become standard of care in the space. Now patients have been treated since 1990 with ESAs. And this is a whole new mechanism, a whole new way of driving red blood cell increases and managing anemia. We will -- you increase hemoglobins much more gradually. You have fewer excursions above target areas that physicians are looking at. You have fewer dose titrations. Generally, it's easier for physicians to use. But much more importantly is the data that's starting to become more clear now and is really building. In November, we presented data at the ASN meeting, the large nephrology meeting that showed we did this Win-Odds analysis of our Phase III study, looking at mortality and hospitalization, 2 prospectively collected hardest endpoints that you have and looked at that, again, this Win-Odds analysis allows you to generate a lot more statistical power. Now it was a 3,500-patient trial. So it was a large trial. But with this analysis, you get over 3 million data points. And when you look at that data, you showed a statistically significant reduction in the risk of dying or being hospitalized with Vafseo. And those are the 2 outcomes that patients care about, physicians care about, dialysis providers care about. So that was just presented. It has been accepted by a top-tier nephrology journal. So we think that will be published very shortly. Then it gets in the hands of our medical folks who can go around and educate physicians on it. Now just -- now this weekend, the weekend before the annual Dialysis Conference, we presented data. We took that data, did an economic analysis on the hospitalization, particularly. And so there was about an 8% decrease in hospitalization when you use Vafseo. The hospitalization decreases based on cardiovascular and infection-related hospitalizations, both clearly explained by the mechanism difference. Well, that 8% difference in hospitalization also had a 16% difference in length of hospitalization. So people got out sooner. And between them, that translated into about a 15% cost reduction when you use standard Medicare costs. So in other words, about $3,700 per patient per year. And if you put all eligible patients who are treated with an ESA on to Vafseo, that would be about [ 1.9 billion ]. So this is the kind of data. We just presented this data, so we're working on the publication now. This is the kind of data that's building that says this is a drug that's going to become standard of care. And we're seeing more and more access to the product. It's dialysis. It always moves more slowly than I would like to see. We keep thinking it's going to move faster, but dialysis providers are like ocean liners. They move slowly. But we're really pleased with the momentum that we're seeing and most pleased with the data because the data at the end of the day is going to drive the adoption.

Yes. I agree. And then you highlighted, I think, in the past TIW dosing is a key lever to improve adherence. And how are you thinking about that broadly going into the dialysis organizations? And where do you see possible variability across different customers?

Yes. Yes. So the TIW dosing or observed dosing that we're calling it is -- now it's not in our label yet. I mean this is a conversation we're planning to have with the FDA. But QD dosing worked beautifully, like daily dosing worked beautifully. I think the thing that surprised me was you've been doing -- you've been giving someone a shot in the chair for the last 30 years. As soon as you saw had to send the drug home, there was a real concern about patient compliance and the like. And so the idea that we had done studies knowing that being quite confident that the drug would work well in TIW dosing, and it does, that this would be an option for physicians to confirm that the patient is taking the drug. And I think this has really proven to be most important for the anemia managers, the nurses who have the day-to-day responsibility for managing the patients. So we've done study FOCUS, smaller one modify where we demonstrated that you could dose TIW. There's 2 studies ongoing now, VOICE and VOCAL, both using TIW dosing. And Jeff Block, who's the physician running the VOICE trial. This is a collaborative trial. He's really the running the trial. He's the one who decided to move at U.S. Renal, move patients to TIW dosing and recommend that to the physicians at U.S. Renal. So by the end of the quarter, we expect they'll all be doing TIW dosing. And anecdotally, we hear from physicians, they still have to go through the titration phase. But once they get through that, the patient just maintains their hemoglobin really, really well. And with ESAs, you're constantly dabbling with the dose to keep them within a range. And I would say never underestimate the power of making a busy nephrologists life easier and how much that means to them. But at the end of the day, the data we hope to generate from VOCAL and from VOICE, obviously, will be about more than just it's easier to use, right? You're really going to keep building on that evidence that this is -- this should be standard of care.

Yes. I hear you. And speaking of VOCAL and VOICE and just thinking about Vafseo going ahead. So there are a few different things happening. So thinking about the data from both those trials and also your TDAPA period also is going to expire. How do you think about the transition for that product going through that and then the data coming through as if all goes well, very positive results and then thinking about the trajectory going forward for Vafseo?

Yes. So we've always had the perspective of looking at the long haul here, right? We're in it for changing standard of care. The thing that we're so fortunate about with Vafseo versus other TDAPA products is that there's a meaningful amount of money within the dialysis bundle to treat anemia because almost every patient needs to be treated, 90-plus percent of patients need to be treated for anemia. So there's real money within that bundle. So we could take the long view. I mean we always thought of TDAPA as a wonderful opportunity for the dialysis provider to -- in a no financial risk way. As a matter of fact, they make some money to use the product, and we could charge a higher price. So we could benefit for some number of years. But we always recognize that long term, we would need to be pricing around ESA pricing. Again, we try to keep it very simple. There's 2 years of TDAPA. After that, there's this payment that goes on for 3 more years. But that gets peanut buttered over every dialysis provider. The idea that you're going to get one to pay more for your drug, while the other one takes that money and puts it in their pocket, we just don't think that way. So we think about this is how we have to price in and around ESAs. Now when you have data that supports that you're saving significant money, about half of dialysis patients are fully capitated for the dialysis provider. So saving that kind of money that you're going to get for basically free does give us some leverage in the negotiation. But 80% of dialysis patients are managed by 2 dialysis providers. So most of the leverage lands on their side. But we know what the pricing for ESAs is, and that's a price in this kind of $2,000 to $2,500 a year, that's something that Vafseo can be a very profitable product for Akebia. And if we develop all of this data -- and the other thing to remember is TDAPA -- not every patient has TDAPA, right? So the day TDAPA ends, while the price comes down and comes down substantively from where we are, as we expected, your patient population grows to everyone is available. So as you build this data that supports that this is a different way to treat patients and the pricing is relatively consistent with the ESAs with all of this data that says you're saving money, the opportunity is there to become standard of care.

And just to reiterate that post TDAPA market opportunity is $1 billion at...

Yes. Thanks, Erik. That's exactly right.

Yes. Makes sense. And just to help frame it, I mean, how much do you think investors are used to thinking about this dynamic with TDAPA expiring, et cetera, versus your expectations? Like where do you see the Street being? And where do you think there might be a disconnect if there is one?

Yes. No, I think there is. I mean I don't know if it's a disconnect. It's just that there's so few TDAPA drugs, right? I mean you've got the DefenCath from CorMedix whose TDAPA is expiring in the middle of the year and us. You had KORSUVA, which, again, difficult because there was no money in the bundle. So how do you use that product. We're just really a unique product from that perspective. But the idea that it's a math equation as you think about 2027, right? How fast can you grow volume? Can you grow it enough to offset the revenue decline? And we've been really clear. We don't think we can we think we can continue to grow volume. If you look at the volume slope, we expect that to sort of be a straight line. But revenue, you're going to have this divot of revenue. But again, between growing based on the data that's available and growing based on more patients being available for treatment, you ultimately gain our share. And we say standard of care in a $1 billion market is a $500-plus million product. I mean that's our belief about what the product can be.

Yes. Got it. Got it. Great. And since we're talking about VOCAL a little bit, I wanted to sort of double-click into that and think about -- so what would be a clinically and commercially meaningful result from VOCAL and especially because you're -- I think you're comparing to ESAs as well. So how are you thinking about like what's the bar or what would be a really great result?

So look, VOCAL is 350 patients. We're running that at DaVita centers, gives DaVita the opportunity -- we're the sponsor of that trial. So that's data that we can use for regulatory filing around TIW as well. If FDA wants it, it gives DaVita clinical experience with it. We've already proven that we're non-inferior. That's what you're looking for there, right, non-inferiority from a hemoglobin management standpoint. The thing that's really interesting in VOCAL from my perspective is the substudy that we're doing with a small number of patients, about 30 patients that is looking at red blood cell characteristics. So this has been seen before, but this idea that you're talking to physicians, you're showing them this data, our Phase III, you were non-inferior, right? But now we're showing them this data with the Win-Odds analysis, and it's kind of a why. And the why is this differential mechanism. And one of the places where you can really demonstrate that there's a different -- this mechanism leads to a different way, this more physiologic way of managing anemia gives you a more physiologic red blood cell. And that's what we hope to show. And we've seen this in other studies, but not with dialysis patients. But the idea that you have a red blood cell that's larger, that carries more oxygen that moves through the capillaries more clearly, all of these omics, metabolomics, et cetera, that we're going to be studying, I think this is going to be really interesting data for physicians. You have to give them a why. And you get in front of VOICE, which is the beginning of '27, where we'll see that -- in about a year from now, less than a year from now, I hope, we'll see that data. But you're showing them this is why you're seeing this clinical difference. You're not just getting the same number of red blood cells, you're getting a better red blood cell. And we're going to follow up with a study that looks at red blood cell lifespan, right? Dialysis patients have a red cell lifespan that's about half what yours and mine is. And the idea that you're also extending that. And again, this has been seen some data out of China showed you -- almost double the lifespan of the red blood cells. So to show that again in U.S. dialysis patients, this is how you build that evidence that physicians say, yes, this is the drug that I need to use to manage anemia.

Yes. And tagging on to that, you're alluding to VOICE. So how are you thinking about the possible hospitalization and mortality endpoints coming out of that? And how could that influence real-world clinical practice?

Yes. Well, I mean, I think we're getting that now from the data that we presented at ASN. This was a post-hoc analysis, but it was very prospectively collected data, right? So it's not like just data mining. But this is basically the same endpoint. So fewer patients. So what I expect to see from VOICE is the same magnitude of difference, the same magnitude of difference in mortality, same magnitude of difference in hospitalization. Now the things that led to hospitalization and MACE rate in the INNO2VATE trial were excursions above a hemoglobin of 12, which we -- always were better than an ESA. But the second was ESA rescue. So how often did the patient have to get an ESA rescue? Well, in the INNO2VATE trial, it was about the same between us and ESAs because you had that dip based on the way you were dosing in INNO2VATE. Now that doesn't exist anymore in the VOICE trial. So in FOCUS, which was a TIW study, we had half the ESA rescue. So if you layer half the ESA rescue on top of the benefits around keeping people in the target range, et cetera, we don't know exactly. Obviously, you do the study to find out what the data says. But even if we see just the same magnitude, that's a huge win and a confirmation of what we saw in INNO2VATE when you put it along with all the other data that we've generated. So we'll all see in about a year.

Yes. Looking forward to the data.

Me too.

And I want to also have some time for your pipeline stuff as well. So I know you recently started talking more about AKB-097 and praliciguat. So maybe could you walk us through why you're excited about these programs? And what are the next drivers of growth?

Yes. So obviously, as a kidney company, you have to build a pipeline, rare kidney is an obvious place for us to go. It's an area of significant interest, but it's an area of significant unmet need still. And we did the deal to bring praliciguat in 2021 for a variety of reasons, including us having to work through the CRL and some issues that our partner had in getting us drug. We weren't able to start the Phase II until the end of last year. And so praliciguat, we're looking first in focal segmental glomerulosclerosis or FSGS. It is an area of high unmet need. Praliciguat has been studied in diabetic kidney disease by Cyclerion. It clearly showed a reduction in proteinuria, but not enough for them to go into that larger market opportunity. We believe that the product could be very effective in FSGS. We did a number of animal studies. We're very, very pleased with the results we showed there. Then with the PARASOL, this kind of FDA academic partnership, looking at what should be the right outcome for -- or the right approvable endpoint for FSGS. Before that, we were looking for a disease that moved quickly, so you could show a difference quickly, but PARASOL kind of gives a much clearer pathway for us. And we took that DKD data just as a pressure check, right? And it was UACR, not UPCR, you have to do some data manipulation, but we felt quite confident in our ability to demonstrate a benefit here. And FSGS is such a heterogeneous disease. There are going to be other products that are going to be approved there, which is great for patients. But we're going to see how treatment moves in the future as these products are available. I mean today, there's nothing available, right? But we think that, praliciguat will fit very, very well within treatment. And it's a unique mechanism of action. There's no one else developing a guat for FSGS. So we're excited about that. That's just started its Phase II, happy with how it's enrolling. We haven't really guided on timing for that yet until we see a little more -- get more confidence in the line of enrollment. 097, we brought in, in December from Q32 Bio. We're incredibly excited about that. Erik and his team led that effort. I think that most of us looked at that and at first and said, oh my god, another complement inhibitor, oh my God, IgAN, how many drugs do we need in IgAN. And as we dug in, particularly talking to the KMEs, the medical opinion leaders, we got incredibly excited about it. And it's this tissue-targeted effect that makes it so interesting, right? I mean you've got an efficacy profile that's potentially as good as the best complement inhibitor out there, kind of the same pathway, which would be like an EMPAVELI. The difference being, because it's this fusion molecule, it gets directly to the tissue of where complement is being produced, gets out of the bloodstream quickly. The 2 benefits of that are, a, since it gets out of the bloodstream, you should be able to avoid the box warning for infections that you see with most complement inhibitors like EMPAVELI. And two, since you're going to the tissue of damage, you can use a much lower dose. So EMPAVELI, I think, has to do about 1 gram infusion twice a week. We're starting our basket study, which we're going to be starting shortly or second half of the year. We're using 450 milligrams. I think it is once a week as an infusion. We think maybe it can be even a lower dose than that or a less frequent dose than that, ultimately getting it to an auto-injector, which would be phenomenal. So efficacy consistent with the best-in-class with an improved safety profile and a more convenient dosing regimen. I mean that's a best-in-class potential drug. So basket study in IgAN, lupus nephritis and C3G will start as early as we can in the second half of the year. Because it's an open-label basket study, we expect to start generating data in '27.

Okay. Great. And on the topic of the basket study, I do get some questions about -- so you're testing different indications and moving them all forward in parallel. How would you prioritize these indications? And what are you looking for to help you figure out which is the one to go forward with down the road?

That's a great question. So first and foremost, we are just looking to get as many of each as we can. And there are other indications. We may add indications to the basket as we go. But IgAN is the largest opportunity. So it may be the one where we see data first. And I think for everyone, we want to see that efficacy data first, right? So it's less about what are we prioritizing to go forward with and more initially and more about show me the data, right? So let's see confirmation about kind of how excited we are, what was seen in Phase I where it gets right to the tissue. So IgAN may well be the first. C3G is such a rare disease, only a few thousand patients. I'm very excited about the opportunity in lupus. There's -- it's a less crowded space. And I was just talking to a couple of physicians here this past week down here in Miami, and they were talking about having 30-year-old women who was starting dialysis from lupus and looking for any opportunity to impact that disease. So this would really be a great one. But we'll do the work now to understand, even IgAN where you say, well, goodness gracious, there's so many IgAN drugs, which is my initial reaction. When you think about the APRILs and BAFFs and what you're doing to people's immune systems for decades, the idea of having a targeted complement inhibitor that you can manage disease early and kind of reduce the amount of time on an APRIL or APRIL, BAFF. And I think that some of these treatment paradigms, we're going to learn about as this data comes forward. So where I thought, well, that's not really such an interesting area. The uniqueness of this compound of 097, I think could lend it to be a very, very important product in treating IgAN even with it being as crowded as it is. We just have to see the data.

Yes. I agree. I'm going to give John a break and maybe ask Erik a question.

I never need a break anyhow.

So just keep going. But Erik, I wanted to also throw a question to you. How are you thinking about just for Vafseo and the commercial products in the portfolio, like any sort of metrics like financially that you're thinking about watching that could indicate good execution going forward to investors? And there's a lot going on in R&D and commercially. How are you thinking about prioritizing these things?

Yes. Yes. No, great question. So yes, on the metrics for Vafseo, John kind of alluded to some of them earlier, we're looking to increase that breadth and the depth, right, of the prescribing. So more prescribers prescribing more. I think the adherence rates are also really important to keep an eye on, and we talked about we're seeing those improve under the TIW dosing [indiscernible]. I think that's important as well. Yes, from a capital perspective, I think we're taking a really balanced view, right? We want to continue to support the Vafseo launch. It's incredibly important to us, continue to generate -- to support that data that John has talked about. Though, we really believe this can become standard of care again in $1 billion market. And then at the same time, continue to bring this really exciting pipeline, which we think has the potential for a lot of value creation for shareholders for longer term.

Yes. Great. And I think in the last minute that we have, I'll zoom out again and a bigger picture question for you guys in terms of what do you think the market still underappreciates about the Akebia story? What are things that we should be thinking about going forward?

Yes. I think that clearly, dialysis reimbursement is complicated, and there are investors that don't -- it just becomes like peanuts, can we really understand what this is? And we do try to simplify with Vafseo that -- I mean, yes, we have this TDAPA, and we're enjoying a higher price now for a couple of years. But our market is unlike any other TDAPA drug in that there's dollars there for use. And we've known that from the beginning. I mean, look, I wish it was $5,000 a year, which it was when I started -- when we started the Phase III study. But at $2,000, $2,500, particularly when you're demonstrating the savings that we're showing, the opportunity to be standard of care in $1 billion market, standard of care is 50% plus 1. We think we can be much better than that, right? And that's -- this is a small molecule. I mean this is -- we have an opportunity for this to be a very, very successful product. And I think people need to see the consistency of that launch growth, got out of the shoots very quickly. And because of these things like adherence and the complexity of these big dialysis organizations, it flattened out from a demand perspective, which surprised us. But we're seeing growth again. We're clearly seeing growth again. And we're seeing it beyond just U.S. Renal. We're seeing DCI, IRC, some of the kind of the fourth and fifth largest are now using the product. And DaVita is starting to move. And eventually, we're going to get Fresenius too. So that opportunity is there. Once you see that revenue growth, you have to start to appreciate the pipeline that we have. I understand that people can't spend a lot of time on that until they feel confident that the thing that's going to fund it is there. But I think we're doing an R&D Day, shameless plug, on April 2. And we have some outside KMEs, who are going to speak at that. It'll be virtual. And I think people will have the opportunity to really get excited about this pipeline.

Okay. Great. Looking forward to it. And so with that, I think we're out of time. But thanks again, John and Erik for joining us and covered a lot of great ground and looking forward to more updates.

Thanks, Roanna. Thanks for the invitation. Appreciate it.