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

Ladies and gentlemen, thank you for standing by. This is Roy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Akebia's Second Quarter 202 Financial Results. [Operator Instructions] I would now like to turn the conference over to Mercedes Carrasco. Please go ahead.

Thank you, and welcome to Akebia's Second Quarter 2026 Financial Results and Business Update Conference Call. Please note that a press release was issued earlier today, Wednesday, August 5, detailing our second quarter 2026 financial results, and that release is available on the Investors section of our website. For your convenience, a replay of today's call will also be available on our website after we conclude. Joining me today, we have John Butler, Chief Executive Officer; Dr. Steven Burke, our Chief Medical Officer; Nick Grund, our Chief Commercial Officer; and Erik Ostrowski, Chief Financial and Chief Business 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 financial results press release that we issued on August 5 as well as in the Risk Factors and Management Discussion and Analysis section of our most recent annual and quarterly reports filed with the SEC. With that, I'd like to introduce our CEO, John Butler.

Thanks, Mercedes, and thanks to everyone for joining us this afternoon. As you know, we've been focused on 2 critical areas of our business that we believe will deliver both important therapeutic advances for patients and value to shareholders. Those are advancing our kidney disease pipeline and making Vafseo standard of care for the treatment of anemia due to CKD in dialysis patients. We've had incredibly important advances in both areas since we last spoke to you. Today, I'll start with research and development. I believe our pipeline is underappreciated and clinical advancement of our rare disease pipeline specifically provides the greatest opportunity to build value. Earlier this week, we announced that we initiated the Phase II basket trial to evaluate ebribafusp, previously known as AKB-097 and ADX-097 in IgA nephropathy, lupus nephritis and C3 glomerulopathy. We believe ebribafusp, a next-generation complement inhibitor could be truly differentiated in the rare kidney disease space in these indications and others. Beyond this initial basket study, we're doing the work to prepare for a Phase II study in ANCA-associated vasculitis and expect to start that study next year. Our other rare kidney asset, praliciguat, continues to enroll in its Phase II study in FSGS. As with Ebri, we believe there are multiple indications where Prali can play an important therapeutic role. And again, we believe the mechanism of Prali will allow it to occupy a unique competitive position in these rare diseases that each have significant unmet need. Our third kidney disease clinical candidate is AKB-9090, which is in a Phase I study in healthy volunteers. 9090 continues to move successfully through the SAD/MAD study, and we expect to report data early next year. Following that data readout, our plan is that next year, our development team's efforts and our dollars will be focused on Ebri and Prali, where we believe the largest opportunity to drive near-term value exists. Dr. Steven Burke, our Chief Medical Officer, is currently attending GlomCon Hawaii, where medical professionals around the world have met to discuss treatments for glomerular disease. That's the reason we're having our call this afternoon rather than a normal morning timing. I'll now ask Steve to share a few remarks on Ebri and Prali. Steve?

Thank you, John. We've built upon our team's commitment to patients and expertise in kidney disease to advance several programs into the clinic in 2026. We believe our mid-stage pipeline products, ebribafusp and praliciguat have the potential to deliver differentiated and targeted approaches to severe diseases with high unmet need. As John mentioned, we just initiated a Phase II basket trial for Ebri. The goal of this trial is to evaluate the safety and efficacy of Ebri in patients suffering from diseases marked by complement activation in the kidney glomeruli, namely IgA nephropathy, lupus nephritis and C3 glomerulopathy. These rare kidney diseases affect thousands of patients. And while there are therapies available, each requires lifelong treatment. The currently available treatments include complement inhibitors, which suppress the complement system in the blood and many require frequent administration. Importantly, they generally have a box warning for significant infection risk. And this profile creates concern for long-term use. In nonclinical studies completed by Q32 Bio, Ebri was shown to be targeted specifically to the sites of complement activation. In patients with complement-mediated glomerular diseases, we believe Ebri should localize to the affected glomeruli, which have significant deposits of C3D while avoiding complement inhibition in the blood. We highlighted this during our R&D Day in April and expect the findings from nonclinical and Phase I studies to be published in medical journals. During our R&D presentation, Dr. Jonathan Barratt, Mayer Professor of Renal Medicine from the University of Leicester, shared that he believed the complement inhibitor with this profile could be used long term and in combination with B-cell-directed therapies such as APRIL and APRIL/BAFF inhibitors without the associated potential of systemic complement inhibition. The recently initiated Phase II basket trial is expected to enroll up to 30 patients and will evaluate a once-weekly subcutaneous dose of Ebri for 26 weeks in the main study, followed by a long-term extension study for responders. In the Phase I study of Ebri in healthy volunteers, again, conducted by 232 Bio, this same dose achieved exposures necessary to provide tissue-specific complement inhibition without inhibiting the complement system in the blood. The primary endpoint of the Phase II study is the incidence of adverse events and secondary endpoints, including the change in proteinuria and kidney function. In addition, the trial will measure every pharmacokinetics and complement biomarkers in the blood and urine to detect if Ebri reduces complement activity in the kidney tissue while avoiding inhibition of the complement system in the blood. The Phase II basket trial is open label, and we expect to report initial data in 2027. With regards to our Phase II study of Prali in patients with FSGS, enrollment activities are ongoing. FSGS is characterized by focal and segmental scarring in the glomeruli. Prali is a small molecule that is designed to stimulate the soluble guanylate cyclase enzyme and has been shown in animal models of kidney disease to inhibit glomerular scarring and preserve kidney function. There are about 40,000 patients currently diagnosed with FSGS in the U.S. This trial will enroll up to 60 patients with primary or genetic FSGS in a randomized, double-blind, placebo-controlled trial. The primary endpoint is change in urine protein creatinine ratio or UPCR from baseline to week 24 and the secondary endpoint is partial remission of proteinuria defined as a 40% UPCR reduction and the UPCR less than 1.5 grams per gram. In a Phase II study of diabetic kidney disease conducted by Cyclerion, Prali demonstrated rapid and sustained reduction in proteinuria as measured by urine albumin creatinine ratio or UACR. We look forward to providing further updates on these studies. And now I will turn it back over to John.

Thanks, Steve. Now let's turn our attention to Vafseo and our efforts to make this important product standard of care. We had a very positive surprise this quarter when Dr. Geoff Block of U.S. Renal Care completed the planned interim analysis of the primary endpoint in the VOICE trial and found the statistical results significantly exceeded the prespecified stopping criteria. Vafseo demonstrated a statistically significant and clinically meaningful reduction in the primary composite endpoint of all-cause mortality and hospitalization with the result driven by a 10% reduction in hospitalization. USRC Kidney Research stopped the trial after a recommendation from the independent data monitoring committee and trial steering committee. And for reference, the VOICE trial enrolled 2,116 patients. Results of the planned interim analysis as of June 1 demonstrated that the trial met the predefined stopping criteria with a win odds of 1.16 and a p-value of 0.0016, establishing non-inferiority and superiority of the primary composite endpoint. We've always had confidence in the clinical differentiation of Vafseo and the potential for a positive outcome of the study, but we were extremely pleased that we had this result earlier than expected. The result is consistent with the post-hoc analysis of the Phase III INNO2VATE program published earlier this year in the Journal of the American Society of Nephrology. When you look at both VOICE and the INNO2VATE analysis, you see that Vafseo demonstrated a consistent result whether dosing the product daily or 3 times weekly and whether comparing Vafseo to a long-acting or a short-acting ESA. It's also important to note that no head-to-head study of ESAs has ever demonstrated a significant benefit in hospitalization. We believe the data will make a huge difference for patients for years to come. As I've said many times, our goal is to make Vafseo standard of care for dialysis patients. Frankly, the voice data gives me greater confidence that we will achieve that goal. I'm especially encouraged by the increased interest we're seeing from the dialysis providers since we made the announcement. Now at the same time, we currently have only shared data through a press release. Dr. Block is working with our support to present these data at a medical conference and have it published in a peer-reviewed journal as quickly as possible. While the tangible impact of this provider interest could take some time, we believe these data help competitively position and differentiate Vafseo moving forward. In the meantime, I'm pleased to report that we had our first quarter with over 10,000 patients and $20 million in revenue. Here's Nick to provide more insight into the quarter. Nick?

Thanks, John, and good afternoon, folks. We're pleased to report significant sequential quarterly revenue growth as well as several adoption metrics and an important milestone with more than 10,500 patients active on Vafseo. Vafseo net product revenue increased to $21.3 million in quarter 2 of 2026, a 34% increase over the previous quarter, representing a continuation of robust growth. The total patients on therapy in quarter 2 represents an approximate 41% increase compared with quarter 1. Also, once again, this quarter, we had the highest number of new patient starts in the quarter since the first quarter of launch, demonstrating strong momentum. The diversification of our prescriber base continues to grow. Today, approximately 1/3 of our prescribers are in DOs outside of USRC. Additionally, a vast majority of patients are being treated under DO implemented observed dosing protocols, which is very much in line with our expectations. The midsized dialysis organizations, USRC, IRC and DCI drove the most significant portion of patient growth, and we believe that all 3 still have significant room to grow moving forward. Another common feature of these 3 customers is the significant level of support in Vafseo that their leadership is demonstrating. Driving prescribing within DaVita is our highest priority as it represents our most significant growth opportunity from a single dialysis organization. In quarter 2, we continue to see additional new prescribers and patients on Vafseo at DaVita. As is the case with our midsized dialysis organization customers, while it is important to educate prescribers and caregivers on Vafseo, an inflection point comes with top-down support. To that end, I'm encouraged by the continued high level of interaction between the teams from Akebia and DaVita, bolstered in the past month by DaVita's interest in learning more about the recent VOICE trial results. While I don't expect to see a meaningful increase in the DaVita adoption curve in quarter 3, there is a heightened level of senior clinical team engagement regarding detailed operational implementation that we have not seen historically. We believe this bodes well for more impactful growth at the end of the year and sets us up well for 2027. At this stage of the launch and to best support dialysis organizations engagement overall, in quarter 2, we implemented a more targeted, streamlined and agile commercial strategy that prioritizes a greater focus on large group practices and strategic partners. The goal is to increase the efficiency and effectiveness of our commercial field team, while at the same time, taking advantage of the broad awareness and breadth of patient access created previously. Our team continues efforts to drive Vafseo prescribing and growth. We understand how important it is for our commercial and medical affairs teams to work closely to engage with dialysis organizations and care decision-makers and support prescribers as they continue to get more experience with Vafseo to increase depth of prescribing as well. And now I'll turn it to Erik to go through the financials.

Thanks, Nick. Total revenues were $49.1 million in Q2 '26 compared to $62.5 million in Q2 '25. This decrease was due to lower Auryxia revenues, which were partially offset by higher Vafseo. Turning to the components of total revenues. Vafseo net product revenues were $21.3 million in Q2 '26 compared to $13.3 million in Q2 '25, representing a 60% year-over-year increase. As we've previously discussed, we note that upon the expected end of Vafseo's TDAPA period on December 31, 2026, we plan to price Vafseo within the price range of ESAs, which is significantly lower than Vafseo's current price. As a result, while we expect Vafseo unit sales volumes to increase in 2027 as compared to 2026, we expect 2027 revenues to decrease compared to 2026 due to this lower planned price. Auryxia net product revenues were $25.5 million in Q2 '26 compared to $47.2 million in Q2 '25. We continue to expect Auryxia revenues to decrease in '26 due to generic competition and pricing pressure. License, collaboration and other revenues increased to $2.4 million in Q2 '26 compared to $2 million in Q2 '25. Cost of goods sold was $10.4 million in Q2 '26 compared to $9.9 million in Q2 '25. Of note, Vafseo-related COGS in both periods was derived from prelaunch inventory, which does not include the full cost of manufacturing as a portion of those inventory-related expenses were recorded as R&D expenses in the period incurred prior to Vafseo's U.S. approval. R&D expenses were $14.1 million in Q2 '26 compared to $11 million in Q2 '25. This increase was driven by activities related to our Phase II clinical trials for praliciguat and ebribafusp as well as higher headcount-related costs. SG&A expenses were $28.2 million in Q2 '26 compared to $26.6 million in Q2 '25, driven by higher commercialization-related activities. Net loss was $8.9 million in Q2 '26 compared to net income of $0.2 million in Q2 '25. The change to a net loss this quarter was the result of lower revenues and higher expenses, including a $1.9 million expense related to the commercial reorganization mentioned by Nick, which is aimed at increasing the efficiency and effectiveness of our commercial efforts. Cash and cash equivalents as of June 30, 2026, were approximately $155.5 million compared to $162.6 million as of March 31, 2026. We believe our existing cash resources and the cash we expect to generate from product, royalty, supply and license revenues, along with our plan to refinance our senior secured term loan facility will enable us to fund our current operating plan for at least 2 years. With that, we will now open the line for questions. Operator?

[Operator Instructions] Your first question comes from Matthew Caufield with H.C. Wainwright.

And really great to see the progress across the platform. So regarding the Vafseo penetration into the dialysis organization, obviously, you've discussed the in-center dosing protocol being an important part of that in terms of adherence and growth. Do you think the near-term growth in the coming quarters is more a factor of new patients getting on to therapy or simply broadening the in-center protocol across those current Vafseo patients? I guess I'm just getting at kind of the best ways to think about the near-term growth drivers overall.

Nick, do you want to take that?

Yes, Matt, great question. Thanks. So really, with the new patients, what we're seeing is a couple of different things. One, the number of clinics that are starting patients is continuing to expand, right? So it's not just within a certain clinic. The number of prescribers continues to grow. It grew 17% this quarter versus quarter 1. So people are starting to try product, try Vafseo outside of, we'll call it, existing physician base. So certainly, that generates a bunch of new patients. In addition, frankly, restarts are going really well. As you recall, we had QD patients that fell off therapy in 2025 as they've rolled through these observed dosing protocols. We've seen just about 25% of those discontinued patients actually come back on therapy, which is also helping the growth rate as well. And so a couple of different factors in there, but most of the growth is coming through the new patients, new clinics and new providers.

Just about every metric or every metric of growth is increasing quarter-on-quarter. So we're really seeing that breadth of prescribing and patients increase. It's great to see the restarts as well. We're really, really very encouraged by that. And obviously, we hope the VOICE data only continues to accelerate that.

Your next question comes from Roanna Ruiz with Leerink.

This is Anna on for Roanna. Two questions from us. Just wondering if you could better characterize the persistence rates such as 90- and 80-day persistence rates rather than just first refill adherence and give any color on maybe the principal reasons for discontinuation now that you have the 3 times a week dosing. And second, just wondering what the time line is for getting like VOICE data in front of the medical organizations and how much you might expect that to move these net new prescriber additions beyond the good growth you've seen so far?

Nick, do you want to take the adherence question?

Yes. So when it comes to adherence, we talked about this first refill item, we've seen real good consistency there. About 89% of those patients who receive a prescription for Vafseo get the refill for the next period. which is really strong. After that, it really tapers down towards what I'll call normal churn in the dialysis patient population. The second part of your question was why do people discontinue? Not any -- no therapy I know of actually works in every patient. And so you may have some folks that get hospitalized during that period, go back on to an ESA, come back into the clinic and then they'll work to put them back on Vafseo. You've got folks that just don't tolerate it. Maybe there's some GI issues associated with it. But at this point, I think we've done a nice job in moving to an adherence rate on first refill that is where we want to be.

Yes. I mean that's where -- when we launched the product, you had this QD dosing and particularly the anemia managers saw people's hemoglobins drop as we told them it would they just weren't used to not controlling that. And we really believe that, that was the main reason for that first refill kind of drop in adherence. And I think the data supports that, that really was the case. And so beyond that, it really is the kind of what you normally see in a dialysis population. So -- and then I think your second question was around the time line to get that data to the dialysis provider. So this is clearly an ongoing effort. And as I said, I think it's important to note that it's not been presented and it's not published. But this is relatively small community, right? And we know that Geoff Block is incredibly excited about this data as we are. And I know he is talking to dialysis providers, his peers at other dialysis providers independent of our conversations. But I know Steve and his team have also been having those conversations. And there are places where -- I mean, like U.S. Renal ran the study. So they've been our strongest supporter, and I think that will only continue to increase. IRC and DCI also certainly IRC incredibly excited about the clinical benefit. This only really increases that excitement. The way we look at it, between those 3 providers, you've got about 66,000 patients in total, most of whom or at least 80% of whom are on an ESA today, and we've got just over 10,000 patients treated. So a huge amount of room to grow there. And again, I mean, the conversations that have been had at the clinical level at DaVita certainly, and as Nick mentioned, I mean, now the conversations are much more operational in nature. And that really, to me, bodes well. Again, it is sort of -- it's a very large organization that we've learned, takes a lot of work to move. But there seems to be some real momentum there. So we're encouraged by that. And we don't mention Fresenius a lot, but we believe that this is the kind of data that will be meaningful for them as well. And those conversations are starting, and I think they'll be much more interested in seeing it published.