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Akebia Therapeutics, Inc. (AKBA) Q1 2019 Earnings Call Transcript

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Akebia Therapeutics, Inc. (NASDAQ: AKBA)
Q1 2019 Earnings Call
May 9, 2019, 9:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Akebia Therapeutics Q1 Fiscal Year 2019 Financial Results and Business Highlights Conference Call. As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Kristen Sheppard, Vice President of Investor Relations. You may now begin.

Kristen Sheppard -- Vice President of Investor Relations

Thank you. Good morning, and thank you for joining us to discuss Akebia's first quarter 2019 financial results and our recent business highlights. The press release containing the company's financial results for the first quarter was issued earlier this afternoon and is also available on our investor relations website. For your convenience, an audio replay of today's call will also be available on our website shortly after we conclude today's webcast.

Joining our call are John Butler, President and Chief Executive Officer of Akebia; and Jason Amello, Chief Financial Officer.

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Before we begin, I'd like to remind everyone that this conference call includes forward-looking statements. Each forward-looking statement contained in this call is subject to risks and uncertainties that could cause actual results to differ materially from those described in these statements. Additional information regarding these factors is described in the Risk Factors and Management's Discussion and Analysis sections of our most recently quarterly and annual financial reports filed with the FCC. The forward-looking statements on this call speak only as of the original date of this call and we do not undertake any obligation to update or revise any of these statements.

With that, I'd like to turn the call over to our CEO, John Butler. John?

John Butler -- Chief Executive Officer

Thank you, Kristen. Good morning, everyone.

It's been just a little over a month since we presented our 2018 results and business highlights, so I'll keep my remarks brief. The first quarter marked the achievement of another important milestone for Akebia with the announcement of top line results from two Phase 3 active control pivotal studies evaluating vadadustat, our investigational oral HIF-PHI, in Japanese patients with anemia due to chronic kidney disease. We're excited by these results as they increase our level of confidence in the HIF pathway, and more specifically, vadadustat's clinical program. They also bring us that much closer to our goal of improving the standard of care with anemia due to CKD. Importantly, these results are expected to serve as the basis for Mitsubishi Tanabe's new drug application for vadadustat in Japan in 2019.

I'm also pleased to announce that we've completed enrollment in INNOVATE, our global clinical studies designed to enable potential NDA and MAA filings for vadadustat for the treatment of anemia due to CKD in dialysis-dependent patients. We enrolled a combined total of over 3,900 patients across these two studies, exceeding our most recent expectations by 300 patients. We continue to expect top line data readout in Q2 of next year, subject to the accrual of MACE.

With respect to PROTECT, our global clinical study is designed to enable potential NDA and MAA filings for vadadustat for the treatment of anemia due to CKD in patients not on dialysis. Enrollment continues to track in line with our expectations and we continue to expect top line data readouts in mid-2020, subject to the accrual of MACE.

The goal of treatment with vadadustat and all HIF/PHIs in general is to raise patients' hemoglobin levels into the target hemoglobin range and keep the hemoglobin stable over time, while avoiding supraphysiologic levels of erythropoietin, which has been associated with increased cardiovascular risk. Our global Phase 3 trials are designed to assess non-inferiority for efficacy and cardiovascular safety for vadadustat as compared to darbepoetin alfa and injectable ESA. The trials also include multiple secondary efficacy and safety end points, which are important in assessing other clinically and hence commercially important areas of differentiation to ESAs, including the incidence of thromboembolic events, hospitalization for heart failure, effects on blood pressure, and in non-dialysis-dependent subjects, progression of kidney disease.

We believe that vadadustat has the potential to offer other advantages, including dosing flexibility with once daily dosing for non-dialysis-dependent patients, and daily or three times weekly dosing for dialysis-dependent patients. We believe this dosing flexibility is an important factor for adherence and convenience within these distinct patient groups.

We also continue to make progress on our commercial strategy for vadadustat. We're encouraged by the level of enthusiasm from our strategic collaboration partners, including most recently Vifor Pharma. Our new amended agreement with Vifor now has the potential to provide access to vadadustat to patients treated in Fresenius Medical Care's U.S. dialysis centers and other third-party dialysis organizations, including mid-size dialysis organizations in the U.S. We believe this creates the potential for rapid adoption of vadadustat upon approval in up to 60% of U.S. dialysis patients.

In summary, we continue to make good progress with our Phase 3 program for vadadustat and believe the approach we've taken to designing our studies has the potential to be a competitive advantage, as it allows for the relatively straightforward collection and analysis of MACE across the relevant studies. We're looking forward to our Phase 3 data and other value driving clinical events over the next 12 to 18 months.

The size of the market opportunity and the significant need for innovation for this patient population provide a large opportunity for multiple products in the space. We're excited about the progress we're making in building our future growth story with the goal of improving the standard of care for people living with anemia due to chronic kidney disease.

Now turning to the progress we've made to date with our marketed product, Auryxia. Auryxia is the only oral iron tablet approved in the U.S. to treat dialysis-dependent CKD patients for hyperphosphatemia and non-dialysis-dependent CKD patients for iron deficiency anemia, or IDA. For Q1, Auryxia revenue increased 12% over the prior-year to $23.1 million and total Auryxia prescriptions increased 22.5% over the same period to 40,080. We believe that the year-over-year growth reflects the strong underlying demand for Auryxia. We believe the sequential decline from Q4 is primarily a result of the new prior authorization required when prescribing Auryxia for its hyperphosphatemia indication for Medicare beneficiaries. As we discussed in our year-end call in late March, this new requirement pressured prescriptions in Q4, and more specifically across the first quarter. As a reminder, this prior authorization is a consequence of CMS' decision to stop covering Auryxia's IDA indication under Medicare Part D.

I'm pleased that we're making good progress with our efforts to help patients and nephrologists navigate this new requirement. We're encouraged with a growth in weekly prescriptions that we're now seeing. In fact, the prescription demand we've seen in the first four weeks of the second quarter exceeded the first four weeks of any quarter since Auryxia was launched. Importantly, we're also continuing to advance the growth strategy we outlined on our last call. The first aspect of this strategy is focused on maximizing Auryxia's opportunity within its hyperphosphatemia indication where we see the greatest potential for near-term revenue growth. We continue to have a high level of engagement with prescribers as we leverage Auryxia's proven clinical benefits, the real world data that we've generated demonstrating Auryxia's lower pill burden versus other phosphate binders, and nephrologists' view that Auryxia has a differentiated tolerability profile.

We're also continuing to leverage the KDIGO treatment guidelines which advise nephrologists to limit the use of calcium-based phosphate binders for dialysis-dependent CKD patients. These interactions are also giving us the opportunity to position Auryxia as an option for patients who are switching from other agents due to efficacy, tolerability, and pill burden limitations. We're also focused on growing Auryxia's share within the commercial and private pay market in the U.S. for IDA. This large and growing patient population represents about 45% of the U.S. patients with IDA today. Over 70% of nephrologists see Auryxia as an advance over other oral iron products and we're improving our commercial capabilities to translate this perception into adoption. I'm very excited about our opportunity to create broader access to Auryxia where presently many of these patients are untreated.

Finally, we're focused on restoring Medicare coverage for Auryxia for its IDA indication. We believe CMS' recent coverage decision negatively impacts choice and care for Medicare beneficiaries. Together with others in the renal care community, we're working hard to urge CMS to restore coverage. There are analogs where CMS has provided Medicare Part D coverage for products in similar situations and that gives us confidence in our position.

Looking ahead, we believe continued execution on this growth strategy and underlying market demand will drive increased revenue for Auryxia in the second quarter and across the year. A favorable outcome from our work with CMS would represent the opportunity for upside. With so much activity under way, having the right leader at the helm of our commercial organization has been a key priority of mine. I'm excited to welcome Dell Faulkingham to our team. As our new chief commercial officer, Dell will be invaluable in advancing our commercial strategies for Auryxia and preparing for the vadadustat launch following FDA approval.

Dell has significant experience in highly technical, but importantly, highly competitive markets where he has demonstrated significant success, most recently as senior vice president of the multiple sclerosis franchise at Biogen. He has deep experience in sales, marketing, and market access. He's already onboard and we expect great things moving forward.

I would also like to share with you that Dr. Steven Burke will succeed Dr. Rita Jain, who's informed us of her decision to step down from her position as senior vice president and chief medical officer with the company, effective June 17th, to pursue other opportunities. Dr. Jain has been a valuable member of our leadership team and we'd like to acknowledge and thank her for her significant contributions to Akebia over her tenure. Rita has agreed to support our team and ensure a seamless and successful transition to her successor.

We're excited to welcome Dr. Burke to our team in June. Steve is an experienced biotechnology executive with extensive drug development experience in kidney disease. He's joining us from Proteon Therapeutics where he has been the chief medical officer since 2006. Prior to that, he was senior vice president of medical and regulatory affairs at Genzyme and was responsible for clinical development at GelTex where he led the global development of Renagel and Renvela. His clinical, medical, and regulatory experience in the renal market will be critically important for us as we drive adoption of Auryxia and prepare vadadustat for global regulatory filings.

I'd now like to turn the call over to Jason.

Jason Amello -- Chief Financial Officer

Thank you, John, and good morning.

As we successfully closed our merger with Keryx on December 12th, 2018, this is the first time we are reporting a full quarter of financial results as a fully integrated biotechnology company. The results for the quarter demonstrate that we are making significant progress on our commercialization and development efforts and we are one quarter closer to achieving our strategic vision.

The company reported total revenue of $72.7 million in the first quarter of 2019 compared to $45.9 million in the first quarter of 2018, which included only collaboration revenue. Looking at the components of our revenue, net product revenue from the sales of Auryxia for the first quarter of 2019 was $23.1 million compared to $22.6 million as reported by Keryx pre-merger during the same period of 2018. This represents a 12.1% increase from the first quarter of 2018. We believe that the majority of Auryxia's revenue is within the hyperphosphatemia indication, which we expect to remain the case for at least the near term.

As a reminder regarding our licensing collaboration revenue, our collaboration agreements with Otsuka and Mitsubishi Tanabe are considered multiple element arrangements under the revenue recognition guidance. This generally means that committed future payments that are probable of being received by the company are recognized over the life of the arrangement on a percentage of completion basis to the extent the activities under the arrangement are performed and delivered by Akebia, rather than when the payments are actually received.

The company also recognizes royalties earned on net sales of ferric citrate in Japan under a sub-license agreement with Japan Tobacco and Torii, which generally gets recognized when related sales occur. With that said, license and collaboration revenue for the first quarter of 2019 was $49.6 million compared to $45.9 million in Q1 '18, of which the majority for both periods related to our cost sharing arrangement under the Otsuka collaboration agreements in connection with our Phase 3 program for vadadustat. Through Q1 2019, Otsuka has funded 52.5% of the company's Phase 3 development cost for vadadustat, and will begin to fund 80% of those costs when a predefined cost threshold is met, which is expected to occur in the second quarter of 2019.

With respect at the MTPC agreement, the company's performance obligations under that agreement were substantially complete as of Q2 2018. Therefore, potential future MTPC collaboration revenue will come in the form of regulatory and commercial milestones, and royalties.

Cost of goods sold for Auryxia was $31.3 million for the first quarter of 2019, consisting of $7.6 million of cost associated with the manufacture of Auryxia, and $23.7 million related to the application of purchase accounting as a result of our merger with Keryx, which includes $14.6 million of share value inventory step up and $9.1 million of amortization of intangibles.

Moving to our research and development expenses, R&D expenses were $82.4 million for the first quarter of 2019 compared to $61.4 for the first quarter of 2018. The increase was primarily attributable to increase in external cost related to the continued advancement of the PROTECT and INNOVATE Phase 3 studies, including ongoing enrollment, manufacture of drug substance and drug product, and regulatory activities in support of the global Phase 3 program, as well as other clinical and preclinical activities.

R&D expenses were further impacted by increases in headcount, consulting costs, and consulting costs for our expanding R&D programs. It is important to keep in mind that a portion of our Phase 3 costs are reimbursed by Otsuka, which gets reported as collaboration revenue, as I mentioned earlier. Selling, general, and administrative expenses were $34.3 million for the first quarter of 2019 compared to $9 million for the first quarter of 2018. The increase was primarily attributable to commercialization costs associated with Auryxia, as there was no comparable commercialization cost in the first quarter of 2018.

As a result of the foregoing operating results, the company reported a net loss for the first quarter of 2019 of $72.4 million as compared to a net loss of $23.4 million for the first quarter of 2018. Net loss for the first quarter of 2019 includes the impact of merger-related accounting charges totaling $23.7 million, as I previously mentioned, offset by a $2.8 million deferred tax benefit.

Turning to our capital position, we ended the first quarter with cash, cash equivalents, and available-for-sale securities of $168 million. As a reminder, there are always shifts in the timing of our cash flows between quarters given the scope of our Phase 3 program for vadadustat. The decrease in our cash position from the end of 2018 was primarily related to those shifts, such as reimbursement amounts from our collaboration partners and payments related to our Phase 3 program, including $13 million of advance purchases of comparator drug in anticipation of Brexit.

Additionally, cash was impacted by a one-time $30 million payment or certain merger-related liabilities that were recorded in 2018, but remained outstanding at the end of the year. Subsequent to the quarter end, we also raised $9.3 million under our existing ATM facility. We believe we have sufficient capital resources, including the prepaid quarterly committed cost share funding from our collaboration partners to fund our current operating plan into the third quarter of 2020. Lastly, we ended the quarter with approximately 117.1 million shares outstanding.

With that, I'll open it up for questions. Operator?

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, if you have a question at this time, please press the * then 1 key on your touchtone telephone. We ask that you please limit yourself to one question and one follow-up question. You may then return to the queue. If your question has been answered or you wish to remove yourself from the queue, please press the # key. To limit any background noise, we ask that you please place your line on mute once your question has been stated.

Our first question comes from Chris Raymond with Piper Jaffray.

Chris Raymond -- Piper Jaffray -- Analyst

Thanks. Just a question on Auryxia. John, I heard your comments about gaining traction with respect to helping physicians work through the existing limitations, I guess, with respect to what Medicare Part D did, but I remember you guys talking about working hard to sort of reverse that decision. Can you maybe talk about progress there? I think you said earlier that there could be resolution this year. Is that still a reasonable assumption?

John Butler -- Chief Executive Officer

Thanks, Chris, for the question. Yeah, we have been working extremely hard, not just us, but other members of the renal community and a number of patient organizations have been working with us, key opinion leaders, and practicing nephrologists have written letters. It's a very active effort, both with CMS and on the hill, as well, to help exert pressure on that side. It's very difficult, as I'm sure you know, to predict the timing of when something like that's going to happen, but we've had multiple meetings with CMS. I feel very positive about the direction this is going in, but it is too early to say exactly when we'll resolve it, but we're not taking our foot off the gas there.

Chris Raymond -- Piper Jaffray -- Analyst

Okay and then maybe back on the vadadustat. We're getting feedback from investors. A lot of folks, I think, are just questioning what the read-through is with respect to the FibroGen data, and I know you guys have talked about this at length. Maybe, could you just remind folks, whether there is or isn't, why a read-through, particularly in the pre-dialysis population when we do get that data? Thanks.

John Butler -- Chief Executive Officer

Sure. Again, thanks for the question, Chris. Of course, we don't have the data yet, so we're all anxiously awaiting it, and we're really looking forward to seeing it. There's no one more positive about the HIF class than I am, I think, and our perspective is when you see positive data for one product, that's good for the class. We think, generally speaking, that is certainly the way we thing about seeing data from any other product being developed in this space. There are significant differences in the programs, so I think you have to take that into account as you look at the results. As you mentioned, you have a placebo control that AstraZeneca is using in their non-dialysis trial versus an active control that we're using. Again, we have very clear feedback from regulators that that was the right comparator to use and we think ultimately this is going to not only set us up for a positive regulatory outcome, but will give us opportunities to compare the drugs so that you have more direct ability to differentiate commercially.

Chris Raymond -- Piper Jaffray -- Analyst

Okay, thank you.

John Butler -- Chief Executive Officer

Thanks, Chris.

Operator

Thank you. Our next question comes from Difei Yang with Mizuho.

Alex Bouilloux -- Mizuho Securities -- Analyst

Hey, good morning, guys. This is Alex on for Difei. I was just wondering if you could comment on the Hy's law disclosure, maybe if you could elaborate a little bit, and what gives you confidence that you will not encounter a second case.

John Butler -- Chief Executive Officer

Yeah, thanks for the question. Again, this was an update that we had through our disclosure in the 10K. This is a case that we previously disclosed from our Phase 2b study from about five years ago, the same case, no new data, but we're always looking at the data, and the current medical team, clinical team updated their -- I remember this was a possibly related case when it was first reported. The current medical team updated that to call it a probably related case and nothing really changed with the data, just the way they looked at it, and with that, we felt appropriate to update our disclosure. Nothing has changed in our view of the safety of the product.

Alex Bouilloux -- Mizuho Securities -- Analyst

Okay, thank you, and just related to the Japan NDA submission in 2019, do you have a sense for the timing of that?

John Butler -- Chief Executive Officer

That, obviously, is Mitsubishi Tanabe who will be doing that filing. We've been working very hard to give them all of the information they need to then translate it and submit it to the PMDA. The guidance right now is 2019 and we're confident that they're on target to do that.

Alex Bouilloux -- Mizuho Securities -- Analyst

Okay, great. Thank you.

Operator

Thank you. Our next question comes from Eric Joseph with JP Morgan.

Eric Joseph -- JP Morgan -- Analyst

Hey, guys. Thanks for taking the question. I'm sorry if I missed it, but I'm just wondering if you could comment on recruitment timelines in the FORWARD 2 trial about evaluating three-times -weekly [inaudible] whether you can provide narrow timelines on a tip line readout, and with a focus broadly here on minimizing hemoglobin excursion, what's the expectation that you might observe some widening of the range with a three-times-weekly dose regimen and what level of tolerance would be accommodated? Thanks

John Butler -- Chief Executive Officer

Eric, thanks for the question. We haven't updated on FORWARD enrollment. We said that we'll have data this year. We're still very much on track for that. This is a dialysis trial. If you look at the INNOVATE trial, for instance, you have captive patients, so enrollment there is certainly quicker than in the non-dialysis population, and I think that's what we're seeing in FORWARD, as well. We're very pleased and no update to timing. We'll have data this year. This is an open label study, so we'll be looking at the data as we go, and the design of FORWARD, it's a once-a-day design and then patients are switched to three-times-weekly, so you'll already have patients who are well-controlled on the drug. I can't recall the number of weeks before the switch, but you'll be moving patients who are well controlled on vadadustat to three-times-weekly dosing. Your design is constantly looking at the hemoglobin level, just like in Phase 3, to avoid having patients have excursions even above 11 where the current guidelines reside, and physicians really only worry when it's more above 13, but we're managing to the guidelines for the FDA. Again, we think that vadadustat has the ability, and it's shown that in Phase 2, to control hemoglobins well. We expect that we'll see that in FORWARD, but we'll all see the data at the end of the year, or sometime this year.

Eric Joseph -- JP Morgan -- Analyst

Got it. You're not looking at MACE in this study, but I'm just wondering if there are incremental safety considerations with a three-times-weekly dosing regimen that would need to be considered and looked at to have these data be eligible for an initial filing in tandem with the INNOVATE results.

John Butler -- Chief Executive Officer

Right, so we're not looking at MACE in FORWARD. Obviously, we'll have 3,900 patients in INNOVATE -- looking at MACE results from INNOVATE, so that database will be extremely strong. We'll look at general safety. These are dialysis patients so they're being seen three times a week, so they are watched over quite carefully just on a normal course of care. Now, this is a Phase 2 study, so we don't have an expectation that this will lead to an indication for three-times-dosing. We're planning the TRILOGY trial in order to be at a Phase 3 to lead to an indication, but we'll have this data and have it published, and obviously in the NDA and MAA, as well.

Eric Joseph -- JP Morgan -- Analyst

Got it. That's helpful. Thanks for taking the questions.

Operator

Thank you. Our next question comes from Chad Messer with Needham & Company.

Chad Messer -- Needham & Company -- Analyst

Great, thanks for taking my question, and good morning. John, I was wondering if you'd just comment a little more on the recent expansion of your agreement with Vifor. How significant is their third-party business?

John Butler -- Chief Executive Officer

Chad, thanks for asking the question. This is something we are extremely excited about and we really think it reflects on the way Vifor, and Fresenius for that matter, are looking at vadadustat and the opportunity for the product in the market. As you know, Fresenius represents about 40% of the dialysis market in the U.S. and the all other non-DaVita, if you will, midsize dialysis providers, smaller dialysis providers represent about 20%. Now, Vifor doesn't have access to all of them, but they are continuing to grow that business and will continue to do that over the next number of years in advance of the vadadustat launch with a large portfolio of products. Being a part of that will very quickly allow us to have the product introduced into more than just the Fresenius network, which, again, speed of launch is critical, and we really think this will have a significant impact on that speed. The TDAPA ruling as well is an important step in the direction where INNOVATE really does encourage innovation for dialysis providers, and the Vifor along with the TDAPA ruling, we think, will really accelerate the launch of vadadustat.

Chad Messer -- Needham & Company -- Analyst

All right, great. Thanks.

Operator

Thank you. Our next question comes from Ed Arce with H.C. Wainwright.

Ed Arce -- H.C. Wainwright -- Analyst

Hi, John. I think all of my questions have been answered, but thank you.

John Butler -- Chief Executive Officer

Thanks, Ed.

Kristen Sheppard -- Vice President of Investor Relations

Excellent.

Operator

Thank you. Our next question comes from Robert Hazlett with BTIG.

Robert Hazlett -- BTIG -- Analyst

Thank you. Thanks for taking a question. John, you've been interacting with [inaudible] for a while now. Could you comment on any fine-tuning that you might be making with regard to messaging of the product in the marketplace for or subtle adjustments or levers you can pull to be able to affect demand? Thanks.

John Butler -- Chief Executive Officer

Thanks for the question. Yeah, I really have enjoyed getting to know the team, the traditional Keryx team, and the product, and have obviously been impressed with the way they've worked through this CMS issue. I have to say, a lot of the first quarter was focused on that and it was focusing on implementing tactical programs to help physicians work through and manage the CMS issue, which has led to a very clear growth curve moving forward. Now, just as of Monday, we have Dell Faulkingham onboard who is our new chief commercial officer, and we have certainly worked together with the team on moving messaging, moving tactical implementation forward. I'm really looking forward to allowing Dell to sink his teeth in here and drive the team forward, and see how steep we can drive that growth curve.

Robert Hazlett -- BTIG -- Analyst

Thank you. Then, just one other question about vadadustat. Do you know the total number of patients that have been exposed to drug? I know that's kind of an obscure question, but just as we're considering things like Hy's law, I just want to make sure we have that type of a number in the back of our minds.

John Butler -- Chief Executive Officer

Yeah, that's not a number we've ever provided, but if you start thinking about the 3,900 patients we have in INNOVATE, many thousand patients in PROTECT, and then hundreds of patients in our Phase 1, Phase 2 program, it is many thousands of patients. Of course, those are all one-to-one randomizations, but it is many thousands of patients have been exposed to the drug at this point.

Robert Hazlett -- BTIG -- Analyst

Okay, thank you very much.

Operator

Thank you. Our next question comes from David Lebovitz with Morgan Stanley.

Ishmael Asante -- Morgan Stanley -- Analyst

Hi, this is Ishmael on for David. Thank you for taking our question. Within the context of the strong growth you are observing in 2Q '19 so far, can you help us understand the ultimate impact you anticipate to Auryxia or ongoing quarters from the IDA ruling? Thank you.

John Butler -- Chief Executive Officer

Thanks for the question. As we've mentioned before, our expectation even before the CMS ruling was that hyperphosphatemia was going to be the key growth driver, certainly in 2019, and IDA was a very important longer-term growth driver. While disappointed by the CMS ruling and working hard to overcome it, we didn't think it was going to have a significant impact on physician adoption in 2019. Now, what was unprecedented was the way that this prior auth was implemented in that I've never seen this in my career where you had all of the patients on the drug who have to go through this prior auth process all as of January 1st, which was most of them, when the plans put the prior auth in place. We had to manage all of those patients through in Q1, focused on it, did it very successfully, and I think we see that success by the first four weeks of the second quarter being the highest we've ever seen since the drug launch. That's really being driven by the hyperphosphatemia indication, so the steepness of that growth curve, what that may turn out to be for the balance of the year and beyond, we just really don't understand what that will be yet, but it will be driven by hyperphosphatemia. The team will focus on those 45% of patients who have IDA and have commercial insurance, but it was always our expectation that hyperphosphatemia was the big driver.

Ishmael Asante -- Morgan Stanley -- Analyst

Thank you.

Operator

Thank you. Our next question comes from Kennen MacKay with RBC Capital Markets.

Kennen MacKay -- RBC Capital Markets -- Analyst

Hi, thanks for taking the question. John, could you maybe just remind us on the endpoints and the registration path forward for vadadustat as it relates to non-inferiority versus superiority on MACE? Going back to your prior comments on how we could sort of think about a read-through to vadadustat from roxadustat MACE events, can you maybe just help us contextualize this a little bit better given the difference in control arm? Should we think that maybe a placebo could have lower MACE events than an active [inaudible] control arm, or how should we be thinking about that? Then, I have one quick follow up question on Auryxia.

John Butler -- Chief Executive Officer

Okay, Kennen. Thanks for the questions. Thanks for the opportunity to really stress that the design of the Phase 3 program is a non-inferiority design. That is the threshold for regulatory approval. That's our expectation, is that we are targeting non-inferiority. To my knowledge, every single trial being done that is a MACE trial for all of the competitors are all non-inferiority design trials, so we're all targeting the same thing. From that perspective, I do think that there is the opportunity for a read-through here. I think you have to remember that in the dialysis market, which will be the first readout, we're incredibly excited that we're just a year away from a readout of our now fully enrolled INNOVATE trial, but that will be an active control trial, as is every other company who's developing drugs for dialysis patients. They're all active control, so that's very clear readout.

Now, non-dialysis, as I mentioned before, when you have a placebo control, it is a difference. There was a difference in how you'll look at MACE. I think when you're looking at vadadustat versus an ESA, you've got a comparator product that has a history of elevated cardiovascular risk, and you have to show you're no worse. I think that's a bar we're really happy to have to cross for regulatory approval. Then I mentioned in my speech there that there are multiple secondary endpoints that allow for that commercial and clinical differentiation of the drug, that if you're comparing to a placebo, you don't have that opportunity.

Kennen MacKay -- RBC Capital Markets -- Analyst

Got you, thanks for clarifying that. Then I just had this one quick follow up on Auryxia. I guess when I had been tracking scrips, it had looked like demand was down about 14% quarter-over-quarter, obviously an impact of that CMS decision and working through those reauthorizations, but I was wondering if you could just elaborate on your commentary around demand being the highest ever for this drug. Then, separately, you mentioned some analogies for the Part D coverage of drugs in similar positions. I was wondering if you could just specify what those were so we can dig into this a little bit more closely and understand where the team is coming from. Thank you.

John Butler -- Chief Executive Officer

Sure. When you look at the quarter-on-quarter change, I think, Kennen, you might have been referencing Q4 to Q1 for the decrease in prescriptions.

Kennen MacKay -- RBC Capital Markets -- Analyst

Correct.

John Butler -- Chief Executive Officer

Yeah, so that is where you saw weakness. What you don't see on a normal basis is the Fresenius scrip numbers, which are included in the 40,080 number that I gave you, and obviously, Fresenius is a very important direct customer for us, the Fresenius RX piece of business. That really is absolutely where you saw that decrease. When you incorporate Fresenius, the decrease is not quite the percentage you referenced. The cadence of the quarter was you saw that drop in the early part of the quarter as all of those patients came through for the prior auth. We implemented these tools. For instance, you saw the utilization of samples double from what we expected in the first quarter under normal circumstances as physicians used samples to bridge patients through the prior auth. Obviously, those are not paying a prescription, but that patient stays on Auryxia, and that's what's driving that increase we saw after those first few weeks. The scrips started to increase.

I think on the March call, I even said we were seeing that growth. We're really seeing that robustly now in Q2. There's a very steep growth curve, and again, how steep that will remain we'll be monitoring, but I'm very encouraged by where that is today. We've come through that period where that [inaudible] of patients have to move through. Once you get that prior auth, it's good for a year, and now even if we aren't successful in overturning CMS, we'll be prepared before they come through again so that you don't have that dip in prescriptions that you saw in the beginning of this year in Q1. We'll be able to manage through that much more effectively.

Kennen MacKay -- RBC Capital Markets -- Analyst

Then, the analogies for drugs in similar positions as it relates to Part D coverage.

John Butler -- Chief Executive Officer

Yeah, thanks, Kennen. The clearest one, the one I worked on myself, was vitamin D analogs. Really, the point that we believe that CMS is making here is that there's a statutory exclusion for vitamins and minerals, and they're saying that iron is a mineral. Of course, what we know about Auryxia is that it's not a naturally occurring iron. It is a chemically created ferric citrate coordination complex, and that's demonstrated most clearly by the fact that our Phase 3 trial in the iron deficiency anemia population was done only in patients who had failed oral iron already. That's a very compelling fact, but this is what we dealt with back when Part D was coming into place in 2006 where Part D wasn't going to cover vitamin D analogs because they were vitamins.

Of course, what we had to explain to CMS and had folks on the hill help us explain this as well, is that this was an analog of vitamin D that dialysis or non-dialysis patients can't process natural vitamin D and manage secondary hyperparathyroidism. You're not using Auryxia as an iron supplement. You're treating a disease. That's the argumentation that we're using and we have used in the past. NIASPAN is another product that went through this, as well, and I didn't work on that one myself, but again, successfully made a very similar argument. I have a lot of confidence in our ability to get through this. Timing, of course, when you're dealing with the government, it's much harder to pin that down.

Kennen MacKay -- RBC Capital Markets -- Analyst

Got you. Thanks, John. I just wanted to say our physician checks come back very much in line with your commentary on Auryxia being perceived as a differentiated product in helping patients, so thank you very much.

John Butler -- Chief Executive Officer

Kennen, thanks for adding that. That's what our research says, as well. Thank you.

Operator

Ladies and gentlemen, thank you for participating in today's question-and-answer session. I would now like to turn the call back over to Mr. John Butler for any closing remarks.

John Butler -- Chief Executive Officer

Thanks, and thanks, everyone, for participating in the call. We look forward to continue updating you with our next quarterly call. Have a great day.

Operator

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Have a wonderful day.

Duration: 43 minutes

Call participants:

Kristen Sheppard -- Vice President of Investor Relations

John Butler -- Chief Executive Officer

Jason Amello -- Chief Financial Officer

Chris Raymond -- Piper Jaffray -- Analyst

Alex Bouilloux -- Mizuho Securities -- Analyst

Eric Joseph -- JP Morgan -- Analyst

Chad Messer -- Needham & Company -- Analyst

Ed Arce -- H.C. Wainwright -- Analyst

Robert Hazlett -- BTIG -- Analyst

Ishmael Asante -- Morgan Stanley -- Analyst

Kennen MacKay -- RBC Capital Markets -- Analyst

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