Akebia Therapeutics, Inc. (NASDAQ:AKBA) Q4 2022 Earnings Call Transcript

Akebia Therapeutics, Inc. (NASDAQ:AKBA) Q4 2022 Earnings Call Transcript March 9, 2023

Operator: Good day ladies and gentlemen. Thank you for standing by and welcome to Akebia's Fourth Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Mercedes Carrasco, Senior Director of Corporate Communications. Please go ahead.

Mercedes Carrasco: Thank you, and welcome to Akebia's fourth quarter and full year 2022 financial results and business updates conference call. Today we also celebrate World Kidney Day, an opportunity to raise awareness for kidney healthy and recognize all those in the kidney community who share in our purpose to better the lives of people impacted by kidney disease. Joining me for today's call, we have John Butler, Chief Executive Officer; and Dave Spellman, Chief Financial Officer. Our press release was issued earlier today, Thursday, March 9th, detailing our fourth quarter and full year 2022 financial results, and that release is available on the investor section of our website. For your convenience, a replay of today's call will also be available on our website after we conclude.

Before we begin, 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 March 9, 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. The forward-looking statements on this call speak only to the original date of this call, and except as required by law, we do not undertake any obligation to update or revise any of these statements. With that, I'd like to introduce our CEO, John Butler.

John Butler: Thanks Mercedes, and thank you all for joining us. Everyone at Akebia has entered 2023 with renewed optimism. Through the past year our team's work and the strategic decisions we've made have put us in a position to thrive as a company. We continue to engage with the kidney community and support our patients on Auryxia. We've advanced the regulatory process for vadadustat in Europe to a point where we're now approaching a potential marketing authorization, and we're excited to look ahead as we evaluate and drive potential pipeline expansion opportunities, including developing hypoxia-inducible factor prolyl hydroxylase inhibitor compounds for potential indications of serious unmet need. We have a team that works with purpose and I'm proud of their accomplishments as they've delivered a company today with a strong revenue base, multiple near-term catalysts, and mid and long-term product development opportunities.

Now let's begin with Auryxia. In 2022, we reported net product revenue growth of nearly 25% over 2021, exceeding the revenue target guidance we established mid-year. Achieving net product revenue growth while the phosphate binder market continues to decline, is a credit to our dedicated commercial team that works hard to ensure thousands of patients have access to Auryxia. Last year, we launched a new commercial model that aligns to customer objectives. We believe the model will enable our team to continue high-touch engagement with high value individual prescribers and entities that are focused on delivering coordinated cost effective care for advanced CKD patients, including those receiving dialysis. Auryxia net product revenue is integral to our operating plan as we continue to support the regulatory processes for vadadustat globally and invest in our other drug research and development activities.

Regarding vadadustat, we're quickly approaching a potential milestone, in late February, the Committee for Medicinal Products for Human Use or CHMP of the EMA adopted a positive opinion recommending that the European Commission approve Vafseo, vadadustat for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis. We anticipated potential marketing authorization for Vafseo to be granted by the EC in May of this year, which would be applicable to all 30 European Union member states and affiliated countries. Beyond the EU we also anticipate a regulatory decision for vadadustat for ACCESS Consortium countries, the UK, Switzerland and Australia later this year. We are dedicated to delivering an oral treatment option to patients with anemia due to chronic kidney disease and continue our efforts to select a potential partner in Europe to commercialize Vafseo if approved.

We don't expect to formalize a partner engagement until sometime after Vafseo receives marketing authorization, but we're deeply engaged in the process to select a partner that can maximize the potential value of Vafseo while quickly reaching appropriate patients. Vafseo marketing authorization in Europe would mean vadadustat would be approved in 31 countries as it's currently approved and marketed in Japan by MTPC for dialysis-dependent and non-dialysis-dependent adult patients. We believe in the favorable benefit risk profile of vadadustat. And to that end, we continue to pursue a potential path for approval in the U.S. for patients on dialysis. Last year we submitted a formal dispute resolution request with the FDA regarding the complete response letter for vadadustat, specifically related to adult patients on dialysis.

In February of 2023, we received a second interim response from the FDA indicating that due to agency resource constraints and staffing needs, Dr. Peter Stein, the Director of the Office of New Drugs or OND, will serve as the deciding authority for the appeal. Dr. Stein has indicated he will seek internal consultation with nephrology, cardiology and liver safety experts in the OND to complete the review, and we expect to receive a response 30 days from when Dr. Stein completes his discussions. We continue to engage with Dr. Stein and the OND and will update investors on this process as appropriate.

UTHealth: Within our four walls, we have the expertise to innovate and develop medicines to address patients' unmet needs. Further, our commercial team continues to keep us connected to patients while also enabling a product revenue stream to fund operations and pipeline expansion. To that end, we're also actively assessing regulatory and development paths for vadadustat in other acute treatment indications.

UTHealth: Within our four walls, we have the expertise to innovate and develop medicines to address patients' unmet needs. Further, our commercial team continues to keep us connected to patients while also enabling a product revenue stream to fund operations and pipeline expansion. To that end, we're also actively assessing regulatory and development paths for vadadustat in other acute treatment indications.

PHI: And to that end, I'll ask Dave to talk more about our operating plan and our financials.

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David Spellman: Thank you, John, and good morning everyone. 2022 was an important year for Akebia and we have developed an operating plan that will enable us to further build value as we capitalize on potential upcoming catalysts in 2023. Most immediately, assuming vadadustat gets approved by the EMA in May, we will have developed a second drug that will be approved in over 30 countries and has the potential to benefit thousands of patients. Beyond a European approval for vadadustat, we could initiate our next ARDS study with UTHealth in a non-COVID ARDS population, generate preclinical data for indications for vadadustat in acute settings, secure potential approval for vadadustat in other countries, including the UK, Switzerland, and Australia, secure an ex-U.S. licensing deal, resolve our FDRR process with the FDA, which would provide clarity to our expense profile and the potential revenue related to vadadustat in the U.S. Beyond vadadustat, broader portfolio opportunities that may be added within our operating plan include potential to leverage our infrastructure to build out our development and commercial portfolio with new external assets and maturation of our preclinical programs with the potential for multiple INDs over the coming years.

Auryxia continues to perform well, which based on our guidance for 2023 will deliver net revenues in excess of $350 million over the 2022, 2023 time period. Our Auryxia guidance of $175 to $180 million assumes inventories return to normal levels, and that we realize that an increase in net price per pill partially offset by a reduction in total units sold. We also assume that the binder market continues to have challenges. Our cost management exercise has yielded important financial strength and stability for us. We expect to have cleared the going concern analysis upon filing of our 10-K, meaning that we have cash that will provide us the resources to fund our operating plan for at least 12 months. This is the result of two main focuses of the company, which we have previously discussed in great detail, but given the significance of the event is worth reviewing again.

First and most obvious is the commercial success that led to a nearly 25% increase in year-over-year net product revenue for Auryxia. Our commercial leadership team undertook a laborious process to look at each and every commercial contract and position the brand to deliver more revenue on fewer net tabs sold. Few products achieve this type of growth, let alone those that are in their APR on the market. Many congrats are owed to our commercial team, including our key account managers. Second, and just as important, has been the narrowing of our strategic focus, which has enabled concentrated spend on items that will support our future growth. We've exited several contracts that were not yielding the return we needed and have asked our people to do more with less and have stopped certain activities in order to push more money into our R&D pipeline.

In addition, we reduced our debt balance and are paying less interest expense than otherwise would have. Overall, we are managing our working capital tightly. We are not offering operating expense guidance at this time, but we'll continue to focus on extending our cash runway. Our focus on maximizing Auryxia revenue remains both pre and post LOE, and we will only look to reinvest in high value areas we can afford to pursue. We'll also look for areas to potentially grow our revenues with Auryxia, for example, by ensuring that we have a TDAPA strategy in place to maximize revenue during this period, as well as potentially having revenue from vadadustat first with a European partnership. On that note, as you are all aware, we recently obtained a positive opinion for vadadustat from the CHMP and now anticipate a potential approval in May.

As John mentioned, we have been actively pursuing our partnership to ensure a successful launch in a timely manner. We cannot, at this time provide guidance on deal economics, but can say we are looking for a partner who will team with us to maximize the value of the asset and shares our goal of benefiting as many patients as possible within the approved indication. Finally, pivoting to NASDAQ compliance, we have filed our definitive proxy and are on track to take the appropriate steps to regain compliance with the price criteria for continued listing on NASDAQ. On today's call, we will not be going through year-over-year fluxes of the financials beyond those provided in the press release, but are happy to dive into questions. With that, we'll open the line to questions.

Operator?

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