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Edited Transcript of AKBA earnings conference call or presentation 12-Nov-19 2:00pm GMT

Q3 2019 Akebia Therapeutics Inc Earnings Call Cambridge Nov 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Akebia Therapeutics Inc earnings conference call or presentation Tuesday, November 12, 2019 at 2:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Jason A. Amello Akebia Therapeutics, Inc. - Senior VP, CFO & Treasurer * John P. Butler Akebia Therapeutics, Inc. - CEO, President & Director * Kristen K. Sheppard Akebia Therapeutics, Inc. - VP of IR ================================================================================ Conference Call Participants ================================================================================ * Antonio Eduardo Arce H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst * Christopher Joseph Raymond Piper Jaffray Companies, Research Division - MD & Senior Research Analyst * David Neil Lebowitz Morgan Stanley, Research Division - VP * Difei Yang Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research * Eric William Joseph JP Morgan Chase & Co, Research Division - VP & Senior Analyst * Justin Hayward Burns RBC Capital Markets, Research Division - Senior Associate ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Ladies and gentlemen, thank you for standing by, and welcome to the Akebia Therapeutics Third Quarter Financial Results and Business Highlights Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to your speaker today, Ms. Kristen Sheppard. Please go ahead, ma'am. -------------------------------------------------------------------------------- Kristen K. Sheppard, Akebia Therapeutics, Inc. - VP of IR [2] -------------------------------------------------------------------------------- Thank you, Catherine, and good morning. My name is Kristen Sheppard, Vice President of Investor Relations with Akebia. Thank you for joining us to discuss Akebia's third quarter 2019 financial results and our recent business highlights. The press release containing the company's financial results for the third quarter was issued earlier this morning 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 today are John Butler, President and Chief Executive Officer; and Jason Amello, Chief Financial Officer. 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 recent quarterly and annual reports filed with the SEC. 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 P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [3] -------------------------------------------------------------------------------- Thanks, Kristen. Good morning, everyone, and thanks for joining us today. Akebia is now within 2 quarters of the first readout of our global Phase III studies of vadadustat, our investigational HIF-PHI, being developed for the treatment of anemia due to CKD, with top line data from INNO2VATE expected in Q2 of '20, followed by PRO2TECT top line data expected in mid-2020 subject to the accrual of MACE. It's incredibly energizing to all of us at Akebia to consider how close we are to the data readout and to the potential introduction of vadadustat into our renal-focused commercial engine. Anemia due to CKD is a disease that affects 5.7 million people in the U.S. Essentially, every organ in the body is affected by this disease, most notably the kidneys and heart. There are limitations to the current standard of care in treating and managing this disease, including the risk of cardiovascular events. Providing a new oral treatment option upon regulatory approval to patients and physicians, one with the potential to help address their unmet needs and possibly better their lives would represent an incredible opportunity to advance patient care, and that's exactly what we've set out to achieve. It's been a busy and exciting few months. First, we achieved the primary objective by strengthening our balance sheet with $80 million in non-dilutive funding on very competitive terms to further support our clinical development program and other strategic goals. This loan, which will close later this month, along with our ability to draw down an additional $20 million by the end of 2020, meaningfully extends our cash runway into 2021, well past the expected top line data readouts of our global Phase III clinical studies. Importantly, Auryxia revenue allows us to service this debt. Vadadustat is the cornerstone of our future growth. So let's turn to the highlights of our global Phase III clinical development program. With both INNO2VATE and PRO2TECT fully enrolled, we remain on track to report top line data for vadadustat in Q2 of 2020 and mid-2020, respectively. In total, we enrolled over 7,000 patients across these studies, which is about 1,700 more than our initial target and speaks to the unmet need for patients with CKD. This is an exciting time for Akebia. There's been great interest in growing excitement amongst the renal community in the opportunity that HIF product candidates represent for patient care, especially following the announcement that the Nobel Prize has been awarded to the 3 HIF scientists whose discoveries led to the development of vadadustat and other drugs, targeting this oxygen-sensing mechanism. We're both honored and excited to be at the forefront of this Nobel Prize-winning science, with vadadustat expected to be the first drug of the HIF class to deliver clear data that directly compares its MACE outcomes for the current standard of care in both dialysis and non-dialysis patients for the treatment of anemia in chronic kidney disease. We're equally excited to be contributing to the growing body of evidence in support of HIFs and vadadustat more specifically. Just last week, at the American Society of Nephrology Meeting, new 52-week efficacy and safety data for vadadustat from 2 pivotal Phase III studies of vadadustat in Japanese patients with anemia due to CKD were presented by MTPC, our collaboration partner in Japan. The details of these data were provided in our press release on Saturday, but I'll briefly highlight the key takeaways. MTPC's positive top line 52-week data show that vadadustat's effect on hemoglobin was sustained through to 52 weeks in each study. We had previously announced in March that each of these studies, 1 in non-dialysis CKD patients and 1 in dialysis-dependent CKD patients, met its primary endpoint based on mean hemoglobin levels at weeks 20 and 24. As correcting and maintaining hemoglobin levels within a target range is paramount in the treatment of anemia due to chronic kidney disease, these new data are highly encouraging and are another proof point in our belief in vadadustat's potential to make a difference in the lives of people impacted by anemia due to CKD, subject to FDA approval. It's worth a reminder that MTPC submitted a JNDA for the Ministry of Health, Labor and Welfare in Japan this past July for marketing approval of vadadustat as a treatment for anemia due to CKD. If approved in Japan, this is expected to lead to the first launch of vadadustat worldwide next year, and Akebia stands to benefit from this launch with tiered double-digit royalties up to 20% of sales in Japan upon approval. So this is a very exciting program on multiple levels, and we believe all of this sets up an incredibly important period in the Akebia story, the expected top line data readouts from our global Phase III program. We continue to have a tremendous amount of confidence in our clinical development program. The headline for our global Phase III program is that we believe it has been designed for clinical, regulatory and commercial success. Very importantly, we expect clear data readouts for efficacy and safety. First, both INNO2VATE and PRO2TECT are designed to assess non-inferiority for efficacy and cardiovascular safety for vadadustat, using an active control, darbepoetin alfa, an injectable ESA, which is the current standard of care. We believe this will enable a straightforward collection and analysis of MACE across the relevant studies and ultimately, a clear and understandable data readout on both efficacy and safety, setting us further apart from our competition. Importantly, our program includes multiple secondary efficacy and safety endpoints to assess other clinically and hence, commercially important areas of differentiation to ESAs, including incidence of thromboembolic events, hospitalization for heart failure and effects on blood pressure, and in non-dialysis CKD subjects, progression of kidney disease. Going a little deeper into what differentiates vadadustat, if successful with these studies. We expect vadadustat to be the first drug of this class in U.S. and European markets, with clear data directly comparing its outcomes to the current standard of care in both dialysis and non-dialysis patients. Moreover, this is another example of our leadership as we believe these data will be highly informative for physicians, patients and payers as they make important decisions about patient care, and a key consideration when differentiating between HIFs in the class. Because our non-dialysis study was designed with an active control, patients in this population that progress to dialysis during the study will be able to stay on the study drug. As a result, we expect to be able to compare how these new-to-dialysis patients on either the control drug or vadadustat do as they transition to dialysis and moving forward. Recall, incident dialysis is important because the event rate in the first year of dialysis is generally much higher. Data will give us tremendous insights into our ability to treat this population. And again, this also makes our MACE analysis much more straightforward. Next we designed these studies after extensive dialogue with the FDA and European regulators. We have prospectively defined and agreed to non-inferiority margins with the FDA and EMA, and we also agreed with the FDA on the key components of our statistical analysis plan. Lastly, in October, our independent data monitoring committee reviewed unblinded safety and efficacy data from Akebia's global Phase III studies of vadadustat as planned and recommended continuation of the studies without modification. We're very focused on bringing vadadustat to markets around the world upon approval. We started with a JNDA submission in Japan this past July by MTPC. As we advance our global Phase III program, we're keying in on NDA and MAA-related activities and commercial plans. It's important to recognize that the most significant investment for a new product launch is building the commercial organization. We believe we are well positioned for a very strong vadadustat launch upon approval with Otsuka sharing in their launch costs, a distribution agreement with Vifor Pharma that allows access to up to 60% of the dialysis market and a strong experienced commercial organization supporting Auryxia, our FDA-approved commercial product. We're also working to build on our leadership in the renal space and leveraging our medical affairs team to deepen our relationships with patient communities and increase awareness of the significant burden of kidney disease. We're excited about these programs and are proud to be doing this all under a new corporate brand that amplifies our commitment to bettering the lives of people impacted by kidney disease. Also as you know, in mid-October, we filed suit against CMS and HHS, challenging their decision to rescind Part D coverage of Auryxia when used for treatment of iron deficiency anemia or IDA and the related prior authorization requirement when used for the treatment of hyperphosphatemia. Patients have been harmed by CMS' decision. And after nearly a year of working to restore coverage, we believe we had no other choice than to pursue litigation. We believe CMS has a legal obligation to cover Auryxia, and we remain confident in the strength of our legal position. We've received a tremendous amount of support from key stakeholders, including the National Kidney Foundation, the American Kidney Fund, Dialysis Patient Citizens and a nationally renowned nephrologist who submitted declaration supporting our lawsuit. We're working through the litigation process towards an outcome in the best interest of patients, Akebia and our shareholders. To that end, on October 29, we filed for a preliminary injunction, and in the alternative, summary judgment to restore coverage. We remain confident in the market opportunity for Auryxia within its hyperphosphatemia indication. We believe this is a great product with a competitive profile that offers proven clinical benefits to patients and is supported by real-world data, showing its lower pill burden versus other binders. As you know, the CMS decision and the prior authorization has a -- had a fundamental impact on the Auryxia business and our outlook. As we're in litigation, my comments regarding Auryxia are limited to a few updates. We're pleased to have signed a new multiyear agreement with Fresenius Medical Care Rx, effective this quarter, which is designed to expand access to Auryxia's proven benefits for treating hyperphosphatemia in dialysis-dependent CKD patients. Although we expect it will take a number of quarters to grow our market share with FMC, we are very confident in the long-term opportunity this represents for the business. Now to date, we have not provided guidance for Auryxia. And over the near term, given the pending litigation and the fundamental impact that CMS and the PA continues to have on our business, we're obviously going to continue with this approach and be cautious in our planning for revenue in Q4 and into 2020. We encourage you to do the same. Over the longer term, we remain optimistic about our growth prospects. So to wrap up, we continue to believe that vadadustat is our biggest near-term value driver. We're making great progress towards our goal of bringing a new oral treatment for anemia due to CKD upon FDA approval to patients and physicians, one that -- with the potential to address their unmet needs and possibly better their lives. We are pleased that we have meaningfully enhanced our capital position and we're extremely excited with the milestones achieved to this point. We look forward to the data readouts expected in 2020. With that, I'll turn the call over to Jason. -------------------------------------------------------------------------------- Jason A. Amello, Akebia Therapeutics, Inc. - Senior VP, CFO & Treasurer [4] -------------------------------------------------------------------------------- Thank you, John, and good morning. As John mentioned, we are making significant progress on our commercialization and development efforts, while at the same time, strengthening our liquidity position. Looking at the components of the P&L for the quarter, total revenue for the third quarter of 2019 was $92 million compared to $53.2 million for the pre-merger third quarter of 2018. Net product revenue from the sales of Auryxia for the third quarter of 2019 increased 13% to $30 million compared to $26.6 million as reported by Keryx premerger during the same period in 2018. Cost of goods sold associated with the manufacture of Auryxia was $11.2 million for the third quarter of 2019. To that, we add about $27.1 million for the noncash purchase accounting effects of the Keryx merger, including an inventory step-up charge of $18 million and $9.1 million of amortization of intangibles, bringing our total reported GAAP cost of sales to $38.3 million. As you know, our collaboration agreements are both highly strategic and important elements of our financial strength. Collaboration and license revenue continues to be a significant source of revenue for us, reflecting the value we are creating as we continue to execute and advance our programs. For the third quarter, we recognized $62 million of collaboration and license revenue compared with $53.2 million in the third quarter of 2018, of which the majority for both periods relates to our Otsuka agreements. Historically, Otsuka had funded 52.5% of our Phase III development cost vadadustat, and starting in Q2 2019, Otsuka began funding 80% of these costs. With continued progress, future collaboration revenue loss come in the form of additional milestones and royalties. Moving to research and development expenses. R&D expenses were $74.5 million for the third quarter of 2019 compared to $70.6 million for the third quarter of 2018. The increase was primarily attributable to an increase -- to increase in headcount and other costs to support continued advancement of the PRO2TECT and INNO2VATE Phase III study of vadadustat and clinical and preclinical activities. These increases were partially offset by a decrease in external costs related to PRO2TECT and INNO2VATE Phase III studies as they advance towards readout. It's important to keep in mind that 80% of our Phase III costs are reimbursed by Otsuka, which gets recorded as collaboration revenue, as I mentioned earlier. Selling, general and administrative expenses were $34.2 million for the third quarter of 2019 compared to $10.4 million for the third quarter of 2018. The increase was primarily attributable to commercialization-related costs associated with Auryxia as there were no comparable commercialization-related costs in the premerger third quarter of 2018. As a result of the foregoing operating results, the company reported a net loss for the third quarter of 2019 of $54.6 million as compared to a net loss of $26 million for the third quarter of 2018. Again, I want to point out that the net loss for the third quarter 2019 includes the impact of noncash charges of $27.1 million related to the application of purchase accounting for the merger with Keryx that I mentioned earlier, offset by an income tax benefit of $1.3 million. Turning to our capital position. We ended the quarter with cash, cash equivalents and available-for-sale securities of $145.6 million. Subsequent to the end of the quarter, we further strengthened our balance sheet and extended our operating cash runway with our very recent no-dilutive tranche debt facility for $80 million up to $100 million. Upon closing, we believe this facility, coupled with the committed research and development funding from our collaborators and the receipt of a regulatory milestone from MTPC, assuming approval of vadadustat in Japan, is expected to provide us with the cash resources to fund our current operating plan into Q1 of 2021. And lastly, we ended the quarter with approximately 119 million shares outstanding. With that, we'll open the line for questions. Operator? ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions) And our first question comes from Chris Raymond with Piper Jaffray. -------------------------------------------------------------------------------- Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [2] -------------------------------------------------------------------------------- Just a couple questions. So John, I'm kind of struck by the statement in your press release, and you kind of said this as well in your prepared remarks about essentially being the only -- potentially the only HIF approved comparing outcomes to current standard of care in both dialysis and non-dialysis. So I mean, John, you know this space pretty well, and even last night, your competitor made a statement, I think that about -- only about 15% or so of patients who start dialysis have gotten an ESA, which actually is the first time I think I've heard them acknowledge the meaningful ESA use. But I mean there's a lot of data out there that says that rate is much higher. So maybe just clear up for us, again, you know the space well, John. I get this from investors a lot. ESA use in the pre-dialysis or non-dialysis setting, how prevalent is it from your perspective? And how many patients starting dialysis are on an ESA? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [3] -------------------------------------------------------------------------------- Chris, thanks for the question. It is certainly more frequent than 15%. I mean you have to break it down a couple of different ways. You have patients who are chronically treated with an ESA, which actually quite common outside of the U.S. But in the U.S., it's much more frequently dosed in a -- as a rescue therapy because of the significant risk associated with ESA use and the fact that you're bringing patients in for injections frequently, having them go to infusion centers, et cetera. So I do think that there is significant work that will need to be done to continue to educate physicians on the need to treat those patients, which is one of the reasons why we have a commercial organization that's talking about anemia today with Auryxia. So but if you talk to nephrologists, they don't -- it's not in their mind that they're not treating these patients. This is very common, and they would much prefer to see a comparison to what they're used to using which is in ESA than to placebo, which really means nothing to them. -------------------------------------------------------------------------------- Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [4] -------------------------------------------------------------------------------- Okay. And then just I know we've kind of gone around on this issue a decent amount with respect to your trial and your design. And I know you differ from your competitor in that you haven't really talked about your non-inferiority margin. Is there any -- and just maybe more directly, I guess why not provide that non-inferiority margin to investors, especially since you have an agreement with the FDA? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [5] -------------------------------------------------------------------------------- So I think you can appreciate, Chris, that it's a very competitive situation. And given that we have agreement with the FDA and EMA, we will hold that for us and how we progress. I don't think it's our job to inform others of our negotiations. -------------------------------------------------------------------------------- Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [6] -------------------------------------------------------------------------------- Fair enough. Okay. And then one final question maybe on this trial. So the way you guys are looking at MACE. John, you guys have stressed that the MACE components are an additional non-primary endpoint in your clinical program for vadadustat. When we saw the roxa data, there was a pretty decent imbalance in MI and stroke. And so I guess the question is, maybe sort of talk a little bit about -- do you feel that that's an advantage for you guys once you finally have those readouts? Or maybe just talk about the value of having those individual components of MACE? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [7] -------------------------------------------------------------------------------- Right. So Chris, when you look at the data that was presented, it's really not surprising to us that there are significant questions around the components and other areas. And from where we're sitting, kind of most of that really revolves around design issues and regulatory interaction. And again, when I talked to KOLs and nephrologists about this, and I was at the sessions at ASN, there were a lot of excitement about the data. And I think that bodes well for us in the class. But it's our design that really makes the difference. It is the -- it's the control, particularly, non-dialysis. The data you're referencing was in non-dialysis patients. We have a direct comparison with ESAs, that's what sets us up from a clinical perspective and from a regulatory perspective, ultimately, from a commercial perspective. But all of those differences that we're seeing are -- we really think of as design or FDA-interaction differences, and we think we've done the right thing on both with the active control and those agreements with FDA and EMA on key statistical elements before -- frankly, on most of them before we started the study. -------------------------------------------------------------------------------- Operator [8] -------------------------------------------------------------------------------- And our next question comes from Eric Joseph with JPMorgan. -------------------------------------------------------------------------------- Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [9] -------------------------------------------------------------------------------- Maybe just to pick up on the last question. In your discussions with regulators, has there been specific discussion on subcomponents within MACE, and I guess their utility? Or is the focus when it comes to non-inferiority strictly on the composite MACE score? Then I had a couple follow-ups. -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [10] -------------------------------------------------------------------------------- I think regulators look at the totality of the data. So clearly, there's an agreement on the primary efficacy and safety endpoints, and those are MACE, as we've described. But I mean what I know about the FDA and EMA is you hand them the data and they analyze it kind of however they want. What you want is a data set that is not complex and not statistically challenging. So that you understand the data that you're handing to them, and they'll look at it in its totality. And again, I mean that is the study that we've designed with an active control in both dialysis and non-dialysis. -------------------------------------------------------------------------------- Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [11] -------------------------------------------------------------------------------- Okay. And just picking up on some of your prepared remarks, discussing some of the secondary endpoints and potential benefits with vadadustat, particularly, progression of CKD. Can you talk a little bit about, I guess mechanistically, how treatment of anemia with HIFs might impact CKD progression? And what baseline expectation is with ESAs on that -- on progression and what might be viewed as kind of a meaningful improvement? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [12] -------------------------------------------------------------------------------- Yes. So the HIFs have shown in preclinical models that they have been able to impact kidney or organ health, kind of better oxygen flow to an organ kind of suggests that it can protect that organ. I think it's important to recognize, again, that in our study in non-dialysis, we're comparing directly to an ESA. So what's known, of course, is that anemia itself has an impact on progression, on GFR, you make -- you correct anemia, correct congestive heart failure and you're improving potentially GFR, not necessarily progression. So there truly is a difference. You really want to explore that versus the standard of care, which is an ESA. And that's what we'll -- that's the answer we'll have in our study. -------------------------------------------------------------------------------- Eric William Joseph, JP Morgan Chase & Co, Research Division - VP & Senior Analyst [13] -------------------------------------------------------------------------------- Got it. And just one on Auryxia, if I could. Appreciating that you're in the midst of a legal dispute when it comes to the IDA opportunity, but just within hyperphosphatemia, I'm wondering, as we turn the corner here, 2020, whether next year, we'd be in a position to talk about guidance within that segment. -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [14] -------------------------------------------------------------------------------- So again, I mean where we are today, we have a tremendous amount of excitement about hyperphosphatemia as an opportunity for us, but given the issues around IDA and CMS, just doesn't make sense for us to guide you in that area. And I mean this is -- we really believe that CMS has a legal obligation to cover the drug. But at this point, I think it's really about being cautious in how we approach revenue expectations for Auryxia. I really encourage you to do the same, Eric. -------------------------------------------------------------------------------- Operator [15] -------------------------------------------------------------------------------- And our next question comes from David Lebowitz with Morgan Stanley. -------------------------------------------------------------------------------- David Neil Lebowitz, Morgan Stanley, Research Division - VP [16] -------------------------------------------------------------------------------- One question. On the IDA, could you give us, I guess, an example of historic precedent of a scenario that might be similar? It seems somewhat unique in which you have a single drug, 2 indications, one reimbursed, one not, and being put in this kind of legal scenario. Is there some scenario we can look at, I guess, to gain some perspective? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [17] -------------------------------------------------------------------------------- Yes, there certainly is, there's actually multiple. One I was involved in myself was with Vitamin D and Part D. Again, same patient population. It wasn't the same in that there were 2 indications, but it was indicated for the treatment of CKD patients, their hyperparathyroidism. And again, I mean, the initial read by CMS was that this was a vitamin, and therefore there was an exclusion for it. But they recognized with our help that this was being used to treat a disease that was not an excluded disease and therefore it should be covered and was, which is why we really believe that we had a clear path forward. Today, we feel the same about Auryxia. This is a product that's being reimbursed for hyperphosphatemia. And therefore, it's not kind of being seen by CMS as a mineral, in that case. And it's -- iron deficiency anemia is not an excluded indication. So we feel that they have a legal obligation to reimburse the drug, and that's what the lawsuit is about. -------------------------------------------------------------------------------- Operator [18] -------------------------------------------------------------------------------- Our next question comes from Difei Yang with Mizuho Securities. -------------------------------------------------------------------------------- Difei Yang, Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research [19] -------------------------------------------------------------------------------- So John, just a couple from JFDA, so Japanese FDA perspective. Why wouldn't they need the MACE? Maybe you could help us with their rationale. -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [20] -------------------------------------------------------------------------------- Well, we basically follow the guidance that regulators give us. The PMDA, and as you know, Japan is always a generally conservative country, doesn't require MACE data. I mean, certainly, like every regulatory authority, you provide them all the data that exists for the drug, but they don't have the expectation that you provide MACE data. They haven't seen in a Japanese population the impact on outcomes, and they, frankly, target higher hemoglobin levels in Japanese patients. And importantly, our partner, MTPC, is really encouraged by the data, as are we. And as you know, it's an active review process and if we stay on expected time lines, we'd be talking about a July approval for vadadustat. -------------------------------------------------------------------------------- Difei Yang, Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research [21] -------------------------------------------------------------------------------- Yes. Then on the very high level from nephrologist perspective, the NDD setting, do you think -- where do you think the market need is? Are the nephrologists are looking for something as safe as a placebo? Or they're looking for something for as long as that something is safer than EPO, you think that market will expand? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [22] -------------------------------------------------------------------------------- So from a nephrologist perspective, I think they're much more interested in seeing a comparison to the drug that they use. And again, to the -- Chris' question earlier, I mean they use on a regular basis. And that's, again, from a commercial perspective, a much stronger package to go in and speak to physicians about because you can make direct comparisons, which you can't do in a placebo-controlled trial. -------------------------------------------------------------------------------- Difei Yang, Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research [23] -------------------------------------------------------------------------------- Yes. Then finally, on GFR. So what is clinically relevant. If I see -- how much of an improvement in GFR that could be signaling that is slowing the progression of CKD? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [24] -------------------------------------------------------------------------------- I think what's clinically relevant is seeing a slower progression, not seeing just a change in GFR, but actually seeing a difference in the time it takes for a patient to get onto dialysis. And I think that's really what will move physicians, not a change in GFR. We are measuring that in our Phase III study. -------------------------------------------------------------------------------- Difei Yang, Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research [25] -------------------------------------------------------------------------------- Yes. So for that design, do you think you have the power to get significant -- to get the statistical significance on the back half? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [26] -------------------------------------------------------------------------------- Yes. No, it's a great question, Difei. And of course, you don't know whether you have the power unless you know kind of what the treatment effect is, and we don't have that -- we don't have anything to base that on. I don't want to oversell our expectations on showing a delayed progression. And let's just see kind of where the data leads us. -------------------------------------------------------------------------------- Difei Yang, Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research [27] -------------------------------------------------------------------------------- Okay, great. And John, while we're on this topic, could you help us with how this portion of the trial was designed? What would you be measuring? Are you using the staging to decide how long does it take for a patient to go from stage 3 to 4 to 5 and -- or there are finer measurements you're trying to discern? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [28] -------------------------------------------------------------------------------- Difei, that's a level of detail on the protocol that I don't have at my fingertips here. So we'll have to come back to you on that. It's a good question, it's a good question. I just don't -- and I haven't looked at the protocol in a long time. So but it's a good question. -------------------------------------------------------------------------------- Difei Yang, Mizuho Securities USA LLC, Research Division - Executive Director of Americas Research [29] -------------------------------------------------------------------------------- No worries. And thank you so much for clarifying -- providing clarifying thoughts on the program. -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [30] -------------------------------------------------------------------------------- Thank you, Difei. -------------------------------------------------------------------------------- Operator [31] -------------------------------------------------------------------------------- Our next question comes from Ed Arce with H.C. Wainwright. -------------------------------------------------------------------------------- Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [32] -------------------------------------------------------------------------------- Perhaps I could ask one on the commercial infrastructure and readiness given the high level of confidence you mentioned earlier in your remarks. As you think out approval and launch, likely late '21, early '22, what are the key factors, the dynamics of the competitive environment that you are looking at? And how are you thinking about addressing those? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [33] -------------------------------------------------------------------------------- So this is really where the merger we completed last year, that's the strategic value of that really starts to pay off, right. I mean I mentioned earlier that communicating on the need to treat patients with chronic kidney disease for anemia chronically versus episodically as physicians do today, that's an important communication point, and one that we can start today talking about iron deficiency anemia, and certainly our medical affairs group can talk more broadly about kind of treating that disease area, the importance of that. That is absolutely critical. The other critical component of success here is the relationship we have with Vifor Pharma. And the fact that we have access to 60% of the dialysis population with vadadustat right from launch. Again, I'll use the Mircera example where in 9 months, 90% of the patients changed. The TDAPA rule that's been finalized by CMS gives us great opportunity to move patients quickly. And just to remind you that Vifor relationship is an exclusive one, vadadustat is the only product -- HIF product that they can sell into their joint venture with Fresenius, Fresenius alone accounts for 40% of the market. So those are kind of a number of things that we've done to really be prepared for commercial launch. The things that we think are -- kind of have that -- will have the biggest impact. And I should also add that we have our partner, Otsuka, who is providing 50% of the commercial muscle for the product as well. So when I look at the competitive environment, I'm really very encouraged by where we are. And unlike a company with a single asset looking to launch themselves where you have a significant capital raise needed to finance that, because of all of those pieces we've put in place, it's much more modest, the investments that we need to make. -------------------------------------------------------------------------------- Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [34] -------------------------------------------------------------------------------- Okay, John, that's a nice summary. One -- perhaps one other question on your ongoing suit with CMS regarding IDA. And I appreciate that there are certainly some things you really wouldn't want to discuss, given the ongoing litigation. But you had mentioned even more recently beyond the initial suit, I think you mentioned that injunction. Just maybe could you perhaps review again, what's the latest status with the overall effort? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [35] -------------------------------------------------------------------------------- Sure, Ed. Thanks for the question. So yes, as you mentioned, we filed a -- for a preliminary injunction, which would obviously -- because of the significant harm that we're experiencing with the -- not just with the lack of reimbursement for iron deficiency anemia, but also because of the prior auths that are required for hyperphosphatemia patients, we filed that with the court. We are waiting to hear on that. I don't know the timing. -------------------------------------------------------------------------------- Operator [36] -------------------------------------------------------------------------------- (Operator Instructions) Our next question comes from Kennen MacKay with RBC Capital Markets. -------------------------------------------------------------------------------- Justin Hayward Burns, RBC Capital Markets, Research Division - Senior Associate [37] -------------------------------------------------------------------------------- This is Justin on for Kennen. Congrats on the progress this quarter. Just a quick question from us as you sort of think about the landscape. Given the higher event rate in year 1 for patients on dialysis already receiving standard of care, do you have any sort of clinician feedback on their willingness to switch over well-controlled patients to a new therapy? -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [38] -------------------------------------------------------------------------------- That's an interesting question. I think that one thing that you need to recognize about dialysis treatment is that it's very protocol-driven, particularly when you think about Fresenius and DaVita. And they really do quite a bit of work to optimize treatment for patients and switch everyone as quickly as they can to have consistency. I mean I think we're encouraged by the data we've seen in incident patients from roxadustat, and we're obviously looking at that population also. And remember, as you treat more patients on non-dialysis and those patients start dialysis on a particular product, there'll be a great desire to continue to maintain them if they're being maintained well. So I do think that the incident market is one that will be very interesting for vadadustat. -------------------------------------------------------------------------------- Justin Hayward Burns, RBC Capital Markets, Research Division - Senior Associate [39] -------------------------------------------------------------------------------- Okay. Great. And then just a quick one on Auryxia if you're able to, it looks like sales were a little flattish this quarter than last quarter. I was wondering if you can go into some of the details behind the slowdown in growth that you saw there. -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [40] -------------------------------------------------------------------------------- So Q3 is always a quarter where you see more of a flattening in the summer months. We had a little bit of softening on the average selling price as well. But fundamentally, the ability to grow in the iron deficiency anemia market has really been impacted by the CMS decision and the prior auth. So we're continuing to focus on hyperphosphatemia. We have a lot of excitement around that. But I do encourage you to be cautious as you think about growth in the fourth quarter and into 2020. -------------------------------------------------------------------------------- Operator [41] -------------------------------------------------------------------------------- And that's all the questions we have. I'd like to turn the call back to Mr. John Butler, CEO, for any closing remarks. -------------------------------------------------------------------------------- John P. Butler, Akebia Therapeutics, Inc. - CEO, President & Director [42] -------------------------------------------------------------------------------- Thanks, Catherine, and thanks, everyone, for attending, again. We look forward to continuing to update you in the future on the progress we make in the business. Have a great day. -------------------------------------------------------------------------------- Operator [43] -------------------------------------------------------------------------------- Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.