Ladies and gentlemen, thank you for standing by, and welcome to Akebia Therapeutics Fourth Quarter 2020 Financial Results Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kristen Sheppard, Senior Vice President of Investor Relations. Thank you. Please go ahead.

Thank you, and welcome to Akebia's Fourth Quarter and Fiscal Year 2020 Financial Results and Business Update Conference Call. Please note that the press release detailing our results for the fourth quarter and fiscal year 2020 was issued earlier this morning and is available on our Investor Relations website. For your convenience, a replay of today's call will also be available on our website shortly after we conclude today's event. Joining me for today's event is John Butler, our Chief Executive Officer; and David Spellman, our Chief Financial Officer. Before we begin, I'd like to remind everyone that this 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 forward-looking statements section of the press release we issued earlier today, as well as in the risk factors in 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 except as required by law, we do not undertake any obligation to update or revise any of these statements. With that, I'd now like to introduce our CEO, John Butler. John?

Thank you, Kristen, and thank you all for joining us today. 2020 was a year of focused execution for Akebia. We set out to accomplish a lot in 2020, and we did what we said we would do: advancing vadadustat, our lead product candidate, and laying the groundwork for a number of catalysts in 2021. More specifically, we achieved key clinical and regulatory milestones, including completing our global Phase III clinical development program for vadadustat and completing our pre-NDA meeting with the FDA. We also executed well against our commercial priorities. After securing the first regulatory approval of vadadustat with our partner, MTPC, earlier in the year, we began supporting the commercialization of vadadustat in Japan under the trade name Vafseo in Q3. As a company whose purpose is to better the lives of people impacted by kidney disease, I've been saddened to watch the disproportionate impact COVID-19 has had on patients on dialysis. Our team did a tremendous job of helping ensure that these patients, who continue to be at the highest risk, have access to our therapies despite the pandemic. As a result of these and other efforts, we grew Auryxia revenue over 2019. I'm incredibly proud of our entire team for all their work across 2020 and their continued commitment to both our purpose and our patients. Importantly, we achieved all this and more while keeping true to our goal of maintaining a strong balance sheet. With forward momentum from 2020, we have line of sight to significant milestones this year that we believe will further position Akebia to deliver on our strategy and build long-term value for our shareholders. Our highest priority is submitting our NDA for vadadustat for the treatment of anemia due to CKD with the FDA. Since completing our pre-NDA meeting in late October, our team has been hard at work putting together a very detailed and comprehensive data package in support of vadadustat's NDA submission. We remain firmly on track to achieve this milestone by the middle of the second quarter of this year. We also expect to follow this with vadadustat's MAA submission to the EMA in collaboration with Otsuka this year. As we advance vadadustat towards commercialization, subject to approval, we continue to execute on key commercial, development and financial priorities across our business. As dialysis is a primary focus, I'll start there. Data from INNO2VATE, our global Phase III program that evaluated the efficacy and safety of vadadustat in patients on dialysis, were clear, consistent and compelling. The data showed that vadadustat achieved non-inferiority to darbepoetin alfa on both the primary and key secondary hematologic efficacy endpoints as well as the primary and key secondary safety endpoints that included MACE, expanded MACE, cardiovascular MACE, cardiovascular mortality and all-cause mortality. Going a little deeper, our clinical data also demonstrated that vadadustat maintained EPO within a physiologic range, increased hemoglobin in a predictable and controlled manner and minimized hemoglobin excursions above that target range. We believe dialysis represents a potential $2 billion market opportunity in the U.S. alone. We're confident that upon approval, we have the potential to address the unmet needs of the over 500,000 adult patients on dialysis in the U.S. and rapidly establish vadadustat as the new oral standard of care for the treatment of anemia due to CKD. We anticipate that the strength of our data, which is clear and consistent across both prevalent and incident dialysis patients, will play a meaningful role in helping develop treatment protocols within dialysis providers, which are critical to driving adoption in the dialysis market, subject of course to regulatory approval. To further strengthen vadadustat's potential profile for in-center dialysis patients, we're working to demonstrate that vadadustat can also be dosed three times a week and plan to have that data available at launch, which will allow us to submit a supplemental NDA for this regimen post approval. Although the significant majority of dialysis patients are cared for in-center, recently, several factors including the COVID-19 pandemic, changing patient preferences, government initiatives and reimbursement changes are supporting a shift towards home dialysis. We believe that as a convenient, once-daily oral therapeutic, vadadustat has the potential to offer an important value proposition both to the growing number of home dialysis patients and to dialysis providers looking to better support these patients and grow their home programs. We believe we are well positioned to support a strong vadadustat launch in dialysis in the U.S. upon approval. Our go-to-market strategy includes leveraging our existing nephrology-focused commercial organization with our partner, Otsuka, sharing in the launch costs and responsibilities. As well, we have an exclusive distribution relationship with Vifor Pharma that positions vadadustat for potential rapid adoption in up to 60% of the U.S. dialysis market. Adding to this is a unique reimbursement model in the U.S. dialysis market with TDAPA, an add-on payment to the bundle that's intended to encourage adoption of innovative therapies by clinicians and dialysis providers. To maximize our market potential and ensure commercial readiness upon U.S. approval, we're executing across many different workstreams within medical affairs, scientific communications, disease state education, patient services and manufacturing. We also recently added LeAnne Zumwalt to our Board of Directors. Many of you may know LeAnne as she spent over 20 years serving in key leadership roles with DaVita, most recently as Group Vice President of Government Affairs before her retirement earlier this year. LeAnne's prospective and extensive operating experience with one of the largest dialysis providers in the U.S. will help ensure that our market and commercial strategies are well aligned with the needs of dialysis providers and their patients. We, along with the executive steering committee who has overseen our Phase III development program, believe it is critical to publish our data. And collectively, we continue to execute on our robust publication plan. To date, this has included the presentation of our Phase III data at ASN and publication of both our INNO2VATE and PRO2TECT methods papers in peer-reviewed journals during the fourth quarter. Looking ahead, we plan to present additional data at the upcoming NKF Spring Clinical Meetings in April, and we have line of sight to publication of our INNO2VATE program in a prestigious peer-reviewed publication expected in the near term. PRO2TECT has been submitted earlier this year for publication as well. Again, there is a significant unmet need among patients with anemia due to CKD, and we see a promising opportunity in vadadustat to advance the care of patients on dialysis. Turning to non-dialysis. As we discussed last quarter, we plan to submit data from PRO2TECT, together with additional analyses, and pursue a broad label for adult patients not on dialysis as part of our vadadustat NDA submission. However, as PRO2TECT missed the primary MACE endpoint, we are remaining cautious on potential approval in non-dialysis. Now in compiling the NDA, we've been able to take a deeper dive into the data to better understand PRO2TECT's MACE result. The cardiovascular outcomes reported in PRO2TECT contrast with those reported in the INNO2VATE program as well as with the safety data from other clinical and preclinical studies of vadadustat in both dialysis and non-dialysis adult patients. Additional in-depth analyses conducted by our team continue to demonstrate that the greater number of MACE events observed among vadadustat patients not on dialysis as compared with those on darbepoetin alfa in the PRO2TECT program was primarily related to an excess of non-cardiovascular deaths and deaths of unknown cause in regions outside of the United States, where significant differences in treatment patterns for patients not on dialysis were observed. As we've previously discussed, we believe these and other analyses inform the cardiovascular safety profile of vadadustat in U.S. patients not on dialysis. We continue to believe that pursuing approval in non-dialysis is the right thing to do for patients, and we look forward to working with the FDA in their review. In addition, I want to share that as part of our NDA work, we undertook a review of hepatic safety across the vadadustat clinical program, which includes data from over 8,000 patients across 36 completed Phase I, II and III clinical studies conducted by Akebia and our partner, MTPC. The review of hepatic safety included a blinded assessment of all hepatic events in the studies by a panel of hepatic experts and analysis by an independent hepatic expert and our team. I'm very pleased to report that based on this review, we concluded that the data across the clinical program showed that the hepatic safety profiles of vadadustat and darbepoetin alfa, an injectable ESA and the current standard of care, appear to be similar, and that there were no Hy's law events identified across the entire vadadustat clinical development program. More specifically, we concluded that a 2014 case previously reported by us as meeting the biochemical criteria for Hy's law, while complicated, was in fact not a case of Hy's law. Our conclusion on this case will be reflected in our NDA for vadadustat. We wanted to share this report finding as we believe it reinforces what we expect will be a high-quality NDA submission for vadadustat. As well, this finding reinforces our confidence around the long-term strategic vision for vadadustat. An important aspect of this strategy is focused on innovation, so let me shift a little bit and talk about our future development plans. Innovation is a core capability at Akebia that we have built over the past decade with robust research and clinical development resources. This engine has yielded significant scientific advancements, including vadadustat, which is based on Nobel Prize winning science. While the near-term and largest commercial opportunity for vadadustat is within anemia due to CKD, we believe there is the potential for additional opportunities for vadadustat. We're encouraged that the current study evaluating the use of vadadustat as a potential therapy to prevent and lessen the severity of acute respiratory distress syndrome, or ARDS, in adult patients who've been hospitalized due to COVID-19 is progressing well. As a reminder, this is a clinical investigator-sponsored study led by UTHealth that we provided supportive funds for last year. UTHealth has shared that over 120 patients are enrolled and recently announced that they have been awarded $5.1 million in funding from the U.S. Department of Defense to expand this clinical trial at their facilities. If the results of this study are positive, we believe this COVID-related clinical experience could offer possibilities not only to move forward and help COVID patients, but also to explore vadadustat for a large and enduring opportunity as a treatment for ARDS beyond COVID. After being relatively quiet in 2020, we look to share more information on potential development opportunities for vadadustat later this year, and where possible, updates from UTHealth. To sum up, as we transition to 2021, we plan to continue executing to prepare for the expected commercialization of vadadustat, while investing in potential opportunities to help position Akebia for the long term. We're pleased to be doing all this from a place of financial strength with a cash runway that extends beyond the expected U.S. launch of vadadustat, assuming timely regulatory approval and the receipt of associated regulatory milestones. And as Dave will discuss, we remain committed to both maintaining a strong balance sheet and improving our cost structure moving forward. In further evidence of these objectives, we recently announced a $60 million transaction with HealthCare Royalty Partners to monetize our Vafseo royalties and sales milestones under our collaboration agreement with MTPC. While Dave will provide more detail shortly, we believe this transaction is strong validation of the value that Vafseo can bring to patients in Japan. As well, we believe it underscores our commitment to preserving both our strategic and financial flexibility while investing for the successful launch of vadadustat upon approval. As we head into the next chapter of Akebia, there's a lot of important work ahead of us in 2021. We remain confident that our hard work in 2020 has laid the foundation for the year ahead and the journey that we're on for the longer term. We're excited about the future. And together with our collaborator, Otsuka, we look forward to bringing vadadustat for the treatment of anemia due to CKD to patients globally upon approval. I'll now turn the call over to Dave who will review our financial results.

Thank you, John, and good morning, everyone. As John discussed, we met key goals in 2020, including the headline, completing our Phase III development program for vadadustat. We also demonstrated the resiliency of our organization and business in response to challenges across the year. Despite these challenges, I'm pleased that we were able to continue supporting our patients and customers and accomplish all that we did while keeping with our objective to maintain a strong balance sheet. This progress underscores our focus on execution and our commitment to our patients. Before reviewing our 2020 financial results, I'd like to provide some detail around our recent $60 million non-dilutive transaction with HealthCare Royalty Partners to monetize our Vafseo royalties and associated sales milestones under our collaboration agreement with MTPC, which for clarity is not included in our 2020 results. Under the terms of the agreement with HCRP, Akebia receives an upfront cash payment of $45 million and is eligible to receive an additional $15 million if certain sales milestones are achieved. In exchange, HCRP has the right to receive Vafseo royalties and sales milestones due to us under our collaboration agreement, subject to an annual cap of $13 million and an aggregate cap of $150 million. After the annual cap is met in any given calendar year, Akebia will recognize 85% of Vafseo royalties and sales milestones from MTPC for that year. After the aggregate cap is met, Akebia will recognize 100% of the Vafseo royalties and sales milestones until the revenue stream ends under the terms of the company's collaboration agreement with MTPC. The transaction does not include potential future regulatory milestones to be paid by MTPC. We're very pleased with this transaction. As a reminder, the third quarter marked the first commercial availability of Vafseo in Japan. Since launching in late August, we recorded approximately $400,000 in royalty revenue related to the sale of Vafseo in Japan by Mitsubishi Tanabe. Now turning to our financial results, starting with revenue. Total revenue was $56.7 million for the fourth quarter of 2020 compared to $69.6 million for the fourth quarter of 2019, and $295.3 million for the full year 2020 compared to $335.0 million for the full year of 2019. The decline in both periods was driven by lower collaboration revenue consistent with the company successfully completing our global Phase III clinical development program for vadadustat, which included the INNO2VATE and PRO2TECT studies. As you know, 80% of our Phase III vadadustat development costs are pre-funded by our collaborator, Otsuka, and these corresponding payments are recorded as collaboration revenue. So as these costs decline, so will the corresponding payments. Separately, I'll note that subject to the terms of our collaboration agreement with Otsuka, Akebia has the potential to receive both regulatory and commercial milestone payments from Otsuka upon the approval and commercialization of vadadustat in both the U.S. and Europe. Collaboration revenue was $22.1 million for the fourth quarter of 2020 compared to $40.6 million for the fourth quarter of 2019, and $166.4 million for the full year 2020 compared with $223.9 million for the full year of 2019. As I just mentioned, the change in both periods is due to the timing in which vadadustat development expenses are incurred, and the associated revenue is recognized on a percentage-of-completion basis. Also, this includes approximately $400,000 in royalties from MTPC received in 2020. In terms of Akebia's commercial performance, net product revenue for Auryxia was $34.6 million for the fourth quarter of 2020 compared with $28.9 million for the fourth quarter of 2019, an increase of 20%, and $128.9 million for the full year 2020 compared to $111.1 million for the full year of 2019, an increase of 16%. We are very proud that our team continued to execute across 2020, getting our therapies to those in need. While we did not experience significant impact from COVID-19 on our revenues during the first nine months of 2020, we believe there was an impact on our revenue growth in Q4, primarily as the kidney patient populations that we serve continue to experience both higher hospitalization and mortality rates due to COVID-19. As COVID-19 continues to adversely and disproportionately impact our patient population, we expect that COVID-19 will have a negative impact on future revenue growth. Cost of goods sold was $63.2 million for the fourth quarter of 2020 compared to $38.1 million for the fourth quarter of 2019. Excluding non-cash purchase accounting adjustments as a result of the merger with Keryx, the increase in the fourth quarter of 2020 was primarily driven by a $14.8 million non-cash charge related to excess purchase commitments. Cost of goods sold was $295.9 million for the full year 2020 compared with $145.3 million for the full year 2019. Cost of goods sold for 2020 includes a $115.5 million non-cash charge related to the impairment of the Auryxia intangible asset in the second quarter of 2020, a $25.1 million non-cash charge related to excess purchase commitments and a $20.1 million non-cash charge for inventory write-downs largely related to a previously disclosed manufacturing quality issue related to Auryxia. We expect COGS to normalize in the second half of 2021 as we continue to focus on quality and work through remaining non-cash purchase accounting adjustments associated with inventory. Research and development expenses were $37.6 million for the fourth quarter of 2020 compared to $80.4 million for the fourth quarter of 2019, and $218.5 million for the full year 2020 compared to $323.0 million for the full year 2019. Again, the decline in both periods was driven primarily by a decrease in the costs consistent with the company completing the INNO2VATE and PRO2TECT studies. We continue to expect that R&D expenses will remain significant as we continue to support ongoing planned clinical work as well as the cost of our supply chain and inventory build ahead of the expected approval of vadadustat. Selling, general and administrative expenses were $40.3 million for the fourth quarter of 2020 compared to $44.9 million for the fourth quarter of 2019, and $153.9 million for the full year of 2020 compared to $149.5 million for the full year of 2019. For 2021, we expect that SG&A expenses will increase modestly from 2020 as we invest in pre-commercial activities for vadadustat and continue to support Auryxia. For our bottom line, the company reported a net loss of $87.0 million for the fourth quarter of 2020 compared to $94.5 million for the fourth quarter of 2019, and $383.5 million for the full year of 2020 compared to $279.7 million for the full year 2019. The increase in net loss for the full year of 2020 was primarily due to lower collaboration revenue and higher COGS, partially offset by lower operating expenses. Turning to our capital position. Cash, cash equivalents and available-for-sale securities were $268.7 million at December 31, 2020. This balance includes the remaining $20 million available under our loan agreement with Pharmakon that we drew down in the fourth quarter as well as $10.6 million in proceeds from the sales under our ATM in the fourth quarter. Additionally, we added approximately $15.9 million in proceeds from ATM sales subsequent to year end. As COVID-19 continues to adversely and disproportionately impact our patient population with higher hospitalization and mortality rates, we expect this will have a negative impact on Auryxia revenue growth. While we are unable to fully quantify the impact of the COVID-19 pandemic on future revenues and revenue growth, we continue to work to position the company to navigate these challenges. As such, our financial priorities remain focused on improving our cost structure and maintaining a strong balance sheet as evidenced by our recent royalty transaction with HCRP that I mentioned earlier. From a tactical perspective, in addition to being disciplined on the investments we make, we remain focused on quality, driving efficiencies and improvements in manufacturing and supply chain, managing costs and driving operating leverage from our existing commercial resources as we move toward an expected vadadustat launch in the U.S., subject to approval. To wrap up, we expect our cash resources to fund our current operating plan beyond the expected U.S. launch of vadadustat, assuming timely regulatory approval and the receipt of associated regulatory milestones. With that, we'll open up the line for questions.

Our first question comes from Chris Raymond with Piper Sandler.

I have a couple of questions. First, could you provide some insight into the impact of COVID on Auryxia, and the renal business more broadly? John, we know that the renal sector is very sensitive to promotional activities. Are you seeing any effects from your representatives not being able to access clinics as they normally would? Additionally, you mentioned generally how COVID might affect things moving into 2021. Can you elaborate on that? While case rates across the U.S. have been declining, the beginning of Q1 still had relatively high numbers. Can you give us more details on how you anticipate this will develop throughout the year?

Certainly, Chris. That's an interesting question, and it's challenging to break it down. I've been quite impressed with the access our representatives have been able to achieve, although it varies across different regions. Some are back in the field, while others are still operating via Zoom, but they are quite effective when they are able to meet with clients. For example, in the fourth quarter, our product saw growth, but not to the extent we anticipated. When reviewing overall prescriptions in the phosphate binder category, prescriptions have been decreasing, even though the size of each prescription tends to be larger. This suggests an impact from COVID, which goes beyond just access issues. Notably, Fresenius and DaVita mentioned significant effects on their patients during their earnings calls earlier this quarter. There is data indicating that the mortality rate among dialysis patients is approximately 20%, significantly higher than the general population. The exact implications of this situation are difficult to predict. The first quarter is typically soft for us due to the prior authorizations that need to be processed; our team is skilled at managing that. However, understanding how the excess mortality and hospitalization affect our performance is more complex. In my role at KCP, we have been advocating for prioritizing dialysis patients for vaccinations, and I believe this is being implemented in various states. The duration and full impact of these changes remain uncertain. Unfortunately, if we've lost patients, that loss will have consequences, but the precise extent of the impact is still to be determined.

Okay. Thanks. And maybe also a follow-up just on vadadustat. So I think you're guiding now I think a little bit more color on timing, so mid this year. Maybe just on use of that PRV, is there a point when you'll be able to give some indication as to whether you can actually use that?

So just to clarify, it's mid-second quarter is the guidance, which is a little earlier than mid-year. No problem. We still have the potential to access the PRV, and that decision will involve Vifor and Otsuka. We have that option, but beyond that, I'm not ready to comment.

We will issue a press release while we submit and educate at that point in time.

Yes. Thanks, Kristen. Yes, we will issue a press release and then you'll know.

And our next question comes from Difei Yang with Mizuho. Would you check your mute button?

Difei Yang here.

Would you check your mute button? I'll go to the next line. Difei Yang, your line is open.

Yes. I'm here. Can you hear me?

Yes. Hey, Difei.

Just a couple quick ones. With regards to the Hy's law case, you were talking about eventually you were able to determine it was not a Hy's law case. Would you give us a little bit more color on what led to that decision? And then secondarily, with regards to the once-daily dosing versus the 3x weekly dosing, and how do you think it will be utilized in the field?

Sure. First, regarding the Hy's law case, this was a complex situation. There was a patient with significantly high liver enzyme levels who was neither hospitalized nor displayed symptoms. At the time of our report, we stated that we continuously reviewed our data. After analyzing data from 8,000 patients in the PRO2TECT and INNO2VATE studies, we engaged an external expert panel to conduct a blinded assessment of all the data. Aside from the Hy's law case, we found that there was no notable difference between vadadustat and darbepoetin, a product that has not shown any liver impact. This is an important conclusion, as is the assessment of the single Hy's law case. We are still examining it and have included this as part of our blinded review, leading us to our current conclusions. I also mentioned previously that we reported this to the FDA and, in our NDA, we clarified that this did not constitute a Hy's law case, which I wanted to share with you as well. As for your second question regarding the 3x weekly versus daily dosing, the 3x weekly option is crucial for in-center dialysis, and we have ongoing studies related to this. We anticipate having data available at the launch, which would enable us to quickly submit a supplemental NDA. It's interesting to note that there is a strong trend toward home dialysis treatments. This may be influenced by COVID and certain reimbursement models encouraging the expansion of these programs among dialysis providers. Currently, home dialysis represents less than 20% of the market, but it is the fastest-growing segment, and we believe a once-daily option will be very appealing to patients, leading to rapid adoption.

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

I have a couple of questions. John, could you provide more details about your analysis of PRO2TECT and the finding that the majority of excess deaths were non-cardiovascular and occurred in patients outside the U.S.? We would appreciate any additional information about your findings. Also, does this increase your confidence in the potential for approval in non-dialysis patients?

Thank you for the question, Ed. This is an important topic. I want to reiterate that we did not meet the overall primary safety endpoint, and that calls for caution. However, the key question remains about the cardiovascular safety profile of the product. In the ex-U.S. population, the excess mortality was primarily due to non-cardiovascular reasons and deaths of unknown cause. It's crucial to recognize that treatment approaches for non-dialysis patients vary significantly around the world, particularly regarding when they begin therapy and whether dialysis is offered. There isn't any clear evidence pointing to a significant issue. When we consider the broader context and examine the U.S. data, where treatment practices are more standardized, it suggests that vadadustat presents an acceptable risk. Additionally, once dialysis treatment begins, it tends to be more uniform globally. The INNO2VATE data supports this consistency. While we still missed the primary safety endpoint, this will be reviewed, but we believe it is appropriate to submit an application for both dialysis and non-dialysis indications.

Okay, that's helpful. I have another question regarding the negative impacts of COVID-19 on future Auryxia growth. I am curious why you mentioned that these impacts really weren't felt until the fourth quarter and are expected to persist into the foreseeable future this year. What specifically do you think was lacking in the second and third quarters that resulted in negligible impacts?

It's a great question, Ed. And I think when you look at how the pandemic impacted across the country, you saw more regional differences, whereas kind of post the summer you saw much more across the U.S. impact. And it all just kind of layers on top of each other. And as I mentioned, the Auryxia prescriptions grew across the year because I think that the messaging that we're delivering is having an impact, but the overall market is shrinking. So it may have been kind of muted a little bit in what we were seeing. But clearly, as we go into the fourth quarter, as I said, we still grew in the fourth quarter; just not to the extent that we had expected. And then when you look at the caution that we're hearing from the people who are treating these patients, I think it just behooves us to reflect that caution to you as well.

And our next question comes from David Lebowitz with Morgan Stanley.

When you think about Auryxia going into the first quarter, do you expect to see a similar disruption with respect to the IDA, I guess re-approval, so to speak.

Reauthorizations.

Reauthorization.

Yes, that's an annual event for us to ensure that all patients have a reauthorization. The team did a great job with that last year, and I believe they are doing the same this year. However, it still has an impact. When we compare 2020 to 2019, the difference wasn't as pronounced. The challenge we face is understanding how COVID will further influence this situation. Are we seeing a decline due to the reauthorizations, which we will address and overcome, or are we actually losing patients from the market? That's our focus. Q1 is typically soft, but we need to be cautious about how COVID might affect us.

And on R&D, clearly the numbers are stepping down as the Phase III program is done. Should we look at 4Q as the run rate, or will it continue to step down as we move into next year?

Yes. So we're not providing specific guidance on the ramp. But I think what I would just give context is while the Phase IIIs do continue to wind down from an expense perspective, we are investing in the supply chain build for vadadustat globally before its approval. So we can't capitalize any of the inventory yet. It will run through the R&D expense line.

And we do have the other studies like MODIFY and FOCUS, the 3x weekly study. So there's still a significant rate of R&D. Certainly not like we had with INNO2VATE and PRO2TECT.

Sure, that makes sense. Regarding my last question about milestones, I know we initially expected milestones in 2021. How should we consider milestone payments in relation to the submission and approval of vadadustat given the changes that have occurred?

Yes. So I would say I don't think anything has shifted. We're still on track. And we just provide the guidance on submitting the NDA by mid-second quarter. The milestones themselves are due to us upon approval in the U.S. and Europe and tied to the DD and NDD indications.

So that would likely be in 2022. Is the $250 million split evenly for each indication, meaning $125 million per indication? Or is it a total of $250 million for overall approval?

We haven't disclosed the specifics of each individual milestone and their breakdowns. However, you can assume there are various milestones related to U.S. DD, U.S. NDD, and ex-U.S., among others.

Right. For Otsuka.

For Otsuka, yes. Sorry.

And currently, I'm showing no further questions. At this time, I'd like to turn the call back over to Mr. John Butler for closing comments.

Thank you, Norma, and thanks, everyone, for joining us this morning. We look forward to updating you on what will be an exciting 2021 for Akebia. Thank you all for joining.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.