Hello, and welcome to the Akebia's First Quarter 2024 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 be advised that today's conference is being recorded. It is now my pleasure to introduce Senior Director, Investor Relations Mercedes Carrasco.

Thank you and welcome to Akebia's first quarter 2024 financial results and business update conference call. Please note that a press release was issued earlier today, Thursday, May 9th, detailing our first quarter financial results, and that release is available on the Investors section of our website. For your convenience, a replay of today's call will also be available on our website after we conclude. Joining me for today's call, we have John Butler, Chief Executive Officer and Principal Financial Officer; and Nick Grund, Chief Commercial Officer. I'd like to remind everyone that this call includes forward-looking statements. Each forward-looking statement on this call is subject to risks and uncertainties that could cause actual results to differ materially from those described in these statements. Additional information describing these risks is included in the financial results press release that we issued on May 9th 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 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 like to introduce our CEO, John Butler.

Thanks, Mercedes, and thanks everyone for joining us today. This is our first quarterly call since the approval of Vafseo in late March. Though only about six weeks ago, I'm extremely encouraged by our early progress. I'm excited by the reaction of the dialysis market, prescribers, dialysis providers, and patient groups, as well as the excitement from the folks at Akebia to get this product into the hands of patients. We celebrated the milestone and win for the kidney community for a moment, then immediately kicked into high gear to initiate our launch. On our Vafseo approval call, I outlined three things we have to execute effectively to drive a successful launch and ensure long-term growth of Vafseo in dialysis. First, drive demand from prescribers. Second, contract effectively with dialysis providers; and third, demonstrate potential additional benefits of Vafseo for dialysis patients and the folks who serve them. Nick will go into more detail, but I'll share that our commercial and medical affairs teams have already engaged with thousands of physicians. I'm extremely encouraged by the physicians' interest and enthusiasm, particularly when I speak to investigators who have experience using the product. We believe the Vafseo label supports widespread adoption, and that's how we're presenting the product to the market. We've developed our launch strategy and tactics that best position Vafseo to potentially become a new oral standard-of-care for dialysis patients with anemia due to chronic kidney disease. As I speak to potential Vafseo prescribers, besides describing their clear interest in using the product for their dialysis patients, they asked me to please not give up on working towards an approval for non-dialysis patients. We will not give up on this patient population. The FDA in the vadadustat CRL suggested we return and discuss appropriate subpopulations where the benefit-risk is positive. Now, this may include conducting a new clinical trial to supplement the data we already have in the patient population we plan to discuss. One potential subgroup we're exploring are CKD patients with anemia not on dialysis with a GFR below 15. We believe these patients would benefit from treatment with Vafseo. Over 70% of these patients are not treated today and they routinely have a higher mortality rate than patients who had their anemia controlled before dialysis, and they continue to have a higher mortality rate 12 months after starting dialysis. A once-a-day oral option may be ideal for this patient population. We plan to engage the FDA this year to discuss a path forward for these patients. And it's critical that we take this population into account as we determine our WACC pricing for Vafseo. We are carefully considering pricing and will announce the WACC by next month. So now let me ask Nick to give us more detail on launch execution.

Thanks, John, and good morning to those of you joining us on the call. I'm pleased to report that the experienced Akebia commercial and medical affairs organizations have been extremely active in the field, engaging with prescribers to build demand for Vafseo and with dialysis prescribers to effectively contract as we prepare for product availability and TDAPA reimbursement in January. It is apparent that excitement and advocacy around the HIF class is strong. A clear unmet medical need exists, with nephrologists reporting that one-third of the dialysis patients with anemia due to CKD have hemoglobin levels that are below the target range. This is despite the availability of ESAs. Further, Akebia’s sponsored market research found that 85% of physicians are familiar with the HIF class and of those who are extremely familiar, 85% have a very positive impression. This is despite the low early adoption of the other approved HIF. I believe this is a very solid foundation to build upon with strong differentiating messages specific to Vafseo. Additional research suggests that nephrologists envision broad utilization of a HIF product, with over 75% of nephrologists stating that they are comfortable prescribing a HIF in any dialysis setting. In fact, research suggests a HIF will be the preferred treatment versus ESAs for almost one-third of nephrologists. These metrics are very encouraging. Even prior to approval, we had started to ramp up for launch. The first step was the expansion of our field-based medical and commercial teams, which grew 55% from 2023. We are excited to have expanded the teams now so that we have an eight-month runway to continue to build advocacy and demand for Vafseo. In the first six weeks since approval, Akebia's key account managers have been actively engaging with approximately 4,500 calls to our key target prescribers with many of those calls, including Vafseo messaging. John will talk more about this later, but I will quickly note that the Vafseo approval has facilitated improved access to Auryxia prescribers. The efforts in the field team have been further supported by digital tactics. Vafseo messages appeared almost 26,000 times in paid search, and we have had over 240,000 targeted brand impressions. We are also proud to have had sponsorship presence in three key meetings since approval: the American Nephrology Nurses Association, the Renal Physicians Association, and the Renal Healthcare Association meetings, which allow for scientific exchange sessions and in-depth discussions with key customers. In parallel, Akebia's medical affairs team continues to work with our Publication Steering Committee to ensure timely and continued publication of relevant vadadustat data for the clinical and scientific community. To date, the primary results for both INNO2VATE and PRO2TECT global Phase III clinical programs have been published in the New England Journal of Medicine in two separate manuscripts. Data on several additional important analyses and subgroups have been published, including peritoneal dialysis subgroup, erythropoietic effects of vadadustat, overall adverse event profile of vadadustat from the pooled Phase III clinical program, etc. These publications were helpful in driving the high degree of HIF awareness that we are reporting from the field. As of the first quarter, the medical affairs team continues to publish key data and analysis at scientific meetings such as the 2024 Annual Dialysis Conference where the cardiovascular safety of vadadustat in patients new to dialysis with CKD related anemia and the safety and efficacy of vadadustat in the treatment of anemia patients with CKD in the U.S. region were presented. Beyond driving prescriber awareness advocacy and demand, contracting with dialysis organizations is critical. Through that process, we will finalize our WACC price. As a reminder, we anticipate pricing Vafseo at a premium. As you likely know, medications for dialysis patients are contracted through dialysis organizations, and those contracts include both an off-invoice discount and a volume-based discount opportunity, meaning that when volume goes up, net price will come down. Engagement with dialysis organizations has been productive. Commercial discussions have been initiated with large dialysis organizations, and ongoing contract development meetings are planned. Auryxia and the high likelihood phosphate binders will be in the bundle, which has allowed us to begin dialogue with dialysis organizations, where we aligned around contract structure and critical components of implementation applicable across the portfolio. With both products available, we have a unique offering to help patients in dialysis organizations achieve their goals. I look forward to updating you as we finalize these agreements over the next several months. Turning now to TDAPA. We will submit our application by June, and as a reminder, the application is only accepted once a quarter. After a six-month TDAPA application process anticipated to be completed in January 2025, we expect the product would be reimbursed and widely available and accessible to patients with rapid adoption. As you can see, our entire organization is working on every aspect of reaching our prospective prescribers, securing access for patients through key channels, and laying groundwork for future growth; our partners are hard at work, too. MEDICE plans to launch Vafseo in Germany and Austria as early as June 1st. They also have launches planned in the Netherlands, Switzerland, Sweden, Norway, and Finland by the end of the year. While we reiterate that a U.S. launch of Vafseo represents the primary commercial opportunity for Akebia and the potential to target an approximately $1 billion U.S. market, we're also pleased that patients through Europe will soon have access to the product. Now let me pass it to John to cover additional opportunities and next steps.

Thanks, Nick. Nick covered prescriber demand and the contracting progress. The third strategic imperative is to continue to collaborate on clinical studies to fill gaps in our data, potentially to expand our label and separately to allow large dialysis providers to gain experience utilizing Vafseo in their own patients. We're in discussions with key investigators and dialysis providers on a collaborative study that we believe will generate significant data. We hope that this data will lead to valuable publications to support further physician education, as well as provide doctors with increased comfort in utilizing Vafseo, potentially enabling continued growth in utilization even after TDAPA concludes. Again, we believe the Vafseo label supports widespread adoption in dialysis patients. Our team has been working diligently to prepare the groundwork for potential Vafseo label expansion to permit more flexible utilization of the product in both new-to-dialysis patients and in alternative dosing regimens. As I mentioned earlier, we also believe Vafseo could benefit CKD patients who are not on dialysis, and we plan to explore label expansion to those patients as well. This is the most significant potential value driver for Akebia after the launch in dialysis. Now, I'll switch gears to our financial results. But before I review the financials, I'll mention that we have an active search for CFO that's going well. I'd like to thank our finance team and our Chief Accounting Officer, Richard Malabre, for the effort and attention they've put in since our year-end close to ensure the quarter close process was seamless. As we've previously reported, I can reiterate that we are well-financed to execute on our Vafseo launch. We also previously strengthened our balance sheet with proceeds from our At The Market sales agreement. Our cash and cash equivalents as of March 31, 2024, were approximately $42 million. In addition, in Q2, we drew down the additional $8 million available to us upon approval of Vafseo under the BlackRock debt facility. We expect that our cash on hand, as well as revenue generated by Auryxia and now Vafseo, starting in January, will fund planned operations for at least two years. We've kept tight control of our spending in the first quarter and are managing the business for stable year-over-year spending in 2024. The team is demonstrating good financial discipline while investing appropriately for a successful launch. You'll notice we also announced that we amended our working capital agreement with Vifor to simplify the payback as a royalty. This does not fundamentally change the timing of the payback of that cash, but it greatly simplifies the operational aspects of managing our supply chain. Total revenues were $32.6 million for the first quarter of 2024, compared to $40 million for the first quarter of '23. Net product revenues were $31 million for the first quarter of '24, compared to $34.7 million for the first quarter of '23. The decrease versus last year is largely a volume decrease as a result of our contracting strategy as we exited the final large Part D payer contract. We remain confident that we can achieve net product revenue growth in '24 versus '23. We believe our Auryxia outreach is actually enhanced by the Vafseo launch as prescribers are eager to discuss a new product and recall that there's a 96% overlap between Auryxia and Vafseo target prescribers. Also, CMS has released guidance on incorporating phosphate binders into the dialysis bundle. Dialysis organizations are now contracting with an eye towards the binders going into the bundle in '25 as Nick mentioned. One other note on Auryxia. In April, Akebia's licensee Averoa submitted a marketing authorization application to the European Medicines Agency for ferric citrate coordination complex and if approved, Averoa will make the product available to patients throughout the EU. I want to congratulate Averoa on the submission and will be available to support launch efforts in the coming years. Cost of goods sold were $11.6 million for the first quarter of '24, compared to $20.2 million for the first quarter of '23. Akebia continues to carry a non-cash intangible amortization charge of $9 million per quarter through the fourth quarter of this year. Research and development expenses were $9.7 million for the first quarter of '24, compared to $19.7 million for the first quarter of '23. Now, we will continue to progress a number of new programs in '24, including the collaborative study I mentioned earlier, as well as preclinical development of HIF-based molecules in our pipeline, but we do not expect a step up over '23 expenses. SG&A expenses were $25.4 million for the first quarter of '24, compared to $25.1 million for the first quarter of '23. Again, we're tightly controlling spend and do not expect a significant uptick as we launch Vafseo. Net loss was $18 million for the first quarter of '24, compared to a net loss of $26.9 million for the first quarter of 2023. Before opening the line for questions, I know that Ali Bratzel from Piper could not make the call this morning, but she sent Mercedes a couple of questions and maybe we can start with those. Mercedes?

Sure. Thanks John. The first question. Please walk us through the Vifor license agreement and amendment and how we should think about modeling the impact.

Sure. So just to remind everyone, back in 2022, as part of an amendment to the Vifor agreement, Vifor provided $40 million of working capital or a working capital fund to finance the product purchases for Vafseo in advance of launch. And in the agreement, we had basically a payback that would go on over time, where ultimately the $40 million would be returned to them. It was very complicated. As POs are approved, more money is added or money is refunded, and POs have to be agreed upon. And it really complicated the management of our supply chain. But it was wonderful to have that $40 million in cash to help finance the purchases of our product. So we really wanted to look to simplify that arrangement. Previously, the way we would model it out is that $40 million would be a hit to our cost of goods over time. And as I said, that would decrease over the life of the product, ultimately being paid back fully. So we really tried to model that as closely as we could in a royalty relationship. So, basically, there will be no payments, no royalty payments till July 1 of next year. And then it's an 8% royalty for the first or for under $100 million in revenue. And the dollars over $100 million is a 14% revenue over time. And then there's three makeup periods, at the end of '26, '27, and '28. That's $10 million if they haven't received that in royalty, $20 million, and then $40 million at the end of '28. So that will come in, now would be in your models as a royalty obligation. And again, as I said, it really is somewhat quite close to the way we expected that money to be paid back over time previously.

Thank you. Next, you've indicated cash and cash resources to fund operations for at least two years. What are the underlying assumptions to that projection?

We completed our ATM in the first quarter and drew $8 million from the BlackRock node, which gives us our current cash position. We believe that our current cash combined with sales from Auryxia and Vafseo will sustain us for at least 24 months. Regarding Auryxia, we know there’s a loss of exclusivity in March next year. However, with the phosphate binders included in the bundle, we see potential for the product to avoid a typical patent cliff associated with small molecules. We've been careful in our cash planning, considering how the revenues for Auryxia will evolve. We believe in the product's potential but wanted to ensure we were cautious in our forecasts. For the Vafseo launch, we expect sales to begin in the first quarter of next year. We've discussed the potential for rapid adoption during the TDAPA period. Even if we take a conservative approach to our launch estimates, we are confident in having at least 24 months of cash runway. If the launch exceeds our expectations, it could extend that runway even further. Now, Andrew, we can open the line for questions.

Absolutely. Please hold on for the next question.

Hello, can you hear me?

Yes, we can. Hey, Ed.

Great. Hi, John, Nick. Congrats on the approval once again, and it looks like you're really gearing up for preparations starting for sales in January. A few questions for me. First, on the pricing. You mentioned that the WACC would be disclosed next month, and that, of course, given the value offered here, that this would be priced at a premium. I'm wondering if you could go into a little bit more detail around some of the criteria that you evaluated, or are evaluating as you come to a final determination on the pricing. In particular, the consideration of when the product comes off the TDAPA designation. That's one. Two is the collaborative study. I was wondering if you could give a little more detail as to what the objectives are there and timelines to the extent that you could share that. And then finally, third question is around Averoa in the EU. I'm hoping you could provide us the economics of that partnership there, and also when the loss of exclusivity would be under that agreement. Thanks so much.

Great. We'll begin with pricing, and I'll ask Nick to provide some insights on our efforts. We are set to announce WACC pricing next month, which is crucial as it differs from our net pricing in the market. I'll ask Nick to elaborate on this. WACC pricing serves as a foundational starting point for pricing and relates to TDAPA or reimbursement. All sales will be contracted. As mentioned on the approval call, while we aren't providing specific price guidance since it varies by contract, the net pricing range seen in your models and by other analysts covering the company aligns with reasonable expectations. It’s anticipated that net pricing will decrease following TDAPA, which is what we expect to happen, bringing it nearer to ESA pricing. However, considering WACC also involves looking at the NDD population. With the IRA, you can only set a price once, so it's essential to evaluate the product's entire lifecycle. We're still assessing which patient populations to discuss with the FDA, as this will influence the population size and the value we offer, impacting pricing. Additionally, understanding the economics related to dialysis is important. Nick, could you share more about that?

Yeah. No, it's a great question, Ed. And I could go on for weeks on pricing, but if I just think about the major components is first, what's the value of the product, right? Really simply, we believe this is an innovative product. We have physician support of that through our market research, where just about 90% of folks believe the HIF class is an advance or major advance versus existing ESA therapy. And so their perceived value, as well as what I'll call the real value, tangible value, we see in the label and with the product. As you noted in my script, 30% of patients are missing the target range on their hemoglobin, and that's despite decades of uses with ESAs. The second piece around value I think about is the frequency of overshoots and undershoots, how hard it is for dialysis organizations and physicians to manage hemoglobin within a relatively tight range. All that value goes into the product and the value of the price. Second, I think about differentiation versus the existing HIF in the marketplace. Today, we spend a lot of time talking about their label and the risk it poses for people with a history of heart failure. 40% of that population has a history of heart failure, and therefore differentiation versus the other HIF is high. John mentioned the future value of NDD. That's in our thinking as well, or non-dialysis. But then again, when we think about TDAPA and why it was set up, it was set up to support innovative products and support the utilization of those innovative products outside of the bundled rate and therefore, making sure that the economic support that usage within the dialysis organizations is critically important. Our conversations with dialysis organizations, they understand the innovative value. They also understand the economic incentives associated with it as well. And we've been in good conversations driving towards conclusion here in the late summer, early fall.

Thanks, Nick. Your second question was about the collaborative study. This is still in progress, but it’s outlined in the script. There are always data gaps. It took 20 years for dialysis providers and physicians to figure out how to use ESAs effectively in dialysis, so generating new data is always necessary. I've noticed that the TDAPA products introduced have missed the mark by not continuing to support the product for new data generation. Beyond TDAPA, we think about long-term adoption, and the price may need to decrease post-TDAPA, which is just the reality of the market. However, the market will still grow, and we aim to penetrate it further. We want to establish an oral standard of care, which requires ongoing data generation. I won't provide specific details about endpoints in the study, but we aim to show significant advantages for patients and also cost savings or benefits for dialysis providers. It also presents an opportunity for many physicians to use the drug in their dialysis clinics, allowing dialysis providers to see its effects on their patient populations. I've talked to several investigators in other studies, and their experience with the drug has showcased its benefits, including the ease of using fewer dose titrations. A larger study will enable more physicians to see the benefits and generate important data for publication to help grow the product throughout its lifecycle. Stay tuned; we're close to discussing this study more, and we’re quite excited about it. Regarding Averoa and Auryxia in Europe, this was a very opportunistic deal. We had concerns about pricing in Europe and its business viability. Averoa has taken a creative and strategic approach, working hard to get the product to MAA. The agreement includes mid-single-digit to low double-digit royalties. Averoa hopes to secure regulatory exclusivity due to their approach, which could provide about 10 years of market exclusivity in Europe, though that isn’t guaranteed. The contract structure was quite advantageous for us, and we’re pleased with the progress our partners are making.

Fantastic. That's helpful. Thank you.

Thanks, Ed.

Hi, good morning. Congrats on the progress, and thank you for taking my questions. First, can you remind us of the segments of the dialysis dependent CKD market where you expect Vafseo to have the strongest use case? And with Auryxia now entering the bundle in 2025, I'm wondering if you could talk more about how maybe your long-term outlook for Auryxia revenue has changed.

Julian, thanks so much for the question. So I'm going to ask Nick to talk about segmentation. Of course, as I said, our positioning is that this product is appropriate and labeled for any patient who's been on dialysis at least three months. But clearly, whenever we introduce a new product, there are areas where physicians will want to use the product first, and maybe Nick can outline that.

Yeah. And then, just to reiterate, when talking to dialysis organizations as well as physicians, they don't pigeonhole it to any particular modality of dialysis, whether that be in-center or home. Though many, their first inclination is home patients make sense. You don't have to bring them into the facility for additional injections. They think they'll be well managed in the home. Many patients who are at home who unfortunately may have to stick themselves with a needle would enjoy the ease-of-use as well as the less pain associated with an oral dosing. And so that's a real advantage in a real population that we think will be one of the faster-growing in the initial launch. The second, the size of that, that's about 80,000 patients and so sizable. The second patient population is the high dose ESA patients. Those are folks that are not well controlled on an ESA. They're requiring higher and higher doses. We heard from several dialysis organizations that it represents roughly 15% to 30% of their total population. And one dialysis organization went as far as said, 20% of our patients on high dose represent 50% of our ESA cost. So not only do you see a benefit in driving down high doses of ESAs that have been linked to mortality rates, you see the opportunity for economic advantages within the dialysis organizations around spending as we don't see the same dose-response needs with Vafseo. And so those two very quickly come to mind. But others have also suggested that they would love to take all of the ESA management out of the dialysis organization. And so I do believe it'll be a stepwise fashion. But anchoring back to what John said is the broad use in dialysis patients and becoming the next standard-of-care, which requires us to be able to address all patient needs.

That’s one of the reasons we want to continue generating more clinical data. We plan to discuss with the FDA the possibility of adding the three times weekly dosing to the label. However, we've heard from the focus data presented last year that many dialysis providers may choose that option independently. I'm encouraged by those who want to completely remove anemia management from the dialysis center, and the once-a-day oral nature of the product seems very practical. I'd like to ask Nick for his insights on Auryxia revenue and perhaps more details about the binders in the bundle. Julian, this has been our expectation for where we would land. While there remains a possibility that legislation could delay this, I believe that with CMS now providing guidance, the likelihood of any delay is decreasing. We have been preparing for this for quite some time.

When I think about binders in the bundle, it is one where the TDAPA profile around creating incentives around innovative products also applies to branded products that are existing in the marketplace as they go into the bundled environment. When I think about that, I imagine dialysis organizations in our conversations, they're going to want to put further controls around their formularies around that, and therefore, making sure we're out there engaging with them around the value of Auryxia is extremely important. Auryxia is a very, very good binder in the eyes of the physician, and they really want to use it moving forward. I believe it'll allow us to contract for predictability around volume in the face of potential generic competition. We haven't necessarily built that into our cash flow models as we talked about it, but if you can imagine folks having Auryxia on formulary with open access, certainly the Medicare fee-for-service patients will be that first population that we'll see usage in. But on open formulary position with Auryxia compared to where we are today will be an enhancement to physicians' access to the product, and all that underpins how we think about the opportunity binders going into the bundle may present for Auryxia.

Very helpful. Thank you very much.

Thank you. Now I'm showing no further questions. So with that, I'll hand the call back over to CEO, John Butler, for any closing remarks.

Thanks, Andrew. And I just want to make one correction. I referenced 12 years of exclusivity and my team already got back to me and said it's 10 years exclusivity in Europe. So thank you for that. But a very nice opportunity for our partner and for Akebia. So I do want to thank everyone for joining us this morning. Our organization is excited, focused, and executing on the opportunities ahead of us. Since our last earnings report, we've received approval for Vafseo. We're engaging thousands of potential prescribers. We've had contracting discussions for both of our products with almost all significant dialysis providers. We'll submit our application for TDAPA reimbursement in June. We're finalizing plans for a significant collaborative research study with Vafseo. We've simplified our working capital fund repayment with Vifor CSL. We're preparing to engage the FDA on a path for the new dialysis and the pre-dialysis patient populations. We're supporting one partner for a launch of Vafseo in Europe this quarter, and a second on a potential launch of Auryxia in Europe next year. And we're doing all of this from a position of financial strength. I look forward to continuing to update you on our progress. Have a great day.

Ladies and gentlemen, thank you for participating. This does conclude today's program and you may now disconnect.