Akebia Therapeutics, Inc. Q3 FY2025 Earnings Call

Good day, and thank you for being here. Welcome to Akebia's Third Quarter 2025 Financial Results Conference Call. Please note that today's conference is being recorded. I would now like to introduce your speaker, Mercedes Carrasco, Senior Director of Investor Relations. Please proceed.

Thank you, and welcome to Akebia's Third Quarter 2025 Financial Results and Business Update Conference Call. Please note that a press release was issued earlier today, Monday, November 10, detailing our third quarter 2025 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; Nick Grund, Chief Commercial Officer; and Erik Ostrowski, Chief Financial and Chief Business 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 November 10, as well as in our Risk Factors and Management Discussion and Analysis section of our most recent annual and quarterly reports filed with the SEC. With that, I'd like to introduce our CEO, John Butler.

Thanks, Mercedes, and thanks to all of you for joining us this morning. The team is just back from a very successful American Society of Nephrology meeting, where we met with prescribers and customers and also presented data that continue to demonstrate the positive impact Vafseo can potentially have on important clinical outcomes in dialysis patients, the quality of data that we believe will lead to Vafseo becoming standard of care to treat anemia in dialysis patients. Of course, today, there is a significant focus on our current launch progress. I'm proud to share that through 41 weeks of launch, Vafseo has generated more total prescriptions than any recent launch in dialysis. This is a reflection of the recognition from prescribers of the potential clinical benefit Vafseo can bring. That being said, from a business perspective, I'm not satisfied with generating $14.3 million in revenue this quarter. No one on the Akebia team is. But to be clear, we are pleased with the direction of all the important launch indicators that we believe will lead to long-term success for the product. We increased accessible patients from 40,000 patients in the first half of the year to almost 70,000 by the end of Q3 with the initiation of the DaVita pilot and the addition of IRC and several smaller providers late in the quarter. However, as we advance through the launch, we continue to appreciate how long it takes to align all of the logistics and processes for a new therapy to be made available for patients, particularly one that will be delivered to a patient's home, a departure from how anemia has been treated for the past 35 years. The bottom line is that getting patients on therapy and in some cases, keeping them on in the highly protocolized dialysis environment has taken longer than we expected. That said, these are operational issues that we and our dialysis provider customers are working through as quickly as possible. We believe that our positioning is compelling. Market research in every conversation I had at the ASN meeting supports physician desire to prescribe. Nick will share more information on our launch as well as sentiments from prescribers that we heard at ASN. Further, I expect that strong interest from physicians is only going to grow with the Win-Odds analysis based on data from the INNO2VATE trial that was presented at ASN last week by Dr. Glenn Chertow. The purpose of the Win-Odds analysis is to bring a greater level of statistical power to analyzing critical clinical outcomes. It's a statistical method designed to prioritize clinically meaningful endpoints in outcomes trials. This post-hoc data analysis showed that patients randomized to vadadustat experienced a lower risk of death or hospitalization compared with patients randomized to the ESA control darbepoetin alfa. The benefit became more significant when you looked at an on-treatment analysis. You’ve heard me say repeatedly that continuing to provide data that supports the clinical differentiation of Vafseo will be critical for the product to become standard of care. This data is an incredibly strong start and an important step in delivering on that promise. We will, of course, work diligently to have these new data published so our medical team can communicate them in the field as appropriate. Moreover, Dr. Block has adopted this Win-Odds endpoint as the primary endpoint in the VOICE study, which we expect to read out in early 2027. As a reminder, late next year, we'll also have the results from the VOCAL study that we're conducting at DaVita clinics. These readouts will be two important data catalysts for the company, and we believe the newly generated information should support continued long-term growth of Vafseo prescribing. Now both the VOICE and VOCAL studies utilize 3 times weekly or TIW dosing regimens. We've said before that observed dosing will be important for the in-center patient population as the dosing schedule can coincide with their dialysis treatments. Now we plan to engage further with the FDA on adding TIW dosing to the label, but we have heard from physicians and providers that they are moving to this dosing regimen based on the evidence that already exists. To this end, U.S. Renal Care is currently implementing a TIW dosing protocol in their clinics with a goal to have it available in all clinics in Q1 of next year. I expect some physicians may wait until Q1 to start new patients on Vafseo when they can leverage TIW dosing. Now additionally, USRC will be shifting from using 150-milligram tablets at home to 300-milligram tablets for in-center use, which could impact inventory levels in Q4. In the long run, I believe this change, enabling observed dosing will improve physicians' ability to drive patient adherence and compliance, which have been factors impacting growth. Before handing the call over to Nick, I want to go back to our launch for a moment. Having more prescriptions written in the first 41 weeks of a launch than any recent launch in dialysis suggests a very strong reception from the dialysis community. Hearing feedback from physicians about their positive experiences with Vafseo and seeing data like Dr. Chertow presented regarding the potential favorable mortality and decreased hospitalization benefits compared to ESAs gives me more reason to believe we will achieve our goal of making Vafseo standard of care for dialysis patients. I'm extremely confident in achieving that long-term goal. In the near term, our team is tackling operational issues head-on to overcome them. Now let me turn it over to Nick to give more granularity on these efforts. Nick?

Thanks, John. Good morning, folks. Like many others at Akebia, I spent the last several days in Houston at ASN talking to nephrologists and leaders from various dialysis organizations. The positive sentiment on Vafseo as a compelling treatment for anemia remains high. In fact, from market research, we now have early insights into the perceptions of nephrologists who have patients on therapy. We're pleased to see that more than half of the nephrologists surveyed view Vafseo as providing more consistent control of anemia than their ESA with fewer dose adjustments. More importantly, at ASN, we met with all of the large and midsized dialysis organizations with prescribing access, and they reinforced that they are vested in the success of Vafseo. All these factors give me confidence that we will achieve our goal of making Vafseo standard of care for dialysis patients. I believe that by continuing to address operational challenges and further improving access, we continue to unlock the true value of Vafseo. To that end, I'll share quarterly launch metrics. But note that as we bring on more dialysis providers in the coming quarters, we will not be able to continue to provide dosing level data moving forward. During the quarter, approximately 725 prescribers wrote a prescription for Vafseo and each prescriber on average wrote approximately 12.7 prescriptions. More than 85% of prescriptions were refills in quarter 3, and the average dose of those refills has increased 5% versus the prior quarter and 32% above the starting dose. We believe this reflects that physicians are getting comfortable treating patients to the optimal therapeutic dose and that this trend of increasing average dose will have a positive impact on revenue. In summary, overall, Vafseo demand in quarter 3 was flat versus quarter 2, with new patient starts offset by lower-than-expected initial adherence. With expanded access, we have more to do to gain new prescribers and get more patients on therapy. We have extremely strong advocacy at USRC, as we said before, and saw a strong initial uptake. Now over 85% of USRC physicians have written a prescription. However, we have seen continued lower adherence at USRC than we expected, lower than the industry standard we shared with you in quarter 2, and the adherence rate at USRC is lower than we anticipate at other dialysis organizations. To improve adherence, we revamped and highlighted our messaging, retrained our sales team to better educate physicians and particularly anemia managers on potential GI issues and dosing and titration strategies. Our medical team is also supporting USRC in adjusting its protocols. Much of this work is still continuing. And in recent months, we've seen an increase in patients getting a first refill, which we believe means caregivers are beginning to better understand how to successfully treat with Vafseo. While a positive sign that our efforts are making an impact, there is still more to do. I'm proud of our medical team for identifying solutions to discontinuations at any time and educating prescribers on Vafseo data to support dosing decisions as they address challenging protocol restrictions. Also important, the data we are seeing suggest discontinuations are lower in PD patients and at organizations with protocols permitting 3 times weekly or TIW dosing. As additional dialysis organizations adopt TIW dosing, including USRC, as John mentioned, we believe we'll continue to see an increase in patient adherence. To continue the success of the Vafseo launch, we need to continue to increase prescribing access across dialysis organizations. We referred to having prescribing access when a dialysis organization has created and operationalized the Vafseo treatment protocol. In quarter 3, we increased prescribing access by greater than 25,000 patients. Additional patients came from 3 sources: Innovative Renal Care, or IRC, the DaVita pilot and a number of other regionally important small and independent dialysis providers. While we anticipated broad access to DCI, the fourth largest dialysis organization, they have yet to enable broad prescribing access through a protocol. IRC, the fifth largest dialysis center, made Vafseo available to patients in mid-August and required all clinic staff to be trained by the end of September. With strong physician advocacy and all staff trained, we expect physicians to trial Vafseo in certain patient subgroups, leading to broader adoption in Q1 2026. The DaVita pilot in over 100 clinics that treat nearly 10,000 patients also began in mid-August. Within large complex organizations, it makes sense to do a test run to ensure a smooth rollout. And during the pilot, we saw patients being identified, labs being drawn, insurance being verified and patients preparing to go on therapy in quarter 4. The pilot was successful in that those processes were streamlined and revised when needed and patients have since been dosed. We are pleased to say that DaVita has decided to roll Vafseo out to the remainder of its clinics and that Vafseo is available broadly as of today. With over 200,000 patients within DaVita now having prescribing access, our teams are working with prescribers to identify those appropriate to start on Vafseo. In summary, while gaining significant traction is taking time, I believe the core tenets of a successful launch are in place and strengthening. We have strong market awareness, increased prescribing access, and we've already overcome several operational issues. With prescribing access for Vafseo at over 260,000 patients today, we expect several dialysis organizations to increase ordering in the fourth quarter of this year and importantly, to build momentum into 2026.

Thanks, Nick. We're happy to report another solid quarter of top line performance with Vafseo and Auryxia. I'll now provide an overview of our results as compared to the third quarter of last year. Total revenues, which are comprised primarily of net product revenues and also include license collaboration and other revenues were $58.8 million in this quarter as compared to $37.4 million in Q3 of last year, representing an increase of over $21 million. Of these amounts, net product revenues increased to $56.8 million this quarter from $35.6 million in Q3 of last year. This was driven by sales of Vafseo, which were $14.3 million in the quarter as well as by an increase in Auryxia sales, which were $42.5 million this quarter as compared to $35.6 million in Q3 of last year. As a reminder, Auryxia lost IP exclusivity in March, and there is an authorized generic for Auryxia on the market, though no generics have been approved by the FDA at this time. We are pleased to post another strong quarterly Auryxia result, though caution future Auryxia sales levels are challenging to predict due to the uncertainty around the timing of potential additional generic competition. Cost of goods sold decreased to $9.4 million this quarter as compared to $14.2 million in Q3 of last year. The key driver of this cost reduction is that we are no longer recording a $9 million quarterly noncash amortization charge related to the acquired developed product rights for Auryxia, which is now fully amortized. Also of note, Vafseo sales in the quarter were derived from prelaunch inventory, which does not include the full cost of manufacturing, and as a portion of Vafseo inventory-related costs were previously expensed R&D prior to Vafseo's FDA approval. R&D expenses increased to $14.9 million this quarter from $8.5 million in Q3 of last year, driven by increased clinical trial program activities, including our VOICE and VOCAL studies, which aim to continue to generate data highlighting the benefits of treating patients with Vafseo as well as higher headcount-related costs. SG&A expenses increased to $29.1 million this quarter as compared to $26.5 million in Q3 of last year. The increase was primarily driven by higher marketing costs in connection with the Vafseo U.S. launch as well as increased headcount-related expense. Turning to the bottom line. We generated net income of approximately $540,000 this quarter as compared to a net loss of $20 million in Q3 of last year. This quarter's net income was primarily driven by the increase in net product revenues, which was partially offset by higher operating expenses. Our cash position is strong. We ended Q3 with $166.4 million in cash and cash equivalents. We believe our existing cash resources and the cash we expect to generate from product, royalty, supply and license revenues are sufficient to fund our current operating plan to profitability, including the advancement of our existing pipeline. In closing, our Q3 financials reflect our continued execution of the Vafseo launch and the continued steadiness of the Auryxia revenue stream. We look forward to discussing our Vafseo launch progress as well as the advancement of our pipeline on our next earnings call. We'll now open the call up to questions.

And our first question comes from Roanna Ruiz of Leerink Partners.

So a couple from me. I was curious, what strategies could you use to overcome the operational challenges that you mentioned for Vafseo, including the average adherence, I think you mentioned the U.S. renal. And are there any learnings you can take from the pilot program with DaVita that could help you figure this out and enhance it going forward?

Great questions. And I think they're both for Nick. So I'm going to turn it over to him.

The first part of the question relates to strategies for improving adherence. We’ve observed that adherence tends to be particularly challenging during the first refill, which occurs right after the initial prescription. Patients are typically prescribed a starting dose of 300 milligrams, often transitioning from higher doses of ESA. This can sometimes lead to a dip in hemoglobin levels. We've noticed that the anemia managers, who are accustomed to using ESA for many years, often revert the patient back to an ESA instead of adjusting the dosage of our drug, which is titratable. The average dose noted in our studies was about 435 milligrams, indicating that titration is expected. However, there has been insufficient titration occurring in practice. To address this, we are focusing on improving our sales team's messaging and the strategies employed by anemia managers regarding titration. Furthermore, our medical team has been collaborating with healthcare providers on long-term usage protocols for the product. Together, these efforts have started to yield positive trends, although there is still significant work ahead. Regarding DaVita, as the second largest dialysis organization, they conduct pilot programs to identify and resolve operational challenges. These challenges may involve ensuring that an initial prescription is correctly entered into their system, necessitating a clinical review and a reimbursement assessment before the order is sent to a specialty pharmacy for fulfillment at the patient's home. The purpose of the pilot was to assess and refine these processes, making necessary adjustments along the way. In our experiences with USRC, we found a highly motivated organization that was well-prepared and able to move quickly, whereas DaVita required more time. This launch is primarily driven by prescribers without a top-down approach, meaning it’s dependent on individual prescriber actions. We needed time to streamline the process from patient identification to prescription fulfillment. The insights gained from this experience, along with those from the broader pilot learnings, have been applied to every subsequent partnership. This is one reason we anticipate that adherence in new dialysis organizations will surpass the early adherence rates observed at USRC. We are actively sharing these insights, which we believe will positively influence outcomes.

Let me add a few points. The pilot was successful, and it took time to work through the process. DaVita was very pleased and has expanded it to their entire community of 200,000 patients, which happened sooner than we anticipated. The key insights stemmed from our initial experiences at U.S. Renal and how those protocols were then adopted at DaVita and other facilities. The dialysis community is quite interconnected; everyone is aware of each other's activities and there is significant communication. For instance, during the ASN meeting, Chief Medical Officers from various dialysis providers gathered to exchange data and clinical practices. Dr. Block provided valuable insights regarding their experience with Vafseo, which we believe influenced how DaVita developed their protocol—something we expect will be very beneficial. Even in the initial pilot phase, we are not experiencing and do not anticipate the same adherence issues due to the adjustments made to the protocols. Another important factor is the anemia manager. Since they're accustomed to administering EPO or MIRCERA in the clinic every day, they tend to revert to that when they notice a drop in hemoglobin, feeling out of control with the drug being at the patient's home. They need significant training to adapt. It took over 20 years to master ESA dosing, and we have only been on the market for 41 weeks. I'm impressed with the progress made in understanding how to utilize the product effectively. Looking ahead, we are optimistic about the trends we are observing.

And our next question comes from Julian Harrison of BTIG.

This is Andrew Kassin on for Julian Harrison. Just a quick question on one of the presentations from ASN. Could you discuss what physician feedback has been like regarding the post-hoc analysis of vadadustat's impact on hospitalization outcomes?

Yes, Andrew, thank you for your question. It's still early as we just had the presentation last Thursday. However, it's been a key topic in my discussions. I believe that was part of Dr. Block's presentation to the Chief Medical Officers. While we weren't part of that presentation, the data is significant. The overall INNO2VATE data showed a 1% lower mortality rate and an 8% lower hospitalization rate, though neither was statistically significant. By using this Wind analysis with a hierarchy—being alive is better than being dead, and being out of the hospital is better than being in it—you can really focus on what matters to patients. The clinicians I've spoken with are very enthusiastic about this. They are already supportive of the product, and this evidence reinforces their belief. However, we can't utilize or communicate this data until it is published, so it’s crucial for us to expedite that process. This reflects the potential we believe the drug has, which is now being validated. We'll also confirm this prospectively with the VOICE trial. Overall, I hope you can sense my optimism. After the ASN meeting, there was a lot of discussion about positive experiences, and the frustration lies primarily in operational challenges. People see the potential for changing patient care and want to be involved. Progress in dialysis takes time, but I'm confident we're on the right path.

And if I could just ask one more quickly. Just on acute kidney injury, have you gotten any sense of what the registrational path could potentially look like for this indication? Has there been any communication with the agency on potential expectations?

No, not yet. This is acute kidney injury is our compound AKB-9090, which we expect to start Phase I early next year. So it's a little early for having that conversation. The great thing is there's this group, the Kidney Health Initiative that ASN sponsors that has multiple manufacturers, the FDA is part of that as well. Elisa Thompson goes to those meetings regularly. And Steve Burke, our Chief Medical Officer and Head of R&D, he's a part of that. He actually chairs the Drug Committee, and he's chairing a special section on AKI. So similar to the way FDA agreed on a path forward for IgAN and seemingly for FSGS as well through the PARASOL activities, I would hope that there'll be real clarity on where AKI or what you have to do in a really streamlined way to get an AKI product approved. We have a few years before that matters to us yet, but it's great that Steve is directly working on that with the FDA and the ASN and the rest of KHI.

Our next question comes from Matthew Caufield of H.C. Wainwright & Company.

Just kind of a two-part question. First for Vafseo. At this stage, what do you view as the greatest hurdles to the LDO and medium dialysis organization expansion for just building on near-term growth? And then separately, for Auryxia, it was mentioned that the generic had not entered the market yet. And I was just curious kind of what your thoughts were there. It seems that may come as a slight surprise. Just trying to get sort of your thinking on that.

Thanks for the questions, Matt. I'll address the second part first. Auryxia continues to perform well. We anticipated generic approvals in March, but they haven't occurred, and we’re not certain why. We are focused on supplying the market and are aware of how much the authorized generic can sell, which comes from us. We plan to maintain our presence in the market. The revenue numbers reflect that Auryxia is doing exceptionally well, especially during the TDAPA period for phosphate binders. As long as that trend continues, we will take advantage of it. However, it’s challenging to think long-term because I expect the generic will eventually be approved. We have faced manufacturing challenges with the product. Although we currently have supply, it isn't as straightforward as some of our other products. Whether this is affecting the situation, I'm not sure, but we are content to meet the market's needs. The biggest obstacle lies in navigating the processes with dialysis providers. It's not as simple as launching other drugs where a doctor prescribes, and it gets filled at the pharmacy. Here, you also have to ensure that payers include it on their formularies. There are many more hurdles we need to clear, which we anticipated but still find frustrating in terms of timing. Once we get past these hurdles, we can focus on generating demand among physicians. My confidence stems from the fact that physicians believe in the product and want to prescribe it. We just need to overcome these operational challenges. If you have anything to add, Nick, feel free to jump in.

Yes, there are really three key points to consider, and John covered one of them well. The first is access. Access refers to enabling prescribing access through a widely usable protocol. Currently, with DaVita, the pilot program has concluded, and it is now available to 200,000 patients. While we still have work ahead with Fresenius, we have an additional 260,000 patients we can approach in the fourth quarter and into 2026. So, while we aren't entirely finished with this phase, it represents significant progress this quarter. The second point involves operational issues, which John mentioned. It's essential to recognize that each dialysis organization is unique. Sometimes, we need to become knowledgeable about their specific processes so we can effectively communicate that to prescribing physicians, making it easier for them to get patients started with the product. We're starting to grasp this and are making progress. The last point is about adherence, which we've discussed several times. We've gained numerous insights from USRC, and they have been instrumental in sharing these insights during the CMO meeting that John referenced. As a result, people are adjusting their behaviors and protocols for new individuals to incorporate these learnings. They are modifying their procedures to potentially enhance patient adherence, and our team is actively supporting this effort from both the commercial and medical perspectives.

Yes, at the start of the year, we had around 40,000 patients with Access. By 2026, we expect that number to grow to about seven times that amount. We need to address various challenges, but we're excited to see that the number of DaVita patients who can access the product is increasing from 10,000 to 200,000. It's encouraging that they're starting sooner, which will help us tackle these issues in the next couple of months. This will position us very well as we begin 2026. We're looking at seven times the number of patients who can potentially access the product, and that's not even including Fresenius, with whom we are actively engaging and had productive discussions at ASN. Eventually, they too will provide access to the product. There’s still much work ahead. Thank you for the questions, Matt.

And our next question comes from Roger Song of Jefferies.

Appreciating the current prescription is mostly coming from USRC strong. And then just curious about when you start with those new patients, including the DaVita and then DCI, IRC upcoming. So how should we think about new patient starts compared to USRC with a pretty strong start? And then also just a quick question related to the inventory. So you mentioned 4Q will be a little bit different. Just give us some color around the 3Q inventory? And then how should we expect for the 4Q?

Thank you for your questions. It's a crucial topic. The experience we had with USRC shouldn't necessarily be seen as a model for other dialysis providers. At USRC, we had strong advocacy from key leaders, who essentially directed us to focus on insured patients. This resulted in a significant uptake in the first quarter, which was beneficial. However, it also caused some adherence challenges, as the anemia nurses were quick to transition patients. While it was advantageous to onboard many patients quickly and gain valuable experience, other providers like DaVita, IRC, DCI, and Fresenius will focus more on growth driven by prescribers. Our commercial and medical organizations are well-equipped to manage this. Each provider needs to be considered individually. Although there is corporate support, we cannot mandate prescriptions. During the TDAPA period, the process necessitates confirming insurance, which adds time. Initially, U.S. Renal assessed all insured patients, and then doctors had to decide to prescribe, confirming insurance, which prolongs the process of onboarding patients. From the DaVita pilot, we learned it took longer than anticipated due to some system glitches. Transitioning from 100 sites to the thousands DaVita has doesn't happen overnight, but we are well-positioned for 2026. Recent discussions with corporate representatives provided confidence in the product's fit within the market. Regarding inventory, U.S. Renal, primarily where our sales come from, has been using 150-milligram tablets shipped to patients' homes. They have this inventory ready and, while they won't push for a change, I anticipate many patients and physicians will shift to TIW dosing, where the 300-milligram tablets are given at the dialysis center. They will need to deplete their 150-milligram stock, and since we ship directly to dialysis providers, the supply chain will be shorter, requiring less inventory of the 300-milligram tablets in the future. We are unsure about the exact Q4 inventory, but it will likely be somewhat lower than the Q3 ending figure.

They added about $1 million in total inventory in the third quarter. It's important to note that as they transition to TIW, physicians who want to prescribe the product are likely to prefer not putting patients through QD before switching to TIW. There may be some hesitance in the system for new patients to begin in the fourth quarter while they wait for the TIW protocol to be implemented.

Yes. They have made it clear to all the USRC physicians that they will be moving to that. They are doing it gradually through centers and expect to have them all available early, hopefully, early in Q1. I do think that if I were a doctor and I have someone I want to start, knowing I want to use TIW, I would likely wait until I can access that before starting them. So that could impact patient starts in the fourth quarter. However, we expect that improved adherence and compliance will be a long-term benefit for us.

I'm showing no further questions at this time. I'd like to turn it back to John Butler for closing remarks.

Thank you so much, and thanks to all of you for joining us this morning. As I said upfront, we're not satisfied with the revenue number we presented this morning, mostly because with data analyses like we presented last week, we're gaining awareness of the type of impact that Vafseo can have for patients. We are gaining access to patients. As I mentioned, when we start '26, we expect to have access to almost 7x as many patients as we did at the start of this year. We're dealing with the operational issues we're encountering, and we're driving demand from prescribers. Coming off this ASN meeting, my confidence has never been higher, and I look forward to updating you all on our progress. Thanks, everybody. Have a great day.

This concludes today's conference call. Thank you for participating, and you may now disconnect.