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spk11: Good day, ladies and gentlemen, and welcome to Akibia Therapeutics' first quarter of 2021 Financial Results and Business Update conference call. As a reminder, this call is being recorded. I would now like to introduce your host for today's event, Kristen Shepard, Senior Vice President of Investor Relations with Akibia.
spk06: Thank you, and welcome to Akibia's first quarter 2021 Financial Results and Business Update conference call. Please note that the press release detailing our results for the first quarter was issued earlier this morning and is available on the investor section of our website. For your convenience, a replay of today's call will also be available on our website shortly after we conclude today's call. 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 statement section of the press release we issued earlier today, as well as in the risk factors and management's discussion and analysis sections of our most recent annual and quarterly reports filed with the SEC. The four 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. John?
spk10: Thank you, Kristen, and thank you all for joining us today. Akiba is off to a great start in 2021, building positive momentum with solid execution on strategic priorities that set the stage for an exciting year. Most importantly, in late March, we submitted the Vatadustat new drug application to the FDA. Our comprehensive NDA submission package includes compelling data from over 8,000 patients across 36 clinical trials of Vatadustat, including our most recent global phase three program. We remain confident in both the clarity and quality of this data package. Submitting the NDA has been our highest priority since reporting our top-line results in 2020. It's a significant milestone for our company, our partner Otsuka, patients, and the entire kidney community. Although our team and our colleagues at Otsuka have extensive experience with regulatory submissions and interfacing with regulatory authorities, this is the first NDA for Akibia as a company. As an organization committed to bettering the lives of people impacted by kidney disease, we're excited to be advancing our lead product candidate and be one step closer to helping address the needs of people living with anemia due to CKD. On behalf of Akiva, I want to express our deepest appreciation to everyone involved in this program, including the physicians, investigators, site coordinators, and most importantly, the patients. We look forward to engaging with the FDA on our NDA and plan to provide an update on our submission at the end of this month. In addition to submitting the NDA, our team has also been hard at work supporting the independent Executive Steering Committee for the Vatadustat Global Phase III Program as they present and publish our Phase III data. Topline data has been presented at medical meetings, including ASN, and the methods papers for both programs have been published in peer-reviewed journals, Nephrology Dialysis and Transplantation, and the American Heart Journal. On our last call, we shared our expectation that the results manuscripts for our Phase III program would be published in a top-tier journal. We are honored that the results of both Innovate and Protect have been published in the New England Journal of Medicine. We believe acceptance and publication in the New England Journal reinforces the scientific rigor and quality of the development program, as well as the clarity of the data for the broader medical community. We're also proud as we believe these publications mark the first time that comprehensive Phase III efficacy and MACE safety results have been published in a peer-reviewed journal for a product candidate in the HIF-PHI class. The lead authors of these publications are Drs. Glenn Chertow from Stanford and Kai-Yui Eckart from Berlin, who are also the co-chairs of the Independent Executive Steering Committee for both Innovate and Protect. Doctors Chertau and Eckart and the entire committee, in collaboration with Akibia, designed the Global Phase III Program after extensive dialogue with the FDA and European regulators. This work included aligning with regulators on the details of our statistical analysis plan, the pre-specified analyses, and the non-inferiority margins. Publication of both innovate and protect efficacy and safety results in the New England Journal further demonstrates a collective commitment to transparency. And having recently submitted our NDA for Betadustat to the FDA, the timing of these publications could not have been better. Feedback and interest in these publications from key opinion leaders and the broader kidney community has been very positive. Subject to regulatory approval of Vatadustat, we believe these publications will be highly informative for physicians, patients, dialysis providers, and payers as they make important decisions about patient care, and potentially a key consideration when differentiating among HIFs in the class, as well as differentiating Vatadustat from treatment with ESAs. Of course, these are the initial results manuscripts. Given the richness of the data set we generated across the program, we anticipate additional data publications will not only inform physicians, but also have the potential to drive adoption of Vatadustat subject to FDA approval. Having successfully executed on the NDA submission and peer-reviewed publications, let's turn to the next phase of our story. The opportunity ahead of us is very clear, and our goal is for Vatadustat to become the oral standard of care for adult patients with anemia due to CKD. And, of course, my comments regarding the launch of Adadustad, its adoption and use, are all subject to its regulatory approval. We are progressing many exciting elements of our business plan towards ensuring the successful launch of Adadustad. Now, let me start with dialysis. We believe dialysis represents a potential $2 billion market opportunity in the U.S. alone. We're confident that upon approval, will have the potential to address the unmet needs of over 500,000 adult patients on dialysis in the US and rapidly establish Vatadustat as the new oral standard of care for the treatment of anemia due to CKD. We anticipate that the consistency and clarity of our dialysis data, bolstered by recent publications in the New England Journal, will play a meaningful role in helping dialysis providers develop treatment protocols which are critical to driving adoption in the dialysis market. To further strengthen Vatadustat's potential profile for in-center dialysis patients, we're conducting two studies, one led by our partner, Otsuka, to demonstrate that Vatadustat can also be dosed three times a week. We plan to have data from these studies available at launch, and assuming the data are positive, use them to support a supplemental NDA for this dosing regimen post-approval. Although the significant majority of dialysis patients are cared for in center, several factors including the COVID-19 pandemic are supporting a growing shift towards home dialysis. Based on reports from the largest dialysis providers, home dialysis appears to be the fastest growing segment of the dialysis population. These trends are exciting as we believe that as a convenient once daily oral therapeutic, Vatadustat 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, simplify administration, and grow their home programs. In fact, data from our Innovate program showed that the results in the subgroup of patients receiving peritoneal dialysis, the largest segment of home dialysis, were similar to the overall population. We very much look forward to presenting these data at a future medical meeting and sharing where appropriate with dialysis providers. With our planned commercial launch and strategic alignments, we believe that we can support rapid adoption of Vatadustat in the dialysis market. We intend to leverage our existing nephrology-focused commercial organization with our partner Otsuka sharing in the launch costs and responsibilities. Understanding the dynamics of the dialysis industry, we strategically positioned Vatadustat for potential rapid adoption in up to 60% of the U.S. dialysis market via an exclusive distribution relationship with V4 Pharma. 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. We continue to believe that the commercial and operational advantages with this go-to-market strategy will be meaningful to both our near-term and long-term growth potential in this market. We're also continuing to advance our launch preparedness activities. These activities include ongoing cultivation of key medical expert and patient advocacy relationships, development of the Vatadustat brand, Salesforce optimization, and market access activities. We're encouraged by the growing awareness at society and medical meetings where HIF-PHI's potential in treating anemia are a focal point of both sessions and discussions. Again, there's a significant unmet need among patients with anemia due to CKD, and we see a promising opportunity in Vatadustat to advance the standard of care for patients on dialysis. I'm turning to non-dialysis. As I mentioned earlier and consistent with our prior comments, we submitted our NDA for Vatadustat pursuing a broad label for both adult patients on dialysis and adult patients not on dialysis. While we remain cautious for approval in non-dialysis, we believe we've put forward a compelling and extensive NDA data package, and we look forward to working with the FDA in the review of the efficacy and safety data. Now shifting gears to performance of our existing commercial product, Erixia. Despite the ongoing negative impact of COVID-19 on dialysis patients, We're encouraged with Arixia's performance in the first quarter. We continue to be pleased with how the market is viewing Arixia's strengths. And importantly, our team continues to do a great job supporting our customers and patients, getting our therapies to those in need. We're also proud that through our work with industry groups, including kidney care partners, we were able to assist in helping the administration prioritize vaccines for these patients who are among the most at risk for COVID. We're hopeful that as the industry continues to focus on prioritizing vaccines for dialysis patients, COVID-related hospitalizations and mortality steadily decline. In summary, we accomplished a great deal, both in the first quarter and more recently with the New England Journal of Medicine publications, setting the stage for what's shaping up to be an exciting year. Fundamental to our success is the team's ongoing execution of our strategic objectives. So I'd like to wrap up with an overview of potential catalysts we are executing on for 2021. Based on standard FDA review timelines, the FDA has a 60-day period to determine whether the NDA is complete and acceptable for review. Given this, we'd expect to provide an update on our NDA submission at the end of this month. Outside the U.S., we're working in close collaboration with Otsuka on Vatadustat's MAA submission to the European Medicines Agency, which is expected this year. We continue to explore potential development opportunities for Vatadustat and look to share more information on these efforts later this year. And where possible, any updates from UT Health regarding their ongoing investigator-sponsored study of Vatadustat as a potential therapy to prevent and lessen the severity of acute respiratory distress syndrome, or ARDS, in adult patients who have been hospitalized due to COVID-19. With a recent $5 million grant from the Department of Defense, UT Health has expanded the study to target 400 patients and currently has over 220 patients enrolled. As I mentioned, we also continue to execute on our publication strategy. We look towards additional presentations of our phase three results and data, including oral presentations of the hematologic efficacy of Vatadustat from both Innovate and Protect at the upcoming ERA-EDTA virtual medical meeting in June. and presentation of Innovate's home dialysis data, among others, at future medical conferences and in peer-reviewed journals. Lastly, as we move closer to the potential launch of Adadustat, we'll also look to share progress on our pre-commercial activities. We are pleased to be doing all of this from a place of financial strength, with a cash runway that extends beyond the expected U.S. launch of Adadustat, assuming timely regulatory approval and the receipt of associated regulatory milestones. And as Dave will discuss, we successfully executed on some key financial as well as operational priorities during Q1, and we remain committed to both maintaining a strong balance sheet and improving our cost structure moving forward. We are excited about the future. And together with our collaborator, Otsuka, we look forward to bringing Vatadustat 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.
spk08: Dave? Thank you, John, and good morning, everyone. As John mentioned, we are very excited to have submitted our NDA for Vatadustat and look forward to engaging with the FDA on our now-published global Phase III results in the New England Journal of Medicine. Having laid the groundwork for potential approval, we're continuing to focus on what's ahead. We're executing on key commercial, development, and financial priorities and making good progress positioning Akiva to deliver on our strategy and build long-term value for our shareholders. Turning to our financial results. Starting with revenue. Total revenue was $52.3 million for the first quarter of 2021 compared to $88.5 million for the first quarter of 2020. reflecting lower collaboration revenue consistent with successfully completing our global Phase III clinical development program for Vatadustat. In terms of Akiva's commercial performance, net product revenue for Orixia increased 4% to $30.4 million for the first quarter of 2021, compared with $29.2 million for the first quarter of 2020. Despite the ongoing impact of COVID-19 on dialysis patients, we are encouraged by this growth. We believe this performance highlights Arixia's favorable product profile and the critical nature of this therapy, as well as our team's ability to execute at a high level. While we remain cautious due to COVID-19, together with our continued commercial efforts, we remain confident that Arixia's positioning will drive product revenue growth for the year. Turning to expenses, we continue to prioritize investments to support our business objectives and ensure a successful launch of Vata-Dustat subject to approval, while also continuing to focus on growing product revenue, improving costs, and advancing our pipeline of development opportunities, including potential label expansion opportunities for Vata-Dustat after its potential approval. Cost of goods sold was $34.6 million for the first quarter of 2021 compared to $27.7 million for the first quarter of 2020. The increase was driven by higher non-cash purchase accounting adjustments as a result of the merger with Carex and a $5.1 million non-cash charge to inventory reserves related to a previously disclosed manufacturing quality issue related to Erixia. These charges were partially offset by an 8.9 million non-cash gain related to a reduction to the liability for excess purchase commitments of a Rixia drug product. As you may recall, earlier this year, we successfully renegotiated certain supply agreements, reducing excess purchase commitments that predate the merger and provide us with additional manufacturing flexibility. We believe these modifications help better position the company moving forward. In addition, We have now fully expensed our inventory step-up from the merger accounting and now expect COGS to begin to normalize in Q2, which is about a quarter earlier than our previous expectation. Research and development expenses were $40.6 million for the first quarter of 2021 compared to $81.2 million for the first quarter of 2020. The spending reduction was primarily driven by a decrease in costs consistent with completing the Innovate and Protect programs. We 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 Vatadustat. Selling, general, and administrative expenses increased to $41.3 million for the first quarter of 2021, compared to $38 million for the first quarter of 2020. As our commercial team is already in place, we continue to expect only a modest increase in SG&A from 2020 as we invest in Vatadustep pre-commercial activities and continue to support Eurexia growth. For our bottom line, net loss was $69.6 million for the first quarter of 2021 compared to $60.7 million for the first quarter of 2020. The increase was primarily due to lower collaboration revenue and higher COGS, partially offset by lower operating expenses. Turning to our capital position, we ended the first quarter with $272.8 million in cash, cash equivalents, and available for sale securities. As previously announced, we strengthened our balance sheet in February with the completion of a non-dilutive transaction to monetize our royalties and sales milestones on Vatabuse.net sales under our collaboration agreement with Mitsubishi Tanabe Pharma Corporation, with an upfront payment of 45 million from healthcare royalty management. Our Q1 cash balance includes the impact of this transaction, as well as 29.8 million in proceeds from sales under our ATM in the first quarter. These funds more than offset cash usage in the quarter, including approximately 30 million of planned consumption of working capital as timing of receivables and payables moved unfavorably from year end. As John mentioned earlier, as we move towards an expected Vatavistat launch in the U.S., subject to approval, we continue to focus on improving our cost structure and maintaining a strong balance sheet to ensure the company remains well positioned. We're being disciplined in the investments we make and remain focused on quality, driving efficiencies, and improvement in manufacturing and supply chain managing costs, and are committed to driving operating leverage from our existing commercial resources. Wrapping up, we expect our cash resources to fund our current operating plan beyond the expected U.S. launch of Vatadustat, assuming timely regulatory approval and the receipt of associated regulatory milestones. With that, we'll open up the line for questions. Operator?
spk11: If you'd like to ask a question, please press star then 1. If your question has been answered and you'd like to move yourself in the queue, press the pound key. Our first question comes from Chris Raymond with Piper Sandler. Your line is open.
spk01: Good morning. This is Allie for Chris this morning. Thank you for taking the questions. So first, congrats on the data publication in NEJM. I'm just wondering if there's any color on the kind of feedback you're getting from the nephrology community. We're specifically curious about the feedback on a couple aspects of the data, the similarity of MACE data between incident and prevalent dialysis patients, and also the geographic difference in the MACE hazard ratios for US versus XUS predialysis patients. So just wondering if you could characterize that feedback. And then separately, just wondering if you could comment on your view of the likelihood of an ADCOM in light of your, the NDA submission and also the scheduling of a panel for Roxxivistat, and just when would you expect to know whether FDA plans to hold one for Vatavistat? Thanks.
spk10: Okay. Thanks very much, Allie. So feedback. So the publication was a week ago. So it's, you know, still early days, but I have to say it's been quite positive. You know, I mean, publication, as you mentioned in the New England Journal, You know, it kind of is the pinnacle of where you want to have an innovative program data published. And the fact that, you know, they published, you know, quickly moved Protect through to publish both Innovate and Protect together, I think really does speak to, you know, how important the technology is. And, again, I think that's generally reflected in the way physicians react to the data. You know, one of the things we have been hearing really since ASN is, is, you know, as we talk about the consistency of the data and the clarity of the data and the straightforward design of the program, I mean, that's what we're hearing back, right? People can understand the program extraordinarily well, and they can assess it. And, of course, the dialysis data, you know, this is what physicians want to see, right? They want to see consistency of data. They want to be able to understand what they're seeing. And, you know, the fact that you have, you know, hazard ratio and innovate, Overall for MACE, MACE+, all-cause mortality, cardiovascular mortality, all basically the same incident prevalent. They can have a lot of confidence in that data. Clearly still questions to answer on the PROTECT studies, but again, a hallmark of what we've tried to do is to be transparent. with all of our data and allow physicians to have that conversation. And I think it's not the first time they've seen geographic differences in studies like this. And certainly U.S. physicians are very focused on the effects of the drug in the U.S. population. And this is... We're really expecting, you know, this is just the first publication, right? I mean, this is an incredibly rich data set. So, you know, we will have many more publications and many more opportunities to dig more deeply into the data. But, you know, so far we're really very, very pleased. Your second question, I think, was on the ad comms. Way too early, of course, for us to know. As we've said before, we would welcome an adcom. We'd be excited about telling the story. We are very confident in our data in both dialysis and non-dialysis, and we look forward to being able to put that forward to an adcom. Just on the standard review process with FDA, we mentioned by the end of the month, we'd be 60 days post the submission, and that's when you'll hear about PDUFA dates and acceptance for filing. Unlikely to hear about ADCOM then, but that's the earliest you could. So we're just really excited about engaging with the FDA now in their review and working with them over the next 10 months or so.
spk01: Great. Thank you.
spk11: Our next question comes from Alethea Young with Cantor Fitzgerald. Your line is open.
spk12: Hey, guys. Thanks for taking my question, and congrats on the publication. That's a big deal. So I had a couple of ones. I just wanted you to talk a little bit about, like, how you think your now dialysis, non-dialysis data shapes up in light of what's been going on with, like, your competitor, Rapsoducet. Also, I was curious, you know, kind of, Of the people who are, like, in the community, you know, in that network, I think you have somewhat of an access to. I just wanted to kind of talk about how you get market share beyond potentially what, you know, would be contracted. And, like, I'm sure New England Journal is a big piece of helping that storyline strengthen. So just those two questions from me. Thanks.
spk10: Alicia, thanks very much for the questions. So obviously not appropriate for me to comment on competitor data. But let me just remind you, of how we approached our development program. I mean, we worked with the FDA and the EMA right from the beginning, talking through what was appropriate, you know, what they wanted to see in an application. We wanted to design a program that was incredibly straightforward, that could answer the questions that were being asked. And, you know, I think that the results of that are easier to see now in that, you know, you have this publication in the New England Journal. And, you know, we're very, very... proud of that, of the work that the team did. Remember, we also engaged with an executive steering committee that helped us to design the program, statistical analysis plan, all of the other pieces that we also engaged with the regulators. So we had very strong independent review and oversight of the program, which once again helps as you move out into the community. So we feel quite a bit of confidence in our data. Dialysis is incredibly straightforward, and as I mentioned previously, we're confident in the non-dialysis data here as well, though cautious. But you really alluded to it with your second question. When you have something like a publication in the New England Journal, that is an incredibly strong uh, signal to the market about the, uh, about the drug. And, um, you know, we are, you know, we're, we're obviously very excited about the relationship that we have with V4 and, and access to 60% of the market, but the pull through of that really will be done by Akibia. And there's no part of the market that we, uh, that we aren't focused on. You know, we think that, um, that this product could be appropriate for a very large percentage of patients on dialysis. And again, potentially on who are not on dialysis as well. So we think the New England Journal papers will help. We think that the subsequent publications, the robustness of this data, the clarity of the program, all of that will be incredibly important to driving share. Now, there's also, as you look at the market, you also have to look at, you know, what's growing in the dialysis market? Well, the home dialysis segment is growing. I mean, COVID-19, I think, you know, put that on a very different plane, right? I mean, everyone recognized that keeping these patients out of the dialysis center has great benefits. And, you know, it's a once-a-day oral product for that population. You know, that's a very straightforward population. Now, to be clear, I mean, we are not niching the product in that space. We think this can be an important product for the entire dialysis population. But when you look outside of the 60% covered by the V4 agreement, you know, those home in DaVita, for instance, that home population is growing quite quickly as well. And, you know, we're excited about the opportunity to potentially have those patients on therapy and others as well.
spk12: Awesome. Thank you very much.
spk11: Our next question comes from Diffie Yang with Missoula Securities. Your line is open.
spk05: Hi. Good morning and thanks for taking my questions. Just two questions. John, could you talk to us about how Tdapa process work and how quickly can you get the Tdapa approval after NDA approval? And then secondarily, what's the significance of three times weekly dosing to the dialysis setting? Thank you.
spk10: Thank you very much. So Tdap is a process. You have to remember there hasn't been a product that's gone through it yet, so we're making some assumptions about that. I mean, the key for us is to file for our HICS-FIX code as quickly as possible after approval, of course. You can't file until you have approval. And then there will be a process once that's given that you then get your TDAPA reimbursement. So exactly how long that's going to take depends on the timing of your approval and, again, how quickly the government works. towards that. So, there's still a little bit of unknown here, but we're looking to move as quickly as possible. I mean, the rule is really clear about the fact that we qualify and, you know, we'll get to that, but it's more in the execution of how quickly, you know, things will move.
spk07: And then the dosing.
spk10: Oh, the dosing, three times weekly dosing. Yeah, so... So, obviously, our goal is to have the most flexibility possible for physicians and dialysis providers. So, you know, we believe having three times weekly will be important in the dialysis center. You know, we've shown that in Phase II that we can dose three times weekly successfully, but we obviously need to generate more data to have that added to the label. So our partner, Otsuka, is running the modified trial, and we're running focus, and we expect to have data available at launch where we can quickly file a supplemental NDA and have that added to our label after that. But we do think that's important for us to maximize the value of the product in the market.
spk05: Thank you, John. A quick follow-up with regards to the milestone, a regulatory approval-related milestone payment. Do you have reminders how big is that payment?
spk08: Hi, it's Dave. So we haven't provided specific guidance on exactly what that would be, but they are significant, and they are time-driven based on how quickly we are approved subsequent to ROC's adduced status, assuming that they are approved.
spk07: And to say, if you know, there's disclosures in the 10-K and the Q that go through some of the commercial milestones, you know, in totality, so you can kind of back into some numbers in those disclosures.
spk05: Thank you both.
spk10: Thanks, Deepay.
spk11: Our next question comes from Bert Haslett with BTIG. Your line is open.
spk04: Yeah, thanks. Congratulations on all the progress in a number of different ways. John, would you be so kind as to put just a little more meat on the bone with regard to what you think with regard to home dialysis trends today? kind of, you know, where they stand now and what you might anticipate 12 and then 24 and, you know, three and five years from now. Again, just there's been a material change here. Just love your insights as to how you think that's going to translate over the next couple of years.
spk10: Yeah, that's a great question, Bert, and it's one that, you know, I think it You'll ask different people, and they'll have different opinions. It's sub-20% of the market today. I think it's actually around 15. I'm going to be just a little short of that. But as I said, this is real desire to drive that. And even within CMS, they're putting payment models together that encourage people driving this ETC model that encourages, and this is a model that they have to be a part of, that encourages dialysis providers to push people, push people is the wrong words to use, but make sure people are moved to home dialysis. There are clearly patients who just simply don't have the ability themselves or the care providers, et cetera, to do home dialysis. So, again, from my perspective, you're not going to have half of the market at home. But it is, at the end of the day, the most important thing is for patients to have choice and have that choice when they're starting. Right now it's very easy to put someone on dialysis in the center, and it takes more work to put them on home dialysis. And I think that's one of the areas where I really see this changing, is that, because patients often crash in the hospital, need to go on to dialysis, how can we enable them to go on to home? That is a focus from many of the organizations that we work with, including the kidney care partners, How do we provide patients the training? How do we make sure they have the choice? I think there can be very significant growth, and I think that's what patient groups want, that's what physicians want, and ultimately that's what the Vita and Fresenius say they're moving towards as well. And so I think, you know, you have the whole community aligned towards that. It can be quite significant.
spk04: Okay, thank you. And then just a couple of nuts and bolts. questions with regard to numbers. With regard to Orixia, I think there was another inventory charge of $5.6 million, if I heard correctly in the comments. Are we cleaned up with that now, these inventory charges with regard to manufacturing? And is that all shored up, or are there still some remainders left to be worked through? And then just one more on R&D after that.
spk08: Hey, Bert. So on the inventory charges, we have taken all the charges that we are aware of. We've taken huge steps in improving our culture of quality and, you know, been – doing everything we can to make sure that we are fully on track there. You know, I can't say that it's fully behind us because you don't know what you don't know, but we're really confident that what we've captured is everything that we're aware of.
spk10: And it's important to point out that this has never been a safety issue. I mean, this is a manufacturing quality issue, but never a patient safety concern. And, you know, the thing is, As you improve your organization and you build that quality culture, these things have come to light, right? And then you deal with them. And moving forward, I have a lot of confidence in the team that we've built that culture and we're moving forward in a really positive way. But, you know, I think Dave's exactly right. You don't know what you don't know.
spk04: Okay. And then just one more on R&D spend. You mentioned that its level will still be significant as you're building inventory and doing other kind of prelaunch activities. How should we think about that, assuming approval, again, sometime around year end? How do we think about R&D spend as a steady state number a year or two or three out?
spk08: Yeah, so Bert, on the R&D spend, so we are continuing to invest in that label expansion, like John mentioned, especially with the TIW studies. Those are much less significant in magnitude than Innovate and Protect were. And once we're able to capitalize inventory, you will see the R&D spend as a total shift down. Obviously, our inventory balances will move up.
spk10: Right, I mean, then you have requirements like pediatric studies, you have the medical affairs support in the field. So there'll always be a level of R&D spending. And then beyond the TIW studies, we also want to explore expanding value stats indications as well. And that's an assessment that's ongoing now, so it's hard to say what that level of spending would be, but to echo what Dave said, it's nowhere near what we spent on innovate and protect. So, you know, it'll get to a much more rational ongoing level of spend. But as we understand those opportunities better, we can come back and clarify that.
spk04: Okay. Just to follow up quickly, with regard to the expanding indications, are those all subject to the OTSUCA agreement? Could you just remind us of OTSUCA's role in that? Do they have a right of first refusal, or how does the agreement contemplate additional indications?
spk08: Yeah, so Otsuka does have a right of first refusal, so they would participate in the development spend as well as the commercialization cost, and we would obviously then share the profits of anything that we bring in. Okay, great.
spk04: Thanks. Congrats on the progress. Thank you. Thanks, Bert.
spk11: Our next question comes from David Lebowitz with Morgan Stanley. Your line is open.
spk09: Thank you very much for taking my question. When you look at launching in the dialysis space, given the data that you have produced and the data that competitors have produced, what's the argument now for the HIFs versus ESAs, given that physicians have 20-plus years of experience with ESAs And it really is changing the way they're treating patients for anemia. And you don't really have the safety argument at this point to make. What's the argument to get them to switch?
spk10: So I think, again, when you look at the Innovate data, you see this consistent result wherever you look with a hazard ratio that is below 1%. when you have conversations with physicians who will be doing the treating, I mean, they are extremely excited about the opportunity to use this product. And beyond simply the convenience of giving someone a pill versus, you know, even though they're sitting in a center and, you know, you can easily give them the EPO, there's a lot of costs that are associated with that. But, you know, again, when you look at what matters to physicians, They equate risk with elevated EPO levels, giving these super physiologic doses of the protein, which you do not do with Vatadustat. The EPO levels are very physiologic. When you look at the data, you see that you have significantly fewer excursions of hemoglobin levels beyond the target range, you have fewer dose adjustments, you have less cycling of hemoglobin, the up and down. These are all of the points that physicians equate with safety and what they're looking forward to with using Vatadustat if it's approved by the FDA. So we think there are very significant reasons and physicians that I've spoken to certainly seem to agree that the opportunity to try something new certainly exists and And obviously, in the non-dialysis population, that becomes an even more powerful message.
spk09: Thank you for taking my question.
spk10: Thanks, David.
spk11: As a reminder, to ask a question, please press star, then 1. Our next question comes from Ed Arce with HC Wainwright. Your line is open.
spk03: Great. Thank you for taking my questions. Let me add my congrats on the recent publications on the pivotal studies. First question is just around understanding the perspectives of prescribing physicians today. Obviously, the publications have only been out for a week or so. But just generally, help us understand, if you could, from what you're hearing, what physicians, how physicians now view the HIF space broadly in terms of treating patients in non-dialysis settings, given some of the recent data, both yours and competitors. And then I have a follow-up.
spk10: Ed, thanks for the question. So I think it's a very important question. You know, I I'll use an example. We were on the phone with a group of physicians, and Steve Burke, our CMO, was reviewing all of the data, Innovate and Protect, and going through it in detail, in the detail that you see in the New England Journal. This was a few weeks before the publication, though. One of the physicians, this is very anecdotal, but one of the physicians talked about how she has to drive her mother to get her ESA injection every month and it's very difficult for her and please could we make sure we get the approval on non-dialysis. In other words, she saw the data, she saw the US data, dug deeply into it and still wanted to literally treat her mother with the product. So, you know, I think that opportunity is there for us and that's the general perspective. As I said, you know, you go back to other studies and you see, you've seen regional differences, you've seen those kinds of things. And the U.S. data is, you know, it's compelling and it's very, very significant, more than 50% of the patients. So, you know, we think that, you know, if We're looking forward to working with the FDA, working through this, and if the FDA agrees and gives us an indication, we feel very strongly that we can be very successful in the market.
spk03: Okay. Thank you. That's helpful. And in terms of the MAA submission later this year, just wondering if you could remind us, are there any significant differences there between that submission relative to the NDA with any potential implications perhaps with labeling and other things that might differentiate the product slightly from in the U.S.?
spk10: So So, of course, Otsuka is leading the EMA process. We're working very closely. It's just kind of the reverse of what we did on the NDA. And much of the filing is the same, but obviously has to be in the European EMA format. There are parts that are different, and those are the things that we're working on. And of course, You know, there's also, you know, we're still working through analyses of the European data, et cetera, for the kind of strategic approach to the indications. We expect to file for both, as we did in the U.S., and we expect to submit this before the end of the year, or OPSA will submit before the end of the year. But, you know, some of the details of that are still work in process.
spk03: I see. Okay. Okay. And then lastly, if I may, John, is, you know, the expansion opportunities with Vatadustat that you mentioned, and I think you also mentioned that perhaps there might be an update in that regard later this year. You know, clearly this is still early days, but I'm just wondering if you could just give us a little more detail on how you think about the product in related opportunities. I realize you may not be at a point where you can name specific indications, but how you view the opportunity set for that VATADU stat, just generally in criteria that you look at as you examine the universe of potential and applications.
spk10: Yeah, thanks, Ed. It's a good question. So, I mean, the one area obviously that we have spoken about in the past and, you know, we're excited about is the investigator-sponsored study that's ongoing with UT Health down in Texas on the use of Vatadustat to lessen the severity of ARDS or acute respiratory distress syndrome in hospitalized patients with COVID-19. This obviously is a very significant opportunity. I think the virus is going to be with us for a long time. There are over 220 patients in. 220 was the last update we had from them. I'm sure they're higher than that now. If you recall, they got a $5.1 million grant from the Department of Defense. they decided to expand that study to 400 patients. So we should see a robust data set. Now, we don't control that, but obviously it's an investigator-sponsored study, but we do hope that we'll have data from that before the end of the year. And again, when you think about HIF and ARDS, that biology makes a lot of sense. And then beyond that, there are clearly other areas, you could probably tick them off, that are clear areas for, you know, where new anemia treatment could be beneficial, and that's the assessment we're doing now, and again, looking at, you know, clinical probability of success. We know this drug increases hemoglobin, you know, what the regulatory thresholds would be in the market opportunity, and, you know, that's ongoing now, as well as kind of looking at what the clinical development program might be for each of these opportunities, and as we said, we'll We'll update you later in the year as we've made decisions around them.
spk03: Okay, great. Thanks so much, John. Appreciate it.
spk10: Thank you, Ed.
spk11: There are no further questions. I'd like to turn the call back over to John Butler for any closing remarks. Thanks, Michelle. Actually, we do have one more question.
spk10: Okay.
spk11: From Eric Joseph with J.P. Morgan. Your line is open.
spk02: Hi, this is on for Eric. Thanks for taking the question. This is Hannah on for Eric. Thanks for taking the question. Just one from us. Given your comments on the compelling U.S. data in Innovate, just wondering if you're not granted approval for a non-dialysis CKD, would you or Otsuka look to revisit the opportunity in pre-CKD in a follow-on Phase III study?
spk10: So way too early to say what we would do there. We are obviously at the very early days of engaging with the FDA. Our engagement with them has been very transparent and collaborative and positive from our perspective. And as I said, we're still, at the end of the month we expect to hear from them around the filing, validation of the NDA. you know, you really start to work more closely with them and understand how they're thinking. Again, our perspective is that the quality and clarity of the data supports that there is an increased cardiovascular risk. But we have always said, you know, let's be cautious about how we think about it. And, you know, we're simply reiterating that today. But what that would mean if we weren't granted a label in this past, it's way too early to say.
spk02: Okay, great. That's helpful. Thanks for taking the question.
spk10: Thank you.
spk11: At this time, there are no further questions. I'd like to turn the call back over to John Butler for Nicole's remarks.
spk10: Thanks so much, Michelle, and thanks, everyone, for joining us on the call today. We look forward to continuing to update you on this very exciting year for Akibia on future calls. Thanks, all. Take care.
spk11: Ladies and gentlemen, this does conclude the conference. You may now disconnect. Everyone, have a great day.
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