This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk05: Good day, and welcome to Akiva's second quarter 2023 financial results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session, and instructions will be given at that time. As a reminder, this call is being recorded. I would now like to introduce your host for today, Mercedes Carrasco, Senior Director of Corporate Communications and Investor Relations. You may begin.
spk02: Thank you. Thank you and welcome to Akibia's second quarter 2023 financial results and business updates conference call. Please note that a press release was issued earlier today, Friday, August 25th, detailing our second 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, Dr. Steve Burke, Chief Medical Officer, and Ellen Snow, Chief Financial 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 August 25th, 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 to 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. As described in the press release, we intend to file an amendment to our 2022 Annual Report on Form 10-K to reflect corrections to our previously issued financial statements due to recently identified accounting errors related to the recording and reporting of return reserves for AREXIA, as well as our second quarter Form 10-Q. Please note that comments made during this call regarding the company's financials reflect revised financial statements for the years ended December 31st, 2022, 2021, and 2020, and the first quarter of 2023, as outlined in the press release and to be described in the amendment to the 2022 Form 10-K and the second quarter Form 10-Q. With that, I'd like to introduce our CEO, John Butler.
spk14: Thanks Mercedes, and thanks everyone for joining us. It's a pleasure to be here with you today. While this is a little later than we expected to be together, the extra time spent was necessary. We're very pleased that the revisions to our financial statements that we had to work through are not material and they don't impact the value of the company. You'll hear from Ellen shortly, but I want to thank her and her team for the work done over the past several weeks that helped to ensure we are best positioned to maximize value as we approach several important catalysts. First, let's focus on the operational progress that we've made over the past few months, working through towards the potential approval of our second product for patients with kidney disease, Vatadustat. We are now on a clear path to potentially gain US approval for Vatadustat as a treatment for anemia due to chronic kidney disease, or CKD, in adult patients on dialysis. In fact, as we shared earlier, we've received the minutes from our recent End of Dispute Type A meeting with the FDA, which reflect our productive discussion with the agency and support our optimism that we will resubmit our new drug application, or MDA, for Vatadustat by the end of this quarter. With that timing for resubmission, we would expect a decision from the FDA on the Vatadustat MDA in March of 2024. We have Dr. Steve Burke here to answer any questions about our interactions with the FDA or our timeline for NDA resubmission at the end of the call. And I'll also discuss initial plans for an anticipated launch next year, if approved. What's especially encouraging for our team at Akibia is that the momentum in the U.S. regulatory discussions follows tangible progress in markets around the globe. Today, I've added the status approved in 34 countries. In the past quarter alone, The European Commission, the United Kingdom Medicines and Healthcare Products Regulatory Agency, and Swiss Agency for Therapeutic Products approved Vafcio, Vatadustat, for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis in the EU, United Kingdom, and Switzerland, respectively. Further, Akiba expects a regulatory opinion on Vatadustat in Australia this year. I want to credit our team who assumed responsibility for the regulatory processes outside the U.S. mid-last year and worked efficiently to secure local approvals to help to enable Akibia to deliver a new therapeutic option to patients in need. To that end, we had previously discussed our priority was to secure a partner in Europe who would bring Vafsio to market. Here again, we met our objective and signed a license agreement with Medici. Medici is a fully integrated pharmaceutical company based in Germany with a strategic focus on the dialysis market. The license agreement grants Medici the exclusive rights to market and sell Vafcio in the European Economic Area, the United Kingdom, Switzerland, and Australia for the treatment of anemia in patients with CKD. The agreement included an upfront payment of $10 million, and in addition, we're eligible for commercial milestone payments up to an aggregate of $100 million and tiered royalty payments ranging from 10% to 30% of Medici's net sales. We believe Medici is situated to maximize the European market potential for Vatadustat. They understand the unique country by country pricing and access dynamics related to dialysis. They are committed and driven to succeed, and we continue to support their efforts. We expect Medici to launch as soon as possible in 2024. Building on the regulatory success we've had in other markets, we're eager to advance the regulatory approval process for Vataducet in the U.S. And approval in the U.S. would represent our most significant commercial market opportunity and allow us to target the 550,000 U.S. patients with anemia due to CKD who are receiving dialysis treatment. I'll note that the resubmission is a very focused filing. As part of the resubmission, we'll submit safety data collected since our original submission in 2021, including data from two alternate dosing studies, FOCUS and MODIFY. We'll also submit post-marketing data from Japan, where tens of thousands of patients have received the drug over the past two years. Now, working through a potential launch timeline, again, we expect to resubmit the NDA by the end of the quarter. So since we're submitting data that was not in the original NDA, our expectation is that our resubmission would undergo a six-month review. And this review period would commence upon submission. As such, we anticipate a new PDUFA date likely in March of 2024. Upon a potential approval, we'll quickly file for TdapA reimbursement, which is a six-month process. After receiving TdapA designation, we'd expect the product to be widely available for patients. We're actively preparing for a potential launch of Vatadustat and are reengaging around the commercial opportunity. Let me summarize. We estimate that approximately 88% of the nearly 550,000 patients on dialysis are treated with an erythropoiesis stimulating agent, or an ESA, for anemia. An injectable is currently the standard of care. Medications used to treat dialysis patients in the U.S. are paid for as part of a bundled payment made to dialysis providers. Now, to promote innovative drug use for Medicare patients on dialysis, CMS created a transitional add-on payment adjustment, or TDAPA. The add-on payment would cover the cost of Vatadustat when a physician prescribes the drug for two years after receiving the TDAPA designation on top of the regular bundle payment. The TDAPA payment would allow providers to incorporate innovative products like Vatadustat into their treatment protocols. while still receiving the full bundle payment for treatment of their PPS or prospective payment system Medicare patients. We believe that we've created a favorable environment for adoption of the product as we prepare for a potential launch. We have a collaboration with V4CSL that provides access to up to 60% of the dialysis market through existing V4CSL relationships, which includes Fresenius Kidney Care and most small to midsize providers. B4CSL has a relationship with Fresenius for the procurement of therapeutic products used in their network, and Vataducet would be made available through that collaboration. We believe V4's unique relationship and our experience in the dialysis market will create a favorable environment for pull-through within the dialysis centers. Together, we believe we are well-positioned for a successful launch if Vataducet is approved. Our collaboration with B4CSL is a profit share. where we retain approximately two-thirds of the profit from Vatadustat, net of certain pre-specified costs, with V4 CSL keeping the remaining one-third. For the remaining 40% of the dialysis market that V4 CSL does not have rights to sell to, we retain 100% of the economics. So one of the most common questions I get these days is on launch costs. I'll note that we are also in a strong position here. The most significant launch expenses relate to people and product. But we have the commercial organization in place today with only incremental additions needed, and we already have the product on the shelf to launch as soon as we receive approval. We believe our additional costs will be truly incremental. Now, to speak more about our financial position, I'm pleased to introduce Ellen Snow, who joined our team as CFO and Treasurer last month. Tom Frantz, Ellen's impact has been near immediate as she brought vast accounting and financial management expertise into the process to close the quarter. Tom Frantz, and put the organization on the right footing by strengthening our product return reserves accounting process that was described in the press release file this morning. Tom Frantz, This financial discipline discipline will be especially important as we prepare to launch that a do set in the US if approved Ellen.
spk07: Thanks, John. First, let me say that I'm extremely pleased to have joined Kibia last month. I saw significant potential and upside for the organization associated with the pending potential Vatadutstat FDA approval, as well as opportunities to optimize the company's cost structure and better leverage the cash flows from Arixia towards improving the balance sheet and creating shareholder value. I'm grateful to have a talented, hardworking, and dedicated accounting team who have worked tirelessly over the last few weeks as we identified and corrected errors in the accounting. As previously announced during the second quarter closed process, we identified errors related to the accruals for product returns. We concluded the errors represent a material weakness and internal controls over financial reporting, a deficiency we're working to remediate. We also intend to revise our financial statements and our 2022 annual report on Form 10-K to correct the impact of the errors, which will primarily impact the balance sheet and the affected years, including liabilities for product returns, accounts receivable, and goodwill, as well as immaterial changes to the prior year revenues. We expect to file our amended Form 10-K and second quarter Form 10-Q on Monday. Now let's move to our current financial position. Importantly, we believe our cash runway will fund our current operating plan for at least 12 months. Cash and cash equivalents as of June 30, 2023 were $53.6 million. Total revenue was $56.4 million for the second quarter of 2023. Of that, $42.2 million was Arixia Net Product Revenue and $14.1 was Other Revenue. Other revenue consists primarily of the $10 million upfront payment in connection with the Medici License Agreement. Arixia net product revenue increased 21.6% over the previous quarter. The growth was due to the timing of purchases and certain Arixia customers and expected cyclical demand from the first quarter to the second quarter. Arixia revenue decreased 2.5% compared to the same quarter of 2022. The decrease compared to the prior year period is due in part to the impact of the shifting payer mix and a volume decrease partially caused by the contracting dynamics and phosphate binder market erosion. We expected quarterly swings in the Arixia revenue, but had also expected the binder market to rebound. Based on our analysis, we believe the binder market is leveling, but there's evidence of a long tail impact of COVID in the dialysis community. We are in a position to affirm our 2023 net product revenue guidance of $175 to $180 million. Our team continues a high-touch engagement with key accounts, and we continue to carefully review the trends. We remain focused on maximizing Arixia revenue through its loss of exclusivity in March of 2025. Regarding expenses, we've reported a decrease in cost of goods sold and R&D expenses compared to the second quarter of 2022. Cost of goods sold decreased slightly to $17.3 million in the second quarter of 2023 from $18.6 million in the second quarter of 2022. R&D expenses decreased from $26 million to $20.2 million, a more than 20% decrease as a result of reduced spending on Vatadustat development, R&D headcount, and outsourced contract services. We have curtailed non-headcount related expenses growth by continuing to find ways of operating more efficiently, placing an increased scrutiny on all areas of operating expenses, and taking measures such as reducing our office footprint with the assignment of the Seaport office lease, which was completed at the end of the second quarter. We are deliberate about managing our expenses in an effort to extend our runway, which will be achieved in part by keeping 2023 headcount relatively flat with current levels. In the time I've spent at Akiva, it's clear that everyone on the team is dedicated to managing resources while continuing to deliver on their individual and group objectives. Revenue from Arixia continues to provide cash for operations, and our teams are motivated by the progress we've made across the business this quarter as we all work to prepare for the launch of Vatadustat in the U.S. next year if approved. With that, let's open the line for questions.
spk05: Thank you. If you'd like to ask a question, please press star 1-1. If your question hasn't answered and you'd like to remove yourself in the queue, please press star 1-1 again. Our first question comes from Allison Bratzel with Piper Sandler. Your line is open.
spk03: Hey, good morning, and thank you for taking the questions. So first, just hoping you could frame for us from a high-level topics that were addressed at the Type A meeting, any remaining gating factors to resubmission for Vatadustat, and just your confidence that FDA will find the resubmission approvable in dialysis without the generation of additional clinical data, and then I have a follow-up.
spk14: Sure, Allie. Thanks for the question. I mean, it was, I think the Type A meeting was a pretty technical meeting in a lot of ways. Steve is here and attended the meeting. Steve, maybe give a little color?
spk12: Sure. This is Steve Burke, the Chief Medical Officer. The meeting was, it's like a a pre-NDA meeting where you meet with the agency to describe how you're going to present the requested data and is that acceptable to them. So for instance, like when we finish an NDA review, we have a 120-day safety update. So we have to do another safety update. And so we just clarified, for instance, the window in which any new data would be collected and reported. So John alluded earlier to the modify and focus studies. what we were going to present, what we were going to provide to them, and was that acceptable, how we were going to present Japanese post-marketing surveillance data, the actual components and how it would be analyzed, and things of this nature. They also had asked some questions about some additional analyses they wanted of the Phase III data. But all of this is pretty modest in scope. but as John indicated, is new data, and therefore, you know, we expect they will get a six-month review clock because of that. I think we're satisfying all the requests and have really excellent clarity of what they want and expect from us, and that we're able to deliver that, and there's no need for us to generate new data, clinical data.
spk14: Yeah, I would say that it was an amazingly collaborative meeting, kind of given that know the crl from last year it was it was very focused on you know what we need to uh um to put through and even going into it most of the questions that we asked we posed to them um you know they found our approach reasonable so it was really more clarification than anything else so we feel pretty good about where where things are and very much on track for our filing that's helpful um so
spk03: Now, just hoping you could also walk us through your expectations for just for what the Veritaset launch will look like kind of between the March PDUFA and the receipt of TDAPA designation during that time frame. And then separately, if you could just kind of frame or compare contrast for us whether Corsuva's launch experience under TDAPA is a good analog for Vatadustat. Any color or perspective there would be helpful. Thanks.
spk14: Yeah. No, thanks for that question, Allie. So a couple of things that are really important to communicate. While we will make the product available during the post-launch pre-FIAAPA, it's really available for dialysis providers to purchase the product and develop protocols or the like. We don't expect widespread adoption until you have the TDAPA designation and they'll have the product reimbursed there outside of the bundle. So that's, I mean, I think that should be a clear expectation for everyone. You know, if we see any dollars, it'll be very modest and you'll really see that uptake at TDAPA. I think that the Corsuva question is a really important one as well, and I appreciate asking that. You know, the Corsuva launch is a very different product and a very different opportunity than Vatadustat, I think for a number of reasons. When you look at Corsuva, this is a product that was approved for pruritus, for severe itching, which is in a small number of patients. The average pricing that's published now for Corsuva is about $135 per dialysis session. And there's nothing in the bundle to cover pruritus other than 25 cents for Benadryl, right? So, you know, the $135, they'd be reimbursed for on a cost basis as well. But when you speak to physicians about, you know, that experience and that desire to use the product, they really worry about, you know, well, when PNAPA ends, there's no mechanism for me to continue to do use this product to benefit patients. And think about it. A bundle payment is about $280 per dialysis session, and you have $135 for Corsuva is a real worry from a financial perspective about having to use that, continuing to use that product. So you're just not seeing patients who could benefit from the product benefit. And so it's one of the reasons why we've been trying to push CMS to create a continued add-on payment beyond Tdapa, you know, that follows the drug and haven't been successful yet. Now, Vataduce, that's very different, right, because there's money in the bundle for ESAs today. The pricing will be very different. While it may be premium to ESAs, it's certainly not going to be $135 per dialysis session. And that those dollars that are in the bundle will continue to be in the bundle post-Tdapa. So now our pricing may have to change from a contracting perspective post-Tdapa. But it's not as if people are going to stop treating anemia or not treat anemia, right? They're going to do that, which they're not doing with pruritus. So, you know, Tdapa is very much a positive for us. It's been more of a challenge for Corsuba.
spk04: That's super helpful. Thank you.
spk14: Thanks, Allie.
spk05: Thank you. Our next question comes from Ed Arcee with HC Wainwright. Your line is open.
spk09: Great. Hello, everyone. Thanks for taking my questions. First, I just wanted to ask again on the Type A meeting. John, you and I have talked about this a number of times since the letter in May. specifically about the two issues from the CRL, the thrombotic events and the risk of DILI, and wanted to get your thoughts on how those meeting minutes, now that you have them in hand, are fully aligned with the path that was offered in that letter from Dr. Stein back in May. And then I have a follow-up.
spk14: Yeah, I think I can say unequivocally, Ed, that they're fully aligned. I mean, I think we have, as I said, and Steve, you kind of gave more detail on, I mean, a lot of that meeting is kind of how you're going to present the data. You know, it's more technical. But, you know, we had questions about our labeling, right? How to submit that. I mean, that's always a good sign, right? So, you know, it was, there was nothing to indicate in that meeting that there was, you anything that was misaligned with the letter that we received from Dr. Stein. You know, as I've said all along, I think that letter describes, you know, kind of the guardrails and the path for us and for the division. And I think that was reflected in the discussions. It was, again, it was a very collaborative discussion. I mean, you know, it's fair to say you never are quite sure what you're going to, when you get, when you go into those meetings. And I think sure Steve agrees. I mean, we were quite pleased with the quality of the focus on the issues and the collaborative nature of the discussion. And, you know, it makes us feel quite good about our path forward.
spk09: Great. And then I'd like to ask if you could remind us of the objective of having the modifying focus studies included in the resubmission?
spk14: Yes. So, for this resubmission, that's an important question. I mean, obviously, we think the modifying focus studies will be quite helpful in securing three times weekly dosing in our label after our initial approval. But it's clear they won't be looking at that three times weekly dosing regimen for this initial approval the the the reason for adding the modify and focus data is to um you you basically have to add all of your safety data uh to your for your filing right which we have to do in 21 when we originally filed and now we simply have to update um all of the safety data that we have so you know it won't be um you know they won't be considering efficacy from those studies at all while, you know, we know that they were successful and, you know, we think we're expecting they'll support our three times weekly filing and we're working to publish them quickly, it won't be in the label.
spk09: Okay, great. Actually, if I could squeeze one more in. Question on Eryxia, probably for Ms. Snow. Given that the half-year net sales is now about 78 million, and you're, you know, reaffirming your guidance of 175 to 180 for the full year. I'm just wondering if you could help us understand what gives you the confidence to reach that guidance, especially given what you describe as a decline in the phosphate binder market. Thanks.
spk14: Yeah, thanks, Ed. I appreciate the question. So a number of things. There are, you know, if you look at the dynamics of sales over the past couple of years, it's kind of that September to December timeframe really is, you know, kind of where we see a significant step up. To be sure, I would say that our, you know, we had an expectation of our price being a bit higher, but our payer mix has skewed towards Part D a little bit more than we expected so you know I would say you know my expectation is probably we're more on the lower end of our guidance range but when you look at you know there's a number of qualitative things as well one of the large dialysis providers hadn't let our sales reps in to see people at all and everything was being done virtually that's just changed in the last month and you know I think everyone could agree that that sales reps can be much more effective, um, when they're face to face, um, with people. So, you know, we expect that to be helpful as well. Um, and, uh, uh, you know, a number of other, uh, those types of dynamics, as Ellen said, we think that the binder market has still been under pressure, um, you know, but it is flattening, if you will, we think this is, you know, obviously we'll continue to monitor this, but, you know, as, uh, um, Robert Hechtman, Jr.: : You know, as it flattens I mean patients still need to be treated right so as they come in the funnel I think there's there's opportunity there and. Robert Hechtman, Jr.: : And you know, we also expect competitive product to be launched in the back half of this year as well, and. Robert Hechtman, Jr.: : You know that will come, I think, with a lot of focus on phosphate control and that's kind of one of those rising tide looks all boats. Robert Hechtman, Jr.: : At moments as well, so when you know I think that there's a number of those types of issues that that allow us to maintain that guidance, albeit I would say. I would think more towards the lower end of the range, where earlier in the year I was expecting the higher end.
spk09: Great. That's very helpful. Thanks so much.
spk14: Thank you, Ed.
spk05: Thank you. Our next question comes from Julian Harrison with BTIG. Your line is open.
spk01: Hi. Good morning. Congrats on the progress, and thank you for taking my questions. First, just on the three-times-weekly dosing regimen, again, you studied it in focus. I'm curious if you could talk more about your strategy there and how soon a potential label for bataduce that could maybe be amended with this dosing regimen.
spk14: Sure. So thanks, Julian, for the question. Welcome to the call. So three-times-weekly is very helpful for treating patients in the dialysis center. You give them the dose regularly. during their dialysis session, you ensure compliance from the patient, you don't have to send them home with drugs. So, you know, we've always felt that that was something that was important, and that's something that we could potentially add to the label, though we never expected to have it in the label at launch. We will publish the data, you know, we expect it to be presented at the ASN meeting in October from FOCUS. Focus was the large study that really looked at that three times weekly dosing. Then, you know, once we have our NDA approved in March, of course, as we've been talking about and expect, then we'll have a conversation with the FDA about supplemental NDA where we'll submit for three times weekly dosing. You know, again, when you think about the low-hanging fruit for, you know, the product adoption initially, It's home patients where daily dosing works just fine. And I would say patients who are on the highest doses of ESAs where they're having the risk of exposure to high doses of ESAs and added cost as well to the dialysis provider. And even though those might be in center patients, I think they'd be willing to dose them once a day and send them home with drug or rely on the publication and choose to use three times weekly dosing. You know, of course, we wouldn't be promoting three times weekly dosing until it's in our label, but that's certainly something that physicians can choose to do with the data that supports it. And then, you know, as I said, we will work to have the three times weekly dosing regimen added to our label as quickly as we can.
spk01: Okay, got it. Thanks. That's helpful. And then earlier in the call, you gave a great overview on your current commercial preparations Sorry if I missed it, but I was just curious if you're talking at all about how much you're manufacturing at risk ahead of potential approval of Vataducet.
spk14: Yeah, thanks for that question, Julian. As I mentioned, the two biggest costs are people and product, and product is a really significant one. Remember, we had product on the shelf ready to launch back last year, And our quality team has done a magnificent job of continuing to generate data, and we were able to push out the expiry date on that product to four years. So that product that's on the shelf today will be able to support our launch. So, you know, we don't have to do any incremental manufacturing and take that incremental cost to be ready to launch the drug. And, of course, that drug is also going to support Medici and the European launch as well.
spk08: Excellent. Great to hear. Thanks again. Thanks so much, Julian.
spk05: Thank you. There are no further questions. I'd like to turn the call over to John Butler for closing remarks.
spk14: Thanks, Michelle. We are extremely pleased with the progress we've made last quarter as we've made significant strides towards our purpose to better the lives of people impacted by kidney disease. We're preparing for very near-term potential catalysts, most immediately the resubmission of the Vatadustat NDA next month. With this momentum, we believe we're now poised to disrupt the market for the anemia of CKD in dialysis patients if Atadustat is approved. Everyone at ATV is excited to be in that position and remains motivated by our potential to help patients. The team is focused on the work we need to do in the very near future to get us there. And I look forward to continuing to update you as we move through resubmission, acceptance, and ultimately potential approval and launch of Atadustat in the U.S. Thank you all for joining us today.
spk05: Thank you for your participation. This does include the program and you may now disconnect. Everyone have a great day.
spk04: Goodbye. Hello. Thank you. Thank you. Thank you. Thank you.
spk05: Good day, and welcome to Akiva's second quarter 2023 financial results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session, and instructions will be given at that time. As a reminder, this call is being recorded. I would now like to introduce your host for today, Mercedes Carrasco, Senior Director of Corporate Communications and Investor Relations. You may begin.
spk02: Thank you. Thank you, and welcome to Akibia's second quarter 2023 financial results and business updates conference call. Please note that a press release was issued earlier today, Friday, August 25th, detailing our second 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, Dr. Steve Burke, Chief Medical Officer, and Ellen Snow, Chief Financial 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 August 25th, 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 to 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. As described in the press release, we intend to file an amendment to our 2022 Annual Report on Form 10-K to reflect corrections to our previously issued financial statements due to recently identified accounting errors related to the recording and reporting of return reserves for AREXIA, as well as our second quarter Form 10-Q. Please note that comments made during this call regarding the company's financials reflect revised financial statements for the years ended December 31st, 2022, 2021, and 2020, and the first quarter of 2023, as outlined in the press release and to be described in the amendment to the 2022 Form 10-K and the second quarter Form 10-Q. With that, I'd like to introduce our CEO, John Butler.
spk14: Thanks Mercedes, and thanks everyone for joining us. It's a pleasure to be here with you today. While this is a little later than we expected to be together, the extra time spent was necessary. We're very pleased that the revisions to our financial statements that we had to work through are not material and they don't impact the value of the company. You'll hear from Ellen shortly, but I want to thank her and her team for the work done over the past several weeks that helped to ensure we are best positioned to maximize value as we approach several important catalysts. First, let's focus on the operational progress that we've made over the past few months, working through towards the potential approval of our second product for patients with kidney disease, Vatadustat. We're now on a clear path to potentially gain US approval for Vatadustat as a treatment for anemia due to chronic kidney disease, or CKD, in adult patients on dialysis. In fact, as we shared earlier, we've received the minutes from our recent End of Dispute Type A meeting with the FDA, which reflect our productive discussion with the agency and support our optimism that we will resubmit our new drug application, or MDA, for Vatadustat by the end of this quarter. With that timing for resubmission, we would expect a decision from the FDA on the Vatadustat MDA in March of 2024. We have Dr. Steve Burke here to answer any questions about our interactions with the FDA or our timeline for NDA resubmission at the end of the call. And I'll also discuss initial plans for an anticipated launch next year, if approved. What's especially encouraging for our team at Akibia is that the momentum in the U.S. regulatory discussions follows tangible progress in markets around the globe. Today, we've had a new set of approved in 34 countries. In the past quarter alone, The European Commission, the United Kingdom Medicines and Healthcare Products Regulatory Agency, and Swiss Agency for Therapeutic Products approved Vafcio, Vatadustat, for the treatment of symptomatic anemia associated with CKD in adults on chronic maintenance dialysis in the EU, United Kingdom, and Switzerland, respectively. Further, Akiba expects a regulatory opinion on Vatadustat in Australia this year. I want to credit our team who assumed responsibility for the regulatory processes outside the U.S. mid-last year and worked efficiently to secure local approvals to help to enable Akibia to deliver a new therapeutic option to patients in need. To that end, we had previously discussed our priority was to secure a partner in Europe who would bring Vafsio to market. Here again, we met our objective and signed a license agreement with Medici. Medici is a fully integrated pharmaceutical company based in Germany with a strategic focus on the dialysis market. The license agreement grants Medici the exclusive rights to market and sell Vapcio in the European Economic Area, the United Kingdom, Switzerland, and Australia for the treatment of anemia in patients with CKD. The agreement included an upfront payment of $10 million, and in addition, we're eligible for commercial milestone payments up to an aggregate of $100 million and tiered royalty payments ranging from 10% to 30% of Medici's net sales. We believe Medici is situated to maximize the European market potential for Vatadustat. They understand the unique country by country pricing and access dynamics related to dialysis. They are committed and driven to succeed, and we continue to support their efforts. We expect Medici to launch as soon as possible in 2024. Building on the regulatory success we've had in other markets, we're eager to advance the regulatory approval process for Vataducet in the U.S. And approval in the U.S. would represent our most significant commercial market opportunity and allow us to target the 550,000 U.S. patients with anemia due to CKD who are receiving dialysis treatment. I'll note that the resubmission is a very focused filing. As part of the resubmission, we'll submit safety data collected since our original submission in 2021, including data from two alternate dosing studies, FOCUS and MODIFY. We'll also submit post-marketing data from Japan, where tens of thousands of patients have received the drug over the past two years. Now, working through a potential launch timeline, again, we expect to resubmit the NDA by the end of the quarter. So since we're submitting data that was not in the original NDA, our expectation is that our resubmission would undergo a six-month review. And this review period would commence upon submission. As such, we anticipate a new PDUFA date likely in March of 2024. Upon a potential approval, we'll quickly file for TdapA reimbursement, which is a six-month process. After receiving TdapA designation, we'd expect the product to be widely available for patients. We're actively preparing for a potential launch of Atadustat and are reengaging around the commercial opportunity. Let me summarize. We estimate that approximately 88% of the nearly 550,000 patients on dialysis are treated with an erythropoiesis stimulating agent, or an ESA, for anemia. An injectable is currently the standard of care. Medications used to treat dialysis patients in the U.S. are paid for as part of a bundled payment made to dialysis providers. Now, to promote innovative drug use for Medicare patients on dialysis, CMS created a transitional add-on payment adjustment, or TDAPA. The add-on payment would cover the cost of Vatadustat when a physician prescribes the drug for two years after receiving the TDAPA designation on top of the regular bundle payment. The TDAPA payment would allow providers to incorporate innovative products like Vatadustat into their treatment protocols. while still receiving the full bundle payment for treatment of their PPS or prospective payment system Medicare patients. We believe that we've created a favorable environment for adoption of the product as we prepare for a potential launch. We have a collaboration with V4CSL that provides access to up to 60% of the dialysis market through existing V4CSL relationships, which includes Fresenius Kidney Care and most small to midsize providers. B4CSL has a relationship with Fresenius for the procurement of therapeutic products used in their network, and Vataducet would be made available through that collaboration. We believe V4's unique relationship and our experience in the dialysis market will create a favorable environment for pull-through within the dialysis centers. Together, we believe we are well-positioned for a successful launch if Vataducet is approved. Our collaboration with B4CSL is a profit share. where we retain approximately two-thirds of the profit from Vatadustat, net of certain pre-specified costs, with V4 CSL keeping the remaining one-third. For the remaining 40% of the dialysis market that V4 CSL does not have rights to sell to, we retain 100% of the economics. So one of the most common questions I get these days is on launch costs. I'll note that we are also in a strong position here. The most significant launch expenses relate to people and product. But we have the commercial organization in place today with only incremental additions needed, and we already have the product on the shelf to launch as soon as we receive approval. We believe our additional costs will be truly incremental. Now, to speak more about our financial position, I'm pleased to introduce Ellen Snow, who joined our team as CFO and Treasurer last month. Alan's impact has been near immediate as she brought vast accounting and financial management expertise into the process to close the quarter. And put the organization on the right footing by strengthening our product return reserves accounting process that was described in the press release file this morning. This financial discipline discipline will be especially important as we prepare to launch that a do set in the US, if approved Ellen.
spk07: Thanks, John. First, let me say that I am extremely pleased to have joined Kibia last month. I saw significant potential and upside for the organization associated with the pending potential Vatidudestat FCA approval, as well as opportunities to optimize the company's cost structure and better leverage the cash flows from Arixia towards improving the balance sheet and creating shareholder value. I'm grateful to have a talented, hardworking, and dedicated accounting team who have worked tirelessly over the last few weeks as we identified and corrected errors in the accounting. As previously announced during the second quarter closed process, we identified errors related to the accruals for product returns. We concluded the errors represent a material weakness and internal controls over financial reporting, a deficiency we're working to remediate. We also intend to revise our financial statements and our 2022 annual report on Form 10-K to correct the impact of the errors, which will primarily impact the balance sheet and the affected years, including liabilities for product returns, accounts receivable, and goodwill, as well as immaterial changes to the prior year revenues. We expect to file our amended Form 10-K and second quarter Form 10-Q on Monday. Now let's move to our current financial position. Importantly, we believe our cash runway will fund our current operating plan for at least 12 months. Cash and cash equivalents as of June 30th, 2023 were 53.6 million. Total revenue was 56.4 million for the second quarter of 2023. Of that, 42.2 million was Arixia Net product revenue and 14.1 was other revenue. Other revenue consists primarily of the $10 million upfront payment in connection with the Medici License Agreement. Arixia net product revenue increased 21.6% over the previous quarter. The growth was due to the timing of purchases and certain Arixia customers and expected cyclical demand from the first quarter to the second quarter. Arixia revenue decreased 2.5% compared to the same quarter of 2022. The decrease compared to the prior year period is due in part to the impact of the shifting payer mix and a volume decrease partially caused by the contracting dynamics and phosphate binder market erosion. We expected quarterly swings in the Arixia revenue, but had also expected the binder market to rebound. Based on our analysis, we believe the binder market is leveling, but there's evidence of a long tail impact of COVID in the dialysis community. We are in a position to affirm our 2023 net product revenue guidance of $175 to $180 million. Our team continues a high-touch engagement with key accounts, and we continue to carefully review the trends. We remain focused on maximizing Arixia revenue through its loss of exclusivity in March of 2025. Regarding expenses, we've reported a decrease in cost of goods sold and R&D expenses compared to the second quarter of 2022. Cost of goods sold decreased slightly to $17.3 million in the second quarter of 2023 from $18.6 million in the second quarter of 2022. R&D expenses decreased from $26 million to $20.2 million, a more than 20% decrease as a result of reduced spending on Bata-Dustat development, R&D headcount, and outsourced contract services. We have curtailed non-headcount related expenses growth by continuing to find ways of operating more efficiently, placing an increased scrutiny on all areas of operating expenses, and taking measures such as reducing our office footprint with the assignment of the Seaport office lease, which was completed at the end of the second quarter. We are deliberate about managing our expenses in an effort to extend our runway, which will be achieved in part by keeping 2023 headcount relatively flat with current levels. In the time I've spent at Akiva, it's clear that everyone on the team is dedicated to managing resources while continuing to deliver on their individual and group objectives. Revenue from Arixia continues to provide cash for operations, and our teams are motivated by the progress we've made across the business this quarter as we all work to prepare for the launch of that Adustat in the U.S. next year if approved. With that, let's open the line for questions.
spk05: Thank you. If you'd like to ask a question, please press star 1-1. If your question hasn't answered and you'd like to remove yourself in the queue, please press star 1-1 again. Our first question comes from Allison Bratzel with Piper Sandler. Your line is open.
spk03: Hey, good morning, and thank you for taking the questions. So first, just hoping you could frame for us from a high-level topics that were addressed at the Type A meeting, any remaining gating factors to resubmission for Vatadustat, and just your confidence that FDA will find the resubmission approvable in dialysis without the generation of additional clinical data, and then I have a follow-up.
spk14: Sure, Allie. Thanks for the question. I mean, it was, I think the Type A meeting was a pretty technical meeting in a lot of ways. Steve is here and attended the meeting. Steve, maybe give a little color?
spk12: Sure. This is Steve Burke, the Chief Medical Officer. The meeting was, it's like a a pre-NDA meeting where you meet with the agency to describe how you're going to present the requested data and is that acceptable to them. So for instance, like when we finish an NDA review, we have a 120-day safety update. So we have to do another safety update. And so we just clarified, for instance, the window in which any new data would be collected and reported. So John alluded earlier to the modifying focus studies what we were going to present, what we were going to provide to them, and was that acceptable, how we were going to present Japanese post-marketing surveillance data, the actual components and how it would be analyzed, and things of this nature. They also had asked some questions about some additional analyses they wanted of the Phase III data. But all of this is pretty modest in scope. but as John indicated, is new data, and therefore, you know, we expect they will get a six-month review clock because of that. I think we're satisfying all the requests and have really excellent clarity of what they want and expect from us, and that we're able to deliver that. And there's no need for us to generate new data, clinical data.
spk14: Yeah, I would say that it was an amazingly collaborative meeting, kind of given that know the crl from last year it was it was very focused on you know what we need to uh um to put through and even going into it most of the questions that we asked we posed to them um you know they found our approach reasonable so it was really more clarification than anything else so we feel pretty good about where where things are and very much on track for our filing that's helpful um so
spk03: Now, just hoping you could also walk us through your expectations for just for what the Veritaset launch will look like kind of between the March PDUFA and the receipt of TDAPA designation during that time frame. And then separately, if you could just kind of frame or compare contrast for us whether Corsuva's launch experience under TDAPA
spk14: is a good analog for that abuse that um you know any color or perspective there would be helpful thanks yeah no thanks for that question ali so a couple of things that are really important to to communicate you know while we will make the product available um during the the you know post-launch pre-tappa and you know it's really available for dialysis providers to purchase the product and and you know develop protocols or the like we don't expect widespread adoption until you have the tdapa designation and they'll have the product reimbursed there outside of the uh outside of the bundle so um that's i mean i think that should be a clear expectation for everyone um you know if we see any dollars it'll be very modest uh and you'll really see that uptake um at tdapa i think that the course of a question is a really important one as well and i appreciate asking that um you know the course of a launch is a very different product and a very different opportunity than Vatadustat, I think for a number of reasons. When you look at Corsuva, this is a product that was approved for pruritus, for severe itching, which is in a small number of patients. The average pricing that's published now for Corsuva is about $135 per dialysis session. And there's nothing in the bundle to cover pruritus other than, you know, 25 cents for Benadryl, right? So, you know, the $135, they'd be reimbursed for on a cost basis as well. But when you speak to physicians about, you know, that experience and that desire to use the product, they really worry about, you know, well, when PNAPA ends, there's no mechanism for me to continue to use use this product to benefit patients. And think about it, a bundle payment is about $280 per dialysis session, and you have 135 for Corsuva. There's a real worry from a financial perspective about having to use that, continuing to use that product. So you're just not seeing patients who could benefit from the product benefit. And so it's one of the reasons why we've been trying to push CMS to create a continued add-on payment beyond Tdapa, you know, that follows the drug and haven't been successful yet. Now, Vataduce, that's very different, right, because there's money in the bundle for ESAs today. The pricing will be very different. While it may be premium to ESAs, it's certainly not going to be $135 per dialysis session. And that those dollars that are in the bundle will continue to be in the bundle post-TDAPA. So now our pricing may have to change from a contracting perspective post-TDAPA. But it's not as if people are going to stop treating anemia or not treat anemia, right? They're going to do that, which they're not doing with pruritus. So, you know, TDAPA is very much a positive for us. It's been more of a challenge for Corsuva.
spk04: That's super helpful. Thank you.
spk14: Thanks, Allie.
spk05: Thank you. Our next question comes from Ed Arcee with HC Wainwright. Your line is open.
spk09: Great. Hello, everyone. Thanks for taking my questions. First, I just wanted to ask again on the Type A meeting. John, you and I have talked about this a number of times since the letter in May. specifically about the two issues from the CRL, the thrombotic events, and the risk of DILI, and wanted to get your thoughts on how those meeting minutes, now that you have them in hand, are fully aligned with the path that was offered in that letter from Dr. Stein back in May. And then I have a follow-up.
spk14: Yeah, I think I can say unequivocally that that they're fully aligned. I mean, I think we have them, as I said, and Steve, you kind of gave more detail on. I mean, a lot of that meeting is kind of how you're going to present the data and it's more technical. But, you know, we had questions about about our our labeling, right? Who should submit that? I mean, that's always a good sign, right? So, you know, it was there was nothing to indicate in that meeting that there was anything that was misaligned with the letter that we received from Dr. Stein. You know, as I've said all along, I think that letter describes, you know, kind of the guardrails and the path for us and for the division. And I think that was reflected in the discussions. It was, again, it was a very collaborative discussion. I mean, you know, it's fair to say you never are quite sure what you're going to get when you go into those meetings. And I think sure Steve agrees. I mean, we were quite pleased with the quality of the focus on the issues and the collaborative nature of the discussion. And, you know, it makes us feel quite good about our path forward.
spk09: Great. And then I'd like to ask if you could remind us of the objective of having the modifying focus studies included in the resubmission?
spk14: Yeah, so for this resubmission, that's an important question. I mean, obviously, we think the modifying focus studies will be quite helpful in securing three times weekly dosing in our label after our initial approval, but it's clear they won't be looking at that three times weekly dosing regimen for this initial approval the the the reason for adding the modify and focus data is to um you basically have to add all of your safety data uh to your for your filing right which we have to do in 21 when we originally filed and now we simply have to update um all of the safety data that we have so you know it won't be um you know they won't be considering efficacy from those studies at all while, you know, we know that they were successful and, you know, we think we're expecting they'll support our three times weekly filing and we're working to publish them quickly, it won't be in the label.
spk09: Okay, great. Actually, if I could squeeze one more in. Question on Eryxia, probably for Ms. Snow. Given that the half-year net sales is now about 78 million and you're, you know, reaffirming your guidance of 175 to 180 for the full year. I'm just wondering if you could help us understand what gives you the confidence to reach that guidance, especially given what you describe as a decline in the phosphate binder market. Thanks.
spk14: Yeah, thanks, Ed. I appreciate the question. So, a number of things. There are, you know, if you look at the dynamics of sales over the past couple of years, it's kind of that September to December timeframe really is, you know, kind of where we see a significant step up. To be sure, I would say that our, you know, we had an expectation of our price being a bit higher, but our payer mix has skewed towards Part D a little bit more than we expected. So, you know, I would say, you know, my expectation is probably we're more on the lower end of our guidance range. But when you look at, you know, there's a number of qualitative things as well. One of the large dialysis providers hadn't let our sales reps in to see people at all, and everything was being done virtually. That's just changed in the last month. And, you know, I think everyone could agree that, that sales reps can be much more effective, um, when they're face to face, um, with people. So, you know, we expect that to be helpful as well. Um, and, uh, uh, you know, a number of other, uh, those types of dynamics, as Ellen said, we think that the binder market has still been under pressure, um, you know, but it is flattening, if you will, we think this is, you know, obviously we'll continue to monitor this, but, you know, as, uh, um, Robert Hechtman, Jr.: : You know, as it flattens I mean patients still need to be treated right so as they come in the funnel I think there's there's opportunity there and. Robert Hechtman, Jr.: : And you know, we also expect competitive product to be launched in the back half of this year as well, and. Robert Hechtman, Jr.: : You know that will come, I think, with a lot of focus on phosphate control and that's kind of one of those rising tide looks all boats. Robert Hechtman, Jr.: : At moments as well, so when you know I think that there's a number of those types of issues that that allow us to maintain that guidance, albeit I would say. I would think more towards the lower end of the range, where earlier in the year I was expecting the higher end.
spk09: Great. That's very helpful. Thanks so much. Thank you, Ed.
spk05: Thank you. Our next question comes from Julian Harrison with BTIG. Your line is open.
spk01: Hi. Good morning. Congrats on the progress, and thank you for taking my questions. First, just on the three times weekly dosing regimen, again, you studied in focus. I'm curious if you could talk more about your strategy there and how soon a potential label for Vataduce that could maybe be amended with this dosing regimen.
spk14: Sure. So thanks, Julian, for the question. Welcome to the call. So three times weekly is very helpful for treating patients in the dialysis center. You give them the dose regularly. during their dialysis session, you ensure compliance from the patient, you don't have to send them home with drugs. So, you know, we've always felt that that was something that was important, and that's something that we could potentially add to the label, though we never expected to have it in the label at launch. We will publish the data, you know, we expect it to be presented at the ASN meeting in October from FOCUS. FOCUS was the large study that really looked at that three times weekly dosing. Then once we have our NDA approved in March, of course, as we've been talking about and expect, then we'll have a conversation with the FDA about supplemental NDA where we'll submit for three times weekly dosing. Again, when you think about the low-hanging fruit for the product adoption initially, It's home patients where daily dosing works just fine. And I would say patients who are on the highest doses of ESAs, where they're having the risk of exposure to high doses of ESAs and added cost as well to the dialysis provider. And even though those might be in-center patients, I think they'd be willing to dose them once a day and send them home with drug or rely on the publication. and choose to use three times weekly dosing. You know, of course, we wouldn't be promoting three times weekly dosing until it's in our label, but that's certainly something that physicians can choose to do with the data that supports it. And then, you know, as I said, we will work to have the three times weekly dosing regimen added to our label as quickly as we can.
spk01: Okay, got it. Thanks. That's helpful. And then earlier in the call, you gave a great overview on your current commercial preparations. Sorry if I missed it, but I was just curious if you're talking at all about how much you're manufacturing at risk ahead of potential approval of that to do set.
spk14: Yeah, you know, thanks for that question, Julian. We, you know, as I mentioned, the two biggest costs are people and product and, you know, product is a really significant one. Remember, we had product on the shelf ready to launch, you know, back last year. And our quality team has done a magnificent job of continuing to generate data, and we were able to push out the expiry date on that product to four years. So that product that's on the shelf today will be able to support our launch. So, you know, we don't have to do any incremental manufacturing and take that incremental cost to be ready to launch the drug. And, of course, that drug is also going to support Medici and the European launch as well.
spk08: Excellent. Great to hear. Thanks again. Thanks so much, Julian.
spk05: Thank you. There are no further questions. I'd like to turn the call over to John Butler for closing remarks.
spk14: Thanks, Michelle. We are extremely pleased with the progress we've made last quarter as we've made significant strides towards our purpose to better the lives of people impacted by kidney disease. We're preparing for very near-term potential catalysts. Most immediately, the resubmission of the Vatadustat NDA next month. With this momentum, we believe we're now poised to disrupt the market for the anemia of CKD in dialysis patients if Vatadustat's approved. Everyone at Akiva is excited to be in that position and remains motivated by our potential to help patients. The team is focused on the work we need to do in the very near future to get us there. And I look forward to continuing to update you as we move through resubmission, acceptance, and ultimately potential approval and launch of Vatadustat in the U.S. Thank you all for joining us today.
spk05: Thank you for your participation. This does include the program and you may now disconnect. Everyone have a great day.
Disclaimer