Akebia Therapeutics, Inc.

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.

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.

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.