Q3 2019 Earnings Call

Ladies and gentlemen, thank you for standing by welcome to that keep your therapeutics third quarter financial results and business highlights conference call. At this time, all participants' lines are in listen only mode. After the speakers presentation, there will be a question and answer session.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Akebia Therapeutics third quarter financial results and business highlights conference call. At this time, all lines are in a listen-only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any assistance, please press star zero.

To ask a question. During this session you will need to press star one on your telephone.

Please be advised that today's conference is being recorded if you acquire any assistance. Please press star Zero I would now like to hand, the conference over to your speaker today. This Kristen Sheppard. Please go ahead ma'am.

Operator: I would now like to hand the conference over to your speaker today, Ms. Kristen Shepard. Please go ahead, ma'am. Thank you, Catherine, and good morning.

Thank you Catherine and good morning, My name is Kristen Sheppard, Vice President of Investor Relations with the caveat. Thank you for joining us to discuss the keep <unk> third quarter 2019 financial results in a recent business highlights.

Kristen Shepard: My name is Kristen Shepard, Vice President of Investor Relations with Akebia. Thank you for joining us to discuss Akebia's third quarter 2019 financial results and our recent business highlights. The press release containing the company's financial results for the third quarter was issued earlier this morning and is also available on our Investor Relations website. For your convenience, an audio replay of today's call will also be available on our website shortly after we conclude today's webcast. Joining our call today are John Butler, President and Chief Executive Officer, and Jason Amello, Chief Financial Officer. Before we begin, I'd like to remind everyone that this conference call includes the King Statement. 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.

The press release containing the Companys financial results for the third quarter was issued earlier. This morning and is also available on our Investor Relations website.

For your convenience an audio replay of today's call will also be available on our website. Shortly after we conclude today's webcast.

Joining our call today are John Butler, President and Chief Executive Officer, and Jason a mellow Chief Financial Officer.

Before we begin I'd like to remind everyone that this conference 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.

Kristen Shepard: Additional information regarding these factors is described in the Risk Factors and Management Discussion and Analysis sections of our most recent quarterly and annual reports filed with the SEC. The foregoing statements on this call speak only as of the original date of this call, and we do not undertake any obligation to update or revise any of these statements. With that, I'd like to turn the call over to our CEO, John Butler.

Additional information regarding these factors is described in the risk factors and managements discussion and analysis sections.

Most recent quarterly and annual reports filed with the FCC.

The forward looking statements on this call speak only as of the original data this call and we do not undertake any obligation to update or revise any of these statements.

With that I'd like to turn the call over to our CEO John Butler John .

John P. Butler: Thanks, Kristen. Good morning, everyone, and thanks for joining us today. Akebia is now within two quarters of the first readout of our global phase 3 studies of Betadustat, our investigational HIF-PHI being developed for the treatment of anemia due to CKD, with top-line data from Innovate expected in Q2 of 2020, followed by PROTECT top-line data expected in mid-2020, subject to accrual in May. It's incredibly exciting to all of us at Akebia to Anemia due to CKD is a disease that affects 5.7 million people in the U.S. Essentially, every organ in the body is affected by this disease. Most notably, the kidneys and heart.

Thanks, Chris Good morning, everyone and thanks for joining us today.

The keep me is now within two quarters of the first read out of our global Phase three studies about a do stuff.

That's the Gayshill hits PHR being developed for the treatment of anemia due to CKD with topline data from innovate expected in Q2 of 20, followed by protect topline data expected in mid 2020 subject to the accrual of makes.

It's incredibly energizing to all of us sort of keep yet to consider how close we are to the data read out onto the potential introduction about a do step into our renal focused commercial engine.

Anemia due to CKD is a disease that affects 5.7 million people in the U.S.

Essentially every Oregon in the body is affected by this disease.

Most notably the kidneys at heart.

John P. Butler: There are limitations to the current standard of care in treating and managing this disease, including the risk of cardiovascular events. Providing a new oral treatment option upon regulatory approval to patients and physicians, one with the potential to help address their unmet needs and possibly improve their lives, would represent an incredible opportunity to advance patient care. And that's exactly what we've set out to achieve.

There are limitations. So the current standard of care in treating and managing this disease, including the risk of cardiovascular events.

Providing a new oral treatment option upon regulatory approval to patients and physicians.

And with the potential to help address their unmet needs and possibly better their lives would represent an incredible opportunity to advance patient care.

And that's exactly what we've set out to achieve.

John P. Butler: It's been a busy and exciting few months. First, we achieved a primary objective by strengthening our balance sheet with $80 million in non-dilutive funding on very competitive terms to further support our clinical development program and other strategic goals. This loan, which will close later this month, along with our ability to draw down an additional $20 million by the end of 2020, meaningfully extends our cash runway into 2021, well past the expected top-line data readouts of our global phase 3 clinical study. Importantly, Erixia Revenue allows us to service this debt.

It's been a busy and exciting few months.

First we achieved a primary objective by strengthening our balance sheet with $80 million a non dilutive funding on very competitive terms to further support our clinical development program and other strategic goals.

This loan which will close later this month, along with our ability to draw down an additional $20 million by the end of 2020.

Meaningfully extends our cash runway into 2021, well past the you expect the topline data read outs of our global phase three clinical studies.

Importantly, auryxia revenue allows us to service the stat.

John P. Butler: Now Vatidustad is the cornerstone of our future growth, so let's turn to the highlights of our Global Phase III Clinical Development Program. With both Innovate and Protect fully enrolled, we remain on track to report top-line data for Vata DoStat in Q2 of 2020 and mid-2020, respectively. In total, we enrolled over 7,000 patients across these studies, which is about 1,700 more than our initial targets and speaks to the unmet need for patients with CKD. This is an exciting time for Akebia.

I've got to do status the cornerstone of our future growth. So, let's turn to the highlights of our global phase three clinical development program.

With both innovate and protect fully enrolled we remain on track to report topline data forgot to do stat in Q2 of 2020 and mid 2020, respectively.

In total we enrolled over 7000 patients across these studies, which is about 1700 more than our initial targets and speaks to the unmet need for patients with CKD.

This is an exciting time for a caveat.

John P. Butler: There's been great interest and growing excitement among the renal community in the opportunity the HIF product candidates represent for patient care, especially following the announcement that the Nobel Prize has been awarded to the three HIFS scientists whose discoveries led to the development of Addustat and other drugs targeting this oxygen-sensing mechanism. We're both honored and excited to be at the forefront of this Nobel Prize-winning science, with Vatadustat expected to be the first drug of the HIF class to deliver clear data that directly compares its MACE outcomes with the current standard of care in both dialysis and non-dialysis patients for the Treatment of Anemia in Chronic Kidney Disease. We're equally excited to be contributing to the growing body of evidence in support of HIFS and Vatidustat more specifically.

There's been great interest in growing excitement amongst the renal community in the opportunity the hips product candidates represent for patient care.

Especially following the announcement that the Nobel Prize has been awarded to the three if scientists whose discoveries led to the development, Nevada do stat and other drugs targeting this oxygen sensing mechanism.

We're both honored and excited to be at the forefront of this Nobel Prize winning science with bad to do so I'd expect it to be the first drug at the his class to deliver clear data that directly compare as its makes outcomes for the current standard of care in both dialysis and non dialysis patients for the treatment of anemia in chronic kidney.

Yes.

We're equally excited to be contributing to the growing body of evidence in support of hips and got to do step more specifically.

John P. Butler: Just last week at the American Society of Nephrology meeting, new 52-week efficacy and safety data for Vatidustat from two pivotal phase three studies of Vatidustat in Japanese patients with anemia due to CKD were presented by MTPC, our collaboration partner in Japan. The details of these data were provided in our press release on Saturday, but I'll briefly highlight the key takeaways.

Just last week at the American Society of Nephrology meeting, New 52 week efficacy and safety data forgot to do stuff from two pivotal phase three studies about to do set in Japanese patients with anemia due to CKD were presented by MTBC, our collaboration partner in Japan.

The details of these data were provided in our press release on Saturday, but I'll briefly highlight the key takeaways.

John P. Butler: MTPC's positive top-line 52-week data show that Vatadustat's effect on hemoglobin was sustained through to 52 weeks in each study. We had previously announced in March that each of these studies, one in non-dialysis CKD patients and one in dialysis-dependent CKD patients, met its primary endpoint based on mean hemoglobin levels at weeks 20 and 24. As correcting and maintaining hemoglobin levels within a target range is paramount in the treatment of anemia due to chronic kidney disease, these new data are highly encouraging and are another proof point in our belief in Betaducet's potential to make a difference in the lives of people impacted by anemia due to CKD, subject to FDA approval. It's worth a reminder that MPPC submitted a JNDA to the Ministry of Health, Labor, and If approved in Japan, this is expected to lead to the first launch of Betadustat worldwide next year, and Akebia stands to benefit from this launch with tiered double-digit royalties up to 20% of sales in Japan upon approval. So this is a very exciting program on multiple levels.

Mtbcs positive topline 52 week data show that got to do stats effect on hemoglobin was sustained through through to 52 weeks in each study.

We had previously announced in March that each of these studies one in non dialysis CKD patients and one in dialysis dependent CKD patients met its primary endpoint based on mean hemoglobin levels at weeks 20 and 24.

As correcting and maintaining hemoglobin levels within a target range is paramount in the treatment of anemia due to chronic kidney disease. These new data are highly encouraging and another proof points in our belief in God to do some potential to make a difference in the lives of people impacted by anemia due to CKD subject to FDA approval.

It's worth remind you that MTBC submitted a J.M.D.A. so the ministry of health Labor and welfare in Japan. This past July for marketing approval about to do that as a treatment for anemia due to CKD.

If approved in Japan. This is expected to lead to the first launch about a two step worldwide next year.

The keep your stands to benefit from this launch with tiered double digit royalties up to 20% of sales in Japan upon approval.

So this is a very exciting program a multiple levels.

John P. Butler: And we believe all of this sets up an incredibly important period in the Akebia story, the expected top-line data readouts from our global Phase III program. We continue to have a tremendous amount of confidence in our clinical development. The headline for our global Phase III program is that we believe it has been designed for clinical, regulatory, and commercial success. Very importantly, we expect clear data readouts for efficacy and safety. First, both Innovate and Protect are designed to assess non-inferiority for efficacy and cardiovascular safety for vatidustat using an active control, darbopoetin alpha, an injectable ESA, which is the current standard of care. We believe this will enable a straightforward collection and analysis of MACE across the relevant studies and ultimately a clear and understandable data readout on both efficacy and safety, setting us further apart from our competition. Importantly, our program includes multiple secondary efficacy and safety endpoints to assess other clinically and hence commercially important areas of differentiation to ESA, including incidents of thromboembolic events, hospitalization for heart failure, and effects on blood pressure And in non-dialysis CKD subjects, progression of kidney disease.

And we believe all of this sets up an incredibly important period and you keep your story you expected topline data readouts from our global Phase three program.

We continue to have a tremendous amount of confidence in our clinical development program.

The headline for our global Phase three program is that we believe it has been designed for clinical regulatory and commercial success.

Very importantly, we expect cleared data read outs for efficacy and safety.

First <unk> innovative protect are designed to assess noninferiority for efficacy and cardiovascular safety for better do stat, using an active control dobre potent now an injectable Esa which is the current standard of care.

We believe this will enable a straightforward collection and analysis amazed across the relevant studies and ultimately a clear and understandable data readout on both efficacy and safety sending us further apart for American competition.

Importantly, our program includes multiple secondary efficacy and safety endpoints to assess other clinically and hence commercially in port in areas of differentiation, yes days.

Including incidents of thromboembolic events hospitalization for heart failure and effect on blood pressure and non dialysis CKD subjects progression of kidney disease.

John P. Butler: Going a little deeper into what differentiates Vatadustat, if successful in these studies, we expect Vatadustat to be the first drug of this class in the US and European markets, with clear data directly comparing its outcomes to the current standard of care in both dialysis and non-dialysis. Moreover, this is another example of our leadership, as we believe these data will be highly informative for physicians, patients, and payers as they make important decisions about patient care and a key consideration when differentiating between HIFs in the class. Because our non-dialysis study was designed with active control, patients in this population that progress to dialysis during the study will be able to stay on the study drug. As a result, we expect to be able to compare how these new-to-dialysis patients on either the control drug or Vatadustat do as they transition to dialysis and moving forward. Recall incident dialysis is important because the event rate in the first year of dialysis is generally much higher.

Going a little deeper into what differentiates validuss that if successful with these studies, we expect better do start to be the first drug of this class and U.S. and European markets with clear data directly comparing its outcomes. So the current standard of care in both dialysis and non dialysis patients.

Moreover, this is another example of our leadership as we believe these data will be highly informative for physicians patients and payers as they make important decisions about patient care and a key consideration when differentiating between hits in the class.

Because our non dialysis study was designed with an active control patients in this population different progressed to dialysis. During the study will be able to stay on the study drug.

As a result, we expect to be able to compare how these new dialysis patients on either the controlled drugs or gotta do stat do as they transition to dialysis and moving forward.

Recall incident dialysis is important because the event rate in the first year of dialysis is generally much higher.

John P. Butler: Data will give us tremendous insights into our ability to treat this population. And again, this also makes our MACE analysis much more straightforward. Next, we designed these studies after extensive dialogue with the FDA and European regulators. We have prospectively defined and agreed to non-inferiority margins with the FDA and EMA. And we also agreed with the FDA on the key components of our statistical analysis. Lastly, in October, our Independent Data Monitoring Committee reviewed unblinded safety and efficacy data from Akebia's Global Phase III studies of Vatidustat, as planned, and recommended continuation of the studies without modification. We're very focused on bringing Vatidu's debt to markets around the world upon approval. We started with a JNDA submission in Japan this past July by MTPC.

Data will give us tremendous insight into our ability to treat this population.

And again. This also makes our makes analysis much more straightforward.

Next we design. These studies after extensive dialogue with the FDA and European regulators, we have prospectively defined and agreed to noninferiority margins with the FDA SDMA.

And we also agreed with the FDA on the key components of our statistical analysis plan.

Lastly in October our independent data monitoring committee reviewed unblinded safety and efficacy data from a TV as global Phase three studies about to do staff as planned and recommended continuation of the studies without modification.

We're very focused on bringing back to do start to markets around the world upon approval.

We started with a Jan da submission in Japan. This past July by MTBC.

John P. Butler: As we advance our global phase three program, we're keying in on NDA and MAA related activities and commercial plans. It's important to recognize that the most significant investment for a new product launch is building the commercial organization. We believe we are well positioned for a very strong Bata2STEP launch upon approval, with Otsuka sharing in their launch call. A distribution agreement with V4 Pharma that allows access to up to 60% of the dialysis market and a strong, experienced commercial organization. Supporting Arixia, our FDA-approved commercial product. We're also working to build on our leadership in the renal space and leveraging our medical affairs team to deepen our relationships with patient communities and increase awareness of the significant burden of kidney disease.

As we advance our global Phase three program working on India in M&A related activities and commercial plans.

It's important to recognize that the most significant investment for new product launch is building the commercial organization.

We believe we are well positioned for a very strong data do step launch upon approval with otsuka sharing in their launch costs.

A distribution agreement with before pharma that allows access to up to 60% of the dialysis market and a strong experienced commercial organization supporting a ricks, yet our ft approved commercial products.

We're also working to build on our leadership in the real space and leveraging our medical affairs team deepen our relationships with patient communities increased awareness of the significant burden of kidney disease.

We're excited about these programs are proud to be doing this all under a new corporate brands that amplifies our commitment to bettering the lives of people impacted by kidney disease.

John P. Butler: We're excited about these programs and are proud to be doing this all under a new corporate brand that amplifies our commitment to bettering the lives of people impacted by kidney disease. Also, as you know, in mid-October, we filed suit against CMS and HHS, challenging their decision to rescind Part D coverage of Erixia when used for the treatment of Iron Deficiency Anemia or IDA, and the related prior authorization requirement when

Also as you know in mid October we filed suit against CMS NHS challenging their decision to recent part D coverage of Auryxia when used for the treatment of iron deficiency anemia or idea.

And the related prior authorization requirement when used for the treatment of Hyperphosphatemia.

Patients have been harmed by CMS decision.

After nearly a year of working to restore coverage. We believe we had no other choice than to pursue litigation.

John P. Butler: Patients have been harmed by CMS, and after nearly a year of working to restore coverage, we believe we have no other choice than to pursue litigation.

We believe CMS has a legal obligation to cover Auryxia and we remain confident in the strength of our legal position.

We've received a tremendous amount of support from key stakeholders, including the National Kidney Foundation, the American Kid Defund dialysis patient citizens and a nationally renowned nephrologist, who submitted declaration supporting our lawsuit.

John P. Butler: We believe CMS has a legal obligation to cover arixia, and we remain confident in the strength of our legal position. We've received a tremendous amount of support from key stakeholders, including the National Kidney Foundation, the American Kidney Fund, dialysis patient citizens, and a nationally renowned nephrologist who submitted declarations supporting our law. We're working through the litigation process towards an outcome in the best interest of patients, Akebia, and our shareholders. To that end, on October 29th, we filed for a preliminary injunction and, in the alternative, summary judgment to restore coverage.

We're working through the litigation process towards an outcome in the best interests of patients a TBS and our shareholders.

To that end on October 29th we filed for a preliminary injunction and in the alternative summary judgment to restore coverage.

We remain confident in the market opportunity for ixia within its hyperphosphatemia indication.

We believe this is a great product with a competitive profile that offers proven clinical benefits to patients and is supported by real world data showing its lower pill burden versus other binders.

John P. Butler: We remain confident in the market opportunity for Arixia within its hyperphosphatemia indication. We believe this is a great product with a competitive profile that offers proven clinical benefits to patients and is supported by real-world data showing its lower pill burden versus other binders. As you know, the CMS decision and the prior authorization had a fundamental impact on the Erixia business and our outlook. However, as we're in litigation, my comments regarding Erixia are limited to a few updates. We're pleased to have signed a new multi-year agreement with Fresenius Medical Care Rx, effective this quarter, which is designed to expand access to Arixia's proven benefits for treating hyperphosphatemia in dialysis-dependent CKD patients. Although we expect it will take a number of quarters to grow our market share with FMC, we are very confident in the long-term opportunity this represents for the business.

As you know the CMS decision and the prior authorization has had a fundamental impact on the auryxia business and our outlook.

As we're in litigation my comments regarding Auryxia are limited to a few update.

We're pleased to have signed a new multiyear agreement with for serious medical care Rx effective this quarter.

Which is designed to expand access to auryxias proven benefits for treating hyperphosphatemia in dialysis dependent CKD patients.

Although we expect that will take a number of quarters to grow our market share with FMC, we're very confident in the long term opportunity. This represents for the business.

Okay date, we've not provided guidance for auryxia and over the near term.

Given the pending litigation and the fundamental impact that CMS and the P.A. continues to have on our business. We're obviously going to continue with this approach and be cautious in our planning for revenue in Q4 and into 2020, we encourage you to do the same.

John P. Butler: Unknown Speaker To date, we've not provided guidance for Arixia. And over the near term, given the pending litigation and the fundamental impact that CMS and the PA continue to have on our business, we're obviously going to continue with this approach and be cautious in our planning for revenue in Q4 and into 2020. We encourage you to do the same. In the longer term, we remain optimistic about our growth. So to wrap up, we continue to believe that Vatiducet is our biggest near-term value. We're making great progress towards our goal of bringing a new oral treatment for anemia due to CKD upon FDA approval to patients and physicians, one that has the potential to address their unmet needs and possibly improve their lives. We are pleased that we have meaningfully enhanced our capital position, and we're extremely excited with the milestones achieved to date. With that, I'll turn the call over to Jason. Thank you, John.

Over the longer term, we remain optimistic about our growth prospects.

So to wrap up we continue to believe that bad to do that is our biggest near term value driver.

We're making great progress towards our goal of bringing a new oral treatment for anemia due to CKD upon FDA approval to patients and physicians, one that with the potential to address their unmet needs and possibly better their lives.

We're pleased that we have meaningfully enhanced our capital position and we're extremely excited with the milestones achieved at this point, we look forward to the data readouts expected in 2020.

With that I'll turn the call over to Jason. Thank you John Good morning.

I mentioned, we're making significant progress our commercialization and development efforts, but the same time strengthening our liquidity position.

Looking at the components of the piano for the quarter.

Total revenue for the third quarter 2019 was 92 million [laughter] 3.29 for the pre merger third quarter of 2018.

Product revenue from the sales Auryxia for the third quarter of 2019 increased 13% to 39 compared to 26.69 as reported by Keryx pre merger during the same period in 2018.

Jason Amello: Thank you, John, and good morning. As John mentioned, we are making significant progress on our commercialization and development efforts while at the same time strengthening our liquidity position. Looking at the components of the P&L for the quarter, total revenue for the third quarter of 2019 was $92 million, compared to $53.2 million for the pre-merger third quarter of 2018. That product revenue from its sales for the third quarter of 2019 increased 13% to $30 million compared to $26.6 million, as reported by Carrick's pre-merger during the same period in 2008. Cost of goods sold associated with the manufacture of Arixia was $11.2 million for the third quarter of 2019.

Cost of goods sold associated with the manufacturer of Auryxia was 11.29 for the third quarter 2019.

So that we have our 27.1 million for the noncash purchase accounting effects of the Keryx merger, including inventory step up charge 18 mine and 9.1 million amortization or they can bringing our total recorded GAAP cost to sales that their game.

As you know our collaboration agreements I thought highly strategic and important elements of our financial strength.

Operation and license revenue continues to be a significant source of revenue for us reflecting the value we are creating as we continue to execute and advance our programs.

The third quarter, we recognize 62, my a collaboration and license revenue compared with 53.2 million in third quarter 2018.

Jason Amello: To that, we add about $27.1 million for the non-cash purchase accounting effects of the Carex merger, including an inventory step-up charge of $18 million and $9.1 million of amortization of intangibles, bringing our total reported gap cost of sales to $38.3. As you know, our collaboration agreements are both highly strategic and important elements of our financial strength. Collaboration and licensed revenue continues to be a significant source of revenue for us, reflecting the value we are creating as we continue to execute and advance our program. For the third quarter, we recognized $62 million of collaboration and license revenue, compared with $53.2 million in the third quarter of 2018, the majority of which relates to Arthritis of Burgdorf. Historically, ASUCA has funded 52.5% of our phase 3 development costs for DataHustat. Starting in Q2 2019, ASUCA began funding 80% of these costs. With continued progress, future collaboration revenue will also come in the form of additional milestones and work.

I wish the majority for both periods relates to our suffer agreements.

Historically, it's fun to 52.5% of like basically development costs about it you said starting in Q2 2019, I see could begin funny Haiti. Besides these costs.

Continued progress future collaboration revenue loss on the form of additional milestones and royalties.

Moving to research and development expenses.

R&D expenses were 74.5 million for the third quarter 2019, compared to 70.6 million for the third quarter 2018.

Increase was primarily attributable to an increase to increase in headcount and other costs to support continued advancement of the protected innovate phase three study of attitudes that and clinical and preclinical activities.

These increases were partially offset by a decrease in external costs related to protect and innovate phase three studies as they advance towards Rita.

It's important to keep in mind that 80% of our phase three costs are reimbursed classes, which gets you put us collaboration revenue as I mentioned earlier.

Selling general and administrative expenses with QIC were 34.2 million for the third quarter of 2019 compared to 10.49 for the third quarter 2018.

The increase was primarily attributable to commercialization related costs associated with the risks here as there were no comparable commercialization related costs and the pre merger third quarter 2018.

Jason Amello: Moving to research and development expenses, R&D expenses were $74.5 million for the third quarter of 2019 compared to $70.6 million for the third quarter of 2018. The increase was primarily attributable to an increase in head count and other costs to support continued advancement of the Protect and Innovate Phase III study of Vatidustat in clinical and preclinical trials. These increases are partially offset by a decrease in external costs related to Protect and Innovate phase 3 studies as they advance towards readout. It is important to keep in mind that 80% of Arce's three costs are reimbursed by Etsuka, which gets recorded as collaboration revenue, as I mentioned earlier. Selling general and administrative expenses were $34.2 million for the third quarter of 2019 compared to $10.4 million for the third quarter of 2018. The increase was primarily attributable to commercialization-related costs associated with Erixia, as there were no comparable commercialization-related costs in the pre-merger third quarter of 2018.

As a result to forgo any operating results the company reported a net loss for the third quarter 2019, 94.6 million I think that's where net loss of 26 million for the third quarter 2018.

Again, I want to point out that the net loss for the third quarter 2019 includes the impact of noncash charges of 27.1 million related to the application of purchase accounting for the merger with Keryx that I mentioned earlier.

That by an income tax benefit of 1.39.

Turning to our capital position, we ended the quarter with cash cash equivalents and available for sale for carries a 145.6 million.

Subsequent to the ended the quarter, we for the further strengthened our balance sheet and extended our operating cash friendly with our very recent nondilutive tranche that debt facility for 80 million up to 109.

On closing we believe this facility coupled with a committed research and development funding from our collaborators and that we see a regulatory milestone from NCTC assuming approval if that its instead in Japan is expected to provide us with the cash resources to fund our current operating plan into Q1 of 2021.

And lastly, we ended the quarter with approximately 119 million shares outstanding.

That will open the lines for questions.

Right.

Thank you.

Jason Amello: As a result of the foregoing operating results, the company reported a net loss for the third quarter of 2019 of $54.6 million, as compared to a net loss of $26 million for the third quarter of 2018. Again, I want to point out that the net loss for the third quarter of 2019 includes the impact of non-cash charges of $27.1 million related to the application of purchased accounting for the merger with Carex that I mentioned earlier, offset by an income tax benefit of $1.3 million. Turning to our capital position, we ended the quarter with cash, cash equivalents, and securities available for sale of $145.6 million. Subsequent to the end of the quarter, we further strengthened our balance sheet and extended our operating cash runway with our very recent non-dilutive trans-debt facility for $80 million up to $100 million.

And as a reminder to ask a question you when you press star one on your telephone.

To withdraw your question. Please press the pound Keith Please standby, we've compiled your Q and a roster.

And our first question comes from Chris Raymond with Piper Jaffray. Your line is open.

Hey, guys. Thanks, a couple questions.

John I'm kinda struck by the statement in your press release, and you kind of set the slow in your prepared remarks.

About you know essentially being the only potentially only half approved comparing outcomes to current standard of care, both dialysis and non dialysis. So.

John you know this price stays pretty well.

And even last night your competitor made a statement I think that about only about 15% or so patients who start dialysis have gotten an yesterday.

Which actually is a first time I think I've I've heard them acknowledge and a meaningful yes that use.

Jason Amello: On closing, we believe this facility, coupled with the committed research and development funding from our collaborators and the receipt of a regulatory milestone from MTPC, assuming approval of Attitude Stat in Japan, is expected to provide us with the cash resources to fund our current operating plan into Q1 of 2021. And lastly, we ended the quarter with approximately 119 million shares outstanding.

But I mean, there's a lot of data out there that says that rate is much higher. So so maybe just clear up for US again, you know the space well John I get this from investors a lot.

Yes, they use in the pre dialysis or non dialysis setting how prevalent as it from your perspective on how many patients starting dialysis or on an essay.

Hey, Chris Thanks for the question is.

Operator: And with that, we'll open the line for questions. Operator? And as a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, please press the pound key. Please stand by while we compile your Q&A roster. And our first question comes from Chris Raymond with Piper Jaffray. Your line is open.

Certainly more more.

Frequent than 15% I mean, you have to break break it down a couple of different ways, you're patients who were all core chronically treated with any esas, which actually quite common outside of the U.S., but in the U.S.. It's much more frequently dose in a as a rescue therapy because of the significant risk associated.

Yes, it use and the fact that you're bringing patients in a four injections frequently having them go to infusion centers et cetera. So you know I do think that there are a significant work that will need to be done to continue to educate physicians on the need to treat those patients which is one of the reasons why we have.

Chris Raymond: Hey guys, thanks. Just a couple questions. So John, I'm kind of struck by the statement in your press release, and you kind of said this as well in your prepared remarks. [inaudible] about, you know, potentially being the only HIF approved to compare outcomes to the current standard of care in both dialysis and non-dialysis. So, I mean, John, you know this space pretty well. And even last night, your competitor made a statement. I think that only about 15% or so of patients who start dialysis have gotten an ESA. Which is actually the first time I think I've heard them acknowledge and, you know, meaningful ESA use. But, I mean, there's a lot of data out there that says that rate is much higher. So maybe just clear this up for us, again, you know this space well, John. I get this from investors a lot. ESA use in the pre-dialysis or non-dialysis setting, how prevalent is it from your perspective, and how many patients starting dialysis are on an ESA?

Hey, commercial organization, that's talking about anemia today with Auryxia, so, but if you talk to nephrologists. They don't it's not in their mind that they're not treating these patients. You know this is is very common and they they would much prefer to see a comparison to what there.

We're used to using a which is any I say then to placebo, which really means nothing to that.

Okay, and then just I know, we've kinda gun around on this issue at a decent about with respect to your your trial and your design and.

And I know you defer from your competitor in that you had really talked about your noninferiority margin.

Is there any and just maybe more directly I guess, you why not provide that noninferiority merging investors as you know the especially since you have an agreement with the FDA.

[noise]. So I think you can appreciate Chris that it's a very competitive situation and.

John P. Butler: Hey, Chris. Thanks for the question. It is certainly more frequent than 15%. I mean, you have to break it down a couple of different ways.

Given that we have agreement with the FDA.

John P. Butler: You have patients who are chronically treated with an ESA, which is actually quite common outside of the U.S., but in the U.S., it's much more frequently dosed as a rescue therapy because of the significant risk associated with ESA use and the fact that, you know, you're bringing patients in for injections frequently, you know, having them go to infusion centers, et cetera. So, you know, I do think that there is significant work that will need to be done to continue to educate physicians on the need to treat those patients, which is one of the reasons why, you know, we have a commercial organization that's talking about anemia today with Erixia. So, but if you talk to nephrologists, they don't, you know; it's not in their minds that they're not treating these patients. You know, this is very common, and they would much prefer to see a comparison between what they're used to using, which is an ESA, and placebo, which really means nothing to them. Okay.

Okay.

You know, we will hold that for a for us and how we progress I don't think it's our job to.

Form others of our negotiations.

Fair enough, Okay, and then one final question maybe on this trial so.

The way you guys are looking at mace.

John you guys is stressed that the based components or an additional non primary endpoint in your clinical program for preventive D stat.

You know that when we saw the Roxa data you know there was a you know pretty decent imbalance and am I in stroke and so.

I guess you know the question is.

Maybe sort of talk a little bit about do you feel that that's an advantage for you guys. Once you finally have those read outs.

Or maybe just talk about.

The value of having you know those individual components of me.

Right. So so Chris when you look at you know the data that was presented.

Chris Raymond: Okay. And then just, I know we've kind of gone around on this issue a decent amount with respect to your trial and your design. And I know you differ from your competitors in that you haven't really talked about your non-inferiority margin. Is there any, maybe more directly, I guess, why not provide that non-inferiority margin to investors, you know, especially since you have an agreement with the FDA?

It's really not surprising to.

Oh, that's there are significant questions.

Around the the components in other areas and from where we're sitting it kind of most of that really revolves around design issues and regulatory interaction and you know again.

You know when I talk to.

Okay Wells and Nephrologists about this and I was at the sessions at eight cents. A there are a lot of excitement about the data and I think that bodes well for us in the class.

John P. Butler: So, you know, I think you can appreciate, Chris, that it's a very competitive situation and, you know, given that we have an agreement with the FDA and EMA, we will hold that for us and see how we progress. I don't think it's our job to inform others of, you know, our negotiations.

But it's our design that really makes the difference is the it's that the active control, particularly in non dialysis. The data you're referencing was then was the non dialysis patients and we have a direct comparison with the assays.

That's what sets us up from a from a clinical perspective.

And from a regulatory perspective, ultimately from a commercial perspective, but all of those those differences.

Chris Raymond: Fair enough. Okay, and then one final question, maybe on this trial. So, the way you guys are looking at MACE, John, you guys have stressed that the MACE components are an additional non-primary endpoint in your clinical program for VataDoStat. When we saw the Roxa data, there was a pretty decent imbalance between MI and stroke, and so I guess the question is... You know, maybe sort of talk a little bit about, do you feel like that's an advantage for you guys once you or maybe just talk about the value of having those individual components of MACE.

We're seeing are we really think of as design or ft interaction differences and you know we think we've done the right thing on both with the active control and those agreements with ft any M&A on key statistical elements before frankly.

Most of them before we started the studies.

Okay, great. Thank you very much.

Thanks, Chris.

Thank you and our next question comes from Eric Joseph with JP Morgan Your line is open.

Hey, guys. Thanks for taking my question, maybe just to pick up on that last question in your discussions with regulators have there.

Has there been discussion on.

John P. Butler: Right, so Chris, when you look at the data that was presented, it's really not surprising to us that there are significant questions around the components and other areas. But from where we're sitting, most of that really revolves around design issues and regulatory interaction. You know, when I talked to Kay Wells and nephrologists about this, and I was, you know, at the sessions at ASN, there was a lot of excitement about the data, and I think that bodes well for us in the class, but it's our design that really makes the difference. It is active control, particularly in non-dialysis patients. The data you're referencing was in non-dialysis patients We have direct comparison with ESAs, that's what sets us up from a clinical perspective and from a regulatory perspective, and ultimately from a commercial perspective. But all of those differences that we're seeing are what we really think of as design or FDA interaction differences. And, you know, we think we've done the right thing on both with active control and those agreements with FDA and EMA on key statistical elements before, frankly, most of them before we started the study.

HM.

Components in me.

And I get their utility or.

Okay, because when it comes noninferiority strictly on the comp as it makes for a follow up.

I think regulators look at the totality of the data. So you know clearly I know, there's an agreement on.

And on the primary efficacy and safety endpoints and those are May says, we've described but no I mean, what what I know about the FDA and the M is you hand them the data and they analyze it you know kind of however, they want and you know what you want as a data set that is.

Not complex.

And you know not statistically challenging so that you understand the data that your handing to them and and you know they'll look at it nets totality.

And again I mean that is the study that we've designed.

With an active control in both dialysis and non dialysis.

Okay.

And just picking up on some of your prepared remarks.

Some of the secondary endpoints and potential benefit with a beta do stuff, particularly progression.

CKD can you talk a little bit about mechanistically, how treatment of anemia with the have might impact CKD progression and.

What baseline expectation is with the assays on that on that are on progress.

Chris Raymond: Okay.

Eric Joseph: Great, thank you very much. Thanks, Chris. Thank you. And our next question comes from Eric Joseph with JP Morgan. Your line is open. Hey guys, thanks for taking the question. Maybe just to pick up on the last question. In your discussions with regulators, has there been specific discussion of subcomponents with inmates, and I guess their utility or the focus when it comes to non-inferiority strictly on the composite MACE score?

I'd be viewed as a anything meaningful improvement.

Yes, so when.

So the hips have shown in preclinical models that they have been able to impact.

Kidney or Oregon.

Well, you know kind of better oxygen flowed to in Oregon kind of suggests that it can protect protect that organ I think it's important to recognize again that in our study and non dialysis, where we're comparing directly to a two any asset. So you know whats known of course is that.

John P. Butler: I think regulators look at the totality of the data. So, you know, clearly, there's agreement on the primary efficacy and safety endpoints. And, you know, those are MACE, as we've described.

And the EMEA itself has an impact on.

On progression on Gee, how far you make a.

You correct anemia.

Correct, congestive heart failure, and you're you're improving potentially g., a far not necessarily progression. So it's a truly is a difference you know you really want to to explore that versus the standard of care, which is any Esa and that's what we'll see answer we'll have a in our study.

John P. Butler: But, you know, what I know about the FDA and EMA is, you hand them the data, and they analyze it, you know, kind of however they want. You know, what you want is a data set that is not complex and, you know, not statistically challenging so that you understand the data that you're handing to them. And, you know, they'll look at it in its totality. And again, I mean, that is the study that we've designed, with active control in both dialysis and non-dialysis.

Got it and just one on Auryxia if I could.

[laughter] appreciating that you're you're in.

The legal dispute when it comes to the Ideate opportunity, but just within Hyperphosphatemia I'm wondering as we turned the corner here 2020 weather mixture, we'd be position I'm talking about guidance.

Eric Joseph: Unknown Speaker Okay. And just picking up on some of your prepared remarks, discussing some of the secondary endpoints and potential benefits with beta-DUCE, particularly progression of CKD. Can you talk a little bit about, I guess mechanistically, how treatment of anemia with the HIVs might impact CKD progression and what the baseline expectation is with ESAs on that, on progression and what might be viewed as a clinically meaningful improvement.

Within that segment. Thanks.

[noise]. So you know again, I mean, where we are today, we have a tremendous amount of excitement about hyperphosphatemia as an opportunity.

For us, but given the issues around the idea and CMS.

Just doesn't make sense for us to to guide you.

John P. Butler: Yeah, so the HIFs have shown in preclinical models that they are able to impact kidney or organ health, kind of better oxygen flow to an organ, which kind of suggests that they can protect that organ. I think it's important to recognize, again, that in our study in non-dialysis, we're comparing directly to an ESA. So, you know, what's known, of course, is that anemia itself has an impact on progression, on, you know, GFR. You make a change to anemia, you correct congestive heart failure, and, you know, you're improving potentially GFR, not necessarily progression. So if there truly is a difference, you really want to explore that versus the standard of care, which is an ESA, and that's what we'll, that's the answer we'll have in our study.

You know in that in that area and I mean this is we really believe that CMS has a legal obligation to cover.

In the drug.

But at this point I think it's really about being cautious in how we approach a revenue expectations for Auryxia I really encourage you to do the same Eric.

Right. So I appreciate it thanks, taking my questions.

Thank you.

Thank you and our next question comes from David Liebowitz with Morgan Stanley . Your line is open.

Oh, Thanks for taking my question, one question, a and B.I.D.A. or could you give us I guess, an example of historic precedent.

The other scenario that that might be similar <unk>, it seems somewhat unique and which which you've had a have a a single drug two indications one is a per one reimbursed one not.

Eric Joseph: Got it. And just one on Erexia, if I could, appreciating that you're in the midst of a legal dispute when it comes to the IDA opportunity, but just within hyperfocus, I'm wondering as we turn the corner here, in 2020, whether next year we'd be in a position to talk about guidance within that segment.

And being put in this kind of legal scenario.

Is there some scenario we can we can look at I guess.

To gain some perspective.

Yeah. There certainly is there's actually multiple one I was involved and myself was set with vitamin D.

And part D. A again same patient population.

The same in that there were two indications, but it was indicated for for the treatment of CKD patients they're hyperparathyroidism.

John P. Butler: So, you know, again, I mean, where we are today, we have a tremendous amount of excitement about hyperphosphatemia as an opportunity for us. But given, you know, the issues around IDA and CMS, it just doesn't make sense for us to guide you in that area. And I mean, this is, we really believe that CMS has a legal obligation to cover the drug. But at this point, I think it's really about being cautious in how we approach revenue expectations for Erixia. I really encourage you to do the same, Eric.

And again I mean, the initial read by by CMS was that this was the vitamin and therefore, you know there was an exclusion for it.

But you know they recognized.

With our with our help that this was being used to treat a disease.

That was not an excluded disease and therefore, a it should be covered and was in which is why we really believed that we had.

You know clear path forward.

Today, and we feel the same about Auryxia and this is a product that's being reimbursed for hyperphosphatemia.

And therefore, it's not it's kind of being a seen by CMS as a mineral in that case.

Eric Joseph: Appreciate it. Thanks for taking the questions, guys. Thank you, and our next question comes from David Leibowitz. Thank you very much for taking my question. One question.

And it's iron deficiency anemia is not have excluded indications. So we feel that they have a legal obligation to reimburse the drug and that's what the lawsuit.

Is about.

Thanks for taking the question.

David A. Spellman: On the IDA, could you give us, I guess, an example of historic precedent of a scenario that might be similar? It seems somewhat unique in which you have a single drug, two indications, one reimbursed, one not, and being put in this kind of legal scenario. Is there some scenario we can look at, I guess, to gain some perspective?

Thank you.

Thank you. Our next question comes from Difei Yang with Mizuho Securities. Your line is open.

Hey, good morning, and thanks for taking my question, So John just pop home.

J.F.D.A., it's slow Japanese ft perspective, why wouldn't they need the nice maybe you put a help us a with their rationale.

John P. Butler: Yeah, there certainly is. There's actually multiple.

John P. Butler: You know, one I was involved in myself was with vitamin D and Part D. Again, the same patient population, but it wasn't the same in that there were two indications, but it was indicated for the treatment of CKD patients, their hyperparathyroidism. And again, I mean, the initial read by CMS was that this was a vitamin, and therefore, you know, there was an exclusion for it. But, with our help, they recognized, with our help, that this was being used to treat a disease that was not an excluded disease, and therefore, it should be covered, and was, which is why we really believed that we had, you know, a clear path forward. You know, today, we feel the same about Erixia. You know, this is a product that's being reimbursed for hyperphosphatemia, and therefore, it's not, you know, kind of being seen by CMS as a mineral in that case. And iron deficiency anemia is not an excluded indication, so we feel that they have a legal obligation to reimburse the drug, and that's what the lawsuit is about.

[noise] well you know, we basically five although the guidance that regulators gave us an out of the P.M.D.A. and as you know Japan is always a generally conservative country doesn't.

Require mace data I mean, certainly you know like every regulatory authority you provide them all the data that exist for the drug but they don't have the expectation or that you provide may stated they haven't seen in a Japanese population the impact on.

On outcomes and and they frankly target a higher hemoglobin levels in Japanese patients and importantly in our partner MTBC is really encouraged by a the data as are we and a as you know it's an active review process and.

If we stay on expected timelines, we'd be talking about a a July approval for about a do stat.

Yes. Thank you for that the additional color then I'm, a very high level from Nephrologist.

David A. Spellman: Thanks for taking the question.

John P. Butler: Thank you.

Defy Yang: Operator Thank you. Our next question comes from Defy Yang with Zuho Securities. Your line is open.

Perspective, I know MDD setting.

John P. Butler: Hi, good morning, and thanks for taking my question. Um, so John, just a couple. From the J-FDA, so the Japanese FDA perspective, why wouldn't they need the MACE? Maybe you could help us with their rationale.

Do you think where where do you think the market me.

Oh, the new falling in love just are looking for something assays as a placebo or they're looking for something for as long as does something is saying for that Paul you think Denmark it will respond.

John P. Butler: Well, you know, we basically follow the guidance that regulators give us. For example, the PMDA, and as you know, Japan is always, you know, a generally conservative country, doesn't require MACE data. I mean, certainly, you know, like every regulatory authority, you provide them with all the data that exists for the drug, but they don't have the expectation that you provide MACE data. They haven't seen in a Japanese population the impact on outcomes, and they frankly target higher hemoglobin levels in Japanese patients. Importantly, our partner, MDBC, is really encouraged by the data, as are we, and, as you know, it's an active review process. And, you know, if we stay on expected timelines, we could be talking about a July approval for Betadustat.

So from an Nephrologist perspective, I think they're much more interested in seeing a comparison to the drug that they use and again I mean to to the Christmas question earlier, I mean, they use on a regular basis.

And that's again from a commercial perspective or a much stronger package to go in and and speak to physicians about because you can make direct comparisons would you can't do want to placebo controlled trial.

Yes. Thank you and then finally on GSR.

So I'm wondering is clinically relevant.

I see a home the jumpers improvement.

That could.

No no.

It's slowing the a progression awesome.

I think whats clinically relevant is seeing a you know a slower progression not seeing just the change in G.I. far but actually seeing.

John P. Butler: Yeah, thank you for that additional color. Then, on a very high level, from a nephrologist's perspective, in an NDD setting, do you think where the market needs are, are nephrologists looking for something as safe as a placebo, or are they looking for something as long as that something is safer than EPO, do you think that market will expand?

A difference in the time it takes for a patient to get onto dialysis and I think that's really what we'll move physicians not a change in CFR, we are measuring that in our phase three study.

Yeah. So for that design do you think you have to be apology to took a significant to get the statistical significance on the guy.

John P. Butler: So from a nephrologist's perspective, I think they're much more interested in seeing a comparison to the drug that they use. And again, to Chris's question earlier, I mean, they use on a regular basis. And that's, again, from a commercial perspective, a much stronger package to go in and speak to physicians about because you can make direct comparisons, which you can't do in a placebo-controlled trial.

Yeah, no. It's a great question Difei and of course, you don't know whether you have the power and unless you know kind of what the treatment effect is and we don't we don't have that you don't have anything to base that on I don't want to oversell or expectations on showing a delayed progression.

And let's just see kind of where the data leads us.

John P. Butler: Yeah, thank you. Then finally, on GFR. So, what is clinically relevant if I see how much of an improvement in GFR that could be signaling that is slowing the progression of CKD?

Okay, Great and John Yes, a while we're on this topic could you help us with how this portion of the trial was designed to was what would you be measuring are you using the Beijing to to decide how long does it takes a lot person to to go from stage three.

John P. Butler: I think what's clinically relevant is seeing, you know, a slower progression, not seeing just a change in GFR but actually seeing a difference in the time it takes for a patient to get on to dialysis. And I think that's really what will move physicians, not a change in GFR. We are measuring that in our Phase 3 study.

Two four to five and what they are buying or measurement youre trying to discern.

John P. Butler: Yeah, so for that design, do you think you have the power to get statistical significance on the...

I did say that [noise].

On the level of detail on the protocol that I don't.

John P. Butler: David Spellman, Wing Yip, Antonio Arce, Allison Bratzel, Julian Harrison, Steven Burke, Unknown And, you know, let's just see kind of where the data leads us.

We have at my fingertips here, so we'll have to.

I'll have to come back to you on that.

Oh, great thinking it's a good question answered the question I, just don't and I haven't looked at the protocol and a long time so.

John P. Butler: Okay, great. And Jon Yip, while we're on this topic, could you help us with how this portion of the trial was designed? What would you be measuring? Are you using the staging to decide how long it takes for a patient to go from stage 3 to 4 to 5? Or are there finer measurements you're trying to discern?

But it's a good a good question no worries and thank you so much for a clarifying providing clarifying thoughts on the program. Thanks.

Thank you Difei.

Thank you.

Our next question comes from Ed Arce with H.C. Wainwright Your line is open.

[noise] Hi, Josh Thanks for taking my questions, perhaps I could ask Oh, one on the.

John P. Butler: You know, D-Fay, that's a level of detail in the protocol that I don't have at my fingertips here. So we'll have to, we'll have to come back to you on that.

Commercial.

Infrastructure and readiness.

John P. Butler: It's a good question. It's a good question. I just don't know, and I haven't looked at the protocol in a long time.

Given the.

The high level of confidence you mentioned earlier in your remarks.

John P. Butler: But it's a good a good question.

Defy Yang: No worries, and thank you so much for clarifying and providing clarifying thoughts on the program. Thank you, Thank you.

As you think about.

Approval and launch like we you know like 21 early 22, what are the key what are the key factors the dynamics of the competitive environment that youre looking at and and and how are you thinking about.

John P. Butler: Thank you, D-Fay.

Antonio Eduardo Arce: Thank you. Our next question comes from Ed Arce with HC Wainwright. Your line is open. Hi John, thanks for taking my questions. Perhaps I could ask one on commercial infrastructure and readiness, given the high level of confidence you mentioned earlier in your remarks. As you think about approval and launch, likely late 21, early 22, what are the key factors, the dynamics of the competitive environment that you're looking at, and how are you thinking about addressing those?

Addressing those.

So this is this is really where are the merger we completed last year. That's the strategic value of that really starts to pay off right. I mean, you know I mentioned earlier that.

Communicating on and the need to treat patients with chronic kidney disease for anemia chronically first is episodic Lee as as physicians do today. It's that's an important communication point and one that that we can start today talking about iron deficiency anemia, and certainly our medical.

John P. Butler: So this is really where the merger we completed last year, the strategic value of that really starts to pay off, right? I mean, I mentioned earlier that communicating the need to treat patients with chronic kidney disease for anemia chronically versus episodically as physicians do today is an important communication point and one that we can start today talking about iron deficiency anemia, and certainly, our medical affairs group can talk more broadly about treating that disease area, the importance of that. That is absolutely critical. The other critical component of success here is the relationship we have with V4 Pharma and the fact that we have access to 60% of the dialysis population with Vatadustat right from launch. Again, I'll use the Mercera example, where in nine months, 90% of the patients changed. The Tdapa rule that's been finalized by CMS gives us a great opportunity to move patients quickly, and just to remind you that the V4 relationship is an exclusive one; Vatadustat's the only product, HIF product, that they can sell into their joint venture with Fresenius. Fresenius alone accounts for 40% of the market.

Affairs group I can talk more broadly about kind of treating that disease area the importance of that.

That is absolutely critical the other critical.

In a component of success here or is the relationship we have a fee for pharma and the fact that you know we have access to 60% of the dialysis population.

You know with or without a dues that right from launch again, a mile use them or Sarah example, where a nine months, 90% of the patients changed the T. gap rule, that's been a finalized by CMS gives us great opportunity to to move patients.

Quickly and just to remind you that before relationship as an exclusive one bad to do so that's the only product.

If product that they can sell into their joint venture with a with Fresenius Fresenius alone accounts for 40% of the market. So those are kind of a number of things that we've done a to really be prepared for for commercial launch. The things that we think are kind of have that that will have the biggest impact.

And I should also add that we have our partner Otsuka, who is providing 50% of the oh, the commercial muscle for the product as well. So you know when I look at the competitive environment I'm really very encouraged by where we are and unlike you know a company with a single.

John P. Butler: So, those are kind of a number of things that we've done to really be prepared for commercial launch, the things that we think will have the biggest impact. And I should also add that we have our partner Otsuka who is providing 50% of the commercial muscle for the product as well. So, when I look at the competitive environment, I'm really very encouraged by where we are. And unlike a company with a single asset looking to launch itself, where you have a significant capital raise needed to finance that, because of all of those pieces we've put in place, it's much more modest the investments that we need to make.

I said looking to launch themselves, where you have significant.

Capital raise needed to finance that you know because of all of those pieces, we put in place it's much more modest the investments that we need to make.

Okay. Thanks, John that's a nice summary, one perhaps one other question on your.

Your ongoing suits with CMS regarding the idea and I appreciate that there there were certainly something's, who you are really.

Antonio Eduardo Arce: Okay. Thanks, John.

John P. Butler: That's a nice summary. Perhaps one other question on your ongoing suit with CMS regarding IDA, and I appreciate that there are certainly some things you really wouldn't want to discuss given the ongoing litigation, but you had mentioned even more recently, beyond the initial suit. I think you mentioned an injunction. Just maybe could you perhaps review again? What's the latest status with the overall effort? Thank you.

I wouldn't want to discuss given the ongoing litigation, but you had mentioned or even more recently beyond the initial suit I think you mentioned an injunction just maybe could you perhaps review again, what's the latest status or with the overall effort. Thank you.

John P. Butler: Sure, thanks for the question. So yes, as we mentioned, we filed a motion for a preliminary injunction, which would obviously, you know, because of, you know, the significant harm that we're experiencing with not just the lack of reimbursement for iron deficiency anemia, but also because of the prior authorizations that are required for hyperphosphatemia patients. You know, we've filed that with the court. We are waiting to hear on that. I don't know the details.

Sure. Thanks for the question and so yes, as we mentioned we filed a for a preliminary injunction which would obviously.

Because of the significant harm that we're experiencing with its not just with the the lack of reimbursing for iron deficiency anemia, but also because of the prior off that Oh are required for hyperphosphatemia patients.

We we filed that with the court at that we're waiting to add to here on that I don't know the timing.

Great. Thanks, so much.

Antonio Eduardo Arce: Great! Thank you so much.

John P. Butler: Thanks, Ed.

Thanks, Ed.

Kenneth McKay: Thank you. And as a reminder, to ask a question, press star 1. Our next question comes from Kenneth McKay with RBC Capital Markets. Your line is open. Hi, this is Justin. I'm on behalf of Ken, and thanks for taking the question and congratulations on the progress this quarter. Just a quick question from us as you sort of think about the landscape.

Thank you and as a reminder to ask a question press Star one.

Our next question comes from Kennen Mackay with RBC capital markets. Your line is open.

Hi, This is just going on for tenant. Thanks for taking my question. Congrats on the progress this quarter I'm just a quick question from US as you sort of think about the landscape.

Kenneth McKay: Given the higher event rate in year one for patients on dialysis already receiving standard of care, do you have any sort of clinician feedback on their willingness to switch over well-controlled patients to a new therapy?

Given the higher event rate in year, one for patients on dialysis already receiving standard of care do many clinician feedback on their willingness to switch over well controlled patients to new therapy.

John P. Butler: That's an interesting question. You know, I think that one thing that you need to recognize about dialysis treatment is that it's very protocol-driven, particularly when you think about Fresenius and DeVita. And, you know, they really do quite a bit of work to optimize treatment for patients and switch everyone as quickly as they can to have consistency. You know, I think we're encouraged by the data we've seen in incident patients from Rox Dustat. And, you know, we're obviously looking at that population also. And, and, and remember, as you treat more patients on non-dialysis and those patients start dialysis on a particular product, there will be a great desire to continue to maintain them if they're being maintained well. So I do think that the incident market is one that will be very interesting for Beta-DoStat.

[noise]. That's an interesting question you know I think that no one thing that that you need to recognize about dialysis.

Treatment.

Is that it's very protocol, driven or as you know, particularly when you think about fresenius and davita and they they really do quite a bit of work to optimize treatments for patients and and switch everyone.

As quickly as they can to have consistency.

I think we're encouraged by the data we've seen an incident patients.

From a roxadustat and we're obviously looking at that population also and then and remember as you treat more patients.

Our non dialysis in those patients start dialysis on a particular product there'll be a great.

Desire to continue to maintain them if they are they're being maintained well. So I do think that the incident market is one that will be very interesting for for better do set.

Kenneth McKay: Okay, great. And then just a quick one on Erixia, if you're able to. It looks like sales were a little flat-ish this quarter over the last quarter. I was wondering if you could go into some of the details behind the slowdown in growth that you saw there.

Okay, Great and then just a quick one on a rig see if you're able to it looks like sales were a little flattish on this quarter last quarter was wondering if you can go into some of the details behind a slowdown in growth you saw there.

John P. Butler: So Q3 is always a quarter where you see more of a flattening in the summer months. And we had a little bit of softening on the average selling price as well. But fundamentally, the ability to grow in the iron deficiency anemia market has really been impacted by the CMS decision and the prior approval, so we're continuing to focus on hyperphosphatemia. We have a lot of excitement around that, but I do encourage you to be cautious as you think about growth in the fourth quarter and into 2020.

[noise] so when a so Q3 is always a quarter, where you see more of a flattening in the summer months.

You know, we had a a little bit of a softening on the average selling price as well and but you know fundamentally the ability to grow in the iron deficiency anemia market has.

Really been impacted by the CMS decision and the the the prior off so you know we're continuing to focus on Hyperphosphatemia, we have a lot of excitement around that.

But you know I do encourage you to be cautious.

As you think about growth in the fourth quarter and and into 2020.

Okay. Thank you very much.

Kenneth McKay: Okay, thank you very much. Thank you, and that's all the questions we have. I'd like to turn the call back to Mr. John Butler, CEO, for any closing remarks.

Thank you and that's all the questions we have I'd like to turn call back to Mr., John Butler Steele for any closing remarks.

John P. Butler: Thanks Catherine and thanks everyone for attending again. We look forward to continuing to update you in the future on the progress we make in the business. Have a great day.

Thanks, Thanks, Katherine and thanks, everyone for attending again, we look forward to continuing to update you in the future on the progress you're making the business how great day.

Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.

Operator: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.