Q1 2021 Akebia Therapeutics Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the T V of Therapeutics first quarter of 2021 financial results and business update conference call as.
Operator: Today, ladies and gentlemen, and welcome to Akiva Therapeutics' first quarter of 2021 financial results and business update conference call. As a reminder, this call is being recorded. I would like to introduce your host for today's event, Kristen Shepard, Senior Vice President of Investor Relations with Akibia.
A reminder, this call's being recorded and I'd like to introduce your host for today's the day Christmas Shepherd Senior Vice President of Investor Relations with the key beer.
Thank you and welcome to <unk> first quarter, 2000, and 'twenty, one and financial results and business update conference call. Please note that the press release detailing our results for the first quarter was issued earlier this morning.
Kristen Shepard: that's relations.
Kristen Shepard: Thank you, and welcome to Akivya's first quarter 2021 financial results and business update conference call. Please note that the press release detailing our results for the first quarter was issued earlier this morning and is available on the investor section of our website. For your convenience, a replay of today's call will also be available on our website shortly after we conclude today's call. Joining me for today's event is John Butler, our chief executive officer, and David Spellman, our chief financial officer. Before we begin, I'd like to remind everyone that this call includes four-looking statements. Each forward-looking statement contained in this call is subject to risk and uncertainties.
And 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. Shortly after we conclude today's call.
Joining me for today's event as John Butler, Our Chief Executive Officer, and David Spellman, Our Chief Financial Officer.
Before we begin I'd like to remind everyone that this call includes forward looking statements. Each forward looking statement contained in this call of subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. Additional information regarding these factors is described in the forward looking statements section of the press release, we issued earlier.
Kristen Shepard: that could cause actual results to differ materially from those described in these statements. Additional information regarding these factors is described in the forward-looking statement section of the press release we issued earlier today, as well as in the risk factors and management's discussion and analysis sections of our most recent annual and quarterly reports filed with the SEC. The four looking statements on this call speak only as of the original date of this call, and except as required by law, we do not undertake any obligation to
Debt as well as and the risk factors and management's 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 of the original date of this call and except as required by law, we do not undertake any obligation to update or revise any of these statements.
Kristen Shepard: any obligation to update or revise any of these statements. With that, I'd like to introduce our CEO, John Butler.
With that I'd like to introduce our CEO John Butler John.
Thank you Christian and thank you all for joining us today.
John P. Butler: Thank you, Kristen, and thank you all for joining us. KeyBee is off to a great start in 2021, building positive momentum with solid execution on strategic priorities that set the stage for an exciting year. Most importantly, in late March, we submitted the Vadduostat new drug application to the FDA. Our comprehensive NDA submission package includes compelling data from over 8,000 patients across 36 clinical trials of Vadadustadt, including our most recent global Phase 3 program.
I'll keep you is off to a great start in 2021.
The positive momentum with solid execution on strategic priorities.
Set the stage for an exciting year.
Most importantly in late March we submitted the bad of the Stat, new drug application to the FDA.
Our comprehensive NDA submission package includes compelling data from over 8000 patients across 36 clinical trials of the van of do stack, including our most recent global Phase III program.
We remain confident and both the clarity and the quality of this need of package.
John P. Butler: We remain confident in both the clarity and quality of this data. Submitting the NDA has been our highest priority since reporting our top-line results in 2020, a significant milestone for our company, our partner with Suka, patients, and the entire kidney community. Although our team and our colleagues at Azuka have extensive experience with regulatory submissions and interfacing with regulatory authorities, this is the first NDA for Akiba as a company.
Submitting the NDA has been our highest priority since reporting our top line results in 2020.
The significant milestone for our company, our partner Otsuka patients and the entire kidney community.
Although our team and our colleagues the added sugar have extensive experience with regulatory submissions and interfacing with regulatory authorities. This is the first NDA for of keep you as a company.
As an organization committed to bettering the lives of people impacted by kidney disease, we're excited to be advancing our lead product candidate and the one step closer to helping address the needs of people living with the anemia due to C. J D.
John P. Butler: As an organization committed to bettering the lives of people impacted by kidney disease, we're excited to be advancing our lead product candidate and being one step closer to helping address the needs of people living with anemia due to KD. On behalf of KBIA, I want to express our deepest appreciation to everyone involved in this program, including the physicians, investigators, site coordinators, and, most importantly, the patients. We look forward to engaging with the FDA on our NDA and plan to provide an update on our submission at the end of this month.
On behalf of the TBA and want to express our deepest appreciation to everyone involved and this program, including the physicians investigators study coordinators.
And most importantly, the patients we.
And we look forward to engaging with the FDA on our NDA and plan to provide and update on our submission at the end of this month.
In addition to submitting the NDA. Our team has also been hard at work supporting the independent Executive steering committee for the amount of <unk> Global Phase III program as they present and publish our phase III data.
John P. Butler: In addition to submitting the NDA, our team has also been hard at work supporting the independent executive steering committee for the Vaddustadt Global Phase 3 program as they present and publish our Phase 3 data. Topline data has been presented at medical meetings, including ASN, and the methods papers for both programs have been published in peer-reviewed journals, Nephrology, Dialysis, and Transplantation and the American Heart Journal. On our last call, we shared our expectations that the results manuscripts for our Phase 3 program would be published in a top tier journal.
Top line data has been presented at medical meetings, including the S N and the message papers, where both programs have been published in peer review journals, and nephrology dialysis and transplantation and the American Heart Journal.
On our last call, we shared our expectation that the results manuscripts for our phase III program would be published and a top tier journal.
John P. Butler: We are honored that the results of both innovate and protect have been published in the New England Journal of Medicine. We believe acceptance and publication in the New England Journal reinforces the scientific rigor and quality of the development program, as well as the clarity of the data for the broader medical community. We're also proud as we believe these publications mark the first time that comprehensive phase three efficacy and possible safety results have been published in a peer-reviewed journal for a product candidate in the HIF PHI class.
We are honored that the results of book innovate and protect had been published and the New England Journal of Medicine.
We believe acceptance and publication and in the New England Journal reinforces the scientific rigor and quality of the development program.
As well as the clarity of the data for the broader medical community.
We're also proud as we believe these publications Mark the first time and the comprehensive phase III efficacy and Mace safety results have been published in a peer reviewed journal for of product candidate and the hips ph high class.
John P. Butler: The lead authors of these publications are Dr. Glenn Chertow from Stanford and Kai Rue Eckhart from Berlin. They were also the co-chairs of the independent executive steering committee for both innovate and protect. Dr. Chertow and Eckhart and the entire committee, in collaboration with Akiba, designed the Global Phase 3 program after extensive dialogue with the FDA and European regulatory authorities. This work included aligning with regulators on the details of our statistical analysis plan, the pre-specified analyses, and the non-furiarity market.
The lead authors of these publications of doctors, Glenn Churchill from Stanford and <unk>.
And we ask art from Berlin.
We're also the co chairs of the independent executive steering committee for both innovate and protect.
Doctors true tower and efforts and the entire committee and collaboration with the keyboard designed the global Phase III program. After extensive dialogue with the FDA and European regulators.
This work included aligning with regulators on the details of our statistical analysis plan.
Pre specified analyses and the non inferiority margin.
Publication of both innovate and protect the efficacy and safety results and the New England Journal further demonstrates our collective commitment to transparency.
John P. Butler: Publication of both innovate and protect efficacy and safety results in the New England Journal further demonstrates a collective commitment to transparency. And having recently submitted our NDA for VADADUSTAT to the FDA, the timing of these publications could not have been better. Feedback and interest in these publications from key opinion leaders and the broader kidney community has been very positive. Subject to regulatory approval of VadduStat, we believe these publications will be highly informative for physicians, patients, dialysis providers, and payers, as they make important decisions about patient care and potentially a key consideration when differentiating among HIFs in the class, as well as differentiating VADUStat from treatment with the SA. Of course, these are the initial results manual.
And having recently submitted our NDA prevent of do staff to the F. D. A the timing of these publications could not have been better.
Feedback and interest and these publications from key opinion leaders and the broader kidney community has been very positive.
Subject to regulatory approval of kind of do staff. We believe these publications will be highly informative for physicians patients dialysis providers and payers as they make important decisions about patient care and.
And potentially a key consideration and differentiating among shifts and the class as well as differentiating bad of do stats from treatment with the assays.
Of course these of the initial results manuscripts, given the richness of the data set we generated across the program. We anticipate additional data publications and will not only inform physicians, but also have the potential to drive adoption of about of do staff subject to FDA approval.
John P. Butler: Given the richness of the data set we generated across the program, we anticipate additional data publications will not only inform physicians but also have the potential to drive adoption of Addustat, subject to FDA approval. Having successfully executed on the NDA submission and peer-reviewed publications, let's turn to the next phase of our business. The opportunity ahead of us is very clear, and our goal is for Vada Ducet to become the oral standard of care for adult patients with anemia due to CKD.
Having successfully executed on the NDA submission and peer reviewed publications.
Let's turn to the next phase of our story.
The opportunity ahead of US is very clear and our goal is for bat of do set the come the oral standard of care for adult patients with anemia due to C. J D.
And of course, my comments regarding the launch of about a new staff its adoption and use are all subject to its regulatory approval.
John P. Butler: And, of course, my comments regarding the launch of DUSAD, its adoption and use, are all subject to its regulatory approval. We are progressing many exciting elements of our business plan towards ensuring the successful launch of editing. Now, let me start with dial.
We are progressing many exciting elements of our business plan towards ensuring the successful launch of bad news that now let me start with dialysis, we believe dialysis represents a potential $2 billion market opportunity and the U S alone.
John P. Butler: We believe dialysis represents a potential $2 billion market opportunity in the U.S. We're confident that upon approval, we'll have the potential to address the unmet needs of over 500,000 adult patients on dialysis in the U.S. And rapidly establish Vaddustat as the new oral standard of care for the treatment of anemia due to KD. We anticipate that the consistency and clarity of our dialysis, bolstered by recent publications in the New England Journal, will play a meaningful role in helping dialysis providers develop treatment protocols, which are critical to driving adoption in the dialysis community.
We're confident that upon approval, we'll have the potential to address the unmet needs of over 500000 adult patients on dialysis and the U S and rapidly establishing out of do stat as the new oral standard of care for the treatment of anemia due to C. J D.
We anticipate that the consistency and clarity of our dialysis data bolstered by recent publications and the New England Journal will play a meaningful role and helping dialysis providers developed treatment protocols, which are critical to driving adoption and the dialysis market.
The further strengthened by the two sets of potential profile for in center dialysis patients were conducting two studies one led by our partner Otsuka to demonstrate the advantages that can also be dosed three times a week.
John P. Butler: To further strengthen Vadidustadt's potential profile for in-center dialysis patients, we're conducting two studies, one led by our partner, Otsuka, to demonstrate that VadaduStat can also be dosed three times a week. We plan to have data from these studies available at launch, and assuming the data are positive, use them to support a supplemental NDA for this dosing regimen post-approval. Although the significant majority of dialysis patients are cared for in centers, several factors, including the COVID-19 pandemic, are supporting a growing shift toward home dialysis.
We plan to have data from these studies available at launch and assuming the data are positive use them to support a supplemental NDA for the dosing regimen and post approval.
Although the significant majority of dialysis patients are cared for in center several factors, including the COVID-19 pandemic are supporting a growing shift towards home dialysis.
John P. Butler: Based on reports from the largest dialysis providers, home dialysis appears to be the fastest growing segment of the dialysis population. These trends are exciting, as we believe that as a convenient once-daily oral therapeutic, Vada-Dustat has the potential to offer an important value proposition, both to the growing number of home dialysis patients and to dialysis providers looking to better support these patients, simplify administration, and grow their home dialysis In fact, data from our Innovate program showed that the results in the subgroup of patients receiving peritoneal dialysis, the largest segment of home dialysis, were similar to those in the overall population.
Based on reports from the largest dialysis providers from the.
This appears to be the fastest growing segment of the dialysis population.
These trends of exciting as we believe that as a convenient once daily oral therapeutics out of Houston has the potential to offer an important value proposition folks of the growing number of home dialysis patients and dialysis providers looking to better support these patients simplify administration and grow their home programs.
In fact data from our innovate program.
Showed that the results and the subgroup of patients receiving peritoneal dialysis the largest segment of home dialysis.
Similar to the overall population.
We very much look forward to presenting these data at a future medical meeting and sharing where appropriate with dialysis providers.
John P. Butler: We very much look forward to presenting these data at a future medical meeting and sharing, where appropriate, with dialysis providers. With our planned commercial launch and strategic alignments, we believe that we can support rapid adoption of Addustat in the dialysis market. We intend to leverage our existing nephrology-focused commercial organization with our partner Otsuka sharing in the launch costs and responsibility. Understanding the dynamics of the dialysis industry, we strategically positioned DUSAT for potential rapid adoption in up to 60% of the U.S. dialysis market as an exclusive distribution relationship with B4 Pharma.
With our planned commercial launch and strategic alignment, we believe that we can support rapid adoption of that of new staff in the dialysis market.
We intend to leverage our existing nephrology focused commercial organization with our partner Otsuka sharing and the launch cost and responsibilities.
Understanding the dynamics of the dialysis industry, we strategically positions out of do stat for potential rapid adoption.
The 60 per cent of the U S dialysis market, the and exclusive distribution relationship with before pharma.
Adding to this is a unique reimbursement model in the U S dialysis market with T that book and add on payment to the bundle that is intended to encourage adoption of innovative therapies by clinicians and dialysis providers.
John P. Butler: Added to this is a unique reimbursement model in the U.S. dialysis market with Tdapa, an add-on payment to the bundle that's intended to encourage adoption of innovative therapies by clinicians and dialysis providers. We continue to believe that the commercial and operational advantages of this go-to-market strategy will be meaningful to both our near-term and long-term growth potential in this market. We're also continuing to advance our launch repair efforts in this activity. These activities include ongoing cultivation of key medical expert and patient advocacy relationships, development of the Vata DuStat brand, Salesforce optimization, and market access activities.
We continue to believe that the commercial and operational advantages with this go to market strategy will be meaningful to both our near term and long term growth potential in this market.
We're also continuing to advance our launch preparedness activities.
These activities include ongoing cultivation of key medical expert and patient advocacy relationships.
And Nevada do start Grand sales force optimization and market access activities.
John P. Butler: We're encouraged by the growing awareness at society and medical meetings, where HIF-PHI's potential in treating anemia is a focal point of both sessions and discussion. Again, there's a significant unmet need among patients with anemia due to KD, and we see a promising opportunity in Vada DuStat to advance the standard of care for patients on dialysis.
We're encouraged by the growing awareness of society and medical meetings, where hip ph is potentially treating anemia are a focal point of book sessions and discussions.
Again, there's a significant unmet need among patients with anemia due to <unk> and we see of promising opportunities and that of do staff to advance the standard of care for patients on dialysis.
And I'm turning to non dialysis as I mentioned earlier and consistent with our prior comments, we submitted our NDA for bat of do stats and pursuing a broad label for both adult patients on dialysis and the adult patients not on dialysis.
John P. Butler: As I mentioned earlier and consistent with our prior comments, we submitted our NDA for Bata Dostat, pursuing a broad label for both adult patients on dialysis and adult patients not on dialysis. While we remain cautious for approval in non-dialysis, we believe we've put forward a compelling and extensive NDA data package, and we look forward to working with the FDA in the review of the efficacy and safety data. Now, shifting gears to the performance of our existing commercial product, Eryxia. Despite the ongoing negative impact of COVID-19 on dialysis patients, we're encouraged with Erixius' performance in the first quarter. We continue to be pleased with how the market is viewing Erixia's strengths.
While we remain cautious for approval and non dialysis. We believe we put forward of compelling and extensive NDA data package and we look forward to working with the FDA and the review of the efficacy and safety data.
Now shifting gears the performance of our existing commercial product of Auryxia.
Despite the ongoing negative impact of COVID-19 on dialysis patients were encouraged with Auryxia performance and the first quarter.
We continue to be pleased with how the market is viewing the auryxia strengths and importantly, our team continues to do a great job supporting our customers and patients getting their therapies to those in need.
John P. Butler: And importantly, our team continues to do a great job supporting our customers and patients, getting our therapies to those in need. We're also proud that through our work with industry groups, including kidney care partners, we were able to assist in helping the administration prioritize vaccines for these patients who are among the most at risk for COVID. We're hopeful that as the industry continues to focus on prioritizing vaccines for dialysis patients, COVID-related hospitalizations, and mortality will steadily decline.
We're also proud that through our work with industry groups, including kidney care partners, we were able to assist and helping the administration prioritize vaccines for these patients who are among the most at risk for COVID-19.
We're hopeful that as the industry continues to focus on prioritizing vaccines for dialysis patients.
And related hospitalizations and mortality steadily decline.
In summary, we accomplished a great deal both in the first quarter and more recently with the New England Journal of Medicine publications.
John P. Butler: In summary, we accomplished a great deal, both in the first quarter and more recently with the New England Journal of Medicine publication. Setting the stage for what's shaping up to be an exciting year, fundamental to our success is the team's ongoing execution of our strategic objectives. So I'd like to wrap up with an overview of the potential catalysts we are executing on for 2021. Based on standard FDA review timelines, the FDA has a 60-day period to determine whether the NDA is complete and acceptable for review.
Setting the stage, what's shaping up to be and exciting year.
Fundamental to our success is the team's ongoing execution of our strategic objectives.
So I'd like to wrap up with an overview of potential catalyst we are executing on for 2021.
Based on standard of FDA review timelines and the FDA has a 60 day period to determine whether the NDA is complete and acceptable for review given this we'd expect to provide and update on our NDA submission at the end of this month.
John P. Butler: Given this, we'd expect to provide an update on our NDA submission at the end of this month. Outside the US, we're working in close collaboration with Otsuka on Batadoustad's MAA submission to the European Medicines Agency, which is expected this year. We continue to explore potential development opportunities for Vata Dostat and look to share more information on these efforts later this year and, where possible, any updates from UT Health regarding their ongoing investigator-sponsored study of Adidas as a potential therapy to prevent and lessen the severity of acute respiratory distress syndrome (ARDS) in adult patients who have been hospitalized due to COVID-19. With a recent $5 million grant from the Department of Defense, UT Health has expanded the study to target 400 patients and currently has over 220 patients enrolled.
Outside the U S. We're working in close collaboration with Otsuka and better do stats MAA submission to the European Medicines agency, which is expected this year.
We continue to explore potential development opportunities for that and do staff and look to share more information on these efforts later this year.
And where possible any updates from UT health regarding the ongoing investigator sponsored study of out of do stack of potential therapy to prevent and lessen the severity of acute respiratory distress syndrome or a rds in adult patients who have been hospitalized due to COVID-19.
With the recent $5 million grant from the Department of Defense U T. Health has expanded the study to target 400 patients and currently has over 220 patients enrolled.
As I mentioned, we also continued to execute on our publication strategy, we look towards additional presentations of our phase III results and data, including oral presentations of the hematologic efficacy of VAT of do staff from both innovate and protect at the upcoming <unk> EDTA virtual medical meeting in June and.
John P. Butler: As I mentioned, we also continue to execute on our publication strategies. We look towards additional presentations of our phase three results and data, including oral presentations of the hematologic efficacy of vatadustat from both innovate and protect at the upcoming ERA, EDTA, virtual medical meeting in June, and presentation of Innovates home dialysis data, among others, at future medical conferences and in peer-reviewed, Lastly, as we move closer to the potential launch of that adduostat, we'll also look to share progress on our pre-commercial activity.
Presentation and been of age home dialysis data among others at future medical conferences and in peer reviewed journals.
Lastly, as we move closer to the potential launch of that of <unk> that we'll also look the share progress on our pre commercial activities.
We are pleased to be doing all of this from a place of financial strength with the cash runway that extends beyond the expected U S launch of out of do stat, assuming timely regulatory approval and the receipt of associated regulatory milestones.
John P. Butler: We are pleased to be doing all of this from a place of financial strength, with a cash runway that extends beyond the expected U.S. launch of Adduostat, assuming timely regulatory approval and the receipt of associated regulatory milestones. And, as Dave will discuss, we successfully executed on some key financial as well as operational priorities during Q1, and we remain committed to both maintaining a strong balance sheet and improving our cost structure moving forward.
And as Dave will discuss we successfully executed on some key financial as well as operational priorities during Q1, and we remain committed to both maintaining a strong balance sheet and improving our cost structure moving forward.
We are excited about the future and together with our collaborator with Tsuga, we look forward to bringing value stat for the treatment of anemia due to CK D to patients globally upon approval.
John P. Butler: We are excited about the future, and together with our collaborator Suka, we look forward to bringing Vada Dostat for the treatment of anemia due to KD to patients globally upon approval. I'll now turn the call over to Dave, who will review our financial results. Dave?
I'll now turn the call over to Dave who will review our financial results.
Dave.
Thank you John and good morning, everyone.
David A. Spellman: Thank you, John, and good morning, everyone. As John mentioned, we are very excited to have submitted our NDA for Vadustadt and look forward to engaging with the FDA on our now-published Global Phase 3 results in the New England Journal of Medicine. Having laid the groundwork for potential approval, we're continuing to focus on what's ahead. We're executing on key commercial, development, and financial priorities and making good progress in positioning Kibia to deliver on our strategy and build long-term value for our shareholders.
As John mentioned, we are very excited to of submitted our NDA for <unk> debt and look forward to engage and with the FDA on our now published global Phase III results and the New England Journal of Medicine.
Having laid the groundwork for potential approval and we're continuing to focus on what's ahead and we're executing on key commercial development and financial priorities and making good progress positioning of TBA to deliver on our strategy and build long term value for our shareholders.
Turning to our financial results.
David A. Spellman: I will now turn to our financial results, starting with revenue. Total revenue was $52.3 million for the first quarter of 2021 compared to $88.5 million for the first quarter of 2020, reflecting lower collaboration revenue consistent with successfully completing our Global Phase 3 clinical development program for Vadadishth. In terms of Akivia's commercial performance, net product revenue for Erixia increased 4% to $30.4 million for the first quarter of 2021, compared with $29.2 million for the first quarter of 2020. Despite the ongoing impact of COVID-19 on dialysis patients, we are encouraged by this growth.
And with revenue.
Total revenue was $52 3 million for the first quarter of 2021 compared to $88 5 million for the first quarter of 2020, reflecting lower collaboration revenue consistent with successfully completed our global phase III clinical development program for value is that.
In terms of the <unk> commercial performance.
Net product revenue for Auryxia increased 4% to $30 4 million for the first quarter of 2021, compared with $29 2 million for the first quarter of 2020 <unk>.
Despite the ongoing impact of COVID-19, non dialysis patients we are encouraged by this growth.
David A. Spellman: We believe this performance highlights Erixia's favorable product profile and the critical nature of this therapy, as well as our team's ability to execute at a high level. While we remain cautious due to COVID-19, together with our continued commercial efforts, we remain confident that Erixius' positioning will drive product revenue growth for the year. Turning to expenses, we continue to prioritize investments to support our business objectives and ensure a successful launch of Vata D-Dustat, subject to approval, while also continuing to focus on growing product revenue, improving costs, and advancing our pipeline of development opportunities, including potential label expansion opportunities for VATADDES debt after its potential approval.
We believe this performance highlights of Rx is favorable product profile and the critical nature of this therapy as well as our team's ability to execute at a high level.
While we remain cautious due to COVID-19, and together with our continued commercial efforts. We remain confident that auryxia is positioning will drive product revenue growth for the year.
Turning to expenses, we continue to prioritize investments to support our business objectives and ensure a successful launch of about of this debt subject to approval. While also continuing to focus on growing product revenue improving costs and advancing our pipeline of development opportunities, including the potential label expansion.
Pension opportunities for Validus debt after its potential approval.
David A. Spellman: Cost of goods sold was $34.6 million for the first quarter of 2021, compared to $27.7 million for the first quarter of 2020. The increase is driven by higher non-cash purchase accounting adjustments as a result of the merger with Carricks and a 5.1 million non-cash charge to inventory reserves related to a previously disclosed manufacturing quality issue related to Erixia. These charges were partially offset by an 8.9 million non-cash gain related to a reduction to the liability for excess purchase commitments of Erexia drug product.
Cost of goods sold was $34 6 million for the first quarter of 2021 compared to $27 7 million for the first quarter of 2020.
The increase was driven by higher noncash purchase accounting adjustments as a result of the merger with Keryx and of $5 1 million noncash charge to inventory reserves related to a previously disclosed manufacturer and quality issue related to Alexia the.
The charges were partially offset by an $8 9 million noncash gain related to a reduction to the liability for excess purchase commitments of Auryxia drug product.
David A. Spellman: As you may recall earlier this year, we successfully renegotiated certain supply agreements, reducing excess purchase commitments that predated the merger and providing us with additional manufacturing flexibility. We believe these modifications help better position the company moving forward.
As you May recall earlier this year, we successfully renegotiated certain supply agreements.
Reducing the excess purchase commitments that predate the merger and provide us with additional manufacturer and flexibility.
We believe these modifications help better position the company and moving forward.
David A. Spellman: In addition, we have now fully expensed our inventory step-up from the merger accounting and now expect COGS to begin to normalize in Q2, which is about a quarter earlier than our previous expectations. Research and development expenses were $40.6 million for the first quarter of 2021, compared to $81.2 million for the first quarter of 2020. The spending reduction was primarily driven by a decrease in cost consistent with completing the Innovate and Protect Program.
In addition, we have now fully expensed, our inventory step up from the merger accounting and now expect Cogs to begin to normalize in Q2.
Which is about a quarter earlier than our previous expectation.
Research and development expenses were $40 6 million for the first quarter of 2021.
Compared to $81 2 million for the first quarter of 2020, the spending reduction was primarily driven by a decrease in costs consistent with completing the innovate and protect the programs.
David A. Spellman: We expect that R&D expenses will remain significant as we continue to support ongoing planned clinical work, as well as the cost of our supply chain and inventory build ahead of the expected approval of Vata DSTAT. Selling general and administrative expenses increased to $41.3 million for the first quarter of 2021 compared to $38 million for the first quarter of 2020. As our commercial team is already in place, we continue to expect only a modest increase in SG&A from 2020 as we invest in VADDESEP pre-commercial activities and continue to support Erixia growth.
We expect net R&D expenses will remain significant as we continue to support ongoing planned clinical work as well as the cost of our supply chain and inventory build ahead of the expected approval of that of this debt.
Selling general and administrative expenses increased to $41 3 million for the first quarter of 2021 compared to $38 million for the first quarter of 2020.
As our commercial team is already in place we continue to expect the only a modest increase in SG&A from 2020 as we invest in value is the pre commercial activities and continue to support Auryxia growth.
For our bottom line net loss was $59 6 million for the first quarter of 2021 compared to $60 7 million for the first quarter of 2020 the.
David A. Spellman: For our bottom line, our net loss was $69.6 million for the first quarter of 2021, compared to $60.7 million for the first quarter of 2020. The increase was primarily due to lower collaboration revenue and higher COGS, partially offset by lower operating expenses.
The increase was primarily due to lower collaboration revenue and higher Cogs, partially offset by lower operating expenses.
Operator: Turning to our capital position, we ended the first quarter with 272.8 million in cash, cash equivalents, and available for sale securities. As previously announced, we strengthened our balance sheet in February with the completion of a non-delutive transaction to monetize our royalties and sales milestones on Vadadustadt net sales under our collaboration agreement with Mitsubishi Tanabe Farma Corporation, with an upfront payment of $45 million from healthcare royalty management. Our Q1 cash balance includes the impact of this transaction, as well as 29.8 million in proceeds from sales under our ATM in the first quarter.
Turning to our capital position, we ended the first quarter with $272 8 million and cash cash equivalents and available for sale securities.
As previously announced we strengthened our balance sheet and February with the completion of the non dilutive transaction to monetize our royalties and sales milestones on Validus debt net sales under our collaboration agreement with Mitsubishi Tanabe Pharma Corporation with an upfront payment of $45 million from healthcare royalty management.
Our Q1 cash balance includes the impact of this transaction as well as $29 8 million and proceeds from sales under our ATM and the first quarter.
Operator: These funds more than offset cash usage in the quarter, including approximately $30 million of plant consumption of working capital as timing of receivables and payables moved unfavorably from the year end. As John mentioned earlier, as we move towards an expected Vada Dvistat launch in the U.S., subject to approval, we continue to focus on improving our cost structure and maintaining a strong balance sheet to ensure the company remains well positioned. We're being disciplined in the investments we make and remain focused on quality, driving efficiencies and improvement in manufacturing and supply chain, managing costs, and are committed to driving operating leverage from our existing commercial resources.
These funds more than offset cash usage in the quarter included approximately $30 million of planned consumption of working capital as timing of receivables and payables moved unfavorably from year end.
As John mentioned earlier, as we move towards and expected that at the start launch and the us subject to approval.
The continued to focus on improving our cost structure and maintaining a strong balance sheet to ensure the company remains well positioned we're being disciplined and the investments, we make and remain focused on quality and driving efficiencies and improvements in manufacturing and supply chain and managing costs and are committed to driving operating leverage from our <unk>.
And commercial resources.
Operator: Rapping up, we expect our cash resources to fund our current operating plan beyond the expected U.S. launch of Vadidustadt, assuming timely regulatory approval and the receipt of associated regulatory milestones. With that, we'll open up the line for questions.
Wrapping up we expect our cash resources to fund our current operating plan beyond the expected U S launch of out of this debt, assuming timely regulatory approval and the receipt of associated regulatory milestones.
With that we'll open up the line for questions operator.
And if you'd like to ask a question. Please press Star then one and for your question has been answered and you'd like to remove yourself and the Q plus the power.
Operator: If you'd like to ask a question, please press star than one. If your question has been answered and you'd like to remove yourself from the queue, press the pound key.
And keep our first question comes from Chris Raymond with Piper Sandler Your line is open.
Allison Marie Bratzel: Our first question comes from Chris Raymond with Piper Sandler. Your line is open. Good morning. This is Awe Bratelon for Chris this morning.
Good morning. This is allie breadth of line for Chris. This morning, Thank you for taking the questions.
John P. Butler: Thank you for taking the questions. So first, congrats on the data publication in NEJM. I'm just wondering what kind of feedback you're getting from the nephrology community. We're specifically curious about feedback on a couple aspects of the data, the similarity of MACE data between incident and prevalent dialysis patients and also the geographic difference in the Maseh hazard ratios for U.S. versus XUS pre-dialysis patients. So I was just wondering if you could characterize that feedback.
So first congrats on the date of publication and any JM.
And just wondering if theres any color on the kind of feedback you're getting from the nephrology community.
Specifically curious about the feedback of the couple of aspects of the day does it.
Similarity of of Mace data between incident and prevalent dialysis patients and also the the geographic difference.
And the mace hazard ratios for the U S versus ex U S.
Pre dialysis patients. So just wondering if you could characterize that feedback and then separately just wondering if you could comment on your view of the likelihood of an AD com and <unk>.
John P. Butler: And then separately, just wondering if you could comment on your view of the likelihood of an adcom in light of the NDA submission and also the scheduling of a panel for Roxibustat. And just when would you expect to know whether FDA plans to hold one for VATADDUSAT? Thank you. Okay. Thank you very much.
Of your the NDA submission and and also the scheduling of of panel for rocks of the staff and just when would you expect to know.
And whether FTA plans to hold the line preventatives that ex.
John P. Butler: Okay, thanks very much, Ellie. So feedback, so the publication was a week ago. So it's still early days, but I have to say it's been quite positive. You know, publication, as you mentioned in the New England Journal, is kind of the pinnacle of where you want to have innovative program data published, and the fact that, you know, they quickly moved protect through to publish both Innovate and Protect together, I think really speaks.
Okay.
Thanks, very much Ali.
So the feedback so the publication was a week ago.
Still early early days, but I have to say it's been.
It's been quite positive.
I mean publication as you as you mentioned in the New England Journal.
And as the Pinnacle of where you want to have and innovative program data published and the fact that they published the quick.
Quickly move protect through to publish both innovate and protect together I think really does speak to her.
John P. Butler: to, you know, how important the technology is. And, again, I think that's generally reflected in the way physicians react to the data. You know, one of the things we have been hearing really since ASN is, you know, as we talk about the consistency of the data and the clarity of the data and the straightforward design of the program, I mean, that's what we're hearing back, right? People can understand the program extraordinarily well, and they can assess it.
And how important the technology is and again I think thats of generally reflected and the way physicians and react to the data.
One of the things we have been hearing really since ASN is as we talk about the consistency of the data and the clarity of the data and the straightforward design of the program and that's what we're hearing the right people can understand the program extraordinarily well.
And they can assess it and of course of the dialysis data.
John P. Butler: And, of course, the dialysis data, you know, this is what physicians want to see, right? They want to see consistency in the data. They want to be able to understand what they're seeing.
This is what physicians want to see right. They want to see consistency of data they want to be able to understand what theyre seeing and and the fact that you have hazard ratio and <unk>.
Innovate.
Overall for Mace Mace, plus all cause mortality of cardiovascular mortality.
John P. Butler: And, you know, the fact that you have, you know, hazard ratio and innovative overall for MACE, MACE, MACE, all cause mortality, cardiovascular mortality, you know, all basically the same incident prevalent. It is, they can have a lot of confidence in that data. Clearly, still questions to answer on the protected studies, but, again, you know, a hallmark of what we've tried to do is to be transparent with all of our data and allow physicians to have that conversation. And I think it's not the first time they've seen geographic differences in studies like this. And, you know, certainly U.S. physicians are very focused on the effects of the drug on the U.S. population.
And so basically the same incident prevalent it is it kind of a.
Lot of confidence and that data.
Clearly still questions to answer on the protect our studies, but again and a hallmark of what we've tried to do is to be transparent.
And with all of our data and allow physicians to have that conversation and.
I think it's not the first time, they've seen geographic differences and studies like this and.
And it's certainly U S physicians are very focused on.
And the effects of the drug and the U S population and the.
This is.
We're really expecting and this is just the first publication of I mean, this is an incredible incredibly rich data set so we will have.
John P. Butler: And, you know, this is... We're really expecting this to be just the first publication, right? I mean, this is an incredible, incredibly rich data set. So, you know, we will have many more publications and many more opportunities to dig more deeply into the data. But, you know, so far, we're really very, very pleased. Your second question, I think, was on the adcom. But way too early, of course, for us to know.
Many more publications and many more opportunities to dig more deeply into the data, but so far we're really very very pleased.
And your second question I think was on the adjuvant.
The way too early of course for us to know.
As we've said before we would welcome an AD com and would be excited about telling the story of debt.
We are very confident and our data.
And in both dialysis and non dialysis and we'd look forward to being able to put that forward two.
John P. Butler: You know, as we've said before, we would welcome an advertising agency. We'd be excited about telling the story. You know, we are very confident in their data for both dialysis and non-dialysis, and we look forward to being able to put that forward to an adcom. Just on the standard review process with FDA, we mentioned, by the end of the month, we'd be 60 days post-submission, and that's when you'll hear about PDUFA dates and acceptance for filing.
Two and two and add Tom just on the standard review process with FDA and we mentioned by the end of the month would be 60 days post the.
The submission and Thats when Youll hear about the <unk> date and acceptance for filing.
And unlikely to hear about AD com and then but that's the earliest you could so we're just really excited about engaging with the FDA now and their review and working with them over the next 10 months or so.
Great. Thank you.
Our next question comes from the Lithia and young with Cantor Fitzgerald. Your line is open.
John P. Butler: It's unlikely to hear about adcom then, but that's the earliest you could. So, you know, we're just really, really excited about engaging with the FDA now in their review and working with them, you know, over the next 10 months or so.
Hey, guys. Thanks for taking my question and congrats on the on the publication that Big day.
The so I had a couple of one I just wanted to talk a little bit about like how you think.
Operator: Our next question comes from Alethea Young with Cantor Fitzgerald. Your line is open.
<unk> of 9000 day the St.
Operator: Hey guys, thanks for taking my question and congrats on the publication; that's a big deal.
What's been going on but like.
Youre of comparator of Rhapsody.
At.
Also I was curious you know kind of on the people who are like and the community you know and that network.
John P. Butler: I just wanted you to talk a little bit about like how you think you're now dialysis, non-dallelps up in light of what's been going on with like your competitor, restate that. Also, can we, I was curious about the people who are, like, in the community, you know, in that network, I think you have somewhat of an access to. I just wanted to kind of talk about how you get market share beyond potentially what, you know, would be contracted. And, like, I'm sure New England Journal is a big piece of helping that storyline. So just those two questions from me. Elitia, thanks very much for the questions.
The somewhat of an access to I just wanted to kind of talk about how you get market share beyond potentially what it would be contracted and like I'm sure and New England Journal of the big piece of helping that storyline and strengthen so.
Just the same question from me thanks.
Okay. Thanks, very much for the questions. So so obviously not appropriate for me to comment on on competitive the data, but let me just remind you of kind of how we approach our development program and we.
And we worked with the FDA and the MAA right from the beginning and talking through what was appropriate and what they wanted to see and and application. We wanted to design a program that was incredibly straightforward that could answer the questions that were that were being asked and.
John P. Butler: So obviously, it is not appropriate for me to comment on competitor data. But let me just remind you of how we approached our development program. I mean, we worked with the FDA and the EMA right from the beginning, talking through what was appropriate, you know, what they wanted to see in an application. We wanted to design a program that was incredibly straightforward that could answer the questions that were being asked.
And that the.
And the results of that are easier to see now and that you'll have this publication and new England Journal and we're very very good.
Proud of that of the work that the.
The team did remember, we also engaged with and executive steering Committee.
That helped us to design the program.
John P. Butler: And, you know, I think that the results of that are easier to see now and that, you know, you have this publication in the England Journal. And, you know, we're very, very proud of that, of the work that the team did. Remember, we also engaged with an executive steering committee that helped us to design the program, statistical analysis plan, and all of the other pieces that we also engage with on the with the regulators.
Statistical analysis plan all of the other pieces that we also engaged with on the with the regulators. So we had very strong independent review and oversight of the program, which once again helps as you as you move out into the community.
So we feel.
Quite a bit of confidence and our data dialysis is incredibly straightforward.
And as I mentioned previously.
John P. Butler: So, you know, we had very strong, independent review and oversight of the program, which once again helps you as you move out into the community. So, you know, we feel quite a bit of confidence in our data. Dialysis is incredibly straightforward. And as I mentioned previously, we're confident in the non-dialysis data here as well, though cautious. But you really alluded to that with your second question.
Previously and we're confident in the non dialysis day to hear as well, though cautious.
But you really alluded to it with your second question I mean the.
And when you have something like a publication of the New England Journal.
That is an incredibly strong.
Signal to the market about the.
About the drug and.
We are.
We're obviously.
Very excited about the relationship that we have with before and and access the 60% of the market, but the pull through of that really will be done by of TBM and Theyre just part of the market that we.
John P. Butler: I mean, when you have something like a publication in an English journal, that is an incredibly strong signal to the market about the drug. And you know we are We're obviously very excited about the relationship that we have with V4 and access to 60% of the market. But the pull-through of that really will be done by Akibia, and there's no part of the market that we aren't focused on.
We arent focused and we think that.
And that this product could be appropriate for a very large percentage of patients on dialysis and.
And again potentially on who are not on dialysis as well so we.
We think the new England Journal papers will help and we think that the subsequent publications of the robustness of the state of the clarity of the program.
John P. Butler: You know, we think that this product could be appropriate for a very large percentage of patients on dialysis and, again, potentially, who are not on dialysis as well. So we think The New England Journal papers will help.
All of that will be.
Incredibly important to driving share now there's also as you look at the market. You also have to look at kind of what.
John P. Butler: We think that the subsequent publications, the robustness of this data, the clarity of the program, all of that will be incredibly important to drive and share. Now, there's also, as you look at the market, you also have to look at, you know, what's growing in the dialysis market. Well, the home dialysis segment is growing. I mean, COVID-19, I think, you know, puts that on a very different plane, right? I mean, everyone has recognized that keeping these patients out of the dialysis center has great benefits.
What's growing and the dialysis market, while the holding dialysis segment is growing and when COVID-19 I think.
Put that on a on a very different place right I mean, everyone recognize that keeping these patients out of the dialysis center.
It has great benefits and it's a once a day oral product.
For that population.
A very straightforward population, but to be clear I mean.
We are not making the product and that in that space. We think this can be and important products of the entire dialysis population, but when you look outside of that the.
The 60% covered by the the before.
<unk> there was home and Davita for instance that home population is growing quite quickly as well and we're excited about the opportunity to.
Potentially.
Of those patients on therapy, and and others as well.
John P. Butler: And, you know, it's a once-a-day oral product for that population. You know, that's a very straightforward population. Now, to be clear, I mean, we are not niching the product in that space. We think this can be an important product for the entire dialysis population. But when you look outside of the 60% covered by the V4 agreement, those living in DeVita, for instance, that home population is growing quite quickly as well. And, you know, we're excited about the opportunity to potentially have those patients in therapy and others as well. Thank you very much.
Awesome. Thank you very much.
Our next question comes from <unk> with Mizuho Securities. Your line is open.
Hi, good morning, and thanks for taking my questions just two questions and John could you talk about how teed up process work and how quickly can you get.
Can you.
Get the T that approval of.
After NDA approval and then secondarily.
Operator: Our next question comes from a different person.
And what's the significance of three times weekly dosing to the dialysis setting.
Operator: from Diffie Yang with Missouill securities. Your line is open. Hi, good morning, and thanks for taking my questions. Just two questions. John, could you talk to us about how the T-DAP process works and how quickly you can get it?
Thank you very much so.
Unknown Attendee: Can you get TDAPA approval after?
And so teed up as the process you have.
Unknown Attendee: after NDA approval, and then secondarily, what's the significance of three times weekly dosing in the dialysis setting? Thank you.
And remember there's hasn't been a product that's gone through it yet so we're making some assumptions about that and the key for us is to.
Is the file for our scope of fixed fixed code as quickly as possible after revenue.
John P. Butler: Thank you very much. So Tdap is a process. You have to remember there hasn't been a product that's gone through it yet, so we're making some assumptions about that. I mean, the key for us is to file for our, it's called Higgs-pix code, as quickly as possible after approval, of course, you can't file until you have approval. And then there'll be a process once that's given that you then get your T-DAPA reimbursement.
After approval of course, you can't file until you have approval.
And then there'll be a process once that's given that you then get the ore TDAP of reimbursement so exactly how long and that's going to take depends on the timing of your of your approval and again how quickly the government works.
John P. Butler: So exactly how long that's going to take depends on the timing of your approval and again how quickly the government works towards that. So there's still a little bit of unknown here, but we're looking to move as quickly as possible. I mean, the rule is really clear about the fact that we qualify and we'll get to DAPA. It's more in the execution of how quickly things will move.
Towards that so theres still a little bit of an unknown here, but we're looking to.
And to move as quickly as possible.
It is really clear about the fact that we qualify and we will get to that but it's more and the and the execution of how quickly.
And if things will move.
John P. Butler: Oh, the dosing, three times weekly dosing. Yeah, so obviously, our goal is to have the most flexibility possible for physicians and dialysis providers. So, you know, we believe having three times weekly will be important in the dialysis center. We've shown that in phase two that we can administer those three times weekly successfully, but we obviously need to generate more data to have that added to the label. So our partner, Otzuka, is running the modified trial, and then we're running focus, and we expect to have data available at launch where we can quickly file a supplemental NDA and have that added to our label after that. But we do think that's important for us to maximize the value of the product in the market.
Of the dose of three times weekly dosing, yes. So.
So obviously our goal is to have the most flexibility possible for physicians and dialysis providers.
We believe having three times weekly will be important.
In the dialysis center and we've shown that in the phase II.
That we can dose three times weekly successfully but we obviously need to generate more data.
That added to the label so our partner Otsuka is running the modified trial.
And then we're running focused and we expect to have data available at launch where we can quickly file a supplemental NDA and have that added to our label after that but we do think that that's important for us to maximize the value of the product and the market.
Thank you John.
Unknown Attendee: Thank you, John. Then a quick follow-up with regard to the milestone, a regulatory approval related milestone payment. Do you have any reminders what that payment is? How big is it?
A quick follow up of with regards to the milestone of regulatory approval related milestone payment.
Kind of what.
How big is that payment.
David A. Spellman: Hi, it's Dave. So we have provided specific guidance on exactly what that would be, but they are significant, they are time-driven based on how quickly we are approved subsequent to Roxaduce, and to say, if you know, there's disclosures in the 10-K and the
Hi, its Dave.
So we haven't provided specific guidance on exactly what that would be.
But they are they are significant and they are.
Our time, driven and based on how quickly we are approved subsequent to.
Two rocks and does that assume that they are approved.
David A. Spellman: And to say, if you know, there's disclosures in the 10K and the queue that go through some of the commercial milestones, you know, in totality, so you can kind of back into some numbers in those disclosures.
Thank you and now this exclusion.
And the key to that.
On the commercial.
And how these vehicles.
Backing.
Sure.
Thank you.
Thanks, Steve.
Our next question comes from Bert Hazlett with BT and <unk>. Your line is open.
Operator: Our next question comes from Bert Haslett with BTIG. Your line is open.
Operator: Yeah, thanks. Congratulations on all the progress in a number of different ways. John, would you be so kind as to put just a little more meat on the bone with regard to what you think with regard to home dialysis trends, kind of, you know, where they stand now and what you might anticipate 12 and then 24 and, you know, three and five years from now? Again, there's been a material change here. I just love your insights as to how you think that's going to translate over the next couple of years.
Yes, thanks, congratulations on all the progress and.
Number of different ways John.
John would you be so kind of as to put just a little more meat on the bone with regard to what you think with regard to home dialysis trends.
Kind of where they stand now and.
And what you might anticipate 12.
And then 24 and your three and five years from now again, just there's been a material change here just love your insight as to how you think thats going to.
John P. Butler: Yeah, that's a great question, Bert, and it's one that, you know, I think you'll ask different people, and they'll have different opinions. It's sub-20% of the market today. I think it's actually around 15.
The translate over the next couple of years.
And that's a great question, Bert and and it's one that debt and I think youll ask different people and they all have different opinions and the sub 20% of the market today I think it's actually around 15, and maybe just a little short of that but as I said. There is this is real desire to drive that and even within CMS theyre, putting payment models together.
John P. Butler: I'm going to be just a little short of that. But as I said, this is a real desire to drive that. And even within CMS, they're putting payment models together that encourage this ETC model that encourages, and this is a model that they have to be a part of, that encourages dialysis providers to push people, push people's wrong buttons to use, but, you know, make sure people are moved to home
Encourage and driving the CTC model that encourages and this is a.
The model that they have to be of part of.
And that encourages dialysis providers to push people push People's Roberts, the use but make sure of people are moved to home dialysis.
John P. Butler: And, you know, there are clearly patients who just simply don't have the ability, themselves or the care providers, et cetera, to do home dialysis. So, you know, again, from my perspective, you're not going to have half of the market at home. But it is, you know, at the end of the day, the most important thing is for patients to have choice and have that choice when they're starting. Right?
There are clearly patients who just simply don't have the ability.
Themselves or the care providers et cetera to do home dialysis.
And again from my perspective, Youre, not going to have half of the market at home.
But it is.
And at the end of the day of the most important thing is for patients to have choice and have that choice when they're starting right. I mean right now it's very easy to put someone on dialysis and the center and it takes more work to put them on home dialysis and I think that's one of the areas where I really see this changing is that.
John P. Butler: I mean, right now, it's very easy to put someone on dialysis in the center, and it takes more work to put them on home dialysis. And I think that's one of the areas where this, I really see this changing, is that, you know, because patients often crash in the hospital, you know, need to go on to dialysis. How can we enable them to go home? I mean, that is a focus of many of the organizations that we work with, including the kidney care partners.
And thats because patients off of crash and the hospital need to go on to dialysis.
How can we enable them to go on to home and that is a focus for from.
Many of the organizations that we work with.
And I and including the kidney care partners, how do we provide to patients the training how do we make sure. They have the choice I think there can be very significant growth and I think thats what.
John P. Butler: How do we provide patients with training? How do we make sure they have the choice? I think there can be very significant growth, and I think that's what patient groups want, that's what physicians want, and ultimately, that's what the Vita and Frasinias say they're moving towards as well. And so I think, you know, you're going to have the whole community aligned towards that. It can be quite significant.
And that's what patient groups want.
That's what physicians want and ultimately that's what Davita and Fresenius day, Theyre moving towards as well.
And so I think you have the whole community aligned towards that it can be quite significant.
Okay. Thank you.
And then just a couple of nuts and bolts questions with regard to the numbers with regard of Ricky I think there was another inventory charge of $5 6 million, if I heard correctly and the comments are we cleaned up with that now the.
Unknown Attendee: Okay, thank you. And then just a couple of nuts and bolts questions with regard to numbers. With regard to Erixia, I think there was another inventory charge of $5,000.
The inventory charges with regard to manufacturing and he's got all showed up or are there still some remainder is left to be.
Worked through and then just one more on R&D after that.
Unknown Attendee: $5.6 million, if I heard correctly in the comments, are we?
Hey, Brian and so on the inventory charges.
We have taken all of the charges that we are aware of we pick and the huge steps and.
Unknown Attendee: Are we cleaned up with that now, these inventory charges with regard to manufacturing? And is that all shored up, or are there still some remainders left to be worked through? And then just one more on R&D after that?
And improving our culture of.
Quality and.
And then.
And do everything we can to make sure that we are fully on track there.
David A. Spellman: Hey Bert, on the inventory charges, we have taken all the charges that we are aware of. We've taken huge steps in improving our culture of quality and, you know, been doing everything we can to make sure that we are fully on track there. But I can't say that it's fully behind us because you don't know what you don't know. But we're rarely confident that what we've captured is everything that we're aware of.
And I can't say that it's fully behind us because you don't know what you don't know, but we're fairly confident that what we've captured is everything that we're aware of.
And it's important to point out that this has never been a safety issue birth and death.
The manufacturing quality issue, but never of patient safety.
Concern and the <unk>.
Thing is as you improve your organization and you build those that quality culture.
Things have come to light right and then you deal with them and moving forward I have a lot of confidence and the team.
John P. Butler: And it's important to point out that this has never been a safety issue, Bert. I mean, this is a, you know, manufacturing quality issue, but never a patient safety concern. And, you know, the thing is, as you improve your organization and you build that quality culture, these things come to light, right? And then you deal with them. And moving forward, I have a lot of confidence in the team that we built that culture, and we're moving forward in a really positive way. But, you know, I think Dave's exactly right. You don't know what you don't know.
We built that culture, and we're moving forward and a really positive way, but I think Dave's exactly right. You don't know what you don't know.
Okay, and then just one more on R&D spend.
And you mentioned that its level will still be significant as you're building inventory and and doing other kind of prelaunch activities and how should we think about debt assuming approval again sometime around year end, how do we think about R&D spend is the steady state number a year or two or three out.
Unknown Attendee: Okay, and then just one more on R&D spend. You mentioned that its level will still be significant as you're building inventory and doing other kinds of pre-launch activities. How should we think about that assuming approval, again, sometime around the year, and how should we think about R&D spend as a steady situation?
Yes, the bird on the R&D spend and so we are continuing to invest and kind of just that label expansion and like John mentioned, especially with the TRW studies those are much less significant and magnitude than the innovate and protect work and once we're able to capitalize the inventory you will see the R&D spend as a total shutdown.
Unknown Attendee: is a steady state number a year or two or three out.
Obviously, our inventory balances will move up.
David A. Spellman: Yeah, so Bert, on the R&D spend, we are continuing to invest in Fadaddy Stat label expansion, like John mentioned, especially with the TIW studies. Those are much less significant in magnitude than innovate and protect work. And once we're able to capitalize inventory, you will see the R&D spend as a total shift down. Obviously, our inventory balances will move up.
Alright, and then you have you have requirements like pediatric study as you have the medical affairs support.
And the field.
There will always be.
The level of R&D spending and then beyond the TRW studies. We also wanted to explore expanding that to do steps indications as well and.
John P. Butler: Right, I mean, then you have requirements like pediatric studies, and you have medical affairs support in the field. So there'll always be a certain level of R&D spending. And then beyond the TTIW studies, we also want to explore expanding the indications for a due step as well. And, you know, that's an assessment that's ongoing now, so it's hard to say, you know, what that level of spending would be. But to echo what Dave said, it's nowhere near.
And that's an assessment that's ongoing now so it's hard to say.
What that level of spending would be but to echo what Dave said, it's nowhere near.
What we spent on and innovate and protect so it will get to a much more rational.
And the kind of ongoing level of standard as we understand those opportunities better we can come back and.
And clarify that.
Okay, and just a follow up quickly with regard to expanding indications are those all subject to the Otsuka agreement could you just remind us some of <unk> role in that do they have a right of first refusal or how does the agreement contemplated additional indications.
John P. Butler: What we spent on innovate and protect. So, you know, it'll get to a much more rational, an ongoing level of spend. But as we understand those opportunities better, we can come back and clarify that.
Yeah. So the does have a right of first refusal so they would participate and the development spend as well as the commercialization costs and we would obviously the share of the process of anything that we've procured Glenn.
Unknown Attendee: Okay, just to follow up quickly, with regard to the expanding indications, are those all subject to the Atsuka agreement? Could you just remind us of Aksuka's role in that?
Thanks, and congrats on the progress thank you.
Thanks Bert.
John P. Butler: Do they have a right of first refusal, or how does the agreement contemplate additional indications?
Our next question comes from David Lebowitz with Morgan Stanley. Your line is open.
Thank you very much for taking my question when you look at launching and the dialysis space.
John P. Butler: Yeah, so Otsuka does have a right of first refusal, so they would participate in the development spend as well as the commercialization costs, and we would obviously then share the profits of anything that we bring in. Thanks.
Given the the data that you have produced and the data that the competitors and produced.
What's the argument now for the <unk> versus Esa is given.
Operator: Thanks, and congrats on the progress. Thank you.
Operator: Our next question comes from David Lovowitz of Morgan Stanley. Your line is open.
And that physicians have 20 plus years of experience with Esa.
And it really is changing the way they're treating patients for anemia.
Unknown Attendee: When you look at launching in dialysis, in the data, what's the argument now for HIFs versus ESAs given that physicians have 20 plus years of experience with ESAs, and it really is changing the way they're treating patients? So I think, again, when you look at the new data, you see, you know, this consistent result wherever you look with a hazard ratio that is, you know, that's below When you have conversations with physicians who'll be doing the treating, I mean, they are extremely excited about the opportunity to use this product.
And and you don't really have the safety of the argument at this point to make what's the argument to get them to switch.
So I think again when you look at the integrated data you would see this consistent result, wherever you look with a hazard ratio that is and how much.
And it's below one.
And when you have conversations with physicians will be doing the treating I mean they are.
Streaming excited about the opportunity to use this product and beyond simply the convenience of giving some of them.
Unknown Attendee: And beyond simply the convenience of giving someone a pill versus, you know, even though they're sitting in a center and, you know, you can easily give them the EPO, there are a lot of costs, et cetera, associated with that.
Pill versus even though they are sitting in a center and you can easily given the IPOH theres a lot of cost et cetera associated with that but again when you. When you look at what matters to physicians, they equate risk with elevated epo levels and of giving the super physiologic dose of of the protein which.
John P. Butler: But, you know, again, when you look at what matters to physicians, they equate risk with elevated EPO levels. You know, giving these superphysiologic doses of the protein, which you do not do with that addusta; the EPO levels are very physiologic. When you look at the data, you see that you have significantly fewer excursions of hemoglobin levels beyond the target range. If you have fewer dose adjustments, you have less cycling of hemoglobin, the up and down.
Do not do with that of due south of the EBIT levels are very physiologic you. When you look at the day that you see that you have significant significantly fewer.
Excursions of hemoglobin levels beyond the target range, you have fewer dose adjustments you have less cycling of hemoglobin and the up and down. These are all of the points of physicians equate with safety and what Theyre looking forward to with them with using that of do status of its approved by the FDA, So and we.
John P. Butler: These are all of the points that physicians equate with safety and what they're looking forward to with using VADADUSTAD if it's approved by the FDA. So, you know, we think there are very significant reasons, and physicians that I've spoken to certainly seem to agree that the opportunity to try something new certainly exists. And obviously, in the non-dialysis population, that becomes an even more powerful message.
There are very significant.
Reasons, and physicians and I've spoken to certainly seem to agree.
The opportunity to try something new.
Certainly exists and and obviously and the non dialysis population that that becomes an even more powerful message.
Unknown Attendee: Thank you for taking my question.
Thank you for taking my question.
Thanks, David.
Operator: As a reminder, to ask a question, please press star then one.
As a reminder, task of question. Please press Star then one.
Operator: Our next question comes from Ed Ars with H.C. Wayne Wright.
Our next question comes from Ed Arce with H C. Wainwright Your line is open.
Operator: Wayne Wright, your line is open.
Unknown Attendee: Great, thank you for taking my questions. And let me add my congratulations on the recent publications.
Great. Thank you for taking my questions and let me.
The add my congrats on the recent publications on the pivotal studies.
Unknown Attendee: recent publications on the Pivotal Studies. The first question is just around understanding, you know, the perspectives of prescribing physicians today. Obviously, the publications have only been out for a week or so. But just generally, help us understand, if you could, from what you're hearing, what physicians, how physicians now view the HIF space broadly in terms of treating patients in non-diolysis settings, given some of the recent data, both yours and competitors. And then I have a follow-up.
First question is just around.
Understanding.
The perspectives of prescribing physicians today, obviously, the publications of only been out for a week or so.
But just generally.
Help us understand if you could from what Youre hearing.
What physicians, how physicians now view.
The hip space.
Broadly.
In terms of treating patients and the non dialysis setting.
And given some of the recent data both the.
Yours and competitors and then I have a follow.
John P. Butler: Ed, thanks for the question. I think it's a very important question. You know, I'll use an example.
And thanks for the question, so and I think it's the very important question and.
I will use it and example, we were.
John P. Butler: We were on the phone with a group of physicians, and Steve Burke, our CMO, was reviewing all of the data, innovate and protect, and going through it in detail, in the detail they see in the New England Journal. But this was a few weeks before publication, though. But one of the physicians, this is very anecdotal, but one of the physicians talked about how she has to drive her mother to get her ESA injection every month, and it's very difficult for her.
We're on the phone with a group of physicians and the Burke our CMO is reviewing.
All of the data innovate and protect and going through it in detail and the detail that you see and the New England Journal and.
And this was a few weeks before the publication of but.
One of the physicians of the very anecdotal, but one of the physician and talked about how she has to drive her mother too to get her her Esa injection every month and it's very difficult for her and please could we make sure we get the approval and non dialysis and other words. She saw the data show the U S data.
John P. Butler: And please, could we make sure we get the approval for non-dialysis? In other words, she saw the data, she saw the US data, dug deeply into it, and still wanted to literally treat her mother with the product. So, you know, I think that opportunity is there for us, and that's the general perspective. They said, you know, you go back to other studies, and you see, you've seen regional differences, you've seen those kinds of things.
Dug deeply into it and still wanted to literally treat her mother with the products so and.
I think that opportunity is there for us and.
And Thats the the general General perspective, and they said you go back to other studies and you see you have seen regional differences you've seen those kinds of things.
John P. Butler: And the U.S. data is, you know, compelling, and it's very, very significant in more than 50% of the patients. So, you know, we think that, you know, if we look forward to working with the FDA, working through this, and if the FDA agrees and gives an indication, we feel very strongly that we can be very successful in the market.
And the U S data is.
It's compelling and and so it varies very significant where the 50% of the patients. So we think that if we're looking.
Looking forward to working with the FDA working through this and.
And if the FDA agrees and gives us an indication we feel very strongly that we can be very successful and the and the market.
Unknown Attendee: Okay, thank you. That's helpful.
Okay. Thank you that's helpful.
John P. Butler: And in terms of the MAA submission later this year, I was wondering if you could remind us if there are any significant differences between that submission relative to the NDA with any potential implications, perhaps, with labeling and other things that might differentiate the product slightly from the U.S. So, of course, Otsuka is leading the MAA process. We're working very closely.
Hum.
And then in terms of the M&A.
Submission later this year.
Just wondering if you could remind us if there any.
Significant.
The difference is there between that submission.
Relative to the NDA.
With any potential implications perhaps.
And with labeling them and.
Other things that might.
Differentiate the product slightly from from and the U S.
John P. Butler: It's just kind of the reverse of what we did with the NDA. And much of the filing is the same, but obviously has to be, you know, in the European EMA format. There are parts that are different, and those are the things that we're working on. And, of course, there's also, you know, we're still working through analyses of European data, et cetera, for the kind of strategic approach. to the indication. We expect to file for both, as we did in the U.S., and we expect to submit this before the end of the year, or, oops, a little submit it before the end of the year.
So.
So of course Otsuka is leading the MAA process. We're working very closely it's just kind of the reverse of what we did on the NDA and much of the filing is the same but obviously has to be.
And the European.
And a format there are parts that are different and those are the things that we're working on and of course and there is also and we're still working through analyses of the European data et cetera for the kind of strategic approach to the indications we expect to file for both as we did and the U S.
And we expect to submit this before the end of the year of cyclical submit before the end of the year, but.
Unknown Attendee: But, you know, some of the details of that are still in the work and process. Let's see. Okay. And then lastly, if I may, John, is...
Some of the details of that are still.
Work and process.
I see okay.
And then and then lastly, if I may John.
The.
Unknown Attendee: You know, the expansion opportunities with Bada Dostat that you mentioned, and I think you also mentioned that perhaps there might be an update in that regard later this year. You know, clearly, this is still early days, but I'm just wondering if you could just give us a little more...
And the expansion opportunities with the attitude that you mentioned and I think you also mentioned that perhaps there might be and update in that regard later this year.
Clearly this is still early days, but I'm just wondering if.
If you could just give us a little more.
The detail and how you think about the the.
Unknown Attendee: detail and how you think about the product in related opportunities. I realize you may
The product and.
Related opportunities.
Unknown Attendee: I realize you may not be at a point where you can name specific indications, but how
And I realize you may not.
<unk> be at a point, where you can name specific indications but.
How how you view the opportunity set for that and try to do stuff just generally the criteria that you look at as you examine the.
John P. Butler: how you view the opportunity set for that bad, generally criteria that you look at as you examine the universe, and potential applications. Yeah, but thanks Ed, it's a good question. So, I mean, the one area that we have spoken about in the past and, you know, we're excited about is the investigator-sponsored study that's ongoing with UT Health down in Texas on the use of Vadaduostat to lessen the severity of ARDS or acute respiratory distress syndrome in patients, hospitalized patients with COVID-19. You know, this obviously is, you know, is very serious. significant opportunity. I think the virus is going to be with us for a long time.
The universe the pen.
Children applications.
Yes.
Thanks, Ed Good question. So I mean, the one area, obviously that we have spoken about in the past and <unk>.
We're excited about is the investigator sponsored study that's ongoing with UT health down in Texas on the use of that of do stat to lessen the.
The severity of Rds or acute respiratory distress syndrome, and patients hospitalized patients with COVID-19.
And this obviously is the bear.
Very significant opportunity I think the virus is going to be with us for for a long time, there over 220 patients and to 'twenty was the last debt. We had update we had from that and I'm sure they're higher than that now.
John P. Butler: There are over 220 patients in. 220 was the last update we had from them. I'm sure they're higher than that now. If you recall, they got a $5 billion, $5.01 million grant from the Department of Defense and decided to expand that study to 400 patients. So we should see a robust data set. Now, we don't control that, but obviously, it's an investigator-sponsored study. We do hope that we'll have data from that before the end of the year.
If you recall, they got a $5 billion and $501 million grant from the department of defense and that.
And they decided to expand that studied the 400 patients. So we should see a robust data set and that we don't control of that but obviously, it's an investigator sponsored study, but we do hope that we'll have data from that before the end of the year and.
John P. Butler: And again, when you think about HIF and ARDS, I mean, that biology makes a lot of sense. And then, beyond that, I mean, there are kind of clearly other areas. You could probably pick them off that are clear areas for where new anemia treatment could be beneficial.
And again and when you think about half and <unk> biology mix makes a lot of sense.
And then beyond that I mean, there are clearly other areas you could probably pick them off.
And that.
Our clear areas for.
New anemia treatment could be beneficial and that's the assessment, we're doing now and again looking at AD and a clinical.
John P. Butler: And that's the assessment we're doing now and again and looking at, you know, the clinical probability of success. We know this drug increases hemoglobin, but we don't know what the regulatory thresholds would be in the market opportunity. And, you know, that's ongoing now, as well as kind of looking at what the clinical development program might be for each of these opportunities. And as we said, we'll update you later in the year as we make decisions.
The probability of success, we know the striking increase the hemoglobin.
And what the regulatory thresholds would be and the market opportunity and that's ongoing now as well as kind of looking at what the clinical development program might be for the each of these opportunities and as we said we will we will update you later in the year.
We've made decisions around that.
Unknown Attendee: Great. Thanks so much, John. I appreciate it.
Okay, great. Thanks, so much John appreciate it.
Thank you Ed.
Operator: There are no further questions. I'd like to turn the call back over to John Butler for any closing remarks. Actually, we do have one more question.
There are no further questions I'd like to turn the call back over to John Butler for any closing remarks.
Thanks, Michelle and I have one more question.
Okay.
Operator: from Eric Joseph. With J.P. Morgan, your line is open.
From Eric Joseph.
With J P. Morgan your line is open.
Operator: Hi, this is on for Eric. Just hand it on for Eric.
Hi, This is on for Eric Thanks for taking the question and just hang on for Eric Thanks for taking the question.
Unknown Attendee: Just one from us, given your comments, U.S. data, and innovation. Just wondering if you're not granted approval for a non-diolysis KD, would you or Ossica look to revisit the opportunity in pre-CKD and a follow-on face-free, So way too early to say, you know, what we would do there. We are, obviously, in the very early days of engaging with the FDA. Our engagement with them has been very transparent, collaborative, and positive from our perspective.
Just one from us and given your comments on the compelling USAID and innovate just wondering if you are not granted approval for a non dialysis. The K D would you or oxy and kind of luxury and revisit the opportunity increase in Haiti and a fall.
All of the one phase III study.
So way too early to say and.
And what we would do there we are obviously at the very early days of engaging with the FDA, our engagement and has been very transparent and collaborative and positive from our perspective and the fact, we're still at the end of the month, we expect to.
Unknown Attendee: And as I said, we're still, you know, at the end of the month; we expect to hear from them around the filing and validation of the NBA. And then, you really start to work more closely with them and understand. how they're thinking. Again, our perspective is that the quality and clarity of the data support that there is a cardiovascular risk, but we have always said, you know, let's be cautious about how we think about it, and we're simply reiterating that today. But what that would mean if we weren't granted a label in the past? It's way too early to see it. Okay, great.
To hear from them around the.
The filing and validation of the of the NDA and then you really start to work more closely with them and understand how they are thinking.
Again, our perspective is that the quality and clarity of the data supports that there isn't a cardiovascular increased cardiovascular risk, but we have always said, let's be cautious about how we think about it.
And we're simply reiterating that today, but what that would mean.
If we were granted a label and.
This past, it's way too early to say.
I think that's helpful. Thanks for taking of the question.
John P. Butler: Okay, great, that's helpful. Thanks for seeing me ask the question.
Thank you.
Operator: At this time, there are no further questions. I could turn the call back over to John Butler for Nicole's remarks.
At this time there are no further questions I'd like to turn the call back over to John Butler for any closing remarks.
John P. Butler: from Nicole's Remark. Thanks so much, Michelle, and thanks everyone for joining us on the call today. We look forward to continuing to update you on this very exciting year for Akiba on future calls. Thanks all. Take care.
Thanks, so much Michel and thanks, everyone for joining us on the call today, and we look forward to.
Continuing to update you on this very exciting year for of TBS on future calls thanks ill take care.
Operator: Ladies and gentlemen, does that include the conference? You may now disconnect. Everyone, have a great day. Theeus
Ladies and gentlemen, this does conclude the conference you may now disconnect everyone have a great day.
Operator: You may now disconnect. Everyone, have a great day!
Yeah.
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Operator: Thank you.
And.
And.
And.
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