Q4 2022 Akebia Therapeutics Inc Earnings Call

Speaker 1: Good day, ladies and gentlemen. Thank you for standing by, and welcome to our KPS 4th Order 2022 Financial Results Conference Call.

Speaker 1: At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star-1-1 on your telephone. You will then hear an automatic message advising your hand its way. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host.

Speaker 1: Zeta Skarasko, Senior Director of Corporate Communications, please go ahead.

Speaker 2: Thank you and welcome to the TBS fourth quarter and full year 2022 financial results and business updates conference call.

Speaker 2: Today we also celebrate World Kidney Day, an opportunity to raise awareness for kidney health and recognize all those in the kidney community who share in our purpose to better the lives of people impacted by kidney disease. Joining me for today's call, we have John Butler, Chief Executive Officer, and Dave Spellman, Chief Financial Officer.

Speaker 2: A press release was issued earlier today, Thursday, March 9th, detailing our fourth quarter and full year 2022 financial results. And that release is available on the investor section of our website.

Speaker 2: For your convenience, a replay of today's call will also be available on our website after we conclude. Before we begin, I'd like to remind everyone that this call includes forward-looking statements. Each forward-looking statement on this call is subject to risks and uncertainties that could cause actual results to differ materially.

Speaker 2: from those described in these statements. Additionally, information describing these risks is included in the financial results press release that we issued on March 9th, as well as in the risk factors and management discussion and analysis section of our most recent annual and quarterly reports filed with the FEC.

Speaker 2: The forward-looking statements on this call speak only to the original date of this call and, except as required by law, we do not undertake any obligation to update or revise any of these statements. With that, I'd like to introduce our CEO , John Butler.

Speaker 3: Thanks Mercedes, and thank you all for joining us.

Speaker 3: Everyone at Akibia has entered 2023 with renewed optimism. Through the past year, our team's work and the strategic decisions we've made have put us in a position to thrive as a company.

Speaker 3: We continue to engage with the kidney community and support our patients on Erixia. We've advanced the regulatory process for VataZustat in Europe to a point where we're now approaching a potential marketing authorization.

Speaker 3: And we're excited to look ahead as we evaluate and drive potential pipeline expansion opportunities, including developing hypoxia inducible factor pro-ohydroxylase inhibitor compounds for potential indications of serious unmet need.

Speaker 3: We have a team that works with purpose and I'm proud of their accomplishments as they've delivered a company today with a strong revenue base, multiple near-term catalysts, and mid- and long-term product development opportunities.

Speaker 3: Now let's begin with Erixia. In 2022, you reported net product revenue growth of nearly 25% over 2021, exceeding the revenue target guidance we established mid-year.

Speaker 3: Achieving net product revenue growth, while the phosphate binder market continues to decline, is a credit to our dedicated commercial team that works hard to ensure thousands of patients have access to Erixia.

Speaker 3: Last year, we launched a new commercial model that aligns the customer objectives.

Speaker 3: We believe the model will enable our team to continue high touch engagement with high value individual prescribers and entities that are focused on delivering coordinated, cost effective care for advanced CKD patients, including those receiving dialysis.

Speaker 3: Erixia net product revenue is integral to our operating plan as we continue to support the regulatory processes for Vatadusta globally and invest in our other drug research and development activities. Dr. Jeff

Speaker 3: Regarding Vatadustat, we're quickly approaching a potential milestone. In late February , the Committee for Medicinal Products for Human Use, or CHMP, of the EMA adopted a positive opinion recommending that the European Commission approve VASEO, Vatadustat, for the treatment of symptomatic anemia associated with CKD.

Speaker 3: in adults on chronic maintenance dialysis.

Speaker 3: We anticipate a potential marketing authorization for VAPCO to be granted by the EC in May of this year.

Speaker 3: which would be applicable to all 30 European Union member states and affiliated countries.

Speaker 3: Beyond the EU, we also anticipate a regulatory decision for Vata-Doostat for access consortium to the UK, Switzerland and Australia later this year.

Speaker 3: We are dedicated to delivering an oral treatment option to patients with anemia due to chronic kidney disease and continue our efforts to select a potential partner in Europe to commercialize Vastio approved.

Speaker 3: We don't expect to formalize a partner engagement until sometime after VAFSEO receives marketing authorization, but we're deeply engaged in the process to select a partner that can maximize the potential value of VAFSEO while quickly reaching appropriate patients.

Speaker 3: Avastio marketing authorization in Europe would mean that Adustat would be approved in 31 countries as it's currently approved and marketed in Japan by MTBC for dialysis-dependent and non-dialysis-dependent adult patients.

Speaker 3: We believe in the favorable benefit-risk profile of that ADU-STAT, and to that end, we continue to pursue a potential path for approval in the U.S. for patients on dialysis.

Speaker 3: Last year we submitted a formal dispute resolution request with the FDA regarding the complete response letter for vetadustat specifically related to adult patients on dialysis.

Speaker 3: In February of 23, we received a second interim response from the FDA, indicating that due to agency resource constraints and staffing needs, Dr. Peter Stein, the Director of the Office of New Drugs, or OND, will serve as the deciding authority for the appeal.

Speaker 3: Dr. Stein has indicated he will seek internal consultation with nephrology, cardiology, and liver safety experts in the OND to complete the review, and we expect to receive a response 30 days from when Dr. Stein completes his discussions. We continue to engage with Dr. Stein and the OND and will update investors on this project.

Speaker 3: for the prevention and treatment of ARDS in patients with COVID-19 and hypoxia.

Speaker 3: Since that time, we've continued to work with UT Health to plan an adequate, well-controlled study in a broad patient population beyond COVID-related ARDS in an acute setting. And we expect that study to begin enrolling patients this year. Within our four walls, we have the expertise to innovate and develop medicines to address patients' unmet needs.

Speaker 3: Further, our commercial team continues to keep us connected to patients while also enabling a product revenue stream to fund operations and pipeline expansion. To that end, we're also actively assessing regulatory and development paths for Vatadustat in other acute treatment indications.

Speaker 3: This year, we also plan to advance preclinical development of multiple novel hispHI compounds for serious disease areas with limited or no treatment options, such as acute kidney injury.

Speaker 3: Our patient focus drives us thoughtfully to invest in new programs to expand our pipeline. We're eager to do that as we look forward into 2023 and beyond. Again, we're able to do this because of the financial base we've strengthened through the past year.

Speaker 3: And to that end, I'll ask Dave to talk more about our operating plan and our financials.

Speaker 4: Thank you, John . Good morning everyone. 2022 was an important year for Akibia and we have developed an operating plan that will enable us to further build value as we capitalize on potential upcoming catalysts in 2023.

Speaker 4: Most immediately, assuming Vadity's debt gets approved by the EMA in May, we will have developed a second drug that will be approved in over 30 countries and have the potential to benefit thousands of patients.

Speaker 4: Beyond the European approval for VataduStat, we could initiate our next ARDS study with UTHealth in a non-COVID ARDS population, generate preclinical data for indications for VataduStat in acute settings, and then we can generate preclinical data for indications for VataduStat in acute settings.

Speaker 4: to cure potential approval for Battidustat in other countries including the UK, Switzerland, and Australia.

Speaker 4: secure an ex-US licensing deal, resolve our FDR process with the FDA, which would provide clarity to our expense profile and the potential revenue related to strategies that in the US.

Speaker 4: Beyond VadaduStat, broader portfolio opportunities that may be added within our operating plan include potential to leverage our infrastructure to build out

Speaker 4: build out our development and commercial portfolio with new external assets.

Speaker 4: in maturation of our preclinical programs with the potential for multiple INDs over the coming years.

Speaker 4: Erixia continues to perform well, which based on our guidance for 2023, will deliver net revenues in excess of $350 million over the 2022-2023 time period. Our Erixia guidance of $175 to $180 million assumes inventories return to normal levels and that we realize an increase in net price per pill.

Speaker 4: partially offset by a reduction in total units sold. We also assume that the binder market continues to have challenges.

Speaker 4: Our cost management exercise has yielded important financial strength and stability for us.

Speaker 4: We expect to have cleared the go and concern analysis upon filing of our 10K, meaning that we have cash that will provide us the resources to fund our operating plan for at least 12 months. This is the result of 2 main focuses of the company, which we have previously discussed in great detail, but given the significance of the event is worth reviewing again. First and most obvious is the commercial success.

Speaker 4: That led to a nearly 25% increase in year-over-year net product revenue for Erixia. Our commercial leadership team undertook a laborious process to look at each and every commercial contract and position the brand to deliver more revenue on fewer net tabs sold.

Speaker 4: Few products achieve this type of growth, let alone those that are in their ADO on the market. Many congrats are owed to our commercial team, including our key account managers. Second, and just as important, has been the narrowing of our strategic focus, which has enabled concentrated spend on items that will support our future growth.

Speaker 4: We've exited several contracts that were not yielding the return we needed and have asked our people to do more with less and it's stopped certain activities in order to push more money into our R&D pipeline. In addition, we reduced our debt balance and are paying less interest expense than otherwise would have. Overall, we are managing our working capital tightly.

Speaker 4: We are not offering operating expense guidance at this time, but we'll continue to focus on extending our cash runway. Our focus on maximizing our revenue remains both pre and post.

Speaker 4: and we will only look to reinvest in high-value areas we can afford to pursue.

Speaker 4: We will also look for areas to potentially grow our revenues with Erixia, for example, by ensuring that we have a TADAPA strategy in place to maximize revenue during this period, as well as potentially having revenue from Vadadu's debt, first with a European partnership.

Speaker 4: On that note, as you are all aware, we recently obtained a positive opinion for Vatadis debt from the CHMP and now anticipate a potential approval in May. As John mentioned, we have been actively pursuing a partnership to ensure a successful launch in a timely manner. We cannot at this time provide guidance on deal economics.

Speaker 4: but can say we are looking for a partner who will team with us to maximize the value of the asset and shares our goal of benefiting as many patients as possible within the approved indication.

Speaker 4: Finally, pivoting to NASDAQ compliance, we have filed our definitive proxy and are on track to take the appropriate steps to regain compliance with the price criteria for continued listing on NASDAQ.

Speaker 4: On today's call, we will not be going through year over year fluxes of the financials beyond those provided in the press release, but are happy to dive into questions. With that, we'll open the line to questions. Operator?

Speaker 1: Thank you. Ladies and gentlemen, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question coming from the line of...

Speaker 5: with FDA since the interim response in late February . And just hoping you could walk us through the possible outcomes and expected kind of cadence of events there. Do you plan to communicate when the 30-day clock starts for Dr. Stein's review? And then I have a couple follow-up questions after that. Sure. Thanks, Allie. So remember to two million and we can do with this employer right now the

Speaker 3: We are in regular conversation with the agency, usually administrative more than anything else. Again, just to stress.

Speaker 3: We don't understand, we can't say what exactly the timing of this is going to be. It will be 30 days after he's finished his internal review.

Speaker 3: He has clearly communicated that he's looking to do that in an efficient manner. You know, exactly what that means, we can't say. So I can't guide you towards when that might be. But it seemed clear in the letter that there's not an expectation of dragging that review out. And I don't want to set an expectation.

Speaker 3: that we'll know exactly when that 30-day clock will start. So it's hard to say we will definitively tell you when it does. But as I said, we will clearly update as appropriate as we understand the process going forward without getting into that day-to-day process.

Speaker 3: communication. And so I think you asked about potential outcomes and

Speaker 3: So there's a number of potential outcomes. You know, there's the outcome of an appeal being denied and just being referred back to the CRL and then back to the division to talk about what a path forward would be.

Speaker 3: There's a very common one is an appeal denied, but identifying a path forward. You know, this is not that would that similar to what happened with the tannapanor and our deli right there was the appeal was denied, but there was an ad com for for the product that ultimately I think they're very much on a path for an approach.

Speaker 3: or a six month review clock, that's part of the communication. But then you're kind of on the road to an approval based on a review of your NDA. So I think those are that kind of the universe of what we might hear. Within that appeal denied, but a pass forward, we don't know what other kind of things might come up from there.

Speaker 5: that approval, just hoping you could kind of share your thoughts on how that approval and also now that the FDA review documents have been published, just how does that impact your thinking about the chances for a successful appeal outcome for VataduStat? And also just for a potential VataduStat label.

Speaker 5: Just noticing that the DAPRA label is specifically indicated for patients on dialysis for at least four months. Is it your sense that that would reflect class labeling or is that more something specific to DAPRA-DSTAT? Understanding this might be a cart before the horse question, but just interested in your thoughts there. Yeah. That's where I was going to start, Allie.

Speaker 3: FDA approving that produced that, you know, proving, you know, a drug in the hit PHI class is a positive signal that they are willing to, you know, make products available from the class. So I think that's, there's no way to read that in a negative way from my perspective. Every product is an individual product though, right? And

Speaker 3: So, you know, how our, what our label might look like vis-a-vis there is, you know, impossible to predict what that would be. Now, like I said, I can't wait to be in in those labeling discussions with the FDA. And, you know, we just do not know kind of what will come from the FDR.

Speaker 3: But we continue to have a lot of confidence in the data. A European CHMT positive opinion, I think, similarly, is nothing but a positive for, you know, kind of...

Speaker 3: for the FDA, as Dr. Stein looks at the label, you know, 31 countries have now decided that the product is safe and effective. And so, but we'll all, you know, we'll do everything we can on our end to move the process effectively and again, we'll communicate it as quickly as we can. Okay. Yeah, understood.

Speaker 5: And then maybe just a last question from me, just on the expense trajectory. I guess this came up a bit in prepared remarks, but just wondering if there's any color you can provide to help us understand.

Speaker 5: that expense trajectory for both R&D and SG&A and just expectations for cash burden over the course of 23 or is that something you'll be able to describe more once you do get that answer from FDA. Thanks.

Speaker 4: Yes, so, Ellie, thanks for the question. So, like I said, in the prepared remarks, we're not going to provide the specific guidance, but we have done a lot of work to continue to bring down R and D and S, G and A. And we continue to do so even this quarter. A lot of that focus is bring it down so that we can balance.

Speaker 4: the Erixia revenue and revenue growth with reinvesting in these pipeline opportunities.

Speaker 4: You know, I think the big thing I mentioned, you know, the expectation to clear the going concern analysis that is our. You know that that's the strongest guidance that we can give that we plan to be able to manage our expenses within the cash that we have and the Erixia revenue. So we're very excited about that. And I think long term.

Speaker 4: The 2 things that would just factor into the burn would be success in the pipeline into your point. The data do that that it is that investment in a commercial launch is not something that we've gotten our plan right now. So, if we are fortunate enough to be having those conversations, we would definitely be reassessing the investment plan. But again, this is where. Uh, going back to something we haven't talked about for a long time.

Speaker 4: Our leverage and our commercial expertise, the model that we have right now, the focus on the dialysis center. Is so the relationship in the dialysis center is so strong and the relationship with before to be able to partner with them on that potential launch. We don't expect that. This is.

Speaker 3: a major, major new investment. Leverage is gonna be the name of the game there. Yeah, such an important point. And I mean, when we made the change to the commercial structure, it was with the thought of about to do that launch in mind as well. And with the V4 partnership, I mean, that would be incredible leverage we could get out of that organization.

Speaker 3: So yeah, there is investment to be made in a launch, but in this case...

Speaker 3: It's a very, very small investment in people, a couple of marketing people maybe, but we dust off a launch plan that we had a year ago, and I think it would be obviously a phenomenal outcome for us. But again, as Dave said, we've built our budget without.

Speaker 3: Right, we want the company to have the discipline of, you know, we want to drive to deposit cash with Aritzia alone and a disciplined approach to spending. And the team's done a phenomenal job of delivering on that. And we expect to continue to deliver towards that in 2020.

Speaker 1: Got it. Thanks so much. Thanks. Thank you. Thank you. And our next question coming from the line-up, and R.C. with ACWAN, where are you on this open? Great. Thanks for taking my questions, Ann. Both, the

Speaker 6: payment with.

Speaker 7: Aperola

Speaker 6: for Rixia in Europe . I'm wondering if you could just discuss.

Speaker 6: What you expect there, what kind of communications we can expect going forward with that, and what's your expectations for the end of exclusivity in those markets?

Speaker 3: Thanks for the question. So Avro is a small European company and again with Erixia...

Speaker 3: we've only had the product available in the US. The idea of bringing this to European patients where we think there can be a benefit, has always been attractive for us.

Speaker 3: But we knew this is something we weren't going to execute on our own. So bringing in a partner to look at this, and look at it a little bit differently. They've got to look at the market just a little bit differently. And they're working on that now, and they're consulting with regulatory authorities. And we tried to put a contract in place here that DR- ID engineering

Speaker 3: that created upside for us if they're successful with very, very little, I don't say downside risk, but distraction for the organization. And that was quite important. So again, we're living our purpose of bringing the products to patients where there's a need, you know, but doing it in a way that, you know, really just creates potential upside for us.

Speaker 3: you know this is a deal that you know obviously a royalty-based deal for us they're they're taking some risk and we're taking very little but you know the upside is that they're if they're successful in the way they approach the VMA with this so you know we'll see I wouldn't say this is something that

Speaker 3: we put a significant amount of focus on as we think about building the company. But we're happy with Abreu as a partner and look forward to supporting them as necessary.

Speaker 6: Okay.

Speaker 6: You also mentioned in the release that you're working on certain initiatives to extend the revenues of ERIXIA beyond March 2025. I wondered if you would care to expand upon that in any way and perhaps related. I think I heard a brief mention in your prepared remarks.

Speaker 6: of TADAPA and wondering if there is any opportunity for you to leverage that come 2025. Thanks.

Speaker 3: Thanks Ed. Yeah, that's very much where Dave.

Speaker 3: really was focused in that in that comment. I mean, there's two, there's two pieces. I mean, one, you know, first and foremost, there's, you know, we have this and the settlements of March of 25.

Speaker 3: But we do know that if you look at the analog of subelomer, given a volume of drug that has to be manufactured per patient, it took quite some time before there was significant generic entry into the market.

Speaker 3: It wasn't a patent cliff, it was a patent slope. And ultimately they did come in, but Sanofi at the time, who was selling the drug, had significant profitability from that. And so there's some opportunity of that. And here we have a product that's much smaller.

Speaker 3: Revenue product that was a billion dollar product development at the time. So, you know, is it financially attractive for a number of?

Speaker 3: generic manufacturers to bring the product in. That's an assessment they have to make. But what's unique to the situation we're in today is, as you said, the Chi-da-pa process. CMS has said that the philosophy finders will go into the bundle

Speaker 3: as of January of 25, which has been the expectation, but in the last final rule, they made that clear, and they made it clear that they were gonna have a two-year Tdapha process, and I think a three-year Tdapha process, which they did for Senecauset, would be more appropriate, and we'll talk to them about that, but.

Speaker 3: with a two-year TdAPA process, it means they're collecting data for those two years to see how the dialysis providers utilize phosphate binders so they can make a decision about...

Speaker 3: What to what what dollar amount to add to the bundle payment come January of 27.

Speaker 3: If you think about this from a dialysis provider standpoint, there's a lot of motivation to use, obviously, the three patients appropriately, but to use products like branded products so that they're not going to end up with a bundled payment that doesn't cover their costs ultimately. So, it's very important to remember that side effects know what area that you prefer to wear wearing to warm up.

Speaker 3: There's clearly an opportunity for us with Erixia over the course of 25 and 26 to work with them on utilizing the drug appropriately for patients, of course, but increasing, continuing to increase the utilization and then helping with that switch over to generics.

Speaker 3: beyond 2026. There's some meaningful revenue opportunities there, and we're just now working with the dialysis providers to see how that will be rolled out.

Speaker 6: Okay, great. And then one last question. I joined a bit late, so maybe you discussed this already, but I just wanted to clarify for Vatadustat in the US, if that process were to ultimately...

Speaker 3: results in an approval. Commercially, what is your plan right now? So the focus of the FDR now is for dialysis patients only. So that would be the expectation of what an approval would yield.

Speaker 3: And the commercial organization that we've put in place now, you know, the reorganization we did late last year, we think from a field perspective, we probably have to add a couple of marketing people, but from a field perspective, we have what we need for that launch because.

Speaker 3: of the V4 relationship. We have the V4 relationship that we have, where they will sell directly to Fresenius and the other small and medium providers who they have contracts with, really allows us to have a much more efficient relationship.

Speaker 3: commercial focus and delivers a tremendous amount of leverage for us on our P&L if we're successful with that.

Speaker 3: delivers a tremendous amount of leverage for us on our P&L if we're successful with that. Great, thanks so much.

Speaker 6: Your line is open. Yeah, thank you for taking the questions and congrats on the progress. Looking forward to more. Just a quick question on margins for this quarter. I think you mentioned it in the call, excuse me, in the release. But COGS had a benefit this quarter. I think there was mention about contract termination fees. Could you go into a little bit more detail about how we should be thinking about the cost of goods and gross margin? Again, I think that's a good question.

Speaker 4: of a supply contract that we had a multi-year supply contract between the different supply agreements that we had back then we had been each quarter been providing updates on something that we called an excess purchase commitment with the restructuring of the supply chain. We expect that those charges.

Speaker 4: are going away and we have reversed those charges in the fourth quarter. So what you'll see going forward within that COGS line, you'll still see the amortization of intangible that is clearly in there and called out as a non-cash expense, but what you'll see now is, you know, you'll see a much more normal cost of goods line which would be just...

Speaker 4: Our costs to produce and sell a and, you know, that'll be, you know, again, we're not providing the specific numbers, but you can go back historically and look at what we've disclosed. Whether it's excess purchase or inventory, right? Off. Take those to the side and it'll just be a much more normal rate and we're really, really happy about those.

Speaker 4: of 70 million dollars that we reversed for those excess purchase commitments.

Speaker 6: Terrific. Looking forward to cleaner numbers moving forward. That's great. A couple of questions on Vata-Doostat. In the U.S., is Dr. Stein seeking additional data from Akiva at all? Are you interacting with him directly in any way shape or form?

Speaker 3: So the focus of the letter is the internal discussions that he's having. If he requests anything from us, then obviously we'll be responsive to that. Part of the FDR is that you can't actually give new data into the English translation.

Speaker 3: coming up to speed, clearly from his letter, he's come up to speed a long way. I mean, he really was quite versed in the issues at hand, but wants to seek that internal guidance. So I think it's more about that. We will do everything we can to support him in that process and support a positive outcome. So.

Speaker 6: what does this give you? What should we expect in terms of data?

Speaker 3: release for that study? Yeah, so I mean we do expect that we'll be presenting that data at a scientific session or in a publication to be determined. It's an important study. It is the study that we feel will be the basis for having a three times...

Speaker 3: when the patient's on dialysis is just another option for them that can be very helpful and ensure compliance for their patients. And so it's important. And I think it's important for patients and it's important commercially too. It's giving physicians more of an option. So that study is completing and we do expect that that data will be presented.

Speaker 6: do status or VAPSAO as we're moving forward. Just any kind of broad characterization you can do, you can provide for the potential authorization may would be helpful. Thanks.

Speaker 3: So obviously, you know, until we have that marketing authorization, you know, we don't want to kind of get ahead of that. But you obviously are talking about a label as you go through the CHMP and, you know, we're very pleased from, you know, kind of.

Speaker 3: at least I'm looking at it with a commercial eye. I think it's a label that we absolutely can work with. There's nothing that's outside of what I would expect in there, and obviously focused on dialysis patients alone. ButspeTu. ----

Speaker 3: you know, when I look at the concerns expressed by the FDA, those are either, you know, those are all handled in a very appropriate way in...

Speaker 3: in the SMPC, so the anticipated SMPC. So we'll see the final when we have it, but you know I have no concerns from a commercial perspective based on what I've seen so far.

Speaker 6: Just one more. Along those lines, how would you characterize the status of interactions for folks with additional commercial parties in the EU? You said pretty clearly that obviously nothing's going to happen until formal authorization.

Speaker 3: Just love to get a sense of the temperament out there. Thanks. Yeah, no, it's a very active process. Getting clarity that it's dialysis versus dialysis and non-dialysis obviously was important to the process.

Speaker 3: having the CHMP positive opinion is very value creating for us and having an authorization creates more value for us ultimately as you get to a deal.

Speaker 3: is very value creating for us and having an authorization creates more value for us, you know, ultimately as you get to, you know, to a deal and

Speaker 3: Creating, you know, we have an active process with multiple parties who are interested. And, you know, seeing that process through and maintaining multiple parties usually yields the best outcome for us and for the product. And, you know, it…

Speaker 3: if that takes a little bit more time, that's time that's usually very, very well spent. So, you know, we're very pleased with how this process is moving forward. Thanks for all that. Congrats on the progress. Looking forward to more. Thank you. Thank you, everybody. Thanks for you like and share your feedback as boss, which hopefully during this time.

Speaker 1: I'm showing up for the questions at this time. I will now send a call back over to Mr. John bottle for any closing remarks

Speaker 3: Thanks, operator, and thank you all for your attendance this morning. While we celebrate World Kidney Day today, our commitment to patients drives us forward every day. I hope you got a sense of our excitement from this call. I just want to really summarize very quickly a few of the exciting developments we're expecting in 2023. We're going to continue to drive revenue growth for Erixia and expect to deliver net product revenue of 175-180 million.

Speaker 3: that UT Health will initiate an ARDS study with Radadustad and a broader patient population.

Speaker 3: And we look forward to talking much more about our pipeline development for Veta-Doostat and other novel his-PHI compounds as the year progresses. So it will be a very, very busy year for us, I think an exciting year for Iqibia, and we look forward to updating you further on it. Thanks again for joining us. Have a great day. Take care.

Speaker 1: Ladies and gentlemen, that's all for today. Thank you for your participation. You may now disconnect. Good bye.

Speaker 1: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1-1.

Speaker 8: .

Speaker 1: The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 11.

Speaker 8: You

Speaker 1: Good day, ladies and gentlemen. Thank you for standing by, and welcome to AKPS Board Quarter 2022 Financial Results Conference Call. At this time, all participants are in listen-only mode.

Speaker 1: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automatic message advising your hand its way. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Ms. Sadie Skarasko, Senior Director of Corporate Communications. Please go ahead. Part 1

Speaker 2: Thank you and welcome to the fourth quarter and full year 2022 financial results and business updates conference call. Today we also celebrate world kidney day, an opportunity to raise awareness for kidney health and recognize all those in the kidney community who share in our purpose to better the lives of people impacted by kidney disease.

Speaker 2: Joining me for today's call, we have John Butler, Chief Executive Officer, and Dave Spellman, Chief Financial Officer. A press release was issued earlier today, Thursday, March 9th, detailing our fourth quarter and full year 2022 financial results.

Speaker 2: and that release 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 after we conclude.

Speaker 2: Before we begin, I'd like to remind everyone that this call includes forward-looking statements. Each forward-looking statement on this call is subject to risks and uncertainties that could cause actual results to differ materially from those described in these statements. Additionally, information describing these risks is included in the form of a

Speaker 2: in the financial results press release that we issued on March 9th, as well as in the risk factors and management discussion and analysis section of our most recent annual and quarterly reports filed with the SEC. The forward-looking statements on this call speak only to the original date of this call and except as required by the SEC.

Speaker 3: renewed optimism. Through the past year, our team's work and the strategic decisions we've made have put us in a position to thrive as a company.

Speaker 3: We continue to engage with the kidney community and support our patients on Erixia. We've advanced the regulatory process for Vata-Doostat in Europe to a point where we're now approaching a potential marketing authorization.

Speaker 3: And we're excited to look ahead as we evaluate and drive potential pipeline expansion opportunities, including developing hypoxia inducible factor pro-alhydroxylase inhibitor compounds for potential indications of serious unmet need. We have a team that works with purpose and I'm proud of their accomplishments.

Speaker 3: as they've delivered a company today with a strong revenue base, multiple near-term catalysts, and mid- and long-term product development opportunities. Now let's begin with Arikseyev. In 2022, you reported net product revenue growth of nearly 25% over 2021, exceeding the revenue target guidance we established mid-year.

Speaker 3: Achieving net product revenue growth, while the phosphate binder market continues to decline, is a credit to our dedicated commercial team that works hard to ensure thousands of patients have access to Erixia. Last year we launched a new commercial model that aligns to customer objectives.

Speaker 3: We believe the model will enable our team to continue high touch engagement with high value individual prescribers and entities that are focused on delivering coordinated, cost effective care for advanced CKD patients, including those receiving dialysis.

Speaker 3: Erixia net product revenue is integral to our operating plan as we continue to support the regulatory processes for Vatadusta globally and invest in our other drug research and development activities. Even if you offer proper certainty for you. All right.

Speaker 3: Regarding vatadustat, we're quickly approaching a potential milestone. In late February , the Committee for Medicinal Products for Human Use, or CHMP, of the EMA adopted a positive opinion recommending that the European Commission approve VASEO, vatadustat, for the treatment of symptomatic anemia associated with CKD.

Speaker 3: and adults on chronic maintenance dialysis. We anticipate a potential marketing authorization for VAPCO to be granted by the EC in May of this year, which would be applicable to all 30 European Union member states and affiliated countries. Beyond the EU, we also anticipate a regulatory decision for Vata-Doostat for access consortium countries.

Speaker 3: the UK, Switzerland, and Australia later this year. We are dedicated to delivering an oral treatment option to patients with anemia due to chronic kidney disease, and continue our efforts to select a potential partner in Europe to commercialize VAPSCO if approved. We don't expect to formalize a partner engagement until sometime after VAPSCO receives symptoms or hospitalizations.

Speaker 3: 31 countries as it's currently approved and marketed in Japan by MCBC for dialysis dependent and non-dialysis dependent result patients

Speaker 3: We believe in the favorable benefit-risk profile of Vatadustat, and to that end, we continue to pursue a potential path for approval in the U.S. for patients on dialysis. Last year, we submitted a formal dispute resolution request with the FDA regarding the complete response letter for Vatadustat specifically related to adult patients on dialysis.

Speaker 3: In February of 23, we received a second interim response from the FDA indicating that due to agency resource constraints and staffing needs, Dr. Peter Stein, the Director of the Office of New Drugs or OND, will serve as the deciding authority for the appeal. Dr. Stein has indicated he will seek internal consultation with nephrology.

Speaker 3: cardiology and liver safety experts in the OND to complete the review. And we expect to receive a response 30 days from when Dr. Stein completes his discussions.

Speaker 3: We continue to engage with Dr. Stein and the O&D and will update investors on this process as appropriate.

Speaker 3: We continue to engage with Dr. Stein and the O&D and will update investors on this process as appropriate. Now, bandages set is also being evaluated for other indications.

Speaker 3: Notably, acute respiratory distress syndrome or ARDS. Last year, we shared data from an investigator-sponsored clinical study with UT Health, evaluating that do-stat for the prevention and treatment of ARDS in patients with COVID-19 and hypoxia.

Speaker 3: Since that time, we've continued to work with UT Health to plan an adequate, well-controlled study in a broad patient population beyond COVID-related ARDS in an acute setting. And we expect that study to begin enrolling patients this year.

Speaker 3: Within our four walls, we have the expertise to innovate and develop medicines to address patients' unmet needs. Further, our commercial team continues to keep us connected to patients, while also enabling a product revenue stream to fund operations and pipeline expansion. To that end, we're also actively assessing regulatory and development paths to address patients' needs and needs.

Speaker 3: for Vatabustat in other acute treatment indications.

Speaker 3: This year, we also plan to advance preclinical development of multiple novel hispHI compounds for serious disease areas with limited or no treatment options, such as acute kidney injury.

Our patient focus drives us thoughtfully to invest in new programs to expand our pipeline. We're eager to do that as we look forward into 2023 and beyond. Again, we're able to do this because of the financial base we've strengthened through the past year. And to that end, I'll ask Dave to talk more about our operating plan and our financials.

Thank you, John , and good morning, everyone.

2022 was an important year for Akibia, and we have developed an operating plan that will enable us to further build value as we capitalize on potential upcoming catalysts in 2023. Most immediately, assuming Vadity's debt gets approved by the EMA in May, we will have developed a second drug that will be approved in over 30 countries and have the potential to benefit thousands of patients.

Beyond the European approval for Vow2DoStat, we could initiate our next ARDS study with UT Health in a non-COVID ARDS population.

generate preclinical data for indications for Vadadustat in acute settings, secure potential approval for Vadadustat in other countries including the UK, Switzerland, and Australia.

secure an ex-US licensing deal, resolve our FDR process with the FDA, which would provide clarity to our expense profile and the potential revenue related to how to do that in the US.

Beyond VatidueSat, broader portfolio opportunities that may be added within our operating plan include potential to leverage our infrastructure to build out

build out our development and commercial portfolio with new external assets and maturation of our preclinical programs with the potential for multiple INDs over the coming years.

Erixia continues to perform well, which based on our guidance for 2023, will deliver net revenues in excess of $350 million over the 2022-2023 time period. Our Erixia guidance of $175 to $180 million assumes inventories return to normal levels and that we realize an increase in net price per pill.

partially offset by a reduction in total units sold. We also assume that the binder market continues to have challenges. A cost management exercise has yielded important financial strength and stability for us.

We expect to have cleared the goal and concern analysis upon filing of our 10k, meaning that we have cash that will provide us the resources to fund our operating plan for at least 12 months.

This is the result of two main focuses of the company, which we have previously discussed in great detail, but given the significance of the event is worth reviewing again. First and most obvious is the commercial success.

That led to a nearly 25% increase in year-over-year net product revenue for Erixia. Our commercial leadership team undertook a laborious process to look at each and every commercial contract and position the brand to deliver more revenue on fewer net tabs sold. Few products achieve this type of growth, let alone those that are in their 8th year on the market. Many congrats are owed to our commercial team, including our key account managers. Second, and just as important, has been the narrowing of our strategic focus

capital tightly.

We are not offering operating expense guidance at this time, but we'll continue to focus on extending our cash runway. Our focus on maximizing our revenue remains both pre and post. And we will only look at the specific

To reinvest in high value areas we can afford to pursue. We will also look for areas to potentially grow our revenues with a, for example, by ensuring that we have a strategy in place to maximize revenue during this period. As well, as potentially having revenue from that. First, with a European partnership.

On that note, as you are all aware, we recently obtained a positive opinion for Vatadustat from the CHMP and now anticipate a potential approval in May. As John mentioned, we have been actively pursuing a partnership to ensure a successful launch in a timely manner.

We cannot at this time provide guidance on deal economics, but can say we are looking for a partner who will team with us to maximize the value of the asset and shares our goal of benefiting as many patients as possible within the approved indication. Finally pivoting to NASDAQ compliance, we have filed our definitive proxy and are on track to complete the process.

to take the appropriate steps to regain compliance with the price criteria for continued listing on NASDAQ.

On today's call, we will not be going through year over year fluxes of the financials beyond those provided in the press release, but are happy to dive into questions.

With that, we'll open the line to questions. Operator? Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Please send back while we compile the Q&A roster.

And our first question coming from the line of.

And our first question coming from the line of. Alison Bresl with Piper Family, your line is open.

Hey, good morning guys. Thank you for taking my questions. So first, just one on the VADAD e-stat appeal process. Could you just help us understand if you've had any additional communications with FDA since the interim response in late February ? And just hoping you could walk us through the possible outcomes and expected kind of cadence of events.

usually administrative more than anything else. And you know again, just to stress

We don't understand, we can't say what exactly the timing of this is going to be. It will be 30 days after he's finished his internal review. He has clearly communicated that he's looking to do that in an efficient manner. Exactly what that means we can't say. I can't guide you towards when that might be.

kind of administrative communication through the process. There isn't a commitment that we'll know exactly when that 30-day clock will start so it's hard to say we will definitively tell you when it does but you know as I said we will clearly update as appropriate as we understand the process going forward without getting into that kind of

you know, that day-to-day communication. And so I think you asked about potential outcomes. And so there's a number of potential outcomes. You know, there's the outcome of an appeal being denied and just being referred back to the CRL and, you know, being referred back to the division to talk about what a path forward.

that ultimately I think they're very much on a path for an approval now. So that's quite common where they'll deny the appeal but give you a path that ultimately leads to an approval. And then there's the appeal granted in which case you are then going to refile your NDA.

And it could be a two month review clock or a six month review clock. That's part of the communication. But then you're kind of on the road to an approval based on a review of your of your NDA. So I think those are that kind of the universe of what we might hear within within that appeal denied in a better path forward. You know there is.

We don't know what other kind of things might come up from there, but I think there's a limited number of things like an ad com. Yes, something else for that. Got it. Did you say you had follow up questions?

Yeah, no, and thanks. That was helpful. Another question I wanted to ask about the deputy stat approval, just hoping you could kind of share your thoughts on how that approval and also now that the FDA review documents have been published, just how does that impact your thinking about the chances for a successful appeal outcome for a deputy stat?

And also just for a potential Zatadu stat label, you know, just noticing that the DAPRA label is specifically indicated for patients on dialysis for at least four months. Is that, is it your sense that that would reflect class labeling or is that more something specific to ZAPRA-DU-STAT? And understanding this might be a cart before the horse question, but just interested in your thoughts there. Yeah. Well, that's where I was going to start, Allie. It really is. See, none of thatamia curat

PHI class is a positive signal that they are willing to make products available from the class. So I think that's...there's no way to read that in a negative way from my perspective. Every product is an individual product though, right? And so, you know, how our...what our label might look like vis-a-vis theirs.

you know, impossible to predict what that would be now. Like I said, I can't wait to be in those labeling discussions with the FDA. And, you know, we just do not know kind of what will come from the FDR, but, you know, we continue to have a lot of confidence in the data, you know, a European.

CHMP positive opinion, I think similarly is nothing but a positive for the FDA as Dr. Stein looks at the label. You know, 31 countries have now decided that the product is safe and effective. We'll all, you know, we'll do everything we can on our end to

color you can provide to help us understand that experience trajectory for both R&D and SG&A and just expectations for cash burn over the course of 23? Or is that something you'll be able to describe more once you do get that answer from FDA? Thanks. Yes, so, Ali, thanks for the question.

bring it down so that we can balance the Erixia revenue and revenue growth with reinvesting in these pipeline opportunities.

You know, I think the big thing I mentioned, you know, the expectation to clear the going concern analysis that is our. You know that that's the strongest guidance that we can give that we plan to be able to manage our expenses within the cash that we have and the Erixia revenue. So we're very excited about that. And I think long term.

The 2 things that would just factor into the burn would be success in the pipeline into your point. The data do that that it is that investment in a commercial launch is not something that we've gotten our plan right now. So, if we are fortunate enough to be having those conversations, we would definitely be reassessing the investment plan. But again, this is where. Going back to something we haven't talked about for a long time.

Our leverage and our commercial expertise, the model that we have right now, the focus on the dialysis center. Is so the relationship and the dialysis center is so strong and the relationship with before to be able to partner with them on that potential launch. We don't expect that. This is. A major major new investment we leverage is going to be the name of the game there.

Yeah, it's such an important point. And I mean, when we made the change to the commercial structure, it was with the thought of a Vatidus that launch in mind as well. And with the V4 partnership, I mean, that would be incredible leverage we could get out of that organization.

So yeah, there is investment to be made in a launch, but in this case, it's a very, very small investment in people, a couple of marketing people maybe, but we dust off a launch plan that we had a year ago and I think it would be, obviously, a phenomenal outcome for us.

But again, as Dave said, I mean, we built our budget without, right? We want the company to have the discipline of, you know, we want to drive to deposit cash with Aritzia alone and a disciplined approach to spending. And the team's done a phenomenal job of

of delivering on that and we expect to continue to deliver towards that in 23. Got it. Thanks so much. Thanks, Adam. Thank you. Thank you. And our next question coming from the line up and RC with AC when regular is open.

Great. Thanks for taking my questions and congrats on all the operational progress in 2022, including the strong growth of Orixia.

First question for me, I noticed you mentioned you have signed a European license agreement inMusic 23.

First question for me, I noticed you mentioned you have signed a European license agreement with Averroa. Averroa?

for Rixia in Europe . I'm wondering if you could just discuss what you expect there, what kind of communications we can expect going forward with that, and what's your expectations for the end of exclusivity in those markets? Thanks for the question. So, Avro is a

and bringing in a partner to look at this, and look at it a little bit differently. They've got to look at the market just a little bit differently. And they're working on that now, and they're consulting with regulatory authorities. And we tried to put a contract in place here that created upside for us if they're successful with very, very little and...

I don't say downside risk, but distraction for the organization. And that was quite important. So again, we're living our purpose of bringing the products to patients where there is a need, but doing it in a way that really just creates potential upside for us. Remember, in Europe , you have a data exclusivity time frame. Blanking on the amount of time it is. But then.

that's what they'll be relying on, you know, rather than, you know, patent protection per se in the market. So there's an opportunity there. You know, this is a deal that, you know, obviously a royalty-based deal for us. They're taking some risk and we're taking very little. But, you know, the upside is that they're, if they're successful in the way they approach the VMA with this. So, you know, we'll see. I wouldn't say this is something that

beyond March 2025. I wondered if you would care to expand upon that in any way and perhaps related. I think I heard brief mention in your prepared remarks of to DAPA and wondering if there is any opportunity for you to leverage that come 2020.

You know, we have this and the settlements of March of 25.

But we do know that if you look at the analog of subelomer, given a volume of drug that has to be manufactured per patient, it took quite some time before there was significant generic entry into the market. It wasn't a patent cliff, it was a patent slope. Ultimately, they did come in.

for a number of...

generic manufacturers to bring the product in. That's an assessment they have to make.

But what's unique to the situation we're in today is, as you said, the Tdapha process. CMS has said that the phosphate binders will go into the bundle as of January 25, which has been the expectation, but in the last final rule,

they made that clear and they made it clear that they were going to have a two-year TdapA process. I think a three-year TdapA process, which they did for Senecausit, would be more appropriate. We'll talk to them about that. But with a two-year TdapA process, it means they're collecting data for those two years to see how the dialysis providers utilize...

phosphate binders so they can make a decision about what dollar amount to add to the bundled payment come January of 27. If you think about this from a dialysis provider standpoint, there's a lot of motivation to use, obviously, the three patients appropriately, but to use products like branded products so that they're not going to end up with a bundled payment that doesn't cover their costs ultimately. So,

There's clearly an opportunity for us with Erixia over the course of 25 and 26 to work with them on utilizing the drug appropriately for patients, of course, but increasing, continuing to increase the utilization and then helping with that switch over to generics.

beyond 2026. There's some meaningful revenue opportunities there, and we're just now working with the dialysis providers to see how that will be rolled out.

Okay, great. And then one last question. I joined a bit late, so maybe you discussed this already, but I just wanted to clarify for VataduStat in the US.

if that process were to ultimately result in an approval.

Commercially, what is your plan right now? So the focus of the FDR now is for dialysis patients only. So that would be the expectation of what an approval would yield. And the commercial organization that we've put in place

Now, you know, the reorganization we did late last year, we think from a field perspective, we probably have to add a couple of marketing people, but from a field perspective, we have what we need for that launch because of the V4 relationship, right? We have the V4 relationship that we have.

you know, where they have, you know, will sell directly to Fresenius and the other, you know, small and medium providers who have contracts, they have contracts with, really allows us to have a much more efficient commercial focus and, you know, delivers a tremendous amount of leverage for us on our P&L if we're successful with that.

have, you know, will sell directly to Fresenius and the other small and medium providers who have contracts, they have contracts with, really allows us to have a much more efficient commercial focus and, you know, delivers a tremendous amount of leverage for us on our P&L if we're successful with that. Great, thanks so much.

Thanks Ed. Thanks Ed. Thank you. Our next question coming from Delilah. Robert Haslett with BTIG, your line is open. Yes, thank you for taking the questions and congrats on the progress. Looking forward to more. Just a quick question on margins for this quarter. I think you mentioned it in the call, excuse me, in the release. But COGS had a benefit this quarter. I think there was mention about contract termination fees. Could you go into a little bit more detail about how we should be thinking about the cost of goods and gross margin?

We had been each quarter been providing updates on something that we call an excess purchase commitment with the restructuring of the supply chain. We expect that those charges are going away and we have reversed those charges in the fourth quarter. So what you'll see going forward

within that COGS line. You'll still see the amortization of Intangible that is clearly in there and called out as a non-cash expense, but what you'll see now is, you know, you'll see a much more normal cost of goods line, which would be just our cost to produce and sell Erixia.

And that'll be, again, we're not providing the specific numbers, but you can go back historically and look at what we've disclosed. Whether it's excess purchase or inventory write-offs.

take those to the side and it'll just be a much more normal rate and we're really, really happy about those contract terminations and reworks because it does save us a real significant amount on the cash flow. And again, a big, big contributor to us having this cash runway that we're talking about now has been

has been changing of those contracts. It was in excess of $70 million that we reversed for those excess purchase commitments. Terrific, looking forward to cleaner numbers moving forward. That's great. A couple on- I do, at the team. Yeah. I bet. A couple of questions on that, a doostat. And in the US, is Dr. Stein seeking additional data and sensor pushID for the previous M Electric?

into the into the review so we couldn't proactively give him anything new to look at it's got to be all things that are included in the NDA that's part of the the rules of the FDR so I mean I think his initial focus is certainly

I don't want to speak for him, but you know coming up to speed clearly from his letter He's come up to speed a long way. I mean he really was was was quite versed in the in the issues at hand But wants to seek that internal guidance. So I think it's it's more about that. We are our you know we will do everything we can to support a Him in that process and support a positive outcome So, you know having a direct communication with him on these issues is something we would be clearly

be presenting that data at a scientific session or in a publication to be determined. It's an important study. It is the study that we feel will be the basis for having a three times weekly dose.

for vetidustad and our label and obviously with the in dialysis patients, right? So even with a negative outcome in the US, we have a positive outcome in Europe and having that ability for dialysis providers to deliver the drug when the patient's on dialysis is just another option for them that can be very helpful and ensure compliance for for their patients and so

And just one more, I think you talked about this to some degree, but I am sorry to kind of come back to it, but just maybe a little bit more formally, what would a label look like in the EU for Vata Do Stat or VASEO as we're moving forward? Just any kind of broad characterization you can do, you can provide for the potential authorization may would be helpful. Thanks.

So obviously, you know, until we have that marketing authorization, you know, we don't want to kind of get ahead of that. But you obviously are talking about a label as you go through the CHMP and, you know, we're very pleased from, you know, kind of kind of, at least I'm looking at it with a commercial eye. And, you know, I think it's a, it's a label that that we absolutely can work with. There's nothing that's, you know, outside of what I would expect.

in there and obviously focused on dialysis patients alone. But when I look at the concerns expressed by the FDA, those are all handled in a very appropriate way in.

in the SMPC, so the anticipated SMPC. So we'll see, you know, the final when we have it, but you know, I have no concerns from a commercial perspective based on what I've seen so far. Terrific, and just one more. Along those lines, how would you characterize the status of interactions for folks with additional commercial parties in the EU?

You said pretty clearly that obviously nothing's going to happen until formal authorization, but just love to get a sense of the temperament out there. Thanks. Yeah, no, it's a very active process. Getting clarity that it's dialysis versus dialysis and non-dialysis obviously was important to the process. Having the CHMP positive opinion is very value creating for us and having an authorization creates more value for us ultimately as you get to...

you know, to a deal and, you know, creating, you know, we have an active process with multiple parties who are interested and, you know, seeing that process through and maintaining multiple parties usually yields the best outcome for us and for the product and, you know, it.

If that takes a little bit more time, that's time that's usually very, very well spent. So, you know, we're very pleased with how this process is moving forward. Thanks for all that. Congrats on the progress. Looking forward to more. Thank you. Thanks for. I'm showing no further questions at this time. I will now send a call back over to Mr. John bottle for any closing room.

revenue growth for Erixia and expected to deliver net product revenue of $175 to $180 million.

We received a positive opinion from the CHMP for Vata-Doostat and anticipate marketing authorization in a couple of months. We expect a regulatory decision for the access consortium countries.

We anticipate engaging a partner to commercialize Radadustad in Europe . We expect a decision on the FDR process with the FDA. We anticipate that UT Health will initiate an ARDS study with Radadustad in a broader patient population.

And we look forward to talking much more about our pipeline development for Veta-Doostat and other novel his-PHI compounds as the year progresses. So it will be a very, very busy year for us, I think an exciting year for Aqibia, and we look forward to updating you further on it. Thanks again for joining us. Have a great day.