Q1 2023 Akebia Therapeutics Inc. Earnings Call
Yeah.
Good day and thank you for standing by welcome to the <unk> first quarter 2023 financial results Conference call. At this time, all participants are in a listen only mode.
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Please be advised that today's conference is being recorded and I would now like to hand, the conference over to your speaker today, Ms. Mercedes Carrasco Senior director of Investor and corporate Communications is correct, though please go ahead.
Thank you and welcome to <unk> first quarter 2023 financial results and business update conference call. Please note that our press release was issued earlier today Monday may eight detailing our first quarter financial results and that release is available in the investors section of our website.
For your convenience a replay of today's call will be available on our website. After we conclude joining me for today's call. We have John Butler, Chief Executive Officer, and Dave Spellman, <unk> Chief Financial Officer.
Like to remind everyone that the call includes forward looking statements. Each forward looking statement on this call is subject to risks and uncertainties that could cause actual results to differ materially from those described in these statements additional information describing these risks is included in the financial results press release that we issued.
On may eight 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.
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.
That I'd like to introduce our CEO John Butler.
Thanks, Mercedes and thank you all for joining us.
I want to begin today by recognizing an exciting milestone that's been years in the making.
Last month, the European Commission granted marketing authorization for <unk> about a new staff are proving the product as a treatment for symptomatic anemia associated with chronic kidney disease in adult patients on dialysis.
The headline here is it batteries that is now approved in 32 countries.
We're extremely proud of this accomplishment and are eager to bring back to market in Europe and beyond delivering an additional oral therapeutic option to patients on dialysis with anemia.
To that end I'll note that our priority in Europe is to quickly complete a partnership with a company that truly understands the complexity of the dialysis market across Europe , and who will make that a priority for the more than 325000 dialysis patients across Europe , who are currently treated for anemia due to <unk>.
Yeah.
We're running a very active process and we look forward to announcing our partner then collaborating with them to support a launch of a sale in Europe late this year.
Again, the approval was an important catalyst for TBS and it would not have been possible without our dedicated team.
If you recall, we assumed responsibility for the marketing authorization application last summer and we work to remain on track for approval.
I'm proud of the team's demonstrated commitment to patients and to our key beer.
I'm also grateful for the patients physicians investigators and site coordinators, who participated in our clinical trials that led to the approval.
In the U S. Our work towards the potential approval for <unk> that continues as we remain engaged with the office of new drugs are OMD on our appeal to Nevada do stack complete response letter or CRM.
Last quarter, we met with Dr. Peter Stein director of the office of new drugs and the deciding authority on our appeal.
Since that time, Dr. Stein indicated he has completed his internal discussions with experts within the R&D and we anticipate a response within the next 30 days.
We continue to believe in the potential benefits that <unk> can deliver as a treatment for anemia due to chronic kidney disease and we believe in the overall market opportunity for that indication.
In fact last month, we announced positive topline results from focus and alternate dosing study evaluating the efficacy and safety of <unk> in hemodialysis patients who were converted from a long acting risk polices stimulating agent or Esa to three times weekly oral value stack dosing for the maintenance.
<unk> of anemia.
The data demonstrated that <unk> met the primary and secondary efficacy endpoints and was non inferior to an Esa in the treatment of anemia due to chronic kidney disease in patients on hemodialysis when used three times a week at the time of dialysis and with a comparable safety profile to the current standard of care.
We believe that the positive top line results are important because if <unk> is approved for this dosing schedule of three times weekly dosing schedule aligns with in center hemodialysis visits ensuring patient compliance.
Again, I want to extend our sincere appreciation to everyone involved in this study.
It was a significant undertaking and we are very pleased with the results.
Youll recall, we're also working with UT health evaluating that and use that as a treatment for acute respiratory distress syndrome or <unk>.
Since our last update I'll confirm that we continue to work with UT health to design and initiate an adequate well controlled study in abroad, <unk> patient population and we expect to enroll patients this year.
Our strategic business decisions and our team's adherence to our strategic focus has enabled us to live up to our purpose to better the lives of people impacted by kidney disease.
We know there are many potential catalysts ahead in the near term and we look forward to reporting on them as we continue to execute against our strategic plan.
With that I'll ask Dave to talk more about our quarterly financials.
Thank you John and good morning, everyone.
Like to begin by addressing the Auryxia revenue. It is important to note that we are affirming our annual net product revenue guidance of $175 million to $180 million, while last quarter. We noted a significant increase in channel inventory. This quarter. There was a significant move against us with a large reduction in auryxia rep inventory at our selling partners.
To the tune of approximately $5 million.
Auryxia net product revenue in the first quarter of 2023 was $34 8 million.
Compared to $41 4 million in the first quarter of 2022, a 15, 9% decrease.
We anticipate that with current contracted dynamics quarterly performance will be a little bit bumpy.
We're realizing a higher net price per tablet approximately 80% higher than three years ago. As a result changes in inventories in the channel are now much more apparent.
Cost of goods sold decreased versus the same period in 2022, we are now what I would call at our normal cost of goods for Auryxia, which will include the $9 million quarterly noncash auryxia intangible asset amortization costs through Q4 of 2024.
Next I'll review operating expenses, an area I believe that our team has performed extremely well.
In the first quarter of 2023, we realized a nearly 50% reduction in operating expense versus the first quarter of 2022.
Nearly 30% reduction from the fourth quarter of 2022.
Our team has been diligent in its efforts to manage spend and sustain a reduction in operating costs rather than diving into the comparisons I believe it will be valuable to remind folks of the actions we have taken over the last 12 months.
While working diligently to further reduce our overhead some of those actions and accomplishments included reducing our head count by more than 55% from Q1 of 2022.
Or do you see an external spend on several support functions occupying less office space.
Winding down of historical clinical programs.
The reduction of contractors and consultants.
A reduction of our supply chain commitments to better reflect our current needs.
As well as other important activities.
While still having several value creation activities ongoing supporting our third strategic pillar.
As for cash with our continued execution of our plan our cash for our cash and Auryxia revenues will allow us to fund our business for at least the next 12 months, we ended the quarter with approximately $57 million in cash on hand, our debt position has been reduced to $51 million.
A 24% reduction from the end of the year, we have significantly reduced our current liabilities.
I also also wanted to address our stock price and NASDAQ listing as.
As many know we have been out of compliance with nasdaq's minimum bid price rules for over a year in an effort to regain compliance earlier. This year, we filed proxy materials proposing amendments to our charter, including a proposal to effect a reverse stock split of our outstanding common stock.
The primary purpose for affecting the reverse stock split was to increase the per share trading price of our common stock so as to regain compliance with the minimum bid price rule and maintain the listing of our common stock on NASDAQ. Unfortunately, the proposal did not pass and we anticipate that we will receive a day.
And notice imminently.
While we plan to appeal the delisting NASDAQ is under no obligation to accept the appeal and there can be no assurance that the appeal will be successful.
Our NASDAQ rules, the only way to maintain our listing upon completion of the appeal process.
Is the trade over $1.
Either organically or through a reverse split for no less than 10 consecutive business days as such if our stock does not organically regain compliance during the appeal process.
We currently plan to file a new proxy statement seeking approval of a reverse stock split.
We appreciate that the majority of our voting shareholders supported the reverse stock split proposals at the special meeting and find value in maintaining the NASDAQ listing.
In the meantime, we continue to operate our business as usual and recognize the value that could come from potential near term catalysts. We are extremely proud of our business progress over the last year since we establish our new strategic pillars I would like to close with a recognition of all the <unk>, who have got us here with that we'll open.
The line for questions operator.
Thank you.
As a reminder to ask a question. Please press star one on your phone and wait for your name to be announced to withdraw. Your question. Please press star one again standby as we compile the Q&A roster.
One moment please for our first question.
Our first question will come from Allison Pretzel of Piper Sandler Your line is open.
Hi, Thanks, good morning, and thanks for taking my questions.
So first just on the VAT as that.
Dr process could you just help us understand the communication <unk> had with FDA on that process.
At least to the extent that you can and just clarify.
When did that 30 day clock starts or just what gives you confidence you'll you'll get an answer from Dr. Stein within 30 days and I have a couple of follow ups.
Okay. Thanks Ali.
So we've been in regular contact and we mentioned that we had a formal type a meeting with Dr. Stein.
Last quarter.
And theres been regular communication.
With the project manager as there normally is during a.
And FDA review.
And.
Yes.
So we expect to.
To have an answer from Dr. Simon within 30 days.
But recall that it's also possible that he'll ask more questions right and extended another 30 days I don't think that's where it's going to go but.
We don't really have insight into what that next communication will will.
We will say, so where while we believe that.
He has the information he needs to make a decision and of course, we feel strongly about where that decision should go.
We don't really have any insight into.
And to what that communication is going to be so we're looking forward to seeing that in and of course I am.
Sure there'll be ongoing communication over the next 30 days as well just regular course of business.
Got it.
And then on just on the EU partnership.
Can you just help us understand what kind of partnerships could be on the table there and just how those discussions have progressed now that you have.
Move on hand in Europe and.
Any kind of.
Clarity or visibility on timing there for a partnership that would be helpful. Thanks.
Sure Ali is a very active process.
Now obviously.
We've been saying all along having the CH MP vote was important but having the approval in hand, and knowing exactly what's in the label et cetera.
Really has accelerated that.
It is.
Hi.
I guess at the end of the day, you can expect a pretty typical.
<unk> transaction would be my guess at this point.
I think the important thing is the indication is in dialysis and dialysis.
Is a complicated market and so finding a partner who really understands that that market opportunity.
And again I mean, it's a European approval, but every one of those European markets is different.
In dialysis is different within each one so that that expertise is really important and we are waiting that heavily as we as we between.
The options that we think we have for our partnership so again, it's a kind of thing we want to move quickly because we want to.
Launched a product as quickly as possible and we are anticipating that before the end of the year, but we want to be very deliberate and pick the right person who is going to maximize the value in the long term.
Got it that's helpful. And then just last one from me just on the focus trial data can you can you kind of walk us through the importance of that three times weekly.
Did you start dosing and maybe what venue we could expect to see full data presented or published that just seems you'd want to get that data out to docs.
Pretty quickly.
<unk>.
Yes, that's exactly right I mean as as you know in dialysis has delivered three times a week.
<unk> dialysis in center.
That home dialysis is going to be an important market for <unk> that we've talked about that from the beginning on the once a day oral oral dosing for <unk>.
It was quite important there.
Yes.
But hemodialysis is still the dominant way of delivering dialysis, both here and in Europe .
And having the option for dialysis providers too.
Basically.
Give the patient.
Their pills, while they are on dialysis, just simplifies things for forever for the dialysis providers and for the patients to ensuring their compliance.
And particularly in the U S. When you think about <unk> and the fact that the dialysis providers are our buying.
<unk> will be by finding about do setup.
If we're approved.
They want to ensure that the drug is being taken by the patient.
So we think that is three times weekly dosing is quite important and then as you referenced we want to try to have that that data would be available as quickly as possible. So I know there is a.
A manuscript that's being worked on.
And of course that.
The meeting you generally will.
Present data that would be the ASN meeting so.
We certainly don't know.
Whether that data will be presented there yet but that would be my expectation.
Okay got it thank you.
Thanks Ali.
Thank you.
One moment please for our next question.
Our next question will come from Ed Arce of H C. Wainwright Your line is open.
Hi, Good morning, everyone. This comment.
Okay, a couple questions for Ed.
Eric first question regarding the <unk>.
A process that you alluded to.
Sponsored spectrum within very base.
And wondering what you consider keeping the best and worst case scenarios.
Would you be open to other around with that.
Sure.
So.
Thomas Thanks for the question. So we've kind of described in the past.
What the potential outcomes are for the.
For the process I think those those very much hold.
Sure.
The.
I suppose the worst case scenario is that our appeal is denied or referred back to the division.
That would be.
Again.
<unk> wouldn't be a path forward for <unk> in the U S with that outcome. Obviously, that's not the one we are hoping for.
Clearest outcome.
Positive outcome, then is that the appeal is granted remember this isn't an approval.
It's an appeal process. So if the appeal is granted then we re file the NDA and the division has either two or six months, depending on whether they make it a type one or two submission.
To review the product again, and then that leads to the approval.
With an approved.
Granted appeal I mean, your likelihood of success is extraordinarily high.
The other the third option.
Would be an appeal that's denied but an identified path forward.
From our perspective that is almost as good as a.
An appeal granted.
FDA is giving you Dr. Stein is giving you a clear path forward.
For approval and we've talked before maybe Thats holding an AD com and then we think that's probably unlikely maybe it's it's.
Some other.
LC puts forward as.
Yes.
Something that allows you to get an approval something short of.
More clinical data right. So it is something and analysis do you have a rems program something else that he says.
This will give you a path to approval and that's a very common.
Outcome as we've learned from these FTR processes.
Alright. Thank.
Thank you so much for Atlanta all of those areas.
Perhaps.
A question from us.
Switching gears to Rex here.
You mentioned in the press release are beyond the law so.
<unk> anticipated March 2023.
What are some possibilities.
To take that.
<unk> okay.
Thank you.
Yes, no. It's a great question. Thank you so <unk>.
Right now the expectation and dialysis remember where Richie as uses us.
Is to treat hypophosphate EMEA in dialysis patients.
Right now CMS is expecting to add <unk>.
Refiners, all oral products that orange part of the bundle already to the bundle as of January one of 2025 and.
What they've said in their last rule is that theyre going to have a TDAP a period for these oral products because right now they don't have the data to know what to add to the bundled payment. So if you use the <unk> as an example, the <unk>.
<unk> product they went through their TDAP a period a few years ago.
You go from being a part D drug to a part b drug.
CMS collect all of the data on utilization of the product and then at the end of the TDAP a period they make a determination for the dollars per dialysis session that there'll be adding to that bundled payment.
And so that's what we expect them to do looking at the different binder is the utilization of each so for.
When you think about this from a dialysis providers perspective, theres great incentive to.
Treat patients very effectively.
We really focus on the treatment of Hypophosphate, EMEA and <unk> and.
And frankly focus on the use of branded products within that in order to maximize the value of that.
Of that payment that's added because once that's added it doesn't change.
CMS doesn't feel they have the.
The ability to go back and look at that payment again so.
For those two years and Thats the TDAP a period that's been defined by CMS at this point in time, So 2025 and 2026, there is a real motivation for them to work.
To utilize products like Auryxia and utilize the branded products. So we will have to contract directly with the dialysis providers.
And work with them on their protocols et cetera.
So that they are utilizing the product. So it's unlike a situation where you simply lose exclusivity in generics come in.
To dominate the market.
We think that there's more opportunity there now even if we get to a situation, where we didnt have TDAP that given the nature of these phosphate binders. If you look at Sevelamer Rina gel run Bela as an example.
Even though they lost their patents.
The dynamics that generic dynamics of the amount of product that has to be delivered to a patient is such that there wasn't really significant interested from from generic manufacturers to bring the product to market. So they had a very very long tail.
On Sevelamer and if we see something like that either through <unk> or through kind of the normal course.
Very significant revenues still it will be a declining revenue stream to be clear, but one that will need very little sales and marketing investments so significant.
<unk> 84 for positive cash flow for the company.
Okay.
Understood that makes sense.
Thank you Eric asked what the general questions.
We're looking forward to.
Our response.
Thanks Tommy.
Thank you.
Okay.
This will end the Q&A portion of the conference I would now like to turn the conference back to John Butler for closing remarks.
Thanks, Chris.
Thank you all again for joining us this morning.
It's hard not to reflect on the progress we've made over the past year since receiving the CRM.
And we've negotiated an exit with otsuka, they brought $55 million in cash and secured significant global rights. We've continued to drive auryxia, allowing us to run the company on Auryxia revenue plus our cash on hand, we've completely changed the cost structure of the company that we've worked through the FTR process with the FDA and most importantly today.
We took over the European filing and led <unk> to be approved in Europe .
We have what may be even more important milestones ahead in the next months and I really look forward to discussing those with you in the near future.
Thanks, everyone have a great week.
This concludes today's conference call. Thank you all for participating you may now disconnect and have a pleasant day.
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