Good day and thank you for standing by. Welcome to the Akebia's Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mercedes Carrasco, Senior Director of Corporate Communications. Please go ahead.

Thank you. Thank you, and welcome to Akebia's third quarter 2022 financial results and business updates conference call. Please note that a press release was issued earlier today, Thursday, November 3, detailing our third quarter financial results and that release is available on the Investors section of our website. For your convenience, a replay of today's call will also be available on our website after we conclude. Joining me for today's call, we have John Butler, Chief Executive Officer; and Dave Spellman, Chief Financial Officer. 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. Additional, information describing these risks is included in the financial results press release that we issued on November 3, 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 law, we do not undertake any obligation to update or revise these statements. With that, I'd like to introduce our CEO, John Butler.

Thanks, Mercedes, and thank you all for joining us this afternoon. Since our last update, our team has been laser focused on work that aligns to Akebia's three strategic pillars. First, we're working to drive Auryxia revenue, while managing costs. And this quarter, we are pleased to again report an increase in net revenue for Auryxia over the third quarter of 2021. Second, we continue to support vadadustat globally. I'll provide more color on the regulatory review processes for vadadustat as a treatment for anemia due to CKD. Our third pillar is to thoughtfully invest in our pipeline. I'm pleased with the progress we've made with respect to our pipeline, particularly as it pertains to our work in the area of HIF based science. But today, I'll just say a few words about our next steps in continuing to explore vadadustat as a treatment for acute respiratory distress syndrome. We recognize that we won't have the opportunity to invest in that pipeline and build that long term value unless we continue to drive financial stability today. Now Dave will share more specific details about the financial results, but there are two important headlines in Q3. First, as I previously noted, we continue to see a year-over-year increase in Auryxia net product revenue, which is driven by an increase in net price per pill. Second, our team has and is continuing to work to bring down operating costs. We reported a decrease in operating expenses compared to Q2 '22, as well as versus the prior year quarter. Driving Auryxia revenue and managing expenses positions Akebia to make strategic decisions about our future. As we think about potential catalysts to add value, our most immediate is clearly vadadustat. As we reported last quarter, we regained the rights to vadadustat from Otsuka in…

Thank you, John, and good afternoon, everyone. Our cash management objectives remain clear, manage the company with existing cash resources and ongoing cash from operations. We've continued a concerted effort to maximize net product revenue, reduce operating expenses and strengthen our balance sheet. Before I dive into the financials, I wanted to address our NASDAQ listing status. While John mentioned that we continue to identify ways to add long term value, we are working through various options to manage our NASDAQ listing. We've applied to transfer the list of our common stock to the NASDAQ capital market and as usual, we will provide material updates when available. Beginning with Auryxia net product revenue, we reported $42.2 million in the third quarter of 2022 compared to $36.8 million in the third quarter of 2021, a 14.9% increase. Total revenue was $49 million in the third quarter of 2022 compared to $48.8 million in the third quarter of 2021. Our commercial payer strategy continues to deliver top line Auryxia growth. While year on year net product revenue is up, we did report a 3.3% decrease in net product revenue from the second quarter of 2022, driven by lower inventories at our distribution partners, as well as a continued contraction in the binder market. To expand on that point, I'll note that the phosphate binder market has declined 15% since the start of COVID, including nearly 6% from Q3 2021 to Q3 of 2022. Further, you likely have heard from the earnings calls of the country's biggest dialysis providers that the overall dialysis market is challenging right now, with the COVID impact and staffing challenges having real impact on their operations. COVID is still a very real challenge to everyone in the dialysis community. We have factored this into our long term forecast…

Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Our first question comes from the line of Allison Braxton from PSV -- excuse me, from PSV. Forgive me. Your line is open.

Hi, guys. Good afternoon. Thanks for the update and for taking my questions. So the first is on the Auryxia business. Now that you're through the restructuring, can you just help us understand the levers and also the timing for reaching cash flow positivity for that asset? And just kind of remind us what gives you confidence that it will have a significant post LOE revenue tail? And kind of related to that, how do you see the commercial opportunity evolving if binders are added to the bundle? And then I have a follow-up on vadadustat.

Great. Okay. Ali, thanks so much for the questions. So Auryxia, again, Dave kind of mentioned it. The thing that's really been surprising has been -- the binder market hasn't rebounded. And you look -- you listen to the big dialysis providers calls and I've been kind of waiting for -- we're all out of COVID, right? And we're just not in the dialysis population. If you look at [US ARDS] (ph) data and you see this unbelievable 40% mortality rate for dialysis patients. And so, the dialysis community is still dealing with COVID on a regular basis. So that's the wildcard here. I mean, since 1991 or whenever I've been in the business the binder market has grown every quarter. So we've got that as a backdrop and we're not sure when it comes back. But as Dave referenced, the key driver for us even with that backdrop is that, we have been able to adjust our contracting strategy moving forward and that's allowed us to even in a more flat sort of volume market has allowed us to continue to see growth and we think that will allow us to continue to see growth through LOE. And so, we're not -- as we think about growing the product, we're not -- we're being more cautious about what you can do from a volume perspective just because we don't really know when the market is going to rebound. Yet we still can drive revenue increases because of the strategy that we've put in place. So that certainly gives us confidence. The post LOE, we really believe that there's an opportunity beyond exclusivity, just using Sevelamer as kind of the perfect comp where there was a loss of exclusivity, but for a number of years post because of the kinds of volumes that generic manufacturers have to produce in the market, there's an opportunity for continued volume growth. Now it will be a declining revenue, but the way you think of it, people always talk about revenue clips after LOE and we said this is more of a revenue slope, declining slope over time. Now the other wildcard you referenced is the adding of the binders to the bundle. CMS put out a final rule again confirming that there will be a TDAPA period of at least two years for the binders going into the bundle. So that would start in January of ‘25, and recall LOE is March of ‘25. So you have the opportunity to contract directly and more volume we have patients who are on free goods now. They all would be part of paying patients. So there are a number of opportunities, still clearly seeing how that's going to play out over the next couple of years. But we think it's a significant opportunity for us beyond just loss of exclusivity. I think that was -- that covered. Was there anything else in there? I think I got them all.

I think as Ali said, she was talking about our ability to drive cash flow from Alexia. I think it really, Ali, is just continued operating expense discipline and really focused on what can actually continue to drive the revenue. And again, as John said, the contracting strategy is a big part of it and from an investment perspective, that's more an allocation of the managed markets team time. And so, as we focus the spend we're aware of where we are in the lifecycle, so the spend has reduced over the last couple of years.

And we'll continue to do so.

Excellent. Thanks. And then just my second question is on vadadustat. I guess now that you have the FDA meeting minutes in hand and have submitted the dispute resolution request. It does seem to have a very narrow focus based on what you described today. Could you kind of expand on what gives you confidence that this process could lead to a US approval in a dialysis population. I guess, are there any examples of drugs that have had a successful FDRR outcome that you look to as an analog for that? And then, could you also just walk us through the cadence of updates or milestones that we can expect from the appeal process through the end of the year and then after you receive the response from the agency at year end? Like what comes next? Thanks.

Yes, thanks for the question. I have to say this is the first time I'm going through a formal dispute resolution myself, so I'm learning as we go as well. But we have great support from folks who's been through it many times before. And I think each dispute is unique and that kind of the things that you're dealing with are very specific to the CRL and that's where we're focused. We said from the beginning that the dialysis data we think clearly demonstrates that the product can be used safely. I think the concerns that have been expressed in the CRL can be labeled around and we think being able to have that conversation in this process will be helpful. As I said, when you have the end of review conference that help narrow the focus for the formal dispute resolution as well and now it's really focused on those two issues I mentioned, thromboembolic events driven by dialysis access, thrombosis and the potential for DILI, drug induced liver injury. So it's a very, very focused FDRR. And again, we feel strongly about the data. And so we certainly won't predict where the FDA will come down, but we're looking forward to going through the process. As we said during the NDA process, we don't kind of -- we have constant contact with the agency. So we don't give kind of play by play. So I think you'll hear when we have a formal response from the agency, which again, based on the timing should be by the end of the year, of course, it's the holidays, so that might leak from a calendar perspective into the first bit of January, but formally we expect to hear by the end of the year.

Got it. Thank you.

Thanks Ali.

Thanks Ali.

Thank you. Our next question is from the line of Ed Arce from HCW. Your line is open.

Hello, everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for the kind of questions. Perhaps first question just following up on the FDRR process. You mentioned in the press release that a response is expected by year end 2022. Can you clarify what type of response should we expect? Would it be a written response or would the future meeting be scheduled at that time?

Yes, we do expect it to be a formal written response, not that there won't be lots of or potentially lots of other less formal communication during the process, I think. But once we get a written response like you get a CRL, you get a response to that formal dispute resolution document. So that's what we expect by the year end.

Got it. Thank you. And perhaps sticking to vadadustat and ARDS, we saw some benefit in [indiscernible] study. What are your initial thoughts on the next study, specifically the primary endpoint or other key endpoints? And also, will this program going forward be partnered with UT Health?

So we are still working on what the endpoints of the next study will be. I think that the endpoints -- the scale that was used in the COVID-19 [indiscernible] study was a very solid endpoint and may well be what we use going forward, but that's still under discussion. I think what's important is that it will be in a broader ARDS population. The COVID population we had in the study that UT performed and they performed a great study, they executed a great study for us. It was in a younger patient population, elastic patient population. When you look at the broader ARDS population driven more by things like pneumonia and sepsis, you see this much higher mortality rate and we really think that in that scale you potentially can see that treatment effect come through. So to be determined, we're still working on that, but that's where we think it'll probably go in that direction. So we're looking at performing the study with UT Health, that's not been formally decided either. They did such a great job in the first study, but I wouldn't say the product is partnered with UT Health, but we certainly would look forward to working with them on this next trial.

Okay. Thank you so much for the clarification. And thank you again for taking the questions. Looking forward to updates on the FDRR.

Thanks, Thomas.

Thank you. I would now like to turn it back to John for closing remarks.

Thanks, Chris, and thank you all again for joining us this afternoon. As I said in the past, a lot has changed for Akebia since April, but I believe we've been thoughtful and deliberate in our efforts to stabilize from a financial standpoint and in our work to plan for the future of Akebia. As we near the close of 2022, we anticipate that we'll have more clarity on regulatory processes and other initiatives that could enable us to potentially add long term value to the company. We look forward to providing updates as we can. Thanks everyone.

Thank you for participation in today's conference. This does conclude the program. You may now disconnect.