Good day and thank you for standing by. Welcome to the Akebia Therapeutics' Third Quarter 2023 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. And I would now like to hand the conference over to your speaker today, Ms. Mercedes Carrasco. Please go ahead.

Thank you. Thank you and welcome to Akebia's third quarter 2023 financial results and business update conference call. Please note that a press release was issued earlier today, Wednesday, November 8th, 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 Ellen Snow, Chief Financial Officer. 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 8th 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 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. With that, I'd like to introduce our CEO, John Butler. John?

Thanks Mercedes. For those who have been following our story over the past couple of years and have witnessed all of our team's efforts, you know it gives me great pleasure to talk to you about Akebia's future today with an extremely important and hard fought catalyst in our sites. As we've reported, the FDA set a user fee goal date, or PDUFA date, of March 27th, 2024, for vadadustat, our oral HIF-PH inhibitor to treat anemia due to chronic kidney disease, or CKD, in patients on dialysis. That's less than five months away. Our team has been working diligently towards the US approval for vadadustat. We completed the formal dispute process and engaged with the FDA during an end of dispute Type A meeting. We then resubmitted to our NDA for vadadustat in September. Our resubmission included post-marketing safety data from tens of thousands of patients in Japan where vadadustat is approved and has been on the market for more than three years. Based on the new data and the resubmission, the FDA assigned a six-month review cycle in line with our prior expectations. Today, they are actively engaged in the review. I just returned from the American Society of Nephrology Kidney Week last week. I was excited to see how much innovation is happening for patients with kidney disease, including multiple products introduced since the meeting last year. I had the pleasure of having many conversations with key medical experts, and I can say unequivocally that these physicians are very excited about the role vadadustat and HIF can play in the treatment of patients with CKD. They were very happy to share thoughts on where the greatest patient need exists as well as areas for future research. For our part, we're confident in our path forward and continue…

Good morning everyone. Our priority continues to be focused on strengthening our balance sheet as we enter a potential launch year, marched this quarter by a favorable loan amendment, which strengthened our cash position for 2024. The Pharmakon loan amendment extends the maturity date of our loan to March of 2025 from November 2024 and defers Akebia's quarterly principal payments until October 31st, 2024, at which time the company will begin making monthly principal payments through the date of maturity. The favorable modification to payment terms enables us to strategically invest in the vadadustat launch activities, while also continuing to maximize Auryxia revenue for the remainder of the year and into 2024. Our cash and cash equivalents and restricted cash as of September 30th, 2023, totaled $48.2 million, which with cash from operations, we expect to fund planned operations for at least the next 12 months. Contributing to our cash position, total revenues were $42 million for the third quarter of 2023. Net product revenues from sale of Auryxia were $40.1 million for the third quarter of 2023 compared to $42 million for the third quarter of 2022. The decrease is primarily due to a reduction in volume and the impact of shifting payer mix partially caused by contracting dynamics and a decline in the phosphate binder market. The decline was partially offset by price increases in January of 2023 and July of 2023. While our quarterly revenue was down from last quarter and compared to the third quarter of 2022, this is a similar trend to what we saw last year, and we'll still expect strong fourth quarter. And thus, as John mentioned, we believe Auryxia's net product revenue will be around $170 million for the full 2023. We are committed to both maximizing our current business opportunities and…

Thank you. [Operator Instructions] Our first question will come from Allison Bratzel of Piper Sandler. Your line is open. Pardon me, Allison Bratzel, your line is open. You may ask your question. [Operator Instructions]

Chris, why don't we move to the next question? We'll come back to Ally.

Thank you. The next question will come from Julian Harrison of BTIG. Your line is open.

Hi congrats on the recent progress and thank you for taking my question. First, both vadadustat and daprodustat have been on the market in Japan for several years now. So, I guess I'm curious if there's anything from the experience there that informs you about how the two drugs should coexist in the US going forward? And then it sounds like the cross-selling opportunity between Auryxia and potential of vadadustat prescribers is likely significant. So, I was just wondering if you could talk more about how you plan to leverage that?

Julian, thanks for your questions. So, we often get asked about the experience in Japan and what there is to learn. And it's tough to really point to much because it's such a different market. For one thing, of course, the product is available for dialysis patients and non-dialysis patients. For another there are, I think, it's five HIF-PHIs that are available on the market in Japan. So, you have a very different commercial dynamic there as well. But what we have seen is kind of steady adoption of the HIF-PHIs into the market. So, as we would expect to see with a new class, it's taken some time for it to kind of move into normal use. But I think we're seeing that become more and more common now across Japan. Of course, when there's five companies promoting the product, you do have a lot more kind of share of voice across that class. But it's just -- again, as we said, we've always wanted the non-dialysis market opportunity as well, right? And that is where you're seeing more of the use and more of the focus from all of the companies, but you're seeing dialysis adoption as well. And then your second question was about the overlap. And -- this is you can go back to 2018 when we closed the transaction with Keryx and created a commercial company in Akebia, it was with the express desire to pick up that leverage, right? The idea that we have this commercial organization in place that's already calling on nephrologists in dialysis centers has deep relationships with them. Of course, we didn't hope for this two-year delay on when we'd be able to take advantage of that leverage. But we think gets extraordinarily important. We have a very experienced sales organization. As I said, I think we'll need to incrementally increase that group. But we'll do that quickly, and Auryxia will benefit from that as much as vadadustat will. But when you look at any of your presence at ASN or any other kind of marketing opportunity, you basically get the leverage of having two products in the market. And I think it's important also, and I kind of referenced this in my prepared remarks that when vadadustat is approved, assuming vadadustat is approved, physicians will be very interested in talking to reps about that new product. Remember, it is an eight or nine-year-old product, it's not quite as easy to get access to physicians. With that access, they obviously have the opportunity to talk about Auryxia as well. And in my past, I've seen significant organic growth from the more mature product when you have the opportunity to improve your access to the people who write the prescriptions, and I think that will be an important point of leverage.

Excellent. Thanks very much.

Thank you, Julian.

Thank you. [Operator Instructions] Our next question will come from Ed Arce of H.C. Wainwright & Co. Your line is open.

Hi John and Melanie. Thanks for taking my question. And sorry I missed past weekend in Philadelphia. Three questions for me. Firstly, on the launch. Just wanted to ask, prior to the TDAPA, which you expect in October of next year, what kind of activities will you be focused on those first six months as you prepare for meaningful sales ramp? And then once you do get the TDAPA, could you just review again the sort of perspective from the dialysis centers on the financial incentives that would be in place once TDAPA is designated. Secondly, I wanted to ask about pricing, especially relative to GSK and what your thoughts there, if you can share anything? And then lastly, I just wanted to ask again about the addressable market. I think you said in your prepared remarks, it was 550,000 or 575,000, and there's a small percentage that do not take any medications for anemia. So, I just wanted to tie that down a little better. Thanks again.

Sure, Ed. Thank you for the question. Sorry, I missed you last week, and I hope you enjoyed the meeting as much as I did. So just the last one first. So, there's about 550,000 dialysis patients. And about 90%, 88% are on an ESA today. So there's always that small percentage of patients who aren't -- don't need to be treated very late stage or early and their hemoglobins are still some start dialysis with a little bit of residual kidney function, so they don't necessarily need to start an ESA right away. So -- but that's still about 0.5 million patients that are eligible. We used to be able to say that the market was growing by 2% to 5% a year religiously for the last 30 years that I've been in, it, but of course, COVID has changed that, really throwing on its head. You've seen that with the phosphate binder market that it hasn't quite started to recover, it's starting to, but not quite there. So, your question is about launch. So, prior to TDAPA, it's actually -- I mean it's frustrating, obviously, to have to wait six months for CMS to provide that that TDAPA designation, and you'll see that come in, I think it's around July. If everything goes on the timeline, we would get the HIF-PHIs code, and so you'd be marching down that. But the dialysis providers really need that time also to prepare for introducing a new product into their protocols, et cetera. So there is -- there'll be things going on in a number of different ways. Obviously, they'll be contracting that's happening with the dialysis providers They'll be -- our commercial organization will be able to talk about the product. It will be an approved product. We're going to…

Great. Thanks John. That’s very helpful.

Thank you, Ed. We able to get Ally back Chris?

Yes. [Operator Instructions] And again, we have Allison Bratzel of Piper Sandler. Your line is open.

Looks like we have luckily multiple ways of communicating these things. So, Ally e-mailed Mercedes her questions. Mercedes will play Ally today.

I'll jump in. Thank you very much, Chris. And all right, let's start with current cash burn and runway guidance. Ellen, can you talk through the runway -- the cash runway guidance, especially with the loan agreement and how that might change things?

Yes. Thank you. We don't provide OpEx guidance. But that said, Auryxia continues to contribute meaningful cash to fund operations, and we have a disciplined approach to spending and continue to streamline and become more efficient in our operations. We're extremely happy with where we landed on our Pharmacon amendment and giving us the opportunity to invest incrementally costs to support the vadadustat launch, and we believe we have sufficient cash to fund operations well through 2024.

Thank you, Ellen. And then just to build on the question on potential pricing for vadadustat. How might you be thinking about pricing once the TDAPA period ends?

That's an important question. So, as we talked about TDAPA, you've got kind of that two-year window where you're outside of the dialysis bundle. When TDAP ends in the final rule that came out just a couple of weeks ago, basically the way CMS has looked at it as they look at the overall utilization of a product that was part of TDAPA and then they basically take those dollars and spread it over all of the dialysis sessions that are provided. So, for a product that has very limited use in a very small number of patients, that's really challenging, right? It doesn't really provide the dialysis providers the cash, if they have one or two patients that are getting a drug. The great thing for vadadustat is, as we've talked about, dialysis -- anemia is treated in 90% of dialysis patients and there are significant dollars already in the bundle. So thinking about that pricing and that post-TDAPA policy is a little bit more straightforward. Now, I don't think that, that post TDAPA policy really encourages innovation long term. And one of the things being part of the kidney care partner, the lobby and coalition, this is a key area of focus for us and kind of creating a better way to incorporate innovation into treatment of these patients. So, we're going to continue to lobby on the hill and with CMS to have those dollars follow the patients, and that's a real opportunity for us. So, if we think about the environment today, though, whatever pricing you have during your TDAPA period, you are going to have to adapt that pricing to kind of what's in the bundle, moving forward. So, there will be, and we'll kind of see where our pricing strategy lands, but I do expect that the contracting price will have to become more aggressive post-TDAPA without a change in that post TDAPA policy. So, stay tuned as that progresses, but that's the way we're thinking about that.

Great. And on vadadustat, can you help us frame the base case expectation on the label, particularly any differences compared vadadustat and whether that will matter for uptake?

So, obviously, we haven't started labeling discussions with FDA yet. I mean they're early in their review. But we do think that there are significant differences between the compounds. We know that FDA does frequently have a desire to have class labeling, but there are certain areas that we really believe that the data doesn't support that. So, we've really tried to address that -- those particular areas as aggressively as we can and as clearly as we can, maybe it's a better word in our draft labeling to the FDA. But of course, we will obviously work with the agency to have the product approved, and there's a point where negotiation ends and you take what you get. But from a compound perspective, we really do think that these are very different products. And some of the areas, like the four months not using the product until patients been on for four months. If you look at the MACE data from INNO2VATE from incident patients and from the 1,000 patients protect who became dialysis patients during treatment there's no increase in MACE risk seen in that data. So, we've incorporated that into our resubmission. I feel very strongly about that, and that's the kind of conversation we're looking forward to having with the agency.

Thanks. And then finally, just on the Auryxia side once more, Ellen had provided good commentary on volume expectations for next year. Just curious if that factors in any impact from the availability of tenapanor? Or more broadly, how should we be thinking about the competitive set for Auryxia moving forward?

Yes. So, the way we think about tenapanor, honestly, as persons working in this space for 30 years as a patient advocate, it's exciting to see a product -- a new technology come in. What we know, Auryxia is a great product, [Indiscernible] is a great product. They don't manage patient's phosphorus levels to normal. And we know that there's a direct relationship between phosphorus and mortality in dialysis patients. And so managing patients more aggressively, if you will, to a lower phosphorus level is a benefit to patients. And with tenapanor, I think they can do that. And that's clearly where the label is written. It is an add-on therapy. So, I didn't mention that as one of the things that can help drive Auryxia sales. There will be more interest in phosphorus management with physicians because they have -- and the Ardelyx folks will be out there talking about tenapanor as well. And the idea that patients who have an average phosphorus of six can get to five or four and a half would be a fantastic thing for patient outcomes. And at the end of the day, more focus on phosphate binders, or phosphate control only helps Auryxia.

Thank you. I'm seeing no further questions in the queue. I would now like to turn the conference back to John Butler for closing remarks.

Thanks Chris and thanks, everyone, for your questions. We're now nearly through 2023, I just want to reiterate how well-positioned we believe Akebia is to close the year. Our team is committed to our strategic objectives. We're eager to bring vadadustat to patients in the US, if approved. And we work to ensure vadadustat is available globally through our commercial partnerships. We'll advance our pipeline and grow our revenue in the years ahead. We believe our efforts will help create sustained value for our shareholders while continue towards our purpose to better the lives of people impacted by kidney disease. Thanks everyone for joining us today. I look forward to updating you in the future.

This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.