Akebia Therapeutics - Earnings Call - Q2 2025

Executive Summary

• Strong quarter with broad-based growth: total revenues rose to $62.5M, up 43% YoY, driven by Vafseo U.S. launch and higher Auryxia sales; GAAP net income of $0.2M vs a loss of $(8.6)M last year.
• Material beat vs Wall Street: revenue beat consensus by ~$15.0M and EPS swung to a profit versus an expected loss; revenue actual $62.5M vs $47.2M est; EPS actual $0.027 vs $(0.016) est (S&P Global) — a clear upside surprise on both top and bottom line. Values retrieved from S&P Global.*
• Commercial momentum building: Vafseo net product revenue reached $13.3M with ~55% QoQ demand growth; >725 prescribers, >80% refills, and average refill dose up ~25%, indicating deepening utilization.
• Near-term catalysts: DaVita ordering for an operational pilot across 100+ clinics beginning August, expected to enable broad prescribing before year-end; protocols at DCI/IRC expected by September, expanding access to >75,000 patients by end of Q3.

What Went Well and What Went Wrong

What Went Well

• Broad beat vs estimates: revenue and EPS surpassed Street expectations with strong product momentum (see Estimates Context). Values retrieved from S&P Global.*
• Vafseo commercial traction: ~55% QoQ demand growth, >725 prescribers, >80% of scripts were refills, and average refill dose up ~25%, signaling retention and dose optimization.
• Expanding dialysis access and enterprise pilots: DCI and IRC protocols by September and DaVita operational pilot in Q3 across 100+ clinics — positioning for broader 2H adoption. CEO: “launch momentum builds… progress efforts to further expand patient access… expect… DaVita… operational pilot… lead to the opportunity for broad prescribing before year end”.

What Went Wrong

• Non-cash items offsetting profitability: $7.0M non-cash expense from change in warrant liability fair value and $5.4M non-cash interest expense tied to settlement royalty liability tempered operating upside.
• Higher R&D spend: R&D rose to $11.0M (from $7.6M) on increased clinical activities (VOCAL, VOICE, VALOR preparations), diluting near-term operating leverage.
• Continued safety and boxed warning communication burden: extensive Vafseo safety/boxed warnings maintained in materials, requiring ongoing prescriber education and monitoring.

Transcript

Speaker 6

Good day, and thank you for standing by. Welcome to the Akebia Therapeutics second quarter 2025 financial results. At this time, all participants are in a listener-only mode. After the speaker's presentation, we'll open up for questions. To ask a question during the session, you will need to press star one one on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's call is being recorded. I would now like to hand the conference over to your speaker, Mercedes Carrasco, Senior Director of Investor Relations. Please go ahead.

Speaker 2

Thank you, and welcome to the Akebia Therapeutics second quarter 2025 financial results and business updates conference call. Please note that a press release was issued earlier today, Thursday, August 7, detailing our second quarter 2025 financial results, and that release is available on the investor sections 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; Nicholas Grund, Chief Commercial Officer; and Erik Ostrowski, Chief Financial and Chief Business 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 August 7, as well as in the risk factors and management discussion and analysis section of our most recent annual and quarterly report filed with the SEC. With that, I'd like to introduce our CEO, John Butler.

Speaker 4

Thanks, Mercedes, and thanks to everyone for joining us this morning. Since Vafseo's vadadustat approval, and even prior, I've spoken about our goal to make Vafseo standard of care for patients with anemia due to chronic kidney disease. From my perspective, this endeavor has three parts. First, successfully launch Vafseo in dialysis during the TDAPA period. Second, continued growth in dialysis post-TDAPA, potentially supported by the data, creating additional areas of differentiation. Third, approval and launch of Vafseo to treat anemia of CKD in patients who are not on dialysis. That's the journey we're on, and I'm proud to report the progress we've made in each area during the second quarter and to date in Q3. I continue to be incredibly pleased with the progress of our launch. We generated over $13 million in Vafseo revenue in Q2, with approximately $12 million in demand sales, a 55% increase over Q1.

In Q2, US Renal Care continued to represent the vast majority of our revenue, and we appreciate their foresight, partnership, and ongoing commitment to delivering innovative therapies to patients. We have to broaden that access to achieve our goals. While we're pleased with the first two quarters of launch, we really only had access to about 40,000 dialysis patients during those months through USRC and other smaller dialysis organizations that operationalized the protocol to easily enable prescribing. In Q2, we had expected to have broader access at the other two mid-sized dialysis providers, DCI and IRC, to support the fourth and fifth largest dialysis providers. Today, I'm pleased to report that both are now completing their processes to make Vafseo available.

As of September, we expect the physicians of these dialysis organizations will be able to write a prescription for Vafseo without restriction, bringing the total patients with access to over 75,000. We believe this will enable a significant step up in growth. Even more significant from a volume and patient access perspective, DaVita, one of the largest dialysis providers, is completing preparations for its operational pilot for Vafseo. We've placed an initial order and expect patients to receive the drug starting in the middle of August. Upon the successful completion of the pilot, we expect to increase patient access by more than sixfold, from 40,000 patients in Q1 and Q2 to at least 275,000 patients later in Q4. Nick will give you more color on all of this launch progress and metrics.

The second focus to drive Vafseo to become a standard of care is to enhance the environment for growth post-TDAP. I'm very pleased to report the VOICE outcomes trial being conducted in collaboration with US Renal Care has been fully enrolled as of late June. Over 2,100 patients enrolled in only seven months. I believe this clearly speaks to investigators' interest in the potential benefits Vafseo may bring their patients and a desire to prove that dosing when administered during dialysis may be beneficial as well. The timing of enrollment completion is important as it means the study will complete in late 2026 with data available in early 2027, shortly after the end of TDAP. VOICE is an outcomes trial looking at all-cause mortality and all-cause hospitalization. While its primary endpoint is non-inferiority, it's powered to demonstrate potential superiority for Vafseo for all-cause hospitalization.

We believe any data demonstrating a positive clinical outcome will be critical in establishing Vafseo as a standard of care. We're also pleased to have initiated VOCAL, a study looking at dosing of Vafseo three times a week, being performed in 18 DaVita dialysis facilities. This study will enroll about 350 patients. An important and exciting sub-study will look at characteristics of red blood cells in patients treated with Vafseo. Previous studies have shown that other PHIs can improve the lifespan of a red blood cell. I believe showing a potential positive impact on red blood cell characteristics, size, lifespan, and oxygen carrying capacity with Vafseo in a dialysis population can demonstrate the tangible difference a more physiologic approach to treating anemia can yield. The third area of focus is securing an indication for non-dialysis patients in the Vafseo label.

Recall that while the stage 4 and 5 non-dialysis population with anemia is roughly the same size as dialysis, about 550,000 patients, it doesn't have the same pricing complexity that dialysis has in a post-TDAP setting, making it potentially four to five times larger than the $1 billion addressable market size of the dialysis market. We've continued to work to move this initiative forward. We completed a Type B meeting with the FDA in May. The meeting addressed a single focus written question to the agency related to the comparator arm for the VALORCC phase 3 trial in non-dialysis CKD. Based on FDA written feedback, we're now planning for an active ESA comparator. We believe this design will simplify the pooling of data with our prior phase 3 U.S. PROTECT program.

We recently submitted a Type C meeting request to further discuss the study design, statistical analysis, and pooling strategy, and we're working to initiate VALORCC by the end of the year. The team at Akebia Therapeutics believes strongly that patients not on dialysis would benefit from access to Vafseo and we're working hard towards our goal to gain alignment with the FDA and to be in a position to enroll the trial quickly. With the launch of Vafseo and continued strong performance of Auryxia, we had over $60 million in net product revenue in Q2, the highest level in the history of the company. In a moment, Erik will talk to you about our strong second quarter financial results and solid financial position. First, let me turn it over to Nick to give more color on the Vafseo launch and what we're learning in the field.

Speaker 0

Thanks, John. Good morning, folks. As we work to build a new standard of care in treating CKD anemia in dialysis patients, we are taking a comprehensive and long-term view on how to establish a successful brand in a large category. To this end, we are rapidly advancing efforts across multiple work streams, which include building patient access, broadening patient physician prescribing, and continuing physician education. We are making great progress on this front. Let me begin with some updates on prescription volumes. During the launch, we are focusing on breadth, the number of physicians prescribing, and depth of the amount they are prescribing. We are very pleased to have 725 prescribers within quarter two, up from approximately 640 in the first quarter. Prescribers are now writing an average of 13.3 prescriptions each, which is also an increase from 12.1. Refills in average doses of Vafseo over time.

Refills represented greater than 80% of prescriptions in quarter two, and the average dose of those refills is about 28% of the total starting dose. We believe this reflects that physicians are getting comfortable treating patients at an optimal therapeutic dose, and as a result, each of our prescriptions. As we have now been out in the field since January, we have observed adherence rates consistently. Some patients, especially those on higher doses of ESA, experience a hemoglobin drop when transitioning to 300 milligrams of the dose of Vafseo. This is a departure from experience with today's standard of care, and anemia managers are conditioned to react as quickly as possible when hemoglobin drops. In some cases, anemia managers do not adjust the titrate per the protocol, and patients will move back. To improve adherence, we quickly revamped and highlighted our messaging, focusing on dosing and titration.

We work with existing customers to adjust protocols, and we educated dialysis organizations who are developing protocols to consider this in their protocol design. We believe our messages on improving adherence are getting out there and taking effect. Our focus ahead is to accelerate growth by increasing utilization of additional DOs by enabling nephrologists with access to write prescriptions. I would like to spend a minute providing more detail on our progress. As we have discussed previously, we have commercial contracts in place with all key dialysis organizations, including purchasing organizations covering nearly 100% of dialysis patients. We are also supporting dialysis organizations in the creation and operationalization of Vafseo treatment protocols. I will refer to this as prescribing access. As John mentioned, we have prescribing access to 40,000 dialysis patients for the first half of the year, resulting in most of the orders since launch from US Renal Care.

Within the next month, we will have prescribing access to over 75,000 dialysis patients, an increase of over 85%, which includes DCI, IRC, and many independent small dialysis organizations. Momentum around protocol development and implementation is picking up further in the third quarter as DaVita physicians will begin prescribing Vafseo as part of this operational pilot at more than 100 dialysis organizations. With large complex systems, it always makes sense to do a test run. The pilot has already begun. DaVita notified the selected pilot sites and ordered product in July to support early pilot prescribing in the interim, which we believe will increase total prescribing access for Vafseo to over 275,000 dialysis patients and enable the opportunity for a significant uptick in ordering in the fourth quarter of the year within DaVita. One additional important note on patient access.

In discussions with dialysis organizations with protocols in place and in the view of claims data, we've confirmed that a significant number of Medicare Advantage clients are covering Vafseo. As a reminder, patients covered by Medicare fee-for-service represent 35% to 40% of dialysis patients, and Medicare Advantage, another 35% to 40% of patients. Therefore, depending on the dialysis organization, the addressable patient population for Vafseo could be doubled to potentially 80% of all dialysis patients having reimbursement for Vafseo. Looking at the totality of our efforts, we're happy with the progress on growing breadth and depth of prescribing, increasing patient access, and physician education. We have increased to amongst 55% quarter over quarter. We expect to meaningfully increase prescribing access to approximately 40,000 patients to over 75,000 patients in the third quarter.

We are on track to access DaVita, which we expect to lead to prescribing access to over 275,000 dialysis patients in quarter four. We're still in the early stages of our goal to build a new standard of care, but we believe we are on track to make our goal a reality. Let me now turn it over to Erik.

Speaker 3

Thanks, Nick. We're happy to report another strong quarter driven by the top-line performance of both Vafseo and Auryxia. I will now provide an overview of our results compared to the second quarter of last year. Total revenues, which are comprised primarily of net product revenues and also include medical collaboration and other revenues, were $62.5 million this quarter compared to $43.6 million in Q2 of last year, representing an increase of $18.9 million. Of these amounts, net product revenues increased to $60.5 million this quarter and $41.2 million in Q2 of last year. This was driven by sales of Vafseo, which, as mentioned, is about $13.3 million in the quarter, as well as by an increase in Auryxia sales, which were $47.2 million this quarter as compared to $41.2 million in Q2 of last year.

As a reminder, Auryxia allowed IPS to submit in March and there is an authorized generic for Auryxia on the market, though no generics have been approved by the FDA at this time. We are pleased with this quarter's strong Auryxia result, though costs from future Auryxia sales levels are challenging to predict due to the uncertainty around the timing of potential additional generic competition. Cost of goods sold increased to $9.9 million this quarter as compared to $17 million in Q2 of last year. The key driver of this cost reduction is that we are no longer reporting a $9 million quarterly non-cash amortization charge related to the acquired development product rights for Auryxia, which is now fully invented.

Also of note, Vafseo sales in the quarter were derived from pre-launch inventory, which does not include the full cost of manufacturing, and a portion of those inventory-related costs were previously expensed to R&D prior to Vafseo's FDA approval. R&D expenses increased to $11 million this quarter from $7.6 million in Q2 of last year, driven by increased clinical trial activities related to Vafseo, as well as our other programs. FDA expenses increased slightly to $26.6 million this quarter from $26.9 million in Q2 of last year. Turning to the bottom line, we generated $247,000 of net income this quarter as compared to a net loss of $8.6 million in Q2 of last year.

This quarter's net income was driven by the increase in revenues, partially on $4 million in interest expenses related to the loan royalty liability, as well as $7 million in non-cash expenses related to the change in the fair value of our warrant liability, which was driven by an increase in our stock price in Q2 over the prior quarter. We ended Q2 with $137.3 million in cash and cash equivalents. We believe our existing cash resources and the cash we expect to generate from product royalties, supply, and license revenues are sufficient to fund our current operating plans to profitability, including to pursue label expansion for Vafseo and advance our other pipeline programs. In closing, our Q2 financials reflect increased uptake of Vafseo, continued resilience of the Auryxia revenue stream, and careful attention to operating expenses, which resulted in our strengthened financial position.

As John and Nick mentioned, the team is dedicating significant energy towards continuing to expand both the breadth and depth of Vafseo utilization, and we look forward to discussing the results of these efforts on our next session call. With that, we welcome questions.

Speaker 6

Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for a name to be announced. To withdraw your question, please press star one one again. Please stand by with the Quality Q&A roster. One moment for our first question. Our first question will come from the line of Roger Song from Jefferies. Your line is open.

Hey, guys. Morning. Congrats for the quarter, and thank you for taking our question. You give us a lot of the good numbers here. Just want to get a sense of some of the key metrics here. First is the patient segment. In terms of the home use and the high ESA, what do you see this quarter and how has this changed over last quarter? Also, how do you forward-looking when you have more larger DO coming online, including DaVita in 4Q, do you see the patient segment will change? Similarly, for the payer, you say the Medicare Advantage seems to be a significant amount of the patient, and can you quantify compared to the fee-for-service? I have a follow-up. Thank you.

Speaker 4

I think that's for you.

Speaker 0

Yeah. When we think about the patient segmentation, it's a great question. Where US Renal Care, who is a vast subscriber of our prescriptions, their protocol is broad. They're allowing QD use for both in-center patients and home patients. We see the usage that is very much similar to the market segment. QD and home patients being about 12% of the total scripts and the remainder being for in-center patients. The second part of that is, how do we see that moving forward when we add on DaVita and others in the fourth quarter? When we look at all of the protocols that they're putting in place, whether it be IRC, DCI, or DaVita, they're all broad protocols that allow for both in-center and home use. Physicians think about patients top of mind that will benefit from Vafseo. They go to two important segments first.

They go to the home patient, where it makes really, really good sense to use an oral therapy for those patients to avoid injections as well as assistance to the dialysis unit. They also think about higher dose ESA patients who have a higher increased mortality and cardiovascular risk associated with those higher doses of ESA. We expect to have continued broad uses. It may tip a little bit higher towards the PD section or the home section. The second part of your question was on market access and Medicare Advantage. To date, we're seeing about 20% of total prescriptions being filled in the Medicare Advantage segment of the population, where 80% is Medicare fee-for-service.

As we look going forward in our discussions with, again, IRC and DCI and DaVita, they have all indicated to have significant Medicare Advantage contracts already in place that will support Vafseo through additional Tdap coverage. That's a great sign. That means that those populations are growing over our initial expectations of fee-for-service, and they're growing at a faster rate. We always thought they would add Medicare Advantage plans over time. It's happened much earlier than we could have anticipated. I think even with US Renal Care, where they started with mostly a focus on fee-for-service, as that Medicare Advantage coverage has grown, they've kind of pushed those patients out to the dialysis centers as well. There's still growth to be clearly within US Renal Care. That's correct. You know.

I think about US Renal Care, over 80% of US Renal Care.

When that new coverage becomes available, those physicians have the opportunity to treat Vafseo to a broader population that is in need of Vafseo that previously didn't have coverage. We are looking forward to continued assessment increases and look forward to driving it.

Excellent. Thank you for the detail. Just a quick one. What's the current average dose strength for your prescription? You see a little bit higher dose level in the recent trend. Thank you.

Nick, I think that's you again. As I referred to in my script, we're seeing refill scripts being at about a 28% increase over the 300 milligram starting doses, which is great. We saw in our Innovate Clinical trial that folks got to approximately an average of 420 milligrams per script. That would be about a 40% increase or at a 25% increase or 28% increase to date. We see as people progress through their prescriptions from first prescription to second prescription, third prescription, those doses continue to titrate up. As you recall, our label has people titrating up at 150 milligrams after four weeks and every four weeks thereafter. Therefore, it's going to take the second or third refill to get them to the appropriate doses.

Speaker 4

I think you know when you mentioned the adherence changes, what some providers are doing is actually allowing a titration at at least two, which we saw in the modified trial as well. The one thing to be aware of, as you bring on new dialysis providers and they bring on more new patients, we see this step up in patients. You may actually see a bit of a step down in those because you have more patients at that starting dose. That's exactly what we would hope to see. As they stay on the drug, they'll titrate to that average dose. Obviously, as you can see, an important component of that growth is important.

Got it. Makes sense. Congrats again.

Thanks, Roger.

Speaker 6

Thank you. One moment for our next question. Our next question comes from the line of Julian Harrison from BTIG. Your line is open.

Hi. Good morning. Congrats on the quarter, and thank you for taking my questions. On the operationalized protocol you're expecting from DaVita, is that expected to be implemented in early or late fourth quarter? Are you able to provide any granularity there? When we start to think about the other large dialysis organization of comparable size to DaVita, should we also expect that corresponding protocol to be preceded by a pilot study as well?

Speaker 4

Great question, Julian. Thanks for it. The DaVita operational pilot, they are preparing for it now. They ordered the product. They're training at the sites. We expect in the next couple of weeks, I think it's the 18th of the month, is when they expect to go live with it. That pilot will last three months, up to three months. Obviously, it could go sooner, but I think the expectation should be around the middle of November is when they basically open that up to the entire DaVita network. As you mentioned, the other large providers, Fresenius, of course. We continue to talk to Fresenius, present them clinical data, etc. We have not been able to progress yet.

I think as DaVita comes on and all of these other providers come on, it becomes more and more difficult for them to keep access from their physicians and patients for this innovative product. My expectation, and correct me if I'm wrong, is they would probably do a similar kind of operational pilot.

Excellent. That's very helpful. A follow-up, if I may, on non-dialysis-dependent CKD, it sounds like you're very close to finalizing the phase 3 trial design for VALORCC. Are you able to give us an approximate sense for how soon this label expansion opportunity could come online for Vafseo? What does the timeline look like after that study starts around year end?

The timeline is going to be driven significantly by how quickly we can enroll this study, right? I mean, it's an outcome study. We still expect, again, all of these details are somewhat to be determined. The numbers we've been giving in the past are about a 1,500-patient trial now with an active comparator versus Vafseo, at least, and doing it strictly in the U.S. with U.S. patients. We can do that pooling of VALORCC with the U.S. PROTECT data to enhance the comfort that there isn't an increased MACE risk, which, of course, we didn't see in the U.S. patients with PROTECT. It's really all about how quickly we can enroll and giving a sense of that before we know what the final protocol looks like. This is one of the activities that we're doing to prepare, working on feasibility.

Now, how many sites, how many patients per site, and that will help us to better inform you. I don't want to get ahead of that data yet. Obviously, our goal would be to enroll as quickly.

Excellent. That makes a lot of sense. Thank you and congrats again.

Thanks so much, Julian.

Speaker 6

Thank you. One moment for our next question. Our next question will come from the line of Mazie Ali-Mohamed from Lyric Partners. Your line is open.

Thanks for taking our question. This is Mazie on for Juan Ruiz. You know, so Auryxia revenues actually grew year from year. I guess one question is, with the only one authorized generic currently in the market, what's your outlook for competitive dynamics over the remainder of 2025? I guess how are you thinking about positioning for additional generic entrants in the future?

Speaker 4

Mazie, thanks for the question. Nick, maybe you can kind of talk about the market dynamics and why we're seeing that growth.

Speaker 0

Yeah. In the market dynamics, it's great news for Auryxia. It's really built on Auryxia's channel. It's very possible with the clinical profile and the benefits of Auryxia, as we've been kind of working with physicians for the last 10 years. When we think about Auryxia pre-bundle, the market, the access for Auryxia was actually extremely limited in prior years. Physicians often had to do a prior auth. In some cases, they had to do a medical exception. They didn't want to really do the work consistently for their patients. Now that the bundle has stood up for Auryxia, it's one of its greatest points in its history. Physicians who are very comfortable using the product on Auryxia-bound patients are taking the opportunity with that increased access of patients on Auryxia, which is great news for Auryxia.

When we think about that trend continuing, maybe for the AG pieces, I'll toss it over to Erik or perhaps John to go into that piece.

Speaker 4

I think, as you said, we have one AG on the market. We know exactly how much product we're supplying to Beatrice, and you know how long that supply agreement really only goes through this year. We need to see what happens with FDA. We've always said to be very careful about how we think about the long term with Auryxia for this. Ultimately, we believe that our product will be approved. It's been said for years that the slope of that curve post-generic availability isn't necessarily that patent cliff that you always see. If you use the VALORCC as an example, it took years before the generics took the lion's share of the market because of the volume that you have to manufacture here. We look at it in a very conservative and real way.

Speaker 3

Yeah. No, I totally agree with John. From an internal perspective, given the reasons you're alluding to in the script as well in my comment, new generic competition could come up at any time. We budget conservatively, and the longer we go without that incremental generic competition is really just upsetting to our internal team.

Speaker 0

Yeah. You know, when we talk about our kind of the task going away, etc., being able to finance our pipeline, it's using a very conservative view of where Auryxia lands over time. We're four months post when we had originally planned to have generics available. We are pleased every day to continue to be able to deliver the product to patients.

Yeah, thanks for the added color. Congrats on the quarter.

Speaker 6

Thank you. I'm showing no further questions at this time. I want to turn it back over to John Butler for closing remarks.

Speaker 4

Thanks, Victor. Thanks, everyone, for joining us this morning. We're focused on our goal of making Vafseo standard of care for treating anemia due to CKD. We're making important progress across all components of that strategy. The launch of this delivery, we're executing the studies in dialysis patients to continue to build evidence of potential benefits, and we're planning to initiate our MDD study, VALORCC, this year. Our revenue performance and cash balance allow us to execute this strategy and advance our early pipeline from a position of financial strength. We look forward to continuing to update you on our progress. Have a great day.

Speaker 6

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.