Akebia Therapeutics - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 revenue declined year over year as Auryxia volumes fell ahead of 2025 reimbursement changes, while operating loss and net loss widened on lower revenue and non‑cash interest tied to the Vifor settlement royalty liability.
• Early U.S. launch metrics for Vafseo are strong: management guided to Q1 2025 net product revenue of $10–$11M and has contracts covering nearly 100% of U.S. dialysis patients; 3 of the top 4 dialysis organizations have already placed orders.
• Operational updates highlight rapid prescriber adoption (500+ prescribers; ~8 prescriptions per prescriber on average), specialty pharmacy backlogs that are easing, and growing Medicare Advantage coverage (>15% of prescriptions in February).
• Regulatory path for label expansion is progressing: FDA offered a meeting to discuss the Phase 3 VALOR protocol for non‑dialysis CKD; Akebia expects to initiate VALOR in 2H 2025; VOICE outcomes study enrollment is >50% toward its 2,200‑patient target.
• Cash of $51.9M at 12/31/24 plus post‑year‑end ATM proceeds ($18.4M) and credit draw ($9.3M) extend runway; management expects cash resources and operations to fund the plan for at least two years.

What Went Well and What Went Wrong

• What Went Well

  • “We expect $10 million to $11 million in net product revenue for Vafseo in the first quarter, a very strong start and well ahead of current analyst estimates.” — John Butler, CEO.
  • Broad market access at launch: “We launched Vafseo with commercial supply contracts in place with dialysis organizations caring for nearly 100% of dialysis patients in the U.S.”.
  • Prescriber momentum: “Over 500 physicians have prescribed Vafseo with an average of approximately 8 prescriptions each” through February; sales to 3 of top 4 dialysis organizations; channel inventory ~3–4 weeks.

• What Went Wrong

  • Revenue contraction: Q4 2024 total revenue fell to $46.5M (−17% YoY) driven by lower Auryxia volume; license/other revenue also declined YoY.
  • Profitability pressure: Q4 net loss of $22.8M vs net income of $0.6M in Q4 2023; non‑cash interest expense from the Vifor settlement royalty liability was $4.9M in Q4.
  • Launch logistics: Early Q1 specialty pharmacy capacity constraints created a several‑week prescription backlog across TDAPA products, though conditions improved toward ~5 days by late quarter.

Transcript

Speaker 4

Good day, and welcome to Akebia's fourth quarter 2024 financial results call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to Mercedes Carrasco, Senior Director of Investor Relations. Please go ahead.

Speaker 0

Thank you, and welcome to Akebia's fourth quarter and full year 2024 financial results and business updates conference call. Please note that a press release was issued earlier today, Thursday, March 13th, detailing our fourth quarter and full year 2024 financial results, 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. Joining me for today's call, we have John Butler, Chief Executive Officer; Nick Grund, Chief Commercial Officer; and Eric 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 March 13th, 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. With that, I'd like to introduce our CEO, John Butler.

Speaker 1

Thanks, Mercedes, and thanks to everyone for joining us this morning. It is March 13th, which is World Kidney Day. As a company whose mission is to better the lives of people impacted by kidney disease, this holds a special meaning. One of the enduring themes of World Kidney Day is driving innovation in the care of kidney disease. I am proud of the role Akebia plays and will continue to play in delivering that innovation. As a matter of fact, as you know, we are just in the early days of bringing an important new treatment to the care of patients on dialysis. It is a pleasure to have the opportunity this morning to discuss the excellent progress we have made in the launch of Vafseo, our HIF PHI inhibitor for the treatment of anemia due to chronic kidney disease for patients on dialysis.

We're in the earliest stage of our launch. The data we will review today represents the first seven weeks of prescribing, and of course, there's always some volatility at this stage. Even at this early stage, we're very excited about what we're seeing in the market. Now, let me be clear: we do not plan to provide quarterly revenue guidance going forward, but we thought it was important to share early performance metrics, especially since we have only about two weeks left in the quarter. With that said, I am very pleased to report that we expect $10-$11 million in net product revenue for Vafseo in the first quarter, a very strong start and well ahead of current analyst estimates. Our goal is to make Vafseo standard of care for patients with anemia due to chronic kidney disease.

That goal has two parts: first, a successful dialysis launch; second, an approval of Vafseo for the non-dialysis patient population. I'll address both, but let's drill down on the launch first. Previously, I outlined the three initiatives we had to execute to work towards a successful launch and sustained growth: create access through effective contracting, drive demand at the prescriber level, and generate data to identify potential additional benefits. When the first prescriptions were written for Vafseo on January 13th, we had commercial supply contracts in place with the dialysis providers who care for nearly 100% of dialysis patients in the U.S., which we believe is a first for a drug with transitional drug add-on payment adjustment, or TDAPA reimbursement. Of course, having a contract in place is just the first step to broad access.

We have also worked with the dialysis organizations to have protocols in place and finalize other operational elements like distribution and ordering details. We've been successful working through this process in many dialysis organizations, and these are the DOs driving early prescribing. For some time, we've said we expect our early use and adoption to come from the medium and small dialysis organizations who care for about 150,000 patients collectively. This has been the case and an appropriate area of focus, but we're also pleased with the progress we're making across the broader market. Now, access without corresponding prescriber demand does not get product to patients. If you recall, as we prepared for product introduction, I spoke about the coiled spring strategy: secure contracts and build prescriber demand to start transitioning patients onto Vafseo as quickly as possible upon availability.

I believe that strategy is playing out in the excellent pull-through to patient prescriptions we've seen in the early launch metrics. Nick will give you a sense of both prescribers and prescriptions through the end of February. With the pieces for a successful launch in place and impressive early traction, our team also focused on the third initiative. Continuing to build evidence is what we believe ultimately allows a product to become standard of care. The VOICE study in collaboration with U.S. Renal Care is an important effort to generate significant data potentially demonstrating additional benefits of Vafseo treatment. Positive results from VOICE would potentially show a significant reduction in hospitalization versus ESAs, data that we believe will be critical for physicians as they make anemia treatment decisions. Dr.

Block, the lead investigator, began study enrollment at the beginning of December, and as of last week, he has enrolled over half of the total target of 2,200 patients. Finally, to become standard of care for all patients with anemia due to CKD, we need to be able to have the product approved for the non-dialysis population. I was in the field with one of our key account managers one day last month, and every physician I spoke to proactively told me that they wanted to use the product for their NDD patients. We plan to work to enable them to do that as quickly as possible.

Now, in our latest communication from the FDA, they offered the opportunity to meet with them to discuss the protocol for our planned phase 3 clinical trial, VALOR, which will study the use of Vafseo in treating anemia in late-stage CKD patients who are not on dialysis. We believe taking the time for this meeting will be helpful to the success of the program in the long run. We expect to initiate the VALOR study in U.S. non-dialysis patients in the second half of this year. We will continue to update you as appropriate as we get closer to initiating this important study. Treatment of non-dialysis patients is clearly a significant potential opportunity for Akebia and for patients, and it's a primary focus for our development organization. In parallel, our commercial organization is completely focused on dialysis launch success.

Now, let me turn it over to Nick to give more details on the early days of our launch.

Speaker 7

Thanks, John. Good morning, folks. Let's start with the headlines for the Vafseo U.S. launch. Demand is extremely strong. We have seen the number of prescribers and prescriptions increasing throughout the quarter, and we expect between $10 million and $11 million in Vafseo net product revenue for Q1 2025. I'm pleased with the early traction, especially considering the market dynamics we've seen early in quarter one. With the transition of binders in the bundle, including our own Auryxia, no longer are a majority of patients filling prescriptions at retail pharmacies. Going forward, the large majority of prescriptions are going to be shipped directly to the patient's home. To enable this change, many of the dialysis organizations must now partner with a specialty pharmacy provider.

Thus far, in quarter one, we are seeing prescription demand for all TDAPA products, including Auryxia and Vafseo, outstrip capacity at specialty pharmacies, in some cases with a backlog for binders and Vafseo exceeding three weeks. However, because we already have a robust distribution network, we were able to work with customers to find capacity. This backlog is starting to subside, but I believe that our customers and patients felt the negative impact. Now, let's get into some of the underlying launch details and demand. Since approval, we spent a lot of time discussing the importance of strategy focused on creating broad access and driving prescriber demand for Vafseo. It is good to see that strategy translate into market activity. In terms of access, we began shipping Vafseo on January 9th.

We had contracts in place with dialysis organizations caring for nearly 100% of patients, and I'll reiterate that the need for DOs to contract for phosphate binders, including Auryxia, helped our team get to the table to contract for Vafseo at the same time. To build demand since approval, our key account managers have worked hard to educate prescribers on the unique attributes of Vafseo and work with them to help identify patients that may benefit from Vafseo therapy. Importantly, these demand-building discussions turned to action. I'd like to focus first on the physician reception now that Vafseo is available for prescribing. As we expected, home patients and those patients on higher doses of ESAs were some of the earliest patients prescribed Vafseo, but we've also seen use more broadly within center patients.

We believe prescribers will continue to expand utilization of Vafseo in these patient groups after gaining experience with the product and seeing the benefits of Vafseo for these initial patients. More broadly, it is clear physicians are excited to have an alternative therapy to help manage anemia in their CKD patients. The enthusiasm has been demonstrated not only through their interaction with our sales team, but is also tangible through our peer-to-peer programs. To date, since launch, we have had over 70 peer-to-peer programs where key medical experts, or KMEs, educate their peers on Vafseo. While the number of programs is impressive, it is the attendees' level of interest and the engaged dialogue that reinforce the opportunity for Vafseo.

In these programs, not only are we seeing strong HCP attendance, but we're also seeing broad attendance by the entire dialysis clinic care team, including prescribers, anemia managers, nurses, and billing and coding personnel. This reinforces our premise that anemia management is an important component of caring for CKD patients on dialysis and that an alternative therapy to ESAs is highly desired. Again, the interest is turning into action as physicians try Vafseo for various patients. Early in a launch, we want to gain breadth of prescribing. Then, as we move past the trial phase, we want to drive depth, resulting in greater volume of prescriptions among our physician targets. I'd like to share with you some insights and metrics we're watching closely to monitor our launch progress. As expected, it's the small to mid-sized dialysis organizations that are driving revenue.

Through the end of February, USRC has been our largest customer. USRC serves approximately 36,000 patients across the U.S. While USRC is certainly an early adopter, other DOs are also purchasing. We are pleased to report that we have sales to three of the top four dialysis organizations. The larger organization that purchased still has work to do in operationalizing a protocol, which once implemented should enable broad prescribing, but it appears they are willing to make the product available to patients in need on a medical exception basis now. In addition, we have a number of independent and small dialysis organizations purchasing Vafseo because of our robust distribution network and our direct contracts with dialysis organizations. We understand the product supply channel extremely well. This allows us to highlight that there are currently approximately three to four weeks of inventory in the channel.

At the prescriber level, from January 13 through the end of February, over 500 physicians have prescribed Vafseo with an average of approximately eight prescriptions each. Of course, there are various levels of prescribing for physicians, ranging from those with only one prescription to those that have as high as 64 prescriptions since January 13. These data tell me that our team has engaged with our highest priority prescribers, and those prescribers are very willing to try Vafseo for their patients. Importantly, of those physicians prescribing, greater than 50% of them care for patients within other dialysis organizations in addition to caring for patients at USRC clinics.

This gives us confidence that as the breadth of dialysis organizations that are fully operational expands, meaning protocols and other logistics are in place for the sale of Vafseo, the physicians should be able to leverage their treatment experience across a number of organizations and drive depth of prescribing. Moving from physician demand and prescribing, I wanted to spend a moment highlighting some early reimbursement trends. As we previously discussed, we have been focused on access for Medicare fee-for-service patients as these patients have immediate reimbursement for TDAPA drugs. We also indicated that we expect Medicare Advantage coverage where dialysis organizations have contracted with Medicare Advantage plans for TDAPA-like or innovation payment. For instance, in February alone, we have seen greater than 15% of prescriptions have been written for payers other than Medicare fee-for-service.

This is an encouraging sign that even early in launch, some Medicare Advantage plans are already covering Vafseo. We're extremely enthusiastic about the initial indications of demand for Vafseo and look forward to updating all of you on our next call. Let me now turn it over to Eric.

Speaker 3

Thanks, Nick. After John and Nick's comments, we're very excited about our prospects in 2025 and are encouraged by what we've seen thus far with the launch of Vafseo in the U.S. I'll now provide an overview of our fourth quarter and full year 2024 financial results as compared to the prior year. Total revenues, which are comprised of net product revenues as well as license, collaboration, and other revenues, were $46.5 million and $56.2 million in the fourth quarters of 2024 and 2023, respectively, and $160.2 million and $194.6 million in 2024 and 2023, respectively. Of these amounts, Auryxia net product revenues were $44.4 million and $53.2 million in the fourth quarters of 2024 and 2023, respectively, and $152.2 million and $170.3 million in 2024 and 2023, respectively.

These decreases were primarily driven by a reduction in volume, partially offset by price increases and execution of our contracting strategy with third-party payers. As a reminder, in late March 2025, Auryxia will lose IP exclusivity. License, collaboration, and other revenues were $2.1 million and $3 million in the fourth quarters of 2024 and 2023, respectively, and $8 million in 2024 compared to $24.3 million in 2023, which included a one-time $10 million license agreement related to upfront payments. Cost of goods sold was $20.4 million and $18.7 million in the fourth quarters of 2024 and 2023, respectively, and $63.2 million and $74.1 million in 2024 and 2023, respectively. In the full year of 2024 and during the fourth quarter of 2023, we realized a $12.3 million benefit and a $4.3 million benefit, respectively, due to our ability to sell inventory previously written down as excess inventory.

In addition, the decrease in cost in both period-over-period comparisons reflects lower Auryxia sales volumes in 2024 as compared to 2023. R&D expenses were $11.8 million and $9.9 million in the fourth quarters of 2024 and 2023, respectively, and $37.7 million and $63.1 million in 2024 and 2023, respectively. The quarterly increase was driven by expense related to the amendment of our license agreement with Siting Li. The yearly decrease was driven by the completion of activities related to certain clinical trials, lower headcount-related costs, and decreased professional service and consulting expenses. SG&A expenses were $27.7 million and $25.4 million in the fourth quarters of 2024 and 2023, respectively, and $106.5 million and $100.2 million in 2024 and 2023, respectively. These increases were driven by costs incurred in connection with preparatory activities related to the Vafseo U.S. launch.

Net loss was $22.8 million in the fourth quarter of 2024 compared to net income of $0.6 million in the fourth quarter of 2023. Net loss was $69.4 million in 2024 compared to $51.9 million in 2022. The increases in net loss were impacted by lower period-over-period revenues as well as by non-cash interest expense incurred in 2024 related to the settlement royalty liability in connection with the July 2024 D4 termination settlement agreement, which was $4.9 million in the fourth quarter of 2024 and $9.3 million for the full year of 2024. Cash and cash equivalents as of December 31, 2024, were $51.9 million compared to $42.9 million as of December 31, 2023. We expect this cash and cash from operations will be sufficient to fund our current operating plan, including planned pipeline advancement for at least two years.

Post-year end, we further strengthened our financial position by raising $18.4 million in net proceeds from sales under our ATM facility, including the sale of shares to top-tier healthcare specialist investors, which we believe has helped increase institutional sponsorship of the TDAPA. In addition, on February 3, 2025, we elected to draw down trustee of our BlackRock credit agreement, resulting in net proceeds of $9.3 million. With that, we welcome questions.

Speaker 4

Thank you. If you'd like to ask a question, please press star 11. If your question has been answered and you'd like to remove yourself from the queue, please press star 11 again. Our first question comes from Allison Bratzel with Piper Sandler. Your line is open.

Hey, good morning, guys. Thanks for taking the questions. Just a couple from me. First, I think you touched on this in the prepared remarks, but does that Q1 Vafseo revenue include any stocking or inventory build? Second, just what are you seeing in terms of dose frequency, particularly for those in-center dialysis patients, daily, two times weekly? And third and last, can you just talk about how protocolization is gating uptake at large-scale dialysis orgs and just how long until you think you see uptake at those LDOs? Thanks.

Speaker 1

Great. Thanks, Allie. First was Q1 revenue and stocking. Yeah, I mean, this is obviously you have your first quarter is when they do need to put inventory in, and Nick referenced that we expect them to stay in the two- to four-week range of inventory. Remember, this has been a retail product, so you're not putting it into the wholesaler and the retailer. It's kind of one stop to the specialty distributor, and it goes from there. We have a very, very good handle on that. In that revenue guidance, there will be a little bit of inventory that's part of it. On the dose frequency side, this is, I mean, it's almost all QD use today. There are some that are starting their protocols, some smaller centers that are starting protocols with TIW dosing. Certainly, at U.S.

Renal, for instance, it's a QD dose protocol that's in place. Anything on that to add, Nick? No, I think you got it all. Yeah. The protocolization, as we said, I mean, this is what takes you get the contract in place, then you've got to get a protocol in place. Beyond the protocol, you've got to get all the operational details. One of the ways I've been describing it is that kind of the distance between the person who signs the contract and the person who writes the prescription, the shorter that distance, the faster they can move. That is clearly the case. If you think about one of the LDOs who has ordered product, while they have a protocol written, getting it operationalized into their myriad of systems, etc., is simply taking longer than we'd like.

It's hard to say exactly how quickly they'll have it up and running. I mean, I think there's an understanding of the value of having the product available. There's a desire from the physicians to write it, and then there's all the bureaucracy that goes in between that gets it up and running. I mean, we've talked about kind of the first half of the year really being driven by the small and medium providers. I mean, there's 150,000 patients there. We feel that that can make most of the year. I think as we get into the second half of the year, we want to see more movement at the larger providers. We expect we will, based on the conversations we've had, at least certainly with the one.

The fact that they are allowing the product for patients that they identified or prescribers identify as high need is great, right? I mean, it's a start. It gets people experienced with the drug. They know they want to make the product available. They just make that available outside of their systems that they have to have in place to make this available broadly at the DO.

Excellent. Thank you.

Thanks, Allie.

Speaker 4

Thank you. Our next question comes from Julian Harrison with BTIG. Your line is open.

Hi, good morning. Thank you for taking my questions. First, Nick, I think you mentioned in your prepared remarks a recent backlog in Auryxia. I'm just wondering if you could expand a little bit more on that. Has demand for Auryxia now with TDAPA online maybe exceeded initial expectations? Am I understanding you correctly there?

Speaker 1

Yeah, Julian, it's a great question. I just want to be really clear. The backlog was for all phosphate binders and Vafseo, not just Auryxia and Vafseo. It is really when a lot of the prescriptions were being filled at the retail pharmacy, there was enough stocking and inventory. Patients would go to the 10,000 or so retail pharmacies in the U.S. to pick up their prescription. On January 1, all of those moved into specialty pharmacy for the most part. Those specialty pharmacy providers, frankly, did not have the capacity. If you think about the intake process, the prescription for a patient, that prescription has to be loaded into a specialty pharmacy system. They have to check insurance. They have to do all that verification that goes around with a prescription. In some cases, they got 20,000 prescriptions in the first 15 days of the month.

That inflow of heavy effort-level prescriptions caused a backlog across the board. As a reaction, what we had done is with a broad distribution network, we said, "Let's move our customers around in some way, shape, or form to be able to help them get to the capacity and therefore fill the prescriptions." While we'll call it in that month of January, maybe early February, we're in this kind of 20-24 day backlog. That subsided substantially for our products over the course of the quarter. We think that it's down in this kind of five-day range today. It didn't impact all folks who have a TDAPA product in quarter one. I mean, it's important to point out that we're focused on those small and medium-sized providers today.

It was really the smaller providers who kind of kept waiting and hoping that the legislation was going to pass to keep the binders out of the bundle. They just were not operationally ready as we were trying to push them to be. I do think they appreciate the help that we are giving them now and only kind of increases our standing with them. Again, the demand is there, and you are seeing the demand. You work through operational issues, and I think it bodes well for the growth of the product.

Okay, got it. Thank you. That makes a lot of sense. I am wondering if you could just talk a little bit more about the timing of your next regulatory interaction before initiating the Valor study back half this year. I am just wondering, are you really just seeking alignment on study design at this point? Are there any other open questions?

No, I think it is really about study design. I mean, we look at the communication that we've gotten from them as kind of in quite a positive light. As I've said before, I mean, they communicated that they see a significant unmet need for an oral therapy to treat patients with non-dialysis patients' anemia, right? That's a significant change from where they were 10 years ago. With that, the opportunity to go and meet with them and talk about things, we want to get started as quickly as we can. There's no question about it. It is not when you start, it's when you finish, right? The idea that we have this conversation, find opportunities to actually speed the program up from where we are, it's just too good to pass up.

Exactly when that we expect that will be a Type C meeting when we meet with them. We haven't sent that meeting request in now. We're kind of working through what you have to send that in. We'll give an update when we know more as appropriate. Obviously, we're looking to do all of this as quickly as we can. Again, speed, but you really want to take advantage of the opportunity they've given us here.

Excellent. Thank you.

Thanks, Julian.

Speaker 4

Thank you. As a reminder, if you'd like to ask a question, please press star 11. Our next question comes from Ed Arse with HC Wainwright & Company. Your line is open.

Hey, good morning, guys. Congrats on the first couple of months of your launch. Thanks for taking my questions. Firstly.

Thank you.

Yeah, I joined a couple of minutes late. I just wanted to see if I could have you go through quickly the launch metrics that you plan to disclose on a quarterly basis. I have a couple of follow-ups.

Speaker 1

Let's talk about what I'll have Nick kind of go through again, what we provided. I think that idea of kind of prescribers and average prescriptions is something that will be really helpful in your kind of following the progress we're making. Nick, you want to review that again?

Yeah. What we had talked about was over 500 physicians prescribing through the end of February with an average prescription level of about eight prescriptions per prescriber. There is a broad range. We have a number of physicians that are still prescribing just one prescription. We also have prescribers that are prescribing as high as 64 prescriptions. We are seeing good breadth of prescribing and some depth early on. I think we need to continue to drive that. We have seen acceleration of prescribers and prescriptions throughout the quarter. We are in that kind of arrow pointing to the upper right, which is awesome. There is still work to do, and there is still a lot of opportunity out there, and we are going to capitalize that in the coming months and quarters.

Yeah. You know, I think when you see someone writing one or two prescriptions, that's trial. Even eight on average is really encouraging. As a matter of fact, Nick, one of the most recent launches in dialysis, which I think is considered a pretty successful launch, is Exposa. And different markets, but both in dialysis, might be interesting to see what their kind of first seven weeks or so of results were.

Yeah. John said it well. As we looked around for comparators, let's be honest, there hasn't been a lot of successes recently in dialysis. Exposa is one that kind of stands out. Comparatively, if you look at their first seven or eight weeks of their launch, their number of prescribers is about half of what we have for prescribers. As you look at kind of trajectory, it looks like comparatively, we're off to a faster start in terms of driving that trial broadly among prescribers.

Okay. Great. Just as I am thinking about the progression throughout this year as you transition from, as you said, mostly the small and medium DOs for now, and then the larger LDOs in the second half of the year, just wondering first on gross to net, what is that looking like right now in the early initial months, and where would you expect it to be steady state? Also, the split between commercial and Medicare, what is that looking like now? Ultimately, where would you see it settling out steady state? Thanks.

Nick, do you want to talk about the commercial to Medicare piece?

Yeah. Certainly, we're seeing what we'll call a good uptake in Medicare Advantage plans. If you recall, Ed, that we had really two major portions. Medicare and Medicare Advantage patients represent a vast majority. About 80% of the total patients are in that bucket. It's split about half and half between what we'll call typical Medicare fee-for-service and patients that are Medicare Advantage. Medicare fee-for-service, we have immediate reimbursement, and the DOs will have immediate reimbursement for the patients that they put on Vafseo. Medicare Advantage, the DOs would need to contract with Medicare Advantage plans to be able to make sure they get a TDAPA-like or an innovation payment associated with new products. We are seeing, obviously, immediate reimbursement on the fee-for-service side.

On the Medicare Advantage side, we're actually really encouraged that about 15% of all the prescriptions we've seen are for Medicare Advantage patients, which means the DOs have been successful to some extent in contracting with those Medicare Advantage plans. That bodes well for additional addressable populations that can get access to Vafseo as we move forward. When we think about the commercial plan, the commercial folks are actually a really small percentage. We have seen selective commercial reimbursement, but the commercial patients are such a smaller portion of the overall dialysis population when compared to Medicare Advantage and Medicare.

Yeah. I think if you focus on that 80-85% of the population that's Medicare, as we've talked in the past, we've always told you, look, to be most conservative, just focus on patients who have a TDAPA fee-for-service TDAPA payment, which is half of your Medicare population. We're really encouraged by the fact that in the first couple of months, we're seeing 15% of prescriptions come through outside or beyond fee-for-service. That's a really good leading indicator. We've always believed that you would get more. Remember, the MA contracts are not ours. They're the dialysis providers. The fact that they're getting access, and again, I mean, these are the smaller providers. We think the larger providers have even better access. It really does bode well for kind of the total addressable market for the population ultimately.

Right.

The other question you asked was about gross to net. We're not providing gross to net on the call. A couple of things just to help get you there. The average, virtually all of the prescriptions written were kind of for that starting dose, which is 300 milligrams. That's a bottle, right? That's $1,278 per bottle is the WAC for that. The reason we're really cautious about providing it, most of the discounts then come from our contracts. We talked about our contracts having a small off-invoice discount and then a volume-based discount. As their volumes grow, that discount will grow as well. Over time, our gross to net will decline. You can interpret that it's a bit higher now. Even as different providers come in, you might see some fluctuation in that.

The other thing to remember, these prescriptions are all being written for that starting dose. We know from our clinical studies that the average dose that patients have to take was about 400 milligrams a day. About a third higher than what you're seeing in the prescriptions today. As we move forward, you're going to see this discount for the rebates. I think you'll also see some offsetting growth in the size of a prescription in the dose. I know that doesn't give you everything you need, but hopefully, it helps a bit.

Yeah. No, that's great, John. Appreciate the detail there. Maybe just one more, if I may, on VALOR. I know you're seeking to get prepared for this meeting and the opportunity there to seek alignment. What portions of the study design that you're seeking can you share with us today? Do you think the cost of that study is embedded within your current runway? Thank you.

Great questions, Ed. The last question is definitely yes. The cost is embedded in our runway discussion. It is part of our base operating plan. Again, we expect to be able to run this trial more efficiently given there are not two other products out there trying to enroll studies. We have a commercial product, albeit for dialysis, so there is a higher level of comfort. We are focusing on nephrologists versus kind of a lot of primary care and the initial protect study. We really think we can do this in an efficient, from a financial perspective, and a quick way. What we talked about before is we are looking to do this with a standard of care comparator.

Kind of discussing with the agency how we'll analyze that data and how you kind of will look at that, I think, again, getting that agreement, or at least kind of having that discussion upfront, will definitely be helpful as they're reviewing the drug later on. I think it's a lot about that, like the analysis plan and using a standard of care comparator. Because remember, the U.S. data from Protect, which had over 1,700 patients, demonstrated that there wasn't an increased MACE risk. That had a DARPA poet in control, right? If this has got a different control, understanding how we're going to do that analysis and how they're going to analyze the data and doing that upfront, I think we can make the tweaks to the protocol that would be helpful for them.

If we can do that now, it obviously is a lot more efficient than if we have to do it down the line, like if we waited a year before we talked to them about the SAP. I think all of that, and I don't know, I'm just encouraged by the fact that they really do seem to want to help see us succeed. We have to execute the trial, right? We're encouraged at this point with their engagement.

Yeah. That's great. Very helpful. Thank you so much, and congrats again on the initial launch here.

Thank you, Ed. Appreciate it.

Speaker 4

Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to John Butler for any closing remarks.

Speaker 1

Michelle, thank you so much. Thank you all for the questions and for your time this morning. Our Vafseo launch is going extremely well. We're committed and focused on the work to make Vafseo a standard of care for treating anemia due to CKD. In kidney month and throughout the year, it's our patients and our purpose that motivate us to continue our pursuit. We look forward to updating you on our progress in May on our Q1 call and seeing many of you during investor meetings later in the year. Thanks, everyone, and have a good day.

Speaker 4

Thank you for your participation. This has concluded the program. You may now disconnect.