Akebia Therapeutics Announces Fourth Quarter and Full-Year 2017 Financial Results

“The past year was highly productive for Akebia as we advanced our global Phase 3 program for vadadustat and completed significant collaboration and licensing deals to provide us with R&D financing, stronger commercial presence at launch and significant validation of vadadustat,” said John P. Butler, President and Chief Executive Officer of Akebia Therapeutics. “We are now approaching an important inflection point, with top-line Phase 3 results anticipated next year, subject to the accrual of MACE events, and market launch anticipated in 2020, subject to approval.”

2017 Full-Year and Recent Corporate Highlights

• Expanded our collaboration with Otsuka for vadadustat, which originally covered the U.S. only, to include a collaboration for Europe, China and other territories. Across both collaboration agreements, the total committed capital upon signing was $473 million with the potential for up to $1.4 billion in milestone payments;
• Entered into an exclusive license agreement with Vifor Pharma to sell vadadustat as its only HIF product for distribution to Fresenius Medical Care in the U.S., a kidney dialysis provider serving nearly 40% of U.S. dialysis patients, subject to approval of vadadustat by the U.S. Food and Drug Administration and inclusion of vadadustat in a bundled reimbursement model;
• Announced positive top-line results from two Phase 2 studies of vadadustat in Japanese patients, one in non-dialysis dependent chronic kidney disease (NDD-CKD) and the other in dialysis dependent chronic kidney disease (DD-CKD); the data from these studies were consistent with findings from previous studies of vadadustat;
• Following a positive consultation with the Japanese regulatory authority, PMDA, collaboration partner Mitsubishi Tanabe Pharma Corporation (MTPC) initiated Phase 3 studies of vadadustat in patients with NDD-CKD and DD-CKD in Japan, which generated a $10 million milestone to Akebia. Data read-outs are expected in 2019;
• Announced that we are targeting full enrollment in our Phase 3 INNO₂VATE and PRO₂TECT studies to occur by the end of 2018, with top-line results anticipated in 2019, subject to the accrual of MACE events, and market launch anticipated in 2020, subject to approval;
• Enhanced the study designs for FO₂RWARD and TRILO₂GY, which we believe will provide additional characterization and differentiation of vadadustat and further strengthen our commercial position, subject to vadadustat’s approval;
• Completed two non-clinical carcinogenicity studies, a two-year study in rats and a six-month study in mice, results of which showed no carcinogenic effect of vadadustat;
• Published positive Phase 2a study results in the American Journal of Nephrology, which showed that vadadustat increased mean hemoglobin levels in a dose-dependent manner and improved biomarkers of iron mobilization in non-dialysis chronic kidney disease patients;
• Prevailed in additional European patent disputes in which the Opposition Division of the European Patent Office revoked another FibroGen, Inc. HIF-related patent in Europe, and another of FibroGen’s patents was significantly narrowed to cover only an indication for which Akebia is not intending to develop vadadustat; and
• Signed an exclusive agreement with Johnson & Johnson Innovation to in-license HIF-targeting product candidates, including AKB-5169 for the treatment of inflammatory bowel disease, for which we are targeting an IND submission in 2018, and access an extensive library of well-characterized HIF pathway compounds.

Financial Results

Akebia reported net income for the fourth quarter of 2017 of $12.3 million, or $0.25 per diluted share, as compared to a net loss for the fourth quarter of 2016 of ($37.9) million, or ($0.99) per share. The net income reported for the fourth quarter of 2017 was attributable to $39.7 million of collaboration revenue recognized in connection with the MTPC agreement as the criteria for revenue recognition was satisfied in the fourth quarter.

The company reported a net loss for the full year of 2017 of ($76.9) million, or ($1.77) per share, as compared to a net loss for the full year of 2016 of ($135.7) million, or ($3.60) per share.

Collaboration revenue was $87.3 million for the fourth quarter of 2017 compared to $1.5 million for the fourth quarter of 2016, and $178.0 million for the full year of 2017 compared to $1.5 million for the full year of 2016. Collaboration revenue recognized in 2016 related only to the Otsuka U.S. agreement, which was consummated in December 2016. Collaboration revenue recognized in 2017 related to revenue recognized under both the Otsuka U.S. agreement and the Otsuka International agreement, which was consummated in April 2017, as well as revenue recognized in connection with the MTPC agreement during the fourth quarter of 2017 as described above.

Research and development expenses were $68.4 million for the fourth quarter of 2017 compared to $33.4 million for the fourth quarter of 2016, and $230.9 million for the full year of 2017 compared to $115.8 million for the full year of 2016. The increase is primarily attributable to an increase in external costs related to the continued advancement of the PRO₂TECT and INNO₂VATE Phase 3 program, including ongoing enrollment; the Phase 2 studies in Japan; and study commencement activities for the FO₂RWARD and TRILO₂GY programs, both of which have been replaced with new study designs. Research and development expenses were further increased by headcount, consulting and facility-related costs related to additional resources required to support our expanding research and development programs.

General and administrative expenses were $7.6 million for the fourth quarter of 2017 compared to $6.1 million for the fourth quarter of 2016, and $27.0 million for the full year of 2017 compared to $22.2 million for the full year of 2016. The increase is primarily attributable to an increase in costs to support the company’s research and development programs, including headcount and compensation-related costs and associated facility- and patent-related costs, as well as consulting costs.

Akebia ended 2017 with cash, cash equivalents and available-for-sale securities of $317.8 million. The company also generally receives cost-share funding from its collaboration agreements with Otsuka and MTPC on a prepaid quarterly basis. Akebia expects its existing cash resources, including the prepaid quarterly committed cost-share funding from its collaborators, to fund its current operating plan into the second quarter of 2019.

Conference Call and Webcast

Akebia management will host its fourth quarter and full-year 2017 investor update conference call and webcast beginning at 4:30 p.m. Eastern Time today, Monday, March 12, 2018.

Individuals interested in participating in the call should dial (877) 458-0977 (U.S. and Canada) or (484) 653-6724 (international) using conference ID number 5847908. To access the webcast, visit the investor’s section of Akebia’s website at www.akebia.com at least 15 minutes prior to the start of the call to ensure adequate time for any software downloads that may be required.

The call will be available for replay via telephone for seven days following the call. To listen to the replay, dial (855) 859-2056 (U.S. and Canada) or (404) 537-3406 (international) using conference ID number 5847908. The archived webcast will be available on Akebia's website after the call has completed.