On August 4, 2022 Akebia Therapeutics, Inc. (Nasdaq: AKBA), a biopharmaceutical company with the purpose to better the lives of people impacted by kidney disease, reported financial results for the second quarter ended June 30, 2022 and provided business highlights (Press release, Akebia, AUG 4, 2022, View Source [SID1234617556]).
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"In May we outlined the pillars of our refined strategic focus in the wake of the unexpected Complete Response Letter (CRL) for vadadustat from the FDA to focus on driving Auryxia revenue while managing our overall spending, supporting the regulatory path for vadadustat, and thoughtfully investing in our pipeline," said John P. Butler, Chief Executive Officer of Akebia. "Today we are reporting 32.4% revenue growth for Auryxia versus the second quarter of 2021 and are increasing our revenue guidance for 2022. Since the beginning of the second quarter, we have regained the rights to vadadustat from Otsuka in the U.S., Europe, and other territories, completed our end of review conference with the FDA, and today we shared data for vadadustat in ARDS that we believe supports further development of the drug for this indication. The progress we’ve made in alignment with our refined focus is a testament to the resilience and tenacity of the Akebia team. We look forward to continuing our progress."
The company had several important business updates since the beginning of the second quarter 2022:
In April, Akebia completed a reduction in force, reducing the employee base by 42% of full-time employees, and further reducing open headcount for a 47% overall reduction.
In June, Akebia and Otsuka Pharmaceuticals Co. Ltd (Otsuka) agreed to terminate their U.S. and international collaboration agreements. As a result, Akebia has regained the rights for vadadustat from Otsuka in the U.S., Europe, China, Russia, Canada, Australia, the Middle East, and certain other territories. Vadadustat is under review by the European Medicines Agency (EMA) for the treatment of anemia associated with chronic kidney disease (CKD) in adults.
In July, Akebia completed an end of review conference with the U.S. Food & Drug Administration (FDA), the first step in the process to determine the path for a potential U.S. approval for vadadustat as a treatment of anemia due to CKD in patients on dialysis. The company received a CRL from the FDA for vadadustat in March 2022.
In July, Akebia repaid $25 million on its $100 million debt facility with Pharmakon. In exchange for the early payment, Pharmakon agreed to amend and waive certain provisions, as described in the Form 8-K filed by the company at the time. The repayment results in savings of approximately 34% of the company’s cash interest on the loan for the remainder of the term.
Today, in a separate press release, Akebia announced initial findings from an investigator-sponsored clinical study with the University of Texas Health Sciences Center, Houston (UTHealth Houston) evaluating vadadustat, Akebia’s investigational oral hypoxia-inducible factor prolyl hydroxylase inhibitor (HIF-PHI), for the prevention and treatment of ARDS in clinical trial subjects with COVID-19 and hypoxemia (O2 saturation ≤94%).
"We clearly outlined our objective to manage the company with existing cash resources and ongoing cash from operations and we are pleased to have made significant progress both in terms of net product revenue growth and cost reduction measures," said David A. Spellman, Chief Financial Officer of Akebia. "Auryxia is delivering on a growth trajectory driven by an increase in net price per pill due to an improved payor mix and improved commercial contract terms. Further, our expenses have already begun to decrease significantly as a result of our refined strategy."
Financial Results
Revenues: Total revenue was $126.8 million for the second quarter of 2022 compared to $52.9 million for the second quarter of 2021.
Net product revenue was $43.7 million for the second quarter of 2022 compared with $33.0 million for the second quarter of 2021, a 32.4% increase; and, compared with $41.4 million for the first quarter of 2022, a 5.4% increase.
Akebia is increasing its net product revenue guidance for Auryxia to $170 – $175 million for fiscal year 2022, raising both the top and bottom end of the guidance range by $5 million. The guidance assumes, among other things, continued stabilization of the phosphate binder market and continued improvement of net realized price per tablet. The company’s gross margin continues to expand due to a reduction in supply chain costs and cost management activities.
License, collaboration and other revenue was $83.1 million for the second quarter of 2022 compared to $20.0 million for the second quarter of 2021. This increase reflects a nonrefundable and non-creditable payment of $55.0 million that Otsuka paid to Akebia in July 2022 under the terms of a termination and settlement agreement between the companies. In addition, the company recognized $15.5 million related to previously deferred revenue as of the date of termination and $9.6 million of non-cash consideration related to Otsuka’s obligations to complete certain agreed upon clinical activities.
COGS: Cost of goods sold was $18.6 million for the second quarter of 2022 compared to $52.5 million in the second quarter of 2021.The decrease compared to the prior year period was primarily due to a $30.3 million non-cash charge in 2021 related to an increase to the liability for excess purchase commitments during the second quarter of 2021.
R&D Expenses: Research and development expenses were $26.0 million for the second quarter of 2022 compared to $37.2 million for the second quarter of 2021. The decrease compared to the prior year period was primarily due to decreased headcount related costs related to the reduction in force and decreased consulting costs.
SG&A Expenses: Selling, general and administrative expenses were $32.8 million for the second quarter of 2022 compared to $41.7 million for the second quarter of 2021. The decrease compared to the same period in the prior year was primarily due to decreased headcount related costs as a result of the reduction in force and lower marketing expenses.
Restructuring: In connection with its previously announced workforce reductions, Akebia incurred $14.5 million in restructuring charges in the second quarter of 2022, primarily related to one-time termination benefits and contractual termination benefits including severance, non-cash stock-based compensation expense, healthcare and related benefits.
Net Income: Net income was $29.3 million for the second quarter of 2022 compared to a $83.0 million net loss for the second quarter of 2021.
Cash Position: Cash and cash equivalents as of June 30, 2022, were $143.9 million, which does not include the $55.0 million cash payment Akebia received from Otsuka in July 2022 and does not reflect Akebia’s approximately $25.0 million prepayment made to Pharmakon in July 2022. Akebia believes that its cash resources will be sufficient to fund its current operating plan for at least the next twelve months. Akebia’s operating plan includes assumptions pertaining to cost avoidance measures and the reduction of overhead costs resulting from the planned amendment of certain contractual arrangements, including with certain supply partners, and the reduction of certain infrastructure costs. The outcome of these assumptions, such as the potential amendment of certain contractual arrangements with supply partners, are outside of Akebia’s control. In addition, future decisions by the FDA or foreign regulatory agencies related to the potential regulatory approval of vadadustat or our ability to generate additional value from vadadustat through partnerships or other transactions may potentially further extend our cash runway, but such future decisions or transactions are not contemplated in our operating plan.
"A focus on our three strategic pillars have guided us to the point where we believe our existing cash resources and revenues from Auryxia will be sufficient to fund our company’s current operating plan for the next several years," said David A. Spellman, Chief Financial Officer of Akebia. "With key inflection points such as a potential European approval and partnering for vadadustat, we look forward to rebuilding in a measured way."
Conference Call
Akebia will host a conference call on Thursday, August 4, 2022, at 4:30 p.m. Eastern Time to discuss its second quarter financial results and provide business updates. To listen to the conference call on August 4th, please dial (833) 630-1955 (domestic) or (412) 317-1836 (international) and ask to join into the Akebia Therapeutics call. The call will also be webcast LIVE and can be accessed via the Investors section of Akebia’s website at View Source
A replay of the conference call will be available two hours after the completion of the call through August 10, 2022. To access the replay, dial (877) 344-7529 (domestic) or (412) 317-0088 (international) and reference replay access code 3608580. An online archive of the conference call can be accessed via the Investors section of Akebia’s website at View Source