On May 9, 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 first quarter ended March 31, 2022 and provided business updates (Press release, Akebia, MAY 9, 2022, View Source [SID1234613926]).
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"While we were surprised and disappointed by the vadadustat Complete Response Letter we received from the FDA in March, our team has responded aggressively by working to strengthen and secure the company financially, with an aim of allowing us to continue to deliver on our purpose to better the lives of people impacted by kidney disease. We plan to focus on Auryxia commercial success while exploring our earlier stage assets and pursuing other value creating business opportunities," said John Butler, Chief Executive Officer of Akebia. "The past six months of Auryxia net sales have been the strongest ever. This is a testament to the strength of our commercial team, which has delivered, even as COVID-19 disproportionately impacted the patients we serve. As we emerge from the pandemic, we believe Auryxia revenue is positioned to continue to grow and provide a solid basis for ongoing financial support for the company."
Akebia has outlined three pillars of its refined strategic focus:
Drive Auryxia revenue and identify cash management opportunities with the objective to enable Akebia to manage the company with existing cash resources and ongoing cash from operations;
Support our partners selling and seeking regulatory approval for vadadustat globally, including potential EMA approval and European launch; and evaluate options for potential U.S. approval; and,
Thoughtfully invest in our pipeline of internal assets and assess other strategic growth opportunities.
Akebia refined its strategic focus following receipt on March 29, 2022 of a Complete Response Letter (CRL) from the U.S. Food & Drug Administration (FDA) for Akebia’s New Drug Application for vadadustat, an investigational oral hypoxia-inducible factor prolyl hydroxylase inhibitor for the treatment of anemia due to chronic kidney disease. Akebia plans to request an end of review meeting with the FDA within ninety days of receipt of the CRL. Akebia plans to evaluate and determine potential next steps for vadadustat in the U.S. following the end of review meeting with the FDA. In the meantime, the company is focused on its path forward without a U.S. approval for vadadustat.
Financial Results
Revenues: Total revenue was $61.7 million for the first quarter of 2022 compared to $52.3 million for the first quarter of 2021.
Net product revenue was $41.4 million for the first quarter of 2022 compared with $30.4 million for the first quarter of 2021, an increase of 36%.
Collaboration revenue was $20.3 million for the first quarter of 2022 compared to $21.9 million for the first quarter of 2021. The decrease in the period compared to the same period in 2021 was primarily due to lower collaboration revenue from Otsuka Pharmaceuticals Co. Ltd (Otsuka) driven by lower development costs incurred subject to cost share provisions under both the Otsuka collaboration agreement for the U.S. and the Otsuka collaboration agreement for certain territories outside the U.S.
Revenue Guidance: Akebia is providing net product revenue guidance for Auryxia of $165 – $170 million for fiscal year 2022. Guidance assumes, among other things, continued stabilization of the phosphate binder market and continued improvement of net realized price per tablet.
COGS: Cost of goods sold was $31.3 million for the first quarter of 2022 compared to $34.6 million in the first quarter 2021. In 2022, cost of goods sold consisted of costs associated with the manufacturing of Auryxia and supply of Vafseo to MTPC for commercial sale in Japan. Additionally, $5.3 million was related to excess and obsolescence reserves associated with Auryxia partially offset by a $0.8 million reduction to the liability for excess purchase commitments, and $9.0 million related to amortization of intangibles.
R&D Expenses: Research and development expenses were $43.8 million for the first quarter of 2022 compared to $40.6 million for the first quarter of 2021. The increase compared to the prior year period was primarily due to increased headcount compared to the first quarter 2021.
SG&A Expenses: Selling, general and administrative expenses were $44.3 million for the first quarter of 2022 compared to $41.3 million for the first quarter of 2021 due to higher marketing expenses in anticipation of the potential approval of vadadustat.
Net Loss: Net loss was $62.4 million for the first quarter of 2022 compared to $69.6 million for the first quarter of 2021.
Cash Position: Cash and cash equivalents as of March 31, 2022, were $174.6 million. Akebia believes that its cash resources will be sufficient to fund its current operating plan through 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 and collaboration partners, and the reduction of certain infrastructure costs. The outcome of these measures, such as the potential amendment of certain contractual arrangements with supply and collaboration partners, are outside of Akebia’s control.
Restructuring: On April 4, 2022, the Board of Directors of Akebia approved a reduction in workforce of approximately 42% across all areas of Akebia (47% inclusive of the majority of open positions) following the receipt of the CRL. On May 5, 2022, Akebia implemented a further reduction in workforce consisting of several members of management. In connection with the restructuring, the company estimates that it will incur restructuring charges of approximately $16.5 million in the aggregate, primarily related to one-time termination benefits and contractual termination benefits including severance, non-cash stock-based compensation expense, healthcare and related benefits primarily in the second quarter of 2022. Akebia expects that the reduction in force will result in an approximate range of $60-65 million reduction in cash required for operating activities through the end of 2023.
"There has been significant effort made since our CRL in March to streamline our operations with a goal of funding operations from the cash flows of Auryxia as well as funds from our collaboration partners," said David A. Spellman, Chief Financial Officer of Akebia. "There is still work to do, and we are focused on delivering increased revenue and greater cost savings. If we are successful in implementing cost avoidance measures, we believe we will have cash flows to support the business through at least the next twelve months and do not anticipate a near-term requirement to further finance the company to execute our operating plan."
Conference Call
Akebia will host a conference call on Monday, May 9, 2022 at 4:30 p.m. Eastern Time to discuss its first quarter financial results and provide business updates. To listen to the conference call on May 9, please dial (877) 458-0977 (domestic) or (484) 653-6724 (international) using conference ID number 1273066. The call will also be webcast LIVE and can be accessed via the Investors section of the Company’s website at View Source
A replay of the conference call will be available two hours after the completion of the call through May 15, 2022. To access the replay, dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and reference conference ID number 1273066. An online archive of the conference call can be accessed via the Investors section of Akebia’s website at View Source