All right, I guess we can get started here. My name is Matthew Caufield, I'm a senior biotech analyst here at H.C. Wainwright, and we're very excited to be welcoming Akebia Therapeutics. We're joined by John Butler, CEO, and also Nik Grund, Chief Commercial Officer. Thank you very much for joining us today, guys.
Thanks for having us, Matt. I appreciate it.
Absolutely. Maybe to start off, you could maybe give us an introduction to Akebia, your work in the kidney disease space, and the important differentiators and opportunities that are there.
Yeah, thank you. As you said, I mean, we are a company who is, we feel very purpose-driven, and our purpose is to better the lives of people who live with kidney disease. Right now, most of our focus is on the launch of our newest product, Vafseo, vadadustat, which is a hypoxia-inducible factor prolyl hydroxylase inhibitor to treat the anemia of chronic kidney disease for people on dialysis. We are very excited about the early stages of the launch, but, you know, obviously we think it's a product that has significant differentiation and, you know, we're really excited about what it can do. Now it's our second commercial product.
We have another commercial product, Auryxia, which is the phosphate binder, that, you know, we will talk a little bit about and certainly has been one that's made a difference for patients as well. You know, as we think about where we're going as a company, I mean, we talk about the desire to have Vafseo become standard of care for all patients with chronic kidney disease. That means getting the launch right, doing a great launch, early days, super happy with how that's going. It also means that we make the product available for patients with chronic kidney disease who are not on dialysis. You know, and we can talk more about that, but that is, you know, this is an oral once-a-day product that is a perfect way to deliver product to patients who are not on dialysis.
Every time I speak to a physician about the dialysis population, where they're excited to use the product, they are, without fail, each of them says, I really want to use the product in the non-dialysis population as well. We are in the process of engaging with the FDA on a path forward. We know we are going to have to do some clinical work there. That is part of making Vafseo standard of care for patients with chronic kidney disease.
You know, beyond that, we don't talk much about our pipeline, but, you know, we are building a pipeline of products within kidney disease, and then we're also thinking about, when we think about this HIF technology, we've really recognized that there are areas outside of the kidney where this technology can be brought to bear and we think can make a real difference for patients. And so building that future beyond kidney disease is kind of the third leg of the stool of how we'll add value long term. I know today we'll probably spend almost all of our time appropriately on the launch of Vafseo, but, kind of later this year, we hope we'll have the opportunity to spend more time talking about the pipeline as well.
Very exciting. The first quarter of this year marked the initial quarter for Vafseo U.S. launch in anemia CKD patients receiving dialysis. Can you discuss a little more about how that launch is progressing, the early trends you're observing among nephrologists' uptake, their enthusiasm?
Yeah, we're excited about it. Nik, why don't you,
yeah, we're very pleased with where, where we've done, what we've done so far in quarter one. If you look at our kind of core strategy, we really want to drive breadth of prescribing and depth of prescribing. When we think about breadth of prescribing, we think about the number of physicians that have prescribed our product. Through the end of quarter one, almost 640 physicians have prescribed the product. Then you look at depth, which is how many prescriptions on average those prescribers write. On average, they've written about 12 prescriptions each. Getting the depth, that range ranges from people that have prescribed one prescription to some physicians who have prescribed over 100 prescriptions. When you get to that magnitude, what you're really seeing is adoption.
You move from trial to adoption, and that's what we want to see more broadly. As we look at quarter one, most of our prescriptions have been for patients that are managed by U.S. Renal Care. We are also seeing activation of many of the other mid and small dialysis organizations, where we have protocols in place and we're starting to see uptake.
I mean, we're really excited about the fact that all five of the top dialysis providers who represent probably 85% of treatment have ordered the product. You know, as Nik says, U.S. Renal is driving the first quarter, and in the second quarter, it will be the small and medium providers, you know, U.S. Renal and others who drive our revenue achievement. Remember, there's 150,000 patients at those small and medium providers.
It is a very, very, you know, deep pool to fish from, if you will. But, you know, both Fresenius and DaVita have purchased product and are allowing access on an exception basis. When a physician has a patient who has a hypersensitivity to ESA or an active malignancy, those are a couple of the ones that we've heard that'll let them write the product. You know, that's not where we want to be long term, from an adoption standpoint, but it says that they recognize there's value here, and we just have to keep working to expand that use. In one of them, you know, I think we're much closer. Maybe Nik, you talk a little bit about the pilot we expect to start soon.
One of the large dialysis organizations already has protocol in place. You go from contracting to protocol. Protocol then allows physicians to actually start prescribing the product. This large dialysis organization, you got to remember these folks have, you know, a thousand clinics, and therefore the complexity of that system is pretty intense. They like to pilot these things first. This large dialysis organization is going to pilot the product in somewhere between 50 and 200 clinics. 50 and 200 clinics is a massive pilot. 200 clinics is larger than most mid-sized dialysis organizations. You look at a pilot of that size, they start off by actually training their people, which is great. They train them on the protocol, they train them on the product. That happens for about a month of training.
And then they move into usage within the trial. This is an operational pilot. It's not a safety, it's not an efficacy pilot, which means what do they want to check? When someone puts it into the system, can they actually get it? Does the, does the system allow them to decide who has reimbursement and who doesn't? Does it allow them to make sure that patient gets a refill on time? Those are the operational aspects of the pilot. That pilot typically will go two to three months because they got to get a refill. at least two months, but two to three is what we, we've been talking to them about. And then they open it up to broad usage. We anticipate that pilot starting in quarter three, and then in quarter four, opening it up to broad usage.
We'll see additional LDO prescribers coming on in the third quarter, but really we'll have access to that entire network starting in quarter four.
We know they're really working towards it, right? We have dialysis providers or sites who've raised their hand to be part of the trial or trying to be pilot, and they're being informed that they are part of that. You know, it's great. You always just want to see it continuing to move towards really kicking off, and we're super excited about where that is and where the launch is in general. I mean, it's important too, because, you know, we talked about U.S. Renal driving the early prescribing.
50% of the physicians at U.S. Renal have patients who are at DaVita or Fresenius centers as well, and they want to be able to use the product for their patients there. You know, that becomes, you know, our greatest, kind of advantage is that you have that advocacy being driven by those physicians for us as well. Many of them are the ones who are raising their hands to be part of this, of this pilot, that's going to start in third quarter.
Very exciting. The team has also mentioned commercial contracts covering approximately 100% of dialysis patients. For people that aren't as familiar with the kidney space, maybe you could speak to how the strategy has started in sort of the small to mid dialysis organizations. This is all targeted towards dialysis organizations. It's not like.
That's right.
Maybe other conventional drugs and biotech where you're looking at different sales format.
That's right. Yeah. And, you know, it's really, a lot of it is driven by the reimbursement system. The dialysis organizations are financially liable for the cost of the product, the cost of treatment. So they're looking for reimbursement, right? And that reimbursement, they want to have positive economics about it. They want to make money. Contracting is that piece that allows them to buy it at less that they're getting reimbursed at. It creates positive economics as TDAPA was intended to do. It gives an incentive for dialysis organizations to use innovative products. And as far as I know, we are the only TDAPA product that had 100% of patients under the care of a dialysis organization, with contracts in place. Now that's step one. Step two is protocol development.
That's where our medical team helps educate the medical teams within the dialysis organizations to make sure that they're aware and educated on the data that they can appropriately select the patient population that they want to use the product in. We have protocols in place with many of the MDOs and small dialysis organizations. We have a protocol in place with the LDO that is going to be starting the pilot. We are still working on the protocol with the other large LDO, who hasn't yet developed a protocol. That is the second piece of it. Then obviously you expand it to usage. Very different from the retail, pharmaceutical model where any doctor can write a prescription and a person goes to your retail CVS or Walgreens and picks it up and charges your insurance company. It is a very different, it is a two-step model.
You've got to contract with LDOs, get them on board with the protocol, then you can talk about prescribing, with the physicians.
You know, it's funny, it does add a level of complexity to the commercial process so that you have these LDOs who are, you know, kind of in the middle, if you will. When you look at, again, it's only one quarter, so it's early days, but when you look at the prescribing that we've had, if you create that right contracting environment where you, you know, create a place where the business side of a dialysis provider is open to the product being used, almost happy to see the product used, you actually can drive in some ways a faster uptake. I mean, I, you know, been working in the dialysis space for a long, long time.
You know, as I think back, I mean, this really feels like one of, if not the fastest dialysis launch, that I've seen. Again, you know, you're, you're, you know, through the end of the quarter, 10 or 12 weeks in, right? We don't want to get over our skis, but, you know, having that really understanding dialysis, and maybe that's one of our competitive advantages as a company, you know, understanding and putting the right contracts in place, you know, to create that, that incentive. That's why TDAPA was put in place. I mean, CMS knew that they were going to spend more money, but they said in a, in a bundled environment, you can't incorporate a new innovative product. We need to create an incentive so that dialysis providers are willing to allow physicians to, to use the product.
That is what TDAPA has done. For us, because 90% of patients need to be treated for anemia, it is central to their care. It has really created an opportunity for us. We are really excited about, you know, the speed at which we are moving. You know, we have to keep going. No one is slowing down, but it is a great start.
Yeah, absolutely. Interestingly, you mentioned TDAPA, so that's within the CKD and the anemia dialysis market. It stands for the Transitional Drug Add-on Payment Adjustment or Reimbursement.
Well done.
So maybe at a high level, you know, for people that are newer to the story, can you describe the main considerations there and how that plays into a successful commercial launch for Vafseo?
Yeah, I mean, it is, it is a question we get from investors frequently. Like, you know, you get to this dialysis reimbursement, it's just got this extra complexity to it. You know, it sort of scares people off. You know, it really was what I said. CMS recognized that it is impossible to put a new innovative product into place. The dialysis providers for a fee for service patient, they get paid $274, I think it is $275 maybe now, per dialysis session, 156 dialysis sessions a year. That's what they get paid to offer basically four hours of pretty intense medical care. They are on a very, very thin margin for that. You say you're bringing in a new product. It's very hard to say, okay, we're willing to use that.
We're willing to let physicians see where they should use that. CMS created this TDAPA program, and this was in the first Trump administration to allow physicians to try the product. What basically they do is CMS pays for this drug, Vafseo, outside of that $274 bundle payment, which includes the payment they for EPO, right? That includes the money for EPO today, but they're going to pay for Vafseo outside of that bundle payment on an ASP basis for two years to allow physicians and dialysis providers to figure out where it fits in the treatment paradigm. You know, there is a whole mechanism post TDAPA for the next three years to pay for it. That's too complicated to talk about now and doesn't do much for us. But it is, you know, this is working.
This is why, as Nik said, we have to put these contracts in place. It's why we have to, you know, create that economic environment for the dialysis providers to, you know, be able to see a return and say to physicians, go ahead, write the product, for the people you feel it's appropriate for. You know, that's, it's not, you know, we start throwing around the acronyms. It seems complicated, but it really is simply a different way to create access for the drug. It's done that for us to this point.
Sure. I mean, it also facilitates the pricing in your favor for the launch for those first couple of years.
That's correct. Yeah, that's a really good point. I mean, it does, you know, during the TDAPA period, we launched at a WAC price of $15,500, which is the starting dose, in a WAC price. No one's paying that. Everyone gets a discount from that. In that post-TDAPA world, this is very unique, right? We will have to have a price that's basically the same as what dialysis providers are paying for ESAs today. On average, that's about $2,500 a year. After TDAPA, we will have to bring our price down. Of course, not every patient has a TDAPA, has access to TDAPA now. It's only fee for service patients, which is about 40%-45% of the dialysis population. Post-TDAPA, the price is lower, but everyone has access to a product.
You're driving the demand and usage from the physicians today. It's like expanding your, your payer universe, sort of, right? As you go, suddenly more patients have access, albeit at a lower price. You drive that, continued uptake and volume. That's why we're doing things like the VOICE trial, you know, to continue to generate data, to continue to, to grow the product.
That's very helpful. Just to wrap up on the pilot trials, is there a specific timing that's useful for investors to be following right now, maybe for the larger dialysis organizations?
Yeah. We're working with that LDO. We're expecting the pilot to be started in quarter three.
When you think about, you know, translating that to revenue, we really think about Q2 as continues to be driven by the small and medium providers, right? Again, which there's lots and lots of room to grow in that population with 150,000 patients in that population. We're not worried about that. Q3, if the pilot is, you know, as advertised, you know, at 200 sites, it could be, you know, 2,000 patients. You start to see that in Q3, but then the doors are really opened in Q4.
That's where this is when we think about kind of step, step up, of the launch, which is not an unusual thing to see, but, you know, I think you'll see that even more granular level when you have these dialysis providers in between.
Yeah, never safe to kind of correct your boss on stage.
Please do.
200 sites is 20,000 patients.
Oh, I'm saying that maybe there's 10 or 10% area that would be part of the pilot. You're absolutely right. There's many more than that patients there, but they wouldn't put everyone on now, right? Maybe they'll put 10%, maybe it's 20%. I think the way they did, and correct me if I'm wrong, which you're going to do whether I want you to or not, is, once a site is part of the pilot, they can put on any patient they want.
Who has reimbursement?
Who has reimbursement. As a matter of fact, the more the merrier, because they want to really pressure test the operational environment there.
Yeah. We talk about fee for service. John mentioned 40%-45% are fee for service. Medicare Advantage is about another 40% of patients. The LDOs have significant more leverage in negotiating with Medicare Advantage plans. We do anticipate that the pie that we're going after isn't just fee for service. It's going to be slightly larger, depending on their Medicare Advantage negotiations.
Yeah. I think we've mentioned before, I mean, we don't want to get too ahead of ourselves, but we expected it to really be just fee for service in the beginning. You know, the data that we're seeing, what is the percentage that we see in?
Yeah, we see up to 20% of reimbursement happening in other plans outside of Medicare.
Outside of Medicare fee for service. That's correct. Right. So mostly those are MA. That's right. Medicare Advantage.
Very helpful. I also wanted to just touch on the market opportunities. We consider Vafseo positioned to address CKD anemia in patients undergoing dialysis. There's also patients in the non-dialysis market. Can you further discuss the opportunities looking at non-dialysis?
Yeah, it is, it is a very, very significant opportunity for us. When you think about market size, if you look at stage four and five patients, CKD patients, you know, as their GFRs are declining, you know, they have, they're, they're characterized as stage one, two, three, four, five. Four and five is really where you see anemia, because their kidneys are failing and kidneys make EPO and they, they, they become anemic. About just over half a million, 550,000 patients are anemic who fall into the stage four and five category, which makes it about the same size as the dialysis market. It is much more valuable though, because as I said, post TDAPA, we have to bring our price down in dialysis. You have a much more traditional market, non-dialysis, where 50% are commercial patients, 50% Part D, Medicaid.
You know, when you think about our average price per patient per year, which is about $15,500, even when you take a normal quote unquote gross to net, hit it for compliance as well, you're still talking about an average price per patient, probably four to five times. While the patient numbers are the same, and dialysis ESA market for that $2,500 a year is a billion dollar market. Multiply that by four or five in the non-dialysis market. The opportunity is much, much greater.
Excellent. I know we just have another minute or so here, but just to wrap things up, I wanted to touch on the pipeline. You mentioned the VOICE outcomes trial for Vafseo. There's also the planned phase III for Vafseo in the CKD anemia patients that are not on dialysis.
That's right.
Any important high level timeframes or catalysts related to each of those, each of those trials?
Yeah, voice, you know, in our last earnings call, we said it was about 1,650 out of 2,200 patients enrolled. I haven't gotten an update since then, but Dr. Block, who's running that study, is moving at it. It's an amazing rate of enrollment. I've never seen that. I hope and believe that speaks to physicians' excitement about the product overall. Hopefully soon we'll be able to talk about full enrollment, you know, hopefully even by the middle of the year. Non-dialysis study, we're engaging with the FDA on that study. We're planning a type C meeting. We don't have a date for that yet, but we're working on initiating a phase III trial there.
Our plan is to start that trial before the end of the year, because we want to get data in front of the FDA as quickly as possible to expand that label, because physicians are waiting. Every time I talk to a physician, they say, we want to use it in non-dialysis. Stay tuned. We're looking forward to talking more about that and obviously the continued success of the launch.
Excellent. Nik and John, this has been really helpful to learn about Akebia. We're very excited to see this year's progress.
Matt, thank you so much.
Thanks for the invitation.
Absolutely.