Research Report: Akebia Therapeutics, Inc.

Company: Akebia Therapeutics, Inc.
Symbol: AKBA
Date of analysis: 4/25/19
Price at analysis date: $6.45
PT: $19.46

AKBA: 1-Year Chart, May 2018 – April 2019

Source: Seeking Alpha

INVESTMENT THESIS:

Commercialized drug Auryxia (approved in the US for hyperphosphatemia in adults with dialysis-dependent chronic kidney disease (DD-CKD) and iron deficiency anemia (IDA) in adults with non-dialysis-dependent (NDD) CKD) has blockbuster potential, but after several years on the market, annual sales are only about $100M. However, they have another potential blockbuster candidate, vadadustat, which is in several phase-3 trials around the globe. The hope is that it can become the standard of care in the $6B+ market for anemia due to CKD in adults with DD-CKD and NDD-CKD. Our valuation for vadadustat alone justifies a position in AKBA.

LIQUIDITY POSITION: Good

As of 4Q18, AKBA had cash of $322M. Additionally, AKBA is eligible to receive over $150M in development and regulatory milestones from its collaboration partners. As per the 4Q18 earnings call, management says that the cash runway should extend into 3Q20, so the risk of dilution seems fairly low.

COMMERCIAL PROSPECTS: Very Good

Auryxia (ferric citrate)

Value: not included in valuation

Auryxia has been on the market in the US since late 2014 for hyperphosphatemia in adults with dialysis-dependent (DD) CKD. In early 2018, it also began selling for a second indication: iron deficiency anemia (IDA) in adults with non-dialysis-dependent (NDD) CKD. Auryxia is also marketed in Japan under the trade name Riona for the improvement of hyperphosphatemia in patients with CKD (both DD and NDD). Lastly, it was approved in the EU in 2015 for the control of hyperphosphatemia in adult patients with CKD under the trade name Fexeric (it is not marketed yet in the EU, as the company continues to explore third party commercialization opportunities).

Expectations for Auryxia were very high, with some analysts projecting peak sales of $1B+ in just the US alone. However, almost 5 full years after launch, the annual run-rate remains at a paltry $100M, with AKBA’s management unwilling to give any type of sales guidance as of 4Q18 (until they become more familiar with the normalized growth rate). Licensing revenue from Japan also remains at less than $2M per quarter, and the inability/unwillingness of KERX’s past management to sign a commercialization partner in the EU several years after approval does not instill much confidence.

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