Akebia (AKBA) Outlook

AKBA has lost 70%+ of it’s value from a 52-week high and closed today at $2.40. As of this writing, the stock hemorrhaged 40% of its value since Friday over a three-day trading period. On Friday, I warned of the impending loss on social media. Upon confirmation of my outlook, I started this blog to help investors in the future by arming them with information.

Akebia was very promising a few months ago with the impending results from studies on vadadustat (vada), a HIF stabilizer for treatment of anemia in kidney disease patients. The promise of positive data was buoyed by the successful 2019 trials of roxadustat (roxa), a competitor molecule developed by Fibrogen (FBGN) and marketed by AstraZeneca (AZ).

Surprisingly, AKBA announced on September 4, 2020 that vada failed its primary safety endpoint in a critical phase 3 trial for non-dialysis dependent patients. The stock plummeted.

AKBA executives promised on investor calls that there was a path forward for FDA approval in non-dialysis dependent patients. They urged shareholders to wait for the American Society of Nephrology (ASN) conference in late October for a more detailed safety analysis and their strategy for approval.

At ASN last week and in an investor call, AKBA released a more detailed analysis of the safety data. Unfortunately, the rehashed analysis failed to provide promising insights or a solution to the safety problem.

Shockingly, the AKBA team opted not to take investor questions on the conference call, instead answering their own precooked questions. The stock has fallen over 40% since.

It seems possible that AKBA did not want to take investor calls because the company itself does not have answers. Where does it go from here?

The problem is that the company’s future rides on vada. The most important patient population for vada’s success is non-dialysis. That trial failed safety and vada does not seem to have a path to approval in non-dialysis patients as the company first asserted.

Vada has a good chance to be approved in dialysis patients, but that patient population is relatively small and will face competition from roxa, as well as ESAs, the currently used treatment. The competition is fierce and the market is limited.

In comparison, roxa showed positive safety and efficacy results in both dialysis and non-dialysis patients and has a quicker approval timeline than vada.

To complicate problems, AKBA built a large sales force for its only currently approved drug, Auryxia. Despite low profits (~$30m/year), AKBA justified the personnel as an expense to develop the eventual sales team for vada. With vada unlikely to be approved in the key patient population, it calls into question whether downsizing will be in order.

AKBA still has a chance as a company, but it needs a new vision. The unfortunate failure of vada caps the upside of the company and requires a retooling, perhaps with a smaller footprint.

Disclosure: I hold no stock or positions in AKBA, FBGN, or AZ.

Disclaimer: The information on this website are opinion only and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

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