Financial Performance Overview

Akebia Therapeutics is a biopharmaceutical company that develops and commercializes treatments for kidney disease. The company has two main commercial products - Vafseo and Auryxia.

In 2024, Akebia’s net product revenue was $152.2 million, down from $170.3 million in 2023. This decrease was primarily due to lower sales volume of Auryxia, partially offset by price increases and improved contracting with third-party payers. Auryxia will lose exclusivity in the U.S. in March 2025, which could negatively impact future revenue. However, the company believes the dynamics of Auryxia’s reimbursement being included in the end-stage renal disease (ESRD) bundle under Medicare Part B could result in a slower revenue decline compared to typical loss of exclusivity scenarios.

Akebia also generates revenue from license, collaboration and other agreements with partners like Medice, Mitsubishi Tanabe Pharma, and Japan Tobacco. This revenue was $8.0 million in 2024, down from $24.3 million in 2023, due to a one-time upfront payment in 2023 and reduced revenue from the company’s supply agreement with Mitsubishi Tanabe Pharma.

The company has incurred net losses each year since inception, with net losses of $69.4 million in 2024 and $51.9 million in 2023. These losses have been driven by the costs of commercializing Auryxia, developing and commercializing Vafseo, and providing general and administrative support.

Key Financial Components

Product Revenue Akebia generates product revenue from sales of Auryxia in the U.S. to customers like dialysis organizations, wholesale distributors, and specialty pharmacies. This revenue includes estimates for discounts, rebates, and product returns. The company expects product revenue to continue coming from Auryxia sales as well as from Vafseo sales following its U.S. launch in January 2025.

License, Collaboration and Other Revenue This revenue comes from license fees, royalty payments, and revenue from product supply under Akebia’s agreements with partners like Medice, Mitsubishi Tanabe Pharma, and Japan Tobacco. The company expects to continue generating this type of revenue from its existing collaborations and any future partnerships.

Cost of Goods Sold (COGS) COGS includes the direct and indirect costs to manufacture Akebia’s commercial products, including at contract manufacturing organizations. It also includes the amortization of the intangible asset related to the Auryxia product rights. COGS for a newly launched product like Vafseo does not include the full manufacturing cost until the initial pre-launch inventory is depleted.

Research and Development (R&D) Expenses R&D expenses are primarily for the development of Vafseo prior to regulatory approval, as well as for Akebia’s pipeline programs. These include personnel costs, clinical trial expenses, manufacturing costs for clinical materials, and other development activities. R&D expenses decreased in 2024 compared to 2023 due to the completion of Vafseo clinical trials and reduced pre-launch inventory costs.

Selling, General and Administrative (SG&A) Expenses SG&A expenses cover commercial, marketing, executive, finance, and other corporate functions. The increase in 2024 was mainly due to higher headcount-related costs and marketing expenses for the Vafseo U.S. launch.

Other Expenses Other expenses include interest, changes in the fair value of warrants, and losses related to debt extinguishment and lease termination. The increase in 2024 was primarily due to non-cash interest expense on the liability related to settlement royalties with CSL Vifor.

Liquidity and Capital Resources

As of December 31, 2024, Akebia had $51.9 million in cash and cash equivalents, and $1.7 million in restricted cash. The company has funded its operations through product sales, collaboration payments, term loans, and equity financings, including $43.0 million raised through an at-the-market (ATM) offering in 2024.

Akebia has incurred recurring losses and negative cash flow from operations. The company believes its existing cash resources and expected product, royalty, supply, and license revenues are sufficient to fund its current operating plan for at least 24 months. However, if operating performance deteriorates, it could affect Akebia’s liquidity and ability to continue as a going concern. The company may also seek additional financing through equity, debt, or strategic transactions.

Key Contractual Obligations and Commitments

Debt Agreements In January 2024, Akebia entered into a $55 million senior secured term loan facility with BlackRock. This included an initial $37 million tranche, an $8 million tranche in April 2024, and a final $10 million tranche drawn in February 2025. The loans mature in January 2028 and have a floating interest rate.

Liability Related to Settlement Royalties As part of terminating its license agreement with CSL Vifor, Akebia agreed to pay CSL Vifor tiered royalties on U.S. sales of Vafseo, ranging from high single-digit to mid-single-digit percentages. This liability is being amortized over the royalty term using an effective interest rate of 41%.

Working Capital Fund Liability In 2022, CSL Vifor provided a $40 million working capital fund to partially finance Akebia’s Vafseo manufacturing costs. Akebia will repay this through quarterly royalty payments of 8-14% of Vafseo U.S. net sales, until the earlier of the full $40 million being repaid or May 2028.

Liability Related to Sale of Future Royalties In 2021, Akebia sold its rights to receive certain royalties and milestones for vadadustat (Vafseo) in Japan and other Asian countries to HealthCare Royalty Partners for $44.8 million. Akebia is amortizing this liability using the effective interest method.

Other Commitments Akebia has various other contractual obligations, including a lease for its Cambridge, Massachusetts office and lab space, license agreements, and manufacturing agreements for Auryxia and Vafseo. The company also has commitments related to the termination of its prior manufacturing agreement with BioVectra.

Analysis of Key Strengths and Weaknesses

Strengths:

• Established commercial products: Akebia has two approved and marketed products, Auryxia and Vafseo, providing a revenue base.
• Vafseo launch: The recent U.S. approval and launch of Vafseo, Akebia’s oral treatment for anemia in chronic kidney disease, represents a significant growth opportunity.
• Partnerships: Akebia has collaboration agreements with experienced partners like Medice, Mitsubishi Tanabe Pharma, and Japan Tobacco to commercialize its products internationally.
• Pipeline: The company has a pipeline of HIF-based product candidates targeting areas of unmet need in kidney disease and other indications.

Weaknesses:

• Recurring losses: Akebia has incurred net losses each year since inception, which could continue if the company is unable to grow revenue sufficiently.
• Auryxia exclusivity loss: The upcoming loss of exclusivity for Auryxia in the U.S. in 2025 could significantly impact revenue, even with the dynamics of its reimbursement.
• Reliance on key products: Akebia is heavily dependent on the commercial success of Auryxia and the launch of Vafseo to drive revenue growth and profitability.
• High R&D costs: Developing new product candidates requires significant ongoing R&D investment, which could strain the company’s resources.

Outlook and Future Prospects

Akebia’s near-term outlook is focused on the successful commercialization of Vafseo in the U.S. and continued management of Auryxia sales in the face of upcoming generic competition. The company’s ability to grow revenue and achieve profitability will depend on Vafseo gaining traction as a new treatment option for anemia in chronic kidney disease patients, as well as Akebia’s efforts to maintain Auryxia’s position in the market.

Longer-term, Akebia’s pipeline of HIF-based product candidates, including those targeting acute kidney injury, respiratory distress syndrome, and retinopathy of prematurity, represent potential avenues for future growth. However, these programs will require significant additional investment and development before reaching the commercialization stage.

Overall, Akebia faces both opportunities and challenges as it works to establish Vafseo, manage the transition for Auryxia, and advance its pipeline. The company’s ability to execute on its strategic priorities and navigate the evolving competitive landscape will be critical to its future success and sustainability.