Akebia Therapeutics, Inc. — 2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing, not a standalone fourth-quarter report; the filing text does not provide a clear set of standalone Q4 financial results. The 10-K was filed March 10, 2023.
Business context
Akebia is a biopharmaceutical company focused on kidney disease. Its marketed U.S. product is Auryxia (ferric citrate), approved for control of serum phosphorus in adults with dialysis-dependent CKD and treatment of iron deficiency anemia in adults with non-dialysis-dependent CKD. Vadadustat is approved in Japan as Vafseo and was under regulatory review in Europe and other markets; U.S. approval remained uncertain. The company also had early-stage HIF-PH inhibitor research programs.
Financial performance and position
| Metric | 2022 | 2021 |
|---|---|---|
| Total revenue | $292.6 million | $213.6 million |
| Auryxia net product revenue | $177.1 million | $142.2 million |
| License, collaboration and other revenue | $115.5 million | $71.4 million |
| Operating loss | $79.1 million | $265.3 million |
| Net loss | $92.6 million | $282.8 million |
| Net loss per share, basic and diluted | $0.51 | $1.70 |
| Net cash used in operating activities | $73.2 million | $253.0 million |
| Cash and cash equivalents at year-end | $90.5 million | $149.8 million |
| Current assets / current liabilities | $184.9 million / $124.8 million | $272.0 million / $256.5 million |
| Term-loan principal at year-end | $67.0 million | Not stated here on a directly comparable basis |
Reported gross profit was approximately $207.8 million, or 71% of revenue, versus approximately $60.2 million, or 28%, in 2021. These comparisons are materially affected by unusual manufacturing, inventory and purchase-commitment charges; they should not be read as a straightforward change in underlying product economics. Current assets exceeded current liabilities by approximately $60.2 million. Cash, cash equivalents and restricted cash totaled $93.2 million at year-end.
Material changes and unusual items
- Auryxia revenue increased 24.5% year over year, attributed primarily to the contracting strategy introduced in late 2021, improved payor mix and pricing; lower sales volume partly offset these factors. Management also cited a year-end customer inventory build.
- Collaboration and other revenue included a $55.0 million nonrefundable Otsuka termination payment, $15.5 million of previously deferred revenue and $9.6 million of non-cash consideration related to agreed clinical activities. Otsuka’s collaborations terminated effective June 30, 2022.
- Operating expenses declined, including R&D to $129.1 million from $147.9 million and SG&A to $138.7 million from $174.2 million. The company recorded $15.9 million in restructuring charges after workforce reductions of approximately 42% in April/May and 14% in November.
- Product cost of goods sold included a $30.2 million inventory write-down, including Auryxia drug substance not expected to be processed into finished product, and $28.7 million in BioVectra termination fees. These items were partly offset by a $67.6 million non-cash reduction in the excess purchase-commitment liability.
- Cash used in operations fell substantially from 2021, reflecting lower net loss, increased revenue and reduced operating expenses, along with lower receivables and inventory purchases. Financing cash flow included a $40.0 million CSL Vifor working-capital contribution, which is repayable, and $33.0 million of debt payments.
Outlook, risks and contingencies
- Liquidity: Management said available cash was expected to fund its current operating plan for at least 12 months from the filing date. This depends on operating assumptions; management warned that materially weaker performance could adversely affect liquidity and going-concern capacity. Additional funding will be needed for strategic growth or later-stage development beyond the current plan.
- Vadadustat: The FDA issued a complete response letter in March 2022, citing an unfavorable benefit-risk assessment, including failure to meet MACE non-inferiority in non-dialysis patients, thromboembolic events in dialysis patients and drug-induced liver injury risk. Akebia’s appeal focused on dialysis patients and remained under FDA consideration at filing. The company reported a positive EMA committee opinion in February 2023, with European Commission action anticipated in May 2023; that action was not yet final in the filing.
- Clinical safety: In Phase 3 dialysis studies, vadadustat met the primary MACE non-inferiority endpoint; in non-dialysis studies it did not (HR 1.17; 95% CI 1.01–1.36). The company also reported an increased thromboembolic-event risk in dialysis patients, driven by vascular-access thrombosis, and hepatocellular injury attributed to vadadustat in fewer than 1% of patients, including one severe case with jaundice.
- Debt and covenants: Pharmakon term loans were secured by specified assets, including Auryxia-related assets. Covenants include minimum liquidity and Auryxia sales requirements and restrictions related to going-concern qualifications in annual reports. Default could permit acceleration and enforcement against collateral. The $40.0 million Vifor working-capital facility is repayable and has contractual interactions with the loan agreement.
- Commercial exposure: Auryxia is the principal source of product revenue. Medicare Part D does not cover its IDA indication and requires prior authorization for Medicare prescriptions. Generic Auryxia entry is licensed from March 20, 2025, subject to FDA approval, with possible earlier entry under specified circumstances. Competition, reimbursement, a declining phosphate-binder market and COVID-19 effects remain risks.
- Other risks and contingencies: The company relies on third-party manufacturers, with single-source supply dependencies; it reported prior Auryxia recalls and current manufacturing/inventory issues. A stockholder lawsuit related to the 2018 merger remained active, and Akebia said it could not reasonably estimate a loss range. Nasdaq had granted an additional compliance period through May 8, 2023 to meet the minimum bid-price requirement; a reverse split proposal was pending stockholder approval. The filing also identifies dilution, legal and patent challenges, and pricing and regulatory risks.
Important facts for investors to verify
- Current cash runway and forecast assumptions, including expected Auryxia sales, planned spending and the timing or terms of any financing.
- FDA’s final response to the vadadustat dispute, any additional evidence or trials required, and the scope and timing of potential approvals in the U.S. and Europe.
- Underlying Auryxia demand and net pricing, customer inventory effects, payor rebates, and exposure to generic entry from March 2025 or earlier.
- Cash obligations and covenant headroom under the Pharmakon loans, plus repayment terms for the Vifor working-capital facility and BioVectra termination payments.
- Whether manufacturing changes, inventory write-downs, supply commitments or the 2022 cost reductions affect future product availability and operating cash flow.
- Resolution and potential financial impact of the merger-related lawsuit, Nasdaq bid-price compliance, and any further share issuance or dilution.