Akebia Therapeutics, Inc. — Q1 2015 Form 10-Q
Reporting period: Three months ended March 31, 2015. Akebia is a clinical-stage biopharmaceutical company developing HIF-based therapies, principally AKB-6548 for anemia associated with chronic kidney disease (CKD). It had no approved products and generated no product revenue.
Financial performance and liquidity
| Metric | Q1 2015 | Q1 2014 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $7.5 million | $6.2 million |
| General and administrative expense | $3.4 million | $3.8 million |
| Total operating expenses / operating loss | $10.9 million | $9.9 million |
| Net loss | $10.7 million | $9.7 million |
| Net loss per share | $0.53 | $43.37 |
| Cash used in operating activities | $8.3 million | $6.0 million |
Net loss per share in 2014 included $86.9 million of preferred-stock accretion; the year-over-year per-share comparison is therefore not representative of the change in operating performance. Interest income and Aerpio reimbursements contributed $0.2 million of other income in Q1 2015. Profit margins are not meaningful because the company had no revenue.
At March 31, 2015, cash and cash equivalents were $27.9 million and available-for-sale securities were $72.4 million, totaling $100.3 million. Total assets were $103.5 million, total liabilities $8.9 million, and stockholders’ equity $94.6 million. The filing reports no material debt. Management stated that April offering proceeds and March-end resources were expected to fund the current operating plan into the fourth quarter of 2016; this is a forward-looking estimate, not a guarantee.
Changes versus the prior comparable period
- R&D expense rose $1.3 million, primarily reflecting dialysis Phase 2 development, AKB-6899 development, personnel and manufacturing costs. Lower Phase 2b and thorough-QT study costs and lower stock compensation partly offset the increase.
- G&A expense declined $0.4 million, mainly from lower stock compensation and professional and consulting fees, partly offset by higher personnel, commercial-planning, insurance and facilities costs.
- Net loss increased $1.0 million, while operating cash use increased $2.3 million. Cash and securities combined declined from $108.9 million at year-end 2014 to $100.3 million at March 31, 2015.
Outlook, development plans and key risks
- Akebia expected to begin Phase 3 development of AKB-6548 for non-dialysis CKD anemia in 2015. FDA and EMA discussions on trial design were ongoing; management expected an FDA end-of-Phase-2 meeting in Q2 2015 and EMA scientific advice in Q3 2015. The anticipated program could include a cardiovascular outcomes study. An NDA was projected by 2019, subject to successful development and regulatory review.
- For dialysis-dependent patients, the AKB-6548 Phase 2 study was underway, with results expected in Q3 2015. If positive, the company expected to begin Phase 3 in 2016.
- AKB-6899 was in preclinical development. The company aimed to file an IND and begin Phase 1 studies, and expected to complete ophthalmology proof-of-concept studies in early 2016.
- In April 2015, after quarter-end, Akebia completed a follow-on offering of 8,363,636 shares at $8.25 per share, receiving approximately $64.6 million net. The offering increased the share count and diluted existing holders; 28,837,260 common shares were outstanding on May 1, 2015.
- Akebia expects continued losses and rising development costs, and may require additional capital. Clinical or regulatory setbacks, delays in enrollment, manufacturing or third-party performance, competition, reimbursement and commercialization challenges could delay or prevent approval or commercial success.
- AKB-6548’s Phase 2b results were described as positive, with common treatment-emergent events balanced between groups and no overall safety signal reported. The filing also notes a higher incidence of serious adverse events in the AKB-6548 group, most commonly renal-related.
- Intellectual-property proceedings remain unresolved: challenges relate to Akebia’s European patent and FibroGen patents in Europe and Japan. Adverse outcomes could affect commercialization in those markets. The filing reports no material change in contractual obligations and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether FDA and EMA discussions produced an agreed Phase 3 design, and whether non-dialysis Phase 3 started on the anticipated schedule.
- Dialysis Phase 2 results and the full safety data, including the reported serious adverse-event imbalance.
- Actual cash burn, trial spending and whether the stated runway into Q4 2016 remains achievable.
- The consequences of the April offering for fully diluted share count and per-share ownership.
- Progress and outcomes in the European and Japanese patent proceedings, and any resulting commercialization constraints.