Akebia Therapeutics, Inc. — 2014 Form 10-K
Reporting period: Fiscal year ended December 31, 2014. This is an annual filing, not a standalone quarterly report; selected fourth-quarter results are included below. Akebia is a clinical-stage biopharmaceutical company developing HIF-based therapies, led by oral anemia candidate AKB-6548. It had no approved products and generated no product revenue.
Financial results and liquidity
| Metric | FY 2014 | FY 2013 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $25.4 million | $10.8 million |
| General and administrative expense | $12.5 million | $5.2 million |
| Total operating expenses / operating loss | $37.9 million | $15.9 million |
| Net loss | $37.0 million | $13.2 million |
| Net loss applicable to common shareholders | $123.9 million | $69.1 million |
| Net cash used in operating activities | $27.5 million | $11.3 million |
| Cash, cash equivalents and available-for-sale securities at year-end | $108.9 million | $32.6 million |
| Working capital | $103.6 million | $29.5 million |
For the three months ended December 31, 2014, operating expenses were $10.6 million, net loss was $10.4 million, and net loss per share applicable to common stockholders was $0.52. Gross margin and operating margin are not meaningful because the company had no revenue.
The $123.9 million FY 2014 loss applicable to common shareholders includes $86.9 million of preferred-stock accretion recorded before conversion of preferred shares at the March 2014 IPO; it is substantially higher than the $37.0 million GAAP net loss. The 2013 common-shareholder loss also included $55.9 million of preferred-stock accretion.
The company reported total liabilities of $6.9 million, primarily accounts payable and accrued expenses. It disclosed $8,000 of capital-lease payments remaining and operating-lease commitments; the filing does not identify material outstanding borrowings. The $104.4 million of 2014 financing cash flow mainly reflects net IPO proceeds. Management estimated existing resources would fund its operating plan through the first half of 2016, absent additional financing or strategic partnerships. A separate going-concern disclosure said cash resources were expected to cover the current operating plan for at least the next 12 months.
Changes versus the prior comparable period
- Net loss increased to $37.0 million from $13.2 million as total operating expenses rose $22.0 million. R&D expense increased $14.6 million, reflecting AKB-6548 studies and development, manufacturing, patent costs, and higher staffing and stock compensation. G&A expense increased $7.4 million, including higher stock compensation, staffing, professional fees, facilities and commercialization planning.
- Operating cash use increased to $27.5 million from $11.3 million, broadly reflecting the higher operating cost base.
- Year-end cash, cash equivalents and available-for-sale securities rose to $108.9 million from $32.6 million, largely following the IPO. Akebia raised approximately $104.4 million net from its March 2014 offering.
- Preferred shares converted into common stock upon the IPO. The reported common-shareholder loss per share is therefore affected by both preferred-stock accretion and substantially different weighted-average share counts between years.
- Other income was $0.9 million in 2014, compared with $2.8 million in 2013; the earlier period included a $2.4 million gain on extinguishment of debt.
Business outlook, commentary and risks
- Akebia reported positive top-line Phase 2b results for AKB-6548 in non-dialysis CKD anemia: 54.9% of treated subjects versus 10.3% on placebo met the primary endpoint (p<0.0001). The company planned to present complete efficacy and safety data in the first half of 2015.
- Management planned to begin Phase 3 studies for non-dialysis CKD anemia in 2015, subject to regulatory discussions, and anticipated a U.S. NDA by 2019 if Phase 3 results were favorable. The proposed Phase 3 program was not yet agreed with FDA or EMA; the company estimated approximately 3,000–3,500 participants across two studies.
- A Phase 2 study in dialysis patients was underway, with results expected in the third quarter of 2015 and Phase 3 studies for that indication planned for 2016. AKB-6899 remained preclinical, with IND-enabling work intended to support an IND filing in 2015.
- In the Phase 2b study, Akebia described AKB-6548 as generally well tolerated, but reported a higher rate of serious adverse events in the active arm in the study summary (23.9% versus 15.3% on placebo), including three deaths in treated subjects. The filing states that one SAE was considered probably related and two possibly related, including one death. Safety and renal-event findings warrant review alongside the complete trial data.
- Key risks include failure or delay in Phase 3 or regulatory approval, unresolved trial design requirements, competition from other HIF-PH inhibitors and established anemia therapies, reimbursement and pricing uncertainty, dependence on contract manufacturers and CROs, and the need for further financing. Patent challenges in Europe and Japan could affect commercialization in those markets.
- Akebia intended to commercialize in the United States itself and seek collaborators for other markets. It had no internal manufacturing or commercial sales infrastructure. The company stated that interest-rate changes of 100 basis points would not materially affect its investment portfolio, given its short-duration, low-risk investments.
Most important facts for investors to verify
- Review the full Phase 2b efficacy and safety data, including the serious adverse events, deaths, renal-event classifications and dose-adjustment results.
- Confirm FDA and EMA feedback on the Phase 3 design, endpoints, sample size, cardiovascular safety requirements and schedule.
- Track dialysis-study results and whether the planned 2015–2016 milestones were achieved.
- Assess cash burn, financing needs and runway against the company’s stated first-half-2016 funding estimate; consider the difference between that estimate and the separate 12-month liquidity disclosure.
- Monitor AKB-6548 patent proceedings, competing products, manufacturing readiness and prospects for reimbursement and commercial partnerships.