Executive Summary / Key Takeaways

• Vafseo's Accelerating Launch: Akebia's oral HIF-PHI, Vafseo, is demonstrating strong early commercial traction in the U.S. dialysis market, with Q2 2025 net product revenues surging 55% over Q1. Strategic partnerships and the imminent broad operationalization by major dialysis organizations like DaVita (DVA) are poised to significantly expand patient access to over 275,000 by Q4 2025.
• Strategic Clinical Development: The company is aggressively pursuing label expansion for Vafseo into the non-dialysis dependent (NDD) CKD population, a market potentially 4x to 5x larger than the dialysis segment. The planned initiation of the Phase III VALOR trial by year-end, coupled with ongoing VOICE and VOCAL studies in dialysis, underscores a commitment to long-term clinical differentiation and market penetration.
• Auryxia's Enduring Contribution: Despite losing U.S. exclusivity in March 2025, Auryxia continues to deliver robust revenue, with Q2 2025 sales up 14.6% year-over-year. Its inclusion in dialysis contracts serves as a strategic asset, facilitating Vafseo's market entry and contributing to Akebia's overall financial stability.
• Strengthened Financial Position: Akebia ended Q2 2025 with $137.3 million in cash and cash equivalents, bolstered by recent equity offerings and debt drawdowns. Management projects this liquidity, combined with expected revenues, will fund its operating plan to profitability, supporting Vafseo's commercialization, label expansion efforts, and early-stage pipeline advancements.

• Competitive Differentiation: Vafseo stands out as the only oral HIF-based treatment for dialysis-dependent CKD anemia in the U.S., offering a convenient, more physiologic approach compared to injectable ESAs. This technological edge, combined with strategic contracting and a focused kidney disease portfolio, positions Akebia to capture significant market share despite competition from larger pharmaceutical players.

Setting the Stage: Akebia's Kidney-Focused Mission and Differentiated Technology

Akebia Therapeutics, Inc. has carved a distinct path in the biopharmaceutical landscape, dedicated to improving the lives of individuals impacted by kidney disease. Founded in 2007 and becoming a public entity in 2014, Akebia's journey has been marked by strategic collaborations and a steadfast commitment to innovation. The company's core business revolves around developing and commercializing therapeutics for chronic kidney disease (CKD), a condition affecting approximately 37 million patients in the U.S. and incurring substantial healthcare costs.

At the heart of Akebia's current investment thesis is Vafseo (vadadustat), an oral hypoxia-inducible factor prolyl hydroxylase (HIF-PH) inhibitor. This differentiated technology represents a significant advancement in anemia management for CKD patients. Unlike traditional injectable erythropoiesis-stimulating agents (ESAs), Vafseo activates the body's natural response to hypoxia, stimulating endogenous erythropoietin production to increase hemoglobin and red blood cell levels. This more physiologic approach offers a tangible benefit of oral administration, enhancing patient convenience and potentially improving adherence compared to frequent injections.

The company's early history laid the groundwork for its current strategic focus. Key partnerships, such as the sublicense agreement with JT (2914.T) and Torii for ferric citrate (Riona) in Japan (June 2013) and the collaboration with Mitsubishi Tanabe Pharma Corporation (4508.T) (MTPC) for Vafseo in Japan and other Asian countries (December 2015), established an international footprint. A pivotal moment arrived with the 2018 merger with Keryx Biopharmaceuticals, Inc., which integrated Auryxia (ferric citrate) into Akebia's portfolio, transforming it into a commercial-stage company. This strategic move provided a foundational revenue stream and critical market presence in the kidney disease space.

Despite facing setbacks, including a U.S. FDA Complete Response Letter for Vafseo in March 2022 and the termination of a collaboration with Otsuka Pharmaceutical Co. Ltd. (4578.T) in July 2022, Akebia demonstrated resilience. The company continued to advance Vafseo globally, securing approvals and launching in 37 countries, including the European Economic Area (EEA), UK, Switzerland, Australia, South Korea, and Taiwan through partnerships. This global presence and the experience gained from international launches have been instrumental in shaping its U.S. commercial strategy.

Vafseo's Commercial Ascent: Early Traction and Strategic Expansion

Vafseo's U.S. market entry in January 2025 marked a significant inflection point for Akebia. The launch has shown remarkable early momentum, exceeding initial expectations. In the first quarter of 2025, Vafseo generated $12 million in net product revenue, surpassing guidance of $10 million to $11 million. This strong performance continued into Q2 2025, with Vafseo net product revenues reaching $13.3 million, representing a 55% increase in demand sales over Q1.

This rapid uptake is a testament to nephrologists' desire for a new oral treatment option for anemia in CKD patients on dialysis. The company's "coiled spring strategy," focused on securing contracts and driving prescriber demand, is clearly yielding results. As of Q2 2025, 725 prescribers had written Vafseo prescriptions, up from 640 in Q1, with an average of 13.3 prescriptions each, indicating growing breadth and depth of utilization. Refills represented over 80% of Q2 prescriptions, and the average dose of those refills increased by 28% from the starting dose, reflecting physician comfort in titrating to optimal therapeutic levels.

Crucially, Akebia has secured commercial supply contracts with dialysis providers covering nearly 100% of dialysis patients in the U.S., a significant achievement for a drug with Transitional Drug Add-on Payment Adjustment (TDAPA) reimbursement. While U.S. Renal Care (USRC) has driven the vast majority of early revenue, Akebia is rapidly expanding access. By September 2025, DCI and IRC, the fourth and fifth largest dialysis providers, are expected to operationalize Vafseo protocols, increasing patient access to over 75,000. Even more impactful, DaVita, one of the largest dialysis providers, initiated an operational pilot in mid-August 2025. Upon its successful completion, Akebia anticipates a more than sixfold increase in patient access, reaching at least 275,000 patients by Q4 2025, setting the stage for a substantial acceleration in ordering.

Beyond the initial launch, Akebia is strategically investing in clinical data generation to solidify Vafseo's long-term position. The VOICE trial, a collaborative outcomes study with USRC, fully enrolled over 2,100 patients in just seven months by late June 2025. This trial, powered to demonstrate potential superiority for all-cause hospitalization, is expected to yield data in early 2027, shortly after the TDAPA period concludes. Additionally, the VOCAL study, initiated in 18 DaVita facilities, is exploring three-times-a-week dosing and investigating Vafseo's impact on red blood cell characteristics like size, lifespan, and oxygen-carrying capacity, aiming to further differentiate its physiologic benefits.

The most significant growth catalyst lies in the non-dialysis dependent (NDD) CKD patient population. This market, roughly 550,000 patients (similar to dialysis), is viewed as a multibillion-dollar opportunity, potentially 4x to 5x larger than the dialysis market due to less complex pricing dynamics post-TDAPA. Akebia is actively pursuing label expansion, planning to initiate the Phase III VALOR cardiovascular outcome study by the end of 2025. A recent Type B meeting with the FDA confirmed an active ESA comparator design, and a Type C meeting request has been submitted to finalize study design, statistical analysis, and pooling strategy. Management is encouraged by the FDA's recognition of the unmet need for an oral therapy in NDD patients, signaling a clear path forward for this high-potential indication.

Auryxia's Enduring Role Amidst Evolving Dynamics

Auryxia (ferric citrate) has been a cornerstone of Akebia's commercial portfolio since the Keryx merger, contributing meaningful revenue. Despite losing U.S. intellectual property exclusivity in March 2025 and the subsequent entry of an authorized generic, Auryxia has demonstrated remarkable resilience. In Q2 2025, Auryxia generated $47.2 million in U.S. product sales, an increase from $41.2 million in Q2 2024. This performance, combined with Vafseo, propelled total net product revenue to a company-record $60.5 million in Q2 2025.

Management attributes Auryxia's sustained strength to its decade-long presence, fostering physician comfort with its clinical profile and benefits. Furthermore, the inclusion of oral phosphate binders in the ESRD bundle as of January 2025 has paradoxically expanded access for Auryxia, making it more readily available to patients than in prior years. While the timing and impact of additional generic competition remain uncertain, Akebia is budgeting conservatively for Auryxia's future sales. The company's ability to maintain revenue, even at potentially lower prices, is supported by its contractual rights to match competitor pricing.

Strategically, Auryxia plays a crucial role beyond its direct revenue contribution. Its presence in Akebia's portfolio has served as a "tool" to facilitate Vafseo contracts with dialysis organizations. The advantages of contracting across Akebia's product portfolio, as evidenced by 100% of current contracts including both Auryxia and Vafseo, underscore its continued strategic value in securing and maintaining broad access for Vafseo.

Financial Fortification and Operational Discipline

Akebia's recent financial performance reflects a company in transition, demonstrating both the significant investment required for commercialization and pipeline development, alongside a strengthening financial position. For the six months ended June 30, 2025, total revenues surged to $119.81 million, a 57% increase from $76.26 million in the prior year period. This top-line growth, driven by Vafseo's launch and Auryxia's sustained performance, led to a net income of $6.36 million for the six-month period, a notable turnaround from a net loss of $26.57 million in the first half of 2024.

Cost of goods sold decreased to $9.9 million in Q2 2025, primarily due to the full amortization of a $9 million quarterly non-cash charge related to Auryxia's intangible asset, which was fully amortized by December 31, 2024. Vafseo's current sales are derived from pre-launch inventory, meaning its Q2 2025 manufacturing and overhead costs were only $0.5 million; at full manufacturing cost, this would have been $1.1 million. The company holds $26.5 million of reduced-cost Vafseo inventory, indicating that future cost of goods sold for Vafseo will increase as this inventory is utilized.

Research and Development (R&D) expenses increased to $11.0 million in Q2 2025, up 44.7% from $7.6 million in Q2 2024. This increase is primarily attributed to heightened clinical trial activities for Vafseo's label expansion and other pipeline programs, alongside higher headcount-related costs. Selling, General, and Administrative (SG&A) expenses, however, saw a slight decrease to $26.6 million in Q2 2025 from $26.9 million in Q2 2024, reflecting disciplined cost management partially offset by Vafseo's U.S. launch marketing costs.

Akebia's liquidity has been significantly bolstered. The company ended Q2 2025 with $137.3 million in cash and cash equivalents. This strong cash position was enhanced by a March 2025 public offering that raised $46.5 million in net proceeds, plus an additional $1.6 million from an underwriters' option, and a $9.3 million net proceeds drawdown from Tranche C of the BlackRock Credit Agreement in February 2025. Management confidently asserts that existing cash resources and expected revenues are sufficient to fund the current operating plan to profitability, including Vafseo's commercialization, label expansion, and advancement of early-stage pipeline programs like AKB-9090 and AKB-10108.

Navigating a Complex Competitive Terrain

Akebia operates within a highly competitive biopharmaceutical landscape, particularly in the kidney disease and anemia treatment markets. While Vafseo holds a unique position as the only oral HIF-based treatment for dialysis-dependent CKD anemia in the U.S., it faces formidable competition from established players and emerging therapies.

Direct Competitors:

• AstraZeneca (AZN): A large, diversified pharmaceutical giant with a strong presence in renal diseases, including roxadustat for CKD-related anemia (approved in some ex-U.S. markets). AstraZeneca's scale, extensive R&D, global distribution, and robust financial health (Gross Profit Margin 75%, Operating Profit Margin 24% in 2024) provide significant advantages. Akebia's Vafseo differentiates through its oral administration and potential for a more physiologic approach, aiming to capture market share by addressing unmet patient needs for convenience and specific clinical profiles.
• FibroGen (FGEN): A closer peer, also focused on HIF inhibitors (roxadustat). FibroGen has faced regulatory hurdles and variable financial performance (Gross Profit Margin 47%, Operating Profit Margin -508% in 2024), making Akebia's partnership-driven commercialization model for Vafseo a potential advantage in execution efficiency. While both companies innovate in the HIF space, Akebia's strategic focus on U.S. market access and targeted clinical studies (VOICE, VOCAL) aim to build a strong evidence base for Vafseo's differentiation.
• GlaxoSmithKline (GSK): Another major pharmaceutical company with a broad portfolio, including some renal conditions. GSK's global reach, strong R&D, and consistent profitability (Gross Profit Margin 70%, Operating Profit Margin 18% in 2024) make it a powerful competitor. Akebia's specialized focus on kidney disease allows for deeper expertise and tailored solutions, potentially offering more targeted efficacy for specific CKD subtypes, which could be a qualitative advantage over GSK's broader offerings.

Auryxia's Competitive Landscape:
Auryxia competes in the hyperphosphatemia market with numerous FDA-approved phosphate binders, many of which are now available in generic forms (e.g., Sanofi (SNY)'s Renagel/Renvela, Fresenius (FMS)'s PhosLo/Phoslyra, Shire's Fosrenol, Fresenius's Velphoro). The recent approval of Ardelyx (ARDX)'s XPHOZAH (tenapanor) in October 2023 for add-on therapy in CKD dialysis patients further intensifies competition. In the iron deficiency anemia (IDA) market, Auryxia faces competition from various oral and intravenous iron formulations, including Shield Therapeutics (STX.L)'s Accrufer. Despite this crowded field, Auryxia's 10-year market presence and increased access post-ESRD bundle implementation have allowed it to maintain strong sales, serving as a critical "tool" to secure broader contracts for Vafseo.

Akebia's Competitive Moats and Vulnerabilities:
Akebia's primary competitive advantages stem from its proprietary HIF technology, offering a unique oral treatment for anemia, and its strategic partnerships that facilitate market access. The potential for Vafseo to improve red blood cell characteristics and demonstrate superiority in hospitalization outcomes (VOICE trial) could further strengthen its clinical differentiation. However, Akebia's smaller scale and reliance on third-party manufacturers for drug substance and product (often single-source suppliers) represent vulnerabilities, exposing it to supply chain disruptions and higher operational costs compared to larger, more integrated competitors. The company's ability to effectively manage these dependencies and leverage its focused expertise will be crucial for sustained competitive success.

Outlook and Risks: Charting the Path Ahead

Akebia's outlook is anchored by the continued commercial ramp-up of Vafseo and the strategic pursuit of its non-dialysis indication. Management anticipates a significant increase in Vafseo patient access, projecting growth from approximately 40,000 patients in Q1/Q2 2025 to over 75,000 by September 2025, and further to at least 275,000 by Q4 2025 following the DaVita operational pilot. This expansion, coupled with the anticipated data from the VOICE trial in early 2027, is expected to drive Vafseo towards becoming the standard of care in the dialysis market. The planned initiation of the VALOR trial for NDD CKD by the end of 2025 opens up a substantially larger market opportunity, which Akebia is well-positioned to pursue with its strengthened financial resources.

Despite this positive trajectory, several risks warrant close monitoring. The timing and extent of additional generic competition for Auryxia remain unpredictable, posing a challenge to its future revenue stream, although management is budgeting conservatively. The TDAPA reimbursement for Vafseo, while currently favorable, is subject to potential changes or elimination, which could impact revenue. Furthermore, the highly concentrated U.S. dialysis market means that slow or limited adoption by large dialysis organizations could hinder Vafseo's growth.

Clinical development, particularly for the NDD label expansion, is inherently lengthy and expensive, with no guarantee of success or timely approval. The FDA's initial safety concerns for Vafseo, which led to a narrower approved indication, highlight the ongoing regulatory scrutiny. Operational risks include reliance on single-source third-party manufacturers, which could lead to supply disruptions or quality issues. Broader industry trends, such as potential FDA disruptions due to administrative changes, the impact of the Inflation Reduction Act on drug pricing, and proposed legislation like the BIOSECURE Act affecting collaborations with Chinese biotechnology companies, could also introduce unforeseen challenges.

Conclusion

Akebia Therapeutics stands at a pivotal juncture, transforming into a commercially vibrant entity driven by the promising U.S. launch of Vafseo. The company's strategic focus on its oral HIF-PHI, coupled with aggressive market expansion initiatives and a robust clinical development pipeline targeting the vast non-dialysis CKD population, underpins a compelling investment thesis. While the journey is not without its complexities, including managing Auryxia's post-exclusivity dynamics and navigating a competitive landscape dominated by larger players, Akebia's differentiated technology and strengthened financial position provide a solid foundation for future growth.

The successful execution of Vafseo's commercial strategy, particularly the integration into major dialysis networks and the advancement of the VALOR trial, will be critical determinants of Akebia's long-term value. Investors should closely monitor patient access metrics, the progress of clinical trials, and the evolving competitive and regulatory environment. Akebia's ability to leverage its technological leadership and operational discipline in the coming quarters will define its trajectory toward establishing Vafseo as a new standard of care in kidney disease.