vadadustat: a differentiated drug that should attract a partner in … · 2017. 12. 21. ·...

Please see pages 20-23 for Important Disclosures 1

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We are initiating coverage of Akebia Therapeutics Inc. with a Buy rating and a 12-month target price of $18. Vadadustat is Akebia’s leading small molecule oral drug being developed for anemia secondary to chronic kidney disease (CKD), and we believe it has the potential to expand the market for anemia in non-dialysis CKD and replace ESAs as standard of care for anemia in dialysis CKD. Unlike ESAs, vadadustat stimulates endogenous production of erythropoietin and iron transfer proteins in a manner similar to when a person adapts to a higher altitude, thereby providing a more physiologic approach to treating anemia.

Vadadustat entered Phase 3 for anemia in non-dialysis CKD in late 2015, with filings for approval expected in 2019. In Phase 2b, vadadustat was successful in safely and predictably raising hemoglobin levels in non-dialysis CKD anemics. In dialysis CKD anemia, Phase 2 read out positive results in 3Q15, and Phase 3 started in that indication in 3Q16, with filings for approval expected in 2020.

Akebia will market vadadustat with partner Otsuka Pharmaceutical in the US, has signed Mitsubishi Tanabe Pharma Corp. (MTPC) as an Asian partner, and is seeking an EU partnership that we anticipate in the not too distant future. We base our valuation for Akebia exclusively on global revenue from vadadustat for anemia in both non-dialysis CKD and dialysis CKD. We project FDA approval and US launch for anemia in non-dialysis patients, the first indication of vadadustat, in 2020, followed by the approval and launch in dialysis patients in 2021. As with the prior two partnerships, an EU deal should serve as a similarly meaningful stock catalyst.

Vadadustat’s differentiated mechanism of action allows hemoglobin levels to increase predictably and sustainably in CKD patients. As a result, peak levels of erythropoietin induced by vadadustat stay within the physiologic range naturally experienced by a person ascending in altitude. Compared to injectable ESAs that supply recombinant versions of erythropoietin without a corresponding increase in iron availability, vadadustat provides a more physiologic approach to treating anemia related to CKD that maintains erythropoietin within a normal physiologic range and enhances natural iron mobilization. Moreover, vadadustat’s flexible oral dosing enables a gradual and controlled titration, and we believe it has some advantages over FibroGen’s (FGEN - $23.85) roxadustat.

Vadadustat could potentially expand the market for anemia in non-dialysis CKD and replace ESAs as standard of care for anemia in dialysis CKD. About 14% of US adults suffer from CKD, including more than 450,000 patients with end-stage CKD on dialysis, with anemia being a common complication. We believe non-dialysis CKD patients are not receiving adequate treatment for anemia, likely due to safety concerns and the relatively inconvenient injection route required for ESAs. Oral vadadustat, in our view, addresses this lack of adequate treatment and could therefore expand the anemia treatment market in non-dialysis CKD. While ESAs are commonly administered for dialysis CKD, vadadustat has the potential to replace ESAs as standard of care for anemia in that setting as well.

Rev ($M) 2016E 2017E 2018ETicker AKBA 1Q 0 26.5A -Last Price $9.67 2Q 0 26.5A -Mkt Cap ($M) $370 3Q 0 39A -Fiscal YE 31-Dec 4Q 0 39E -50d ADV (000) 271 Annual 0 131E 156EShort int (M) 1.5S/O (M) 38.3 EPS 2016E 2017E 2018EAnnual Hi $11.07 1Q -0.7 -0.39A -Annual Lo $7.00 2Q -0.95 -0.46A -Cash ($M) $321 3Q -0.96 -0.21A -Debt ($M) $0 4Q -1.03 -0.29E -

Source: Big Charts Annual -3.63 -1.36E -1.00E

Akebia Therapeutics, Inc. January 26, 2017

Jonathan Aschoff, Ph.D. 212.417.8277

[email protected]

BUY (AKBA, $9.67)

Vadadustat: a Differentiated Drug That Should Attract a Partner in Every Major Market and Deliver in Phase 3: Initiating BUY/$18 TP

Opus National Capital Markets Biotechnology

January 26, 2017 2

Exhibit 1: Product pipeline

Source: Company documents

Valuation

We derive our target price of $18 through a DCF analysis, assuming a 10% discount rate that is applied to all cash flows and the terminal value, which is based on a 6 multiple of our projected 2022 EBITDA of $190 million. We base our valuation for Akebia exclusively on revenues from vadadustat (formerly AKB-6548) for anemia secondary to chronic kidney disease (CKD) in the US, where Akebia intends to market vadadustat with US partner Otsuka Pharmaceutical upon potential FDA approval. Outside of the US, Akebia has partnered with Mitsubishi Tanabe Pharma Corp. (MTPC) to develop and commercialize vadadustat in Asia, and should deliver a European partnership for vadadustat in the not too distant future, in our view. Potential collaboration revenues from such a European partnership would create upside to our valuation. In 4Q16, Akebia and Otsuka signed a deal to contribute equally to commercialization efforts and share equally all vadadustat related costs and revenue in the US. Under the terms of the Otsuka agreement, Otsuka will pay Akebia $265 million in committed capital plus development and commercial milestones, including $125 million upon signing, $35 million more in 1Q17, and at least $105 million of the costs of global vadadustat development. Also, Otsuka will pay potential development and commercial milestones of up to $765 million. Under the terms of the MTPC agreement, MTPC will pay Akebia $100 million for costs associated with the Phase 3 vadadustat program, including $40 million paid upon signing. Also, Akebia may receive up to about $250 million in additional development and sales milestone payments from MTPC, and MTPC will make tiered royalty payments, from the low teens up to 20%, on any vadadustat sales in Japan, Taiwan, South Korea, Indonesia, India and other Asian countries. To estimate the US non-dialysis market, we are assuming a 6% prevalence rate for Stages 3, 4 and 5 CKD among adults aged 20 or older, and a 10% weighted prevalence of anemia among Stages 3, 4 and 5 CKD patients. To estimate the US dialysis market, we are modeling about 450,000 dialysis patients in the US, and a 50% prevalence of anemia in these dialysis patients. Our valuation assumes US approval and launch of vadadustat for anemia in non-dialysis patients in early 2020 and for anemia in dialysis patients in early 2021, and we project an annual initial US price for vadadustat of $15,000 and an average ex-US price of $12,000. Our financial model does not include potential success based milestones, thus far totaling up to just over $1 billion, which would provide upside to our valuation, if and as received. Potential approvals for drug candidates beyond vadadustat, such as AKB-6899, would also provide upside to our valuation. Our cash of $321 million represents cash at the end of 3Q16 of $161 million, plus the $160 million coming from Otsuka over 1Q17.

Vadadustat for anemia secondary to CKD

Market opportunity for vadadustat

Chronic kidney disease is characterized by the gradual loss of kidney function that may eventually lead to kidney failure. There are five stages of CKD categorized by a measure of the filtration function of the kidney, and patients with Stage 5 CKD, or end stage renal disease (ESRD), usually require renal replacement therapy consisting of dialysis and kidney transplant. According to the US Renal Data System using data from the National Health and Nutrition Examination Survey 2007-2012, the US prevalence of CKD in adults 20 years of age or


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older was about 14% during that period, or 4% for Stage 1 CKD, 3% for Stage 2 CKD, 6% for Stage 3 CKD, 0.5% for Stage 4 CKD, and 0.1% for Stage 5 CKD. More than 450,000 CKD patients were treated with dialysis in 2012. Anemia, defined as insufficient red blood cells and low hemoglobin levels, is common in CKD and can lead to more rapid progression of CKD and an increased death rate. According to Prevalence of Anemia in Chronic Kidney Disease in the United States published on PLOS ONE, the prevalence of anemia was 15% in non-dialysis CKD patients from 2007-2010, and increased with the stage of CKD from 8% at Stage 1 to 12% at Stage 2, 17% at Stage 3, 50% at Stage 4, and 53% at Stage 5. Despite the significant presence of anemia in later stages of CKD, reported treatment rates for anemia in non-dialysis patients are typically low, with the percentage of incident ESRD patients who received pre-ESRD erythropoiesis-stimulating agents (ESAs, an anemia treatment) being only 15% in 2012. We believe non-dialysis CKD patients are not receiving adequate treatment for anemia, likely due to safety concerns with injectable ESAs and their inconvenient route of administration, and we believe that potentially safer options such as oral vadadustat would address this lack of adequate treatment and expand the market for anemia treatment in non-dialysis CKD patients. While ESAs are commonly administered to CKD patients on dialysis, we believe vadadustat has the potential to replace ESAs as standard of care for anemia in the dialysis setting. Sales of ESAs, the current standard of care foe anemia, are estimated to be $3.5 billion. CKD patients are primarily treated by about 7,000 nephrologists in the US, and Akebia plans to reach out to the majority of these nephrologists with a specialty sales force of about 125 reps. In 4Q15, Akebia partnered with MTPC to develop and commercialize vadadustat in Asia, and in 4Q16 Akebia partnered with Otsuka to co-commercialize vadadustat in the US. Given these two lucrative contracts, we project Akebia to deliver a European partnership as well, an event that should serve as a meaningful stock catalyst.

Exhibit 2: Prevalence of CKD by stage among NHANES participants age 20 & older, 1988-2012

Source: US Renal Data System and NHANES 1988-1994, 1999-2004 & 2005-2012 participants age 20 & older

Background of vadadustat

Vadadustat is a once-daily oral HIF-PH inhibitor designed to treat anemia secondary to CKD. HIF-PH enzymes normally target HIF-2α proteins for degradation. Vadadustat’s inhibition of HIF-PH results in increased levels of HIF-2α in cells, which in turn binds to HIF-β in the nucleus of the cell, thereby stimulating production of erythropoietin and iron transfer proteins. The increase in erythropoietin and iron in the bone marrow leads to increased hemoglobin and red blood cell production, thereby raising the amount of oxygen circulating in the blood. We note that the response that vadadustat elicits is similar to the natural response activated when a person adapts to high altitude, and therefore peak levels of erythropoietin induced by vadadustat stay within the physiologic range naturally experienced by a person ascending in altitude. Compared to injectable ESAs that supply recombinant versions of erythropoietin without a corresponding increase in iron availability, vadadustat provides a more physiologic approach to treating anemia related to CKD that maintains erythropoietin within a normal physiologic range and enhances natural iron mobilization. Moreover, vadadustat’s flexible oral dosing enables a gradual and controlled titration, thereby raising hemoglobin levels predictably and sustainably.


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Exhibit 3: Mechanism of action of vadadustat (AKB-6548)


Clinical trials with vadadustat

To date vadadustat has been evaluated for anemia secondary to CKD in heathy volunteers, non-dialysis patients, and dialysis patients. Akebia initiated the vadadustat Phase 3 program for anemia secondary to CKD in non-dialysis patients in late 2015, with an NDA submission for this indication planned for 2019. The completed Phase 2b trial demonstrated that vadadustat can safely and predictably raise hemoglobin levels in non-dialysis patients with anemia secondary to CKD. Previously, a Phase 2a trial showed that vadadustat increased hemoglobin levels in a dose-dependent manner in non-dialysis patients with anemia secondary to CKD. In addition, a Phase 2 trial in dialysis patients with anemia secondary to CKD read out positive results in 3Q15 and a Phase 3 program began in 3Q16.

Ongoing Phase 3 non-dialysis program (PRO2TECT)

Akebia initiated the Phase 3 program with vadadustat in non-dialysis patients with anemia secondary to CKD in late 2015, after concluding an end-of-Phase 2 meeting with the FDA in 2Q15 and a formal scientific advisory meeting with the EMA in 3Q15. The Phase 3 program is designed to support global regulatory approvals, with a potential NDA filing in the US by 2019. The PRO2TECT program includes two studies, correction and conversion, which will enroll about 3,100 NDD-CKD patients in aggregate across 500 sites internationally. The correction trial will enroll 1,000 rESA-naïve anemic patients (hemoglobin <10.0 g/dL), and the conversion trial will enroll 2,100 patients (hemoglobin 8.0-11.0 g/dL in the US and 9.0-12.0 g/dL ex-US) currently receiving rESA and will be converted to receive either vadadustat or active control. Both open-label trials will randomize patients 1:1 to receive either vadadustat or standard of care darbepoetin alfa. Primary endpoints are the change in hemoglobin levels from baseline compared to standard of care for efficacy and non-inferior major adverse cardiovascular events (MACE) compared to standard of care for safety. Akebia should be able to complete enrollment of these two trials in late 2017.

Patients will be dosed for an average dosing period of 1.5 years, with the total duration for the trial estimated to be 3 years. Patients with declining hemoglobin levels will receive rescue therapy including injectable ESAs and/or blood transfusions. Importantly the Phase 3 program will adopt a central adjudication for adverse events to avoid variability in adverse event adjudication at local sites that was seen in the Phase 2b trial. The Independent Data Monitoring Committee for the PRO2TECT program already held its initial meeting and recommended continuing the studies without modification.

Phase 2b non-dialysis trial (CI-0007)

A Phase 2b trial (NCT01906489) with vadadustat in non-dialysis patients with anemia related to CKD read out full results in March 2015, where vadadustat was shown to safely and predictably raise hemoglobin levels in non-dialysis patients. In this double-blind Phase 2b trial, 210 patients with Stages 3, 4 and 5 CKD not on dialysis were randomized 2:1 to receive vadadustat (n=138) or placebo (n=72) once daily for 20 weeks and were followed thereafter for 4 weeks. Patients were assigned to one of the three arms: 1) ESA treatment naïve (50% of


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all patients), 2) ESAs previously treated and off ESAs for more than 11 weeks (30% of all patients), and 3) ESAs actively treated (20% of all patients). The vadadustat dose started at 450mg QD and was adjusted in accordance with the patient's hemoglobin response based on a pre-specified dose titration algorithm that is designed to minimize hemoglobin excursions of >13.0g/dL. All patients received oral iron therapy to maintain ferritin between 50-300ng/mL, and ESA rescue was allowed after week 6 if anemia worsened. The primary endpoint was the percentage of patients 1) achieving or maintaining a mean hemoglobin ≥11.0g/dL, or 2) increasing mean hemoglobin by ≥1.2g/dL above the pre-treatment value, with the mean hemoglobin measured by the average of hemoglobin values at weeks 19 and 20.

About 54.9% of vadadustat treated patients met the primary endpoint, versus 10.3% of placebo patients (p<0.0001), and the difference in mean hemoglobin between vadadustat and placebo was 1g/dL. Hemoglobin levels plateaued around weeks 6-8 in vadadustat treated patients. About 73% of all hemoglobin measurements taken from week 8 to 20 for vadadustat treated patients were within a clinically-relevant range of 10-12g/dL, versus 43% for placebo patients, indicating predictable and sustained hemoglobin response with vadadustat over time. Consistent with Akebia’s adaptive dosing approach that is designed to avoid hemoglobin excursion, only 6 vadadustat treated patients (4.4%) experienced a hemoglobin level of >13.0g/dL during the treatment period, with 5 of the 6 patients experiencing such an excursion only on a single hemoglobin measurement.

In addition, vadadustat increased reticulocyte (immature red blood cell) counts and enhanced iron mobilization, speaking to its ability to resolve anemia in a physiologic pattern. Reticulocyte counts peaked at week 2 ahead of the peak in hemoglobin levels and declined through week 8 in vadadustat treated patients, mimicking the predicted response to altitude-associated hypoxia. Vadadustat also increased total iron-binding capacity at week 4, and sustained it over the dosing period. In addition, vadadustat did not alter VEGF levels, a biomarker typically associated with HIF-1α response, confirming vadadustat's preferential targeting of HIF-2α, the main regulator of erythropoietin production and iron mobilization. Renal function was stable in patients treated with vadadustat, as there were no changes from baseline in mean cystatin C or serum creatinine, which are two biomarkers associated with renal function.

A post-hoc analysis was also performed to examine any correlations between final vadadustat dose, mean change in hemoglobin, markers of inflammation (hepcidin and CRP), and prior weekly ESA dose. It was determined that baseline inflammatory markers and prior weekly ESA dose did not correlate with vadadustat dose at week 20 (p=0.4). Mean increase in hemoglobin (from baseline to week 20) also was independent of baseline hepcidin (p=0.6), prior weekly ESA dose (p=0.9) and CRP (p=0.6). It is therefore clear that the hemoglobin response and vadadustat dose requirement for correction and maintenance of hemoglobin are independent of underlying systemic inflammation and baseline ESA dose in non-dialysis CKD.

Vadadustat was generally well tolerated in the Phase 2b trial. Treatment emergent adverse events (TEAEs) were evenly distributed between the vadadustat and placebo arms (74.6% and 73.6%, respectively) and were consistent with those reported in past trials. SAEs were more common with vadadustat than placebo (23.9% and 15.3%, respectively), primarily driven by a higher incidence of renal SAEs with vadadustat (9.4% and 2.8%, respectively). This unfavorable imbalance in renal SAEs was due to variability in how investigators classified renal SAEs, and we note that dialysis initiations, a more objective measure of the severity of renal SAEs, were comparable between vadadustat and placebo (8.0% and 9.7%, respectively). Renal and/or dialysis related TEAEs, regardless of the severity classified, were also comparable between vadadustat and placebo (9.4% and 9.7%, respectively). Three deaths occurred in the treatment arm. Two deaths were deemed not drug-related, and one death was deemed possibly drug-related largely because no autopsy was allowed by the patient’s family. The possibly drug-related death happened in a 65-year-old female with hypertension and diabetes at entry, who was on vadadustat for only a month and died of ischemic heart disease at home. The second death (deemed unrelated) occurred in a 71-year-old obese male with heart failure, diabetes, atrial fibrillation, high blood pressure, COPD with pulmonary hypertension, and who was also on continuous oxygen at entry. He died of chronic heart failure and atrial fibrillation during the follow-up period when he was not on treatment and thus this patient’s overwhelming predispositions and timing of death fail to implicate study drug. The final death (also deemed unrelated) was in a 54-year-old female with hypertension and diabetes as well as low potassium, magnesium, and bicarbonates at entry, who died of sepsis, respiratory failure, and cardiac arrest in the hospital, and the cause of death does not fit with the vadadustat mechanism.

We believe that vadadustat has been able to generate enough clinical data to support the notion that it is likely to prove itself to be a differentiated anemia drug. It has the potential to be safer than the injected ESAs that dominate the market, as we believe that the MACE observed in this non-dialysis CKD Phase 2b trial was overwhelmingly driven by preexisting conditions, which we view as being corroborated by the Phase 2 dialysis CKD trial, which we will detail below.


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Exhibit 4: Mean hemoglobin levels over time (ITT all groups) in Phase 2b


Exhibit 5: Reticulocyte counts over time in Phase 2b


Exhibit 6: Total iron binding capacity over time in Phase 2b



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Exhibit 7: Safety profile in Phase 2b


Exhibit 8: % of all hemoglobin measurements from week 8 to week 20 that are within 2 ranges in Phase 2b


Phase 2a non-dialysis trial (CI-0005)

Akebia presented at the American Society of Nephrology meeting in November 2012 results from a Phase 2a trial (NCT01381094) with vadadustat in non-dialysis Stages 3, 4 and 5 CKD patients. Vadadustat elicited a dose-dependent increase in hemoglobin levels from baseline compared to placebo (p<0.0001). Vadadustat was also shown to stabilize iron supply to the bone marrow while improving hemoglobin production. Vadadustat was generally well-tolerated, with no drug-related SAEs and no change from baseline on key biomarkers of VEGF, CRP, or Cystatin-C.

In this double-blind Phase 2a trial, a total of 91 CKD patients were randomized to receive one of the four starting doses of vadadustat (240, 370, 500, or 630mg QD, n=72 total) or placebo (n=19) for 6 weeks. At entry, patients had hemoglobin ≤10.5g/dL and were either ESA naïve or off ESAs for more than 11 weeks. The vadadustat dose was adjusted over the course of treatment to avoid excessive hemoglobin levels, and 50mg of oral iron was given daily to maintain normal ferritin levels. The primary endpoint was the mean absolute change in hemoglobin from baseline to week 6, and secondary endpoints included safety and tolerability as well as PK assessment.

At day 42, vadadustat treated patients experienced a mean increase in hemoglobin ranging from 0.7 to 1.4g/dL, while placebo patients experienced a mean decrease in hemoglobin of 0.1g/dL. A one-way analysis of variance (ANOVA) test showed that the difference between vadadustat and placebo in mean absolute hemoglobin change was statistically significant (p<0.0001), thereby meeting the primary endpoint. Dose-dependent increases in hemoglobin occurred even though 26% of patients on vadadustat 630mg and 11% of patients on vadadustat 500mg decreased their dose as per the dose titration algorithm. No patient experienced hemoglobin levels


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beyond the threshold of 13g/dL throughout the study period, consistent with Akebia’s adaptive dosing approach. Also, hemoglobin increase seen with vadadustat was preceded by an increase in reticulocytes and did not cause erythropoietin levels to increase from baseline, indicating that vadadustat elicited red blood cell production physiologically without chronically elevating erythropoietin levels. In addition to hemoglobin increase, there was a parallel increase in iron mobilization, with significant dose-related reductions in ferritin and hepcidin, as well as an increase in total iron binding capacity, suggesting vadadustat’s ability to stabilize the iron supply to the bone marrow and improve hemoglobin production.

Vadadustat was generally well tolerated. AEs were reported in 34 vadadustat treated patients (47.2%) and 11 placebo treated patients (57.9%), with AEs evenly distributed across the four vadadustat dosing arms and therefore no apparent dose-dependent effects. AEs that were deemed drug-related occurred in 10 vadadustat treated patients (13.9%) and one placebo treated patient (5.3%). Eight SAEs were identified, one of which, fluid overload, occurred in a placebo treated patient (5.3%), and the remaining seven SAEs were observed in vadadustat treated patients (9.7%), including gastroenteritis, hypoglycemic event, dizziness, triple vessel coronary artery disease with non-ST elevation myocardial infarction, hypertensive crisis, ventricular pacemaker lead replacement, and uremia. None of the eight SAEs were considered drug-related. Notably, vadadustat did not alter VEGF levels, a biomarker typically associated with HIF-1α response, consistent with vadadustat preferential targeting of HIF-2α. There was no statistically significant change in inflammation (C-reactive protein), renal function (Cystatin-C), heart rate, blood pressure, or EKG values (including QT assessments).

Exhibit 9: Change in hemoglobin from baseline to week 6 (g/dL) in Phase 2a


Exhibit 10: Changes in total iron binding capacity from baseline to week 6 (ug/dL) in Phase 2a



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Exhibit 11: Maximum hemoglobin values through week 6 in Phase 2a


Exhibit 12: Changes in hemoglobin, reticulocyte count, and erythropoietin from baseline in Phase 2a



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Exhibit 13: Safety profile in Phase 2a


Ongoing Phase 3 dialysis trial (INNO2VATE)

Akebia initiated its INNO2VATE trial evaluating vadadustat in dialysis patients in 3Q16, having vetted key elements of the trial with both the FDA and EMA. INNO2VATE includes two separate trials which together will enroll about 2,600 DD-CKD patients worldwide (400 patients not on an ESA and 2,200 patients on an ESA, with 1:1 randomization in both groups to either vadadustat or active control). Both trials will have non-inferiority primary efficacy endpoints for hemoglobin response and an assessment of cardiovascular safety via MACE. We project the entire vadadustat Phase 3 program to cost about $450 million (about $80k per patient, 5,700 patients), and the company intends to cover the cost with its current cash plus contributions from new and existing partners. An ethnobridging trial showed that vadadustat’s PK and PD are similar in both Japanese and Caucasian volunteers at all multiple ascending doses tested (150 mg, 300 mg and 600 mg given once daily for 10 days), and only 2 mild AEs were reported in vadadustat-treated subjects, both of which resolved. These results clearly support Akebia’s development plans with partner MTPC.

Phase 2 dialysis trial (CI-0011)

In 2Q15, Akebia reported positive results from a Phase 2 multi-center open-label trial (NCT02260193) with vadadustat for the treatment of anemia secondary to CKD in dialysis patients, the second indication for vadadustat that the company initiated in September 2014. At entry, patients enrolled in the Phase 2 trial were undergoing chronic hemodialysis for ≥3 months, with hemoglobin >9g/dL and <12g/dL, and with anemia secondary to CKD treated with ESAs and intravenous iron. ESAs were continued during the screening period, but were discontinued prior to the start of vadadustat, and IV iron was administered throughout the trial to maintain normal ferritin levels. Patients were treated for 16 weeks, including an initial 8-week dosing period assessing hemoglobin response to three different vadadustat starting doses and an additional 8-week dosing period assessing hemoglobin response to dose adjustments guided by a protocol-defined algorithm (see Exhibit 14). Vadadustat was able to maintain mean hemoglobin in patients converted from treatment with ESAs throughout the 16-week treatment period, the trial’s primary endpoint. Vadadustat was given at a starting dose of 300 mg once daily, 450 mg once daily, or 450 mg thrice weekly and all cohorts exhibited clearly consistent hemoglobin stability, with only one excursion above 13 g/dL, but that patient had the excursion for only one assessment (10 weeks), and was successfully dose reduced to 150 mg.

Exhibit 14: Phase 2 trial design



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In addition to the clear potency demonstrated at all three dosing regimens in patients switched from ESA therapy, the clean safety profile goes a long way toward reversing CV concerns from the Phase 2 trial in anemia related to CKD in predialysis patients. In our view, the current dialysis setting’s composition of sicker patients than a predialysis setting should be a better arena for safety concerns to surface, but the absence of adverse event data in support of these concerns underscores our view that preexisting patient conditions in the predialysis trial drove any observed imbalance in death and MACE. In the dialysis trial, there were two transfusions, but one patient had extreme blood loss due to vascular access surgery and the other was hospitalized with pneumonia, again, bringing up the influence of extraneous conditions, rather than vadadustat, regarding transfusion. In 94 patients, the expectation was for two MIs, and two occurred. About 3-4 deaths and 7 strokes were also expected, but none of either occurred. This outcome increases our confidence in Phase 3 success.

We fully appreciate that this Phase 2 only treated patients for 16 weeks, but the clean safety profile, not to mention the extremely stable hemoglobin across all doses cohorts, goes a long way in such a sick population relative to the healthier non-dialysis population. Also in the dialysis trial, there were no SAEs reported as being related to vadadustat, with most SAEs being typical GI, infection, hospitalizations seen in dialysis patients and which were well-balanced among the three dose cohorts. Only 7 of the 94 dialysis patients dropped out and 5 of the 7 had unrelated complications such as pneumonia, broken ankle, hospitalization. Akebia's medical advisors are not concerned about safety issues from either trial, most importantly the non-dialysis trial CV events.

A post-hoc analysis was performed to examine any relationship between final vadadustat dose, mean change in hemoglobin, baseline markers of inflammation (hepcidin and CRP), and prior weekly ESA dose. No correlation was observed between the final vadadustat dose and baseline markers of inflammation or ESA dose (p-values ranging from 0.3 to 0.9). Also, vadadustat maintained hemoglobin independent of baseline CRP (p=0.07) and hepcidin (p=0.11). The hemoglobin response and vadadustat dose requirements for hemoglobin maintenance are therefore independent of underlying systemic inflammation and baseline ESA dose in patients with DD-CKD.

Exhibit 15: Mean hemoglobin levels at study stages


Exhibit 16: Summary of AEs and SAEs



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Earlier trials

In addition to the aforementioned trials with vadadustat, Akebia has completed two more Phase 2 trials involving non-dialysis patients, one Phase 1 trial involving dialysis patients, and five Phase 1 trials involving healthy volunteers. In these early trials, vadadustat was well tolerated with no SAEs reported and elicited dose responsive increases in hemoglobin levels and reticulocytes. The most common potentially drug-related AEs were gastrointestinal disorders, including diarrhea, nausea and constipation.

x Phase 1 CI-0001. This double-blind Phase 1 trial evaluated six single doses of vadadustat (80, 160, 300, 600, 900, and 1,200mg) in healthy males. In each dose cohort, 6 subjects were on vadadustat and 2 were on placebo. There were seven AEs in the vadadustat arm, including one case of diarrhea that was considered potentially drug-related, and three AEs in the placebo arm. No SAEs were reported. The half-life of vadadustat was about 4.8 hours and a single dose of vadadustat elicited dose responsive increases in erythropoietin levels.

x Phase 1 CI-0002. This double-blind Phase 1 trial evaluated three doses of vadadustat (500, 700, and 900mg) administered for 10 days in healthy males. In each dose cohort, 8-9 subjects were on vadadustat and 3 on placebo. AEs were reported in 26 subjects and were evenly distributed across dosing cohorts, with potentially drug-related AEs being gastroesophageal reflux and dyspepsia. No SAEs were reported. Vadadustat elicited dose responsive increases in reticulocytes and hemoglobin levels. Erythropoietin levels increased following each dose and returned to baseline by 24 hours post dosing.

x Phase 1 CI-0006. This Phase 1 cross-over trial enrolled eight healthy males to receive a single dose of vadadustat capsule and tablet, with a three-day wash-out period between doses. The vadadustat capsule and tablet were shown to be bioequivalent and were both well tolerated following a single dose.

x Phase 1 CI-0008. In this Phase 1 trial examining the radioactivity and PK of vadadustat, six healthy volunteers received a single dose of vadadustat 650mg. The total radioactivity recovery was about 60% in urine and 26% in feces. The majority of the drug-related radioactivity (>75%) in plasma was associated with vadadustat.

x Phase 1 CI-0010. This randomized, partially blinded, four-way crossover trial enrolled 50 healthy volunteers each to receive four different treatments (vadadustat 600mg, vadadustat 1,200mg, placebo, and moxifloxacin 400mg). Vadadustat was not shown to alter the QT intervals in healthy volunteers following a single dose of up to 1,200mg. Recall that a lengthened QT interval is often associated with certain ventricular arrhythmias and sudden death.

x Phase 1 CI-0009. This randomized crossover Phase 1 trial enrolled 12 dialysis patients to receive a 450mg dose of vadadustat four hours prior to the first hemodialysis session and another 450mg dose of vadadustat two hours after the second dialysis session. Vadadustat was well tolerated with no SAEs reported during dosing and over the 48-hour in-house observation period after each dose. One patient experienced an exacerbation of a concurrent diabetic foot ulcer resulting in two SAEs during the follow-up period, which were deemed unrelated to vadadustat. The timing of vadadustat administration (pre- or post-hemodialysis) did not significantly affect the PK of vadadustat, suggesting that the hemodialysis procedure has minimal impact on the clearance of vadadustat.

x Phase 2 CI-0003. In this open-label trial, 22 non-dialysis CKD patients received a single dose of 500mg of vadadustat. Five patients experienced drug-related AEs, and no SAEs were reported. The half-life of vadadustat was modestly longer at 7.9 hours in CKD patients than in healthy volunteers. A single dose of 500mg of vadadustat elicited changes in erythropoietin levels and peak erythropoietin levels that were similar to those observed in the Phase 1 CI-0001 trial with the 600mg dose of vadadustat in healthy volunteers.

x Phase 2 CI-0004. In this open-label trial, 10 non-dialysis CKD patients received vadadustat for 28 days. Patients started at either 300mg (Stage 4 CKD) or 400mg (Stage 3 CKD), and could be titrated weekly based on reticulocyte count and hemoglobin. Three patients had drug-related AEs, including nausea, chills, peripheral neuropathy, peripheral sensory neuropathy and muscle spasms, and no SAEs were reported. The average hemoglobin levels rose from 9.91g/dL at baseline to 10.54g/dL by day 29.

Competitive landscape for vadadustat

Erythropoiesis-stimulating agents (ESAs). Currently, ESAs are the standard of care for anemia secondary to CKD. They are synthetic recombinant versions of a naturally occurring human protein, erythropoietin, and are therefore structurally and biologically similar to erythropoietin. Like erythropoietin, ESAs work by stimulating the bone marrow to produce red blood cells. Drugs in the ESA class include


January 26, 2017 13

epoetin alfa (marketed as Epogen, Procrit and Eprex) and darbepoetin alfa (marketed as Aranesp). In the US, Epogen is commercialized by Amgen for dialysis use, while Procrit and Eprex are commercialized by Johnson & Johnson for non-dialysis use. Aranesp, introduced in the US by Amgen in 2001, has significant market share particularly in the non-dialysis market, although it is approved for both dialysis and non-dialysis patients. Mircera, a PEGylated ESA designed to be longer lasting compared to currently approved ESAs, was approved by the FDA for anemia in both dialysis and non-dialysis patients and was launched by Roche in the US in October 2014. In several studies, ESAs have been associated with an increased risk of death, serious cardiovascular events, and stroke when administered to target a hemoglobin level of above 11g/dL, possibly due to hemoglobin levels that peak initially, fluctuate over the treatment period, and occasionally go beyond the target levels with the administration of ESAs. Consequently the FDA now includes a boxed warning on the labels for ESAs stating that ESAs increase the risk of death, myocardial infarction, stroke, venous thromboembolism, thrombosis of vascular access, and tumor progression or recurrence. The FDA also guided to a more conservative dosing schedule for ESAs and no longer sets a hemoglobin target level. We believe that vadadustat, with its physiologic approach to correct anemia, can provide a more controlled and steady rise in hemoglobin levels. Moreover, vadadustat’s flexible oral dosing potentially offers a more convenient administration and a gradual and reliable dose titration compared to the intravenous or subcutaneous administration with ESAs.

Biosimilars for ESAs. A biosimilar product is another version of an existing branded biologic product. It may be commercialized in a given market once the patent for the original reference product expires in that market. In the US, the patents for epoetin alfa have expired between 2012 and 2015, and biosimilar versions of epoetin alfa are being reviewed by the FDA and studied in clinical trials. Hospira submitted a BLA to the FDA in December 2014 for Retracrit, a proposed biosimilar to epoetin alfa, while Sandoz is evaluating its biosimilar to epoetin alfa in two Phase 3 trials, SENSE and ACCESS, which started in October 2012. We expect biosimilars to epoetin alfa, once on the market, to drive down prices of branded ESAs. In the EU, the patents for epoetin alfa already expired in 2004, and several biosimilar versions are available on the market. We note that biosimilars have the same mechanism of action as ESAs, and are therefore also prone to significant safety concerns. A potentially safer drug such as vadadustat that employs a more physiologic approach to increase hemoglobin levels would be preferable to biosimilars, in our view.

Other HIF drug candidates. FibroGen is also developing a HIF-PH inhibitor, roxadustat, in partnership with AstraZeneca in the US and China, and with Astellas in the EU and Japan. Roxadustat is currently in a global Phase 3 program to support regulatory approvals for anemia secondary to CKD in both dialysis and non-dialysis patients in the US, EU, Japan and China. FibroGen’s US and EU Phase 3 program has an aggregate target enrollment of about 7,500 to 8,000 patients, and is designed to incorporate an analysis of major adverse cardiac events (MACE) that is likely required for approval in the US. In addition, multiple patient populations will be evaluated in the Phase 3 program, such as non-dialysis patients, patients newly started on dialysis, and dialysis experienced patients. Previously, over 1,400 subjects were evaluated in 26 completed Phase 1 and 2 trials with roxadustat in the US, EU, and Asia, demonstrating the drug’s potential for a favorable safety and efficacy profile in anemic CKD patients. Beyond roxadustat regarding oral HIF-PH inhibitors, GSK will evaluate GSK1278863 in a 52-week Phase 3 trial in 270 Japanese non-dialysis patients and 50 peritoneal dialysis patients with anemia, and Bayer has completed three of its five molidustat Phase 2 trials.

Based on results available to date, we believe vadadustat is at least comparable to roxadustat in efficacy and safety. In the non-dialysis setting, roxadustat was evaluated in an open-label Phase 2b trial (041 in the US) in 145 patients with anemia secondary to CKD. Patients were dosed for 16 and 24 weeks at six different starting doses of roxadustat, including three tier-weight based doses and three fixed doses administered TIW, BIW, or QW. Overall 92% of all patients achieved a hemoglobin increase of ≥1g/dL from baseline at the end of treatment. We note that the 041 trial was open-label and had started before the FDA adopted a more conservative target for hemoglobin levels, and that its results may not be directly comparable to results from the Phase 2b trial with vadadustat, which is a placebo-controlled trial designed to avoid excessive hemoglobin levels of >13g/dL. Previously, roxadustat was evaluated in two Phase 2 placebo-controlled trials (017 in the US and 047 in China) involving non-dialysis patients with anemia secondary to CKD, whose designs are comparable to Akebia’s placebo-controlled Phase 2a trial. In the 017 dose-ranging trial, 116 patients not receiving ESAs were randomized to receive four weight-based doses of roxadustat administered either BIW or TIW (n=88) or placebo (n=28) for four weeks. Dose-dependent increases in hemoglobin were observed for all four doses from day 8 (p=0.025) to day 22 (p=0.0001) and days 26-29 (p<0.0001). A responder was defined as having a hemoglobin increase of ≥1g/dL at the end of treatment, and a 100% response rate was seen at the highest roxadustat dose. In the 047 trial, 91 patients not receiving ESAs were randomized to receive two weight-based doses of roxadustat administered TIW (n=61) or placebo (n=30) for eight weeks. Dose-dependent increases in hemoglobin were observed for both dose cohorts, and 93.1% of patients on the high roxadustat dose achieved a hemoglobin increase of ≥1g/dL at the end of treatment.


January 26, 2017 14

The SAE rates with roxadustat were 4.5% in the four-week 017 trial and 13.1% in the eight-week 047 trial, straddling the SAE rate of 9.7% seen in the six-week Phase 2a trial with vadadustat.

With the potential of Akebia launching vadadustat after FibroGen launches, we point out what we view to be some competitive advantages for vadadustat. As per FibroGen’s 2016 10k, there is a potential interaction between roxadustat and three statins (atorvastatin, rosuvastatin and simvastatin), and in CKD patients statin treatment is often initiated earlier than anemia treatment. Roxadustat was shown to increase statin plasma concentration, and an adverse effect associated with increased statin plasma concentration is myopathy, which typically presents in a form of myalgia. The studies indicated the potential for increased exposure to those statins when roxadustat is taken simultaneously with those statins and suggested the need for statin dose reductions for patients receiving higher statin doses. FibroGen performed additional clinical pharmacology studies to see if the drug interaction could be minimized or eliminated by a modification of the dosing schedule that would separate the administration of roxadustat and a statin, however, such studies showed no minimization of effect. Therefore, there is the potential for this drug interaction to lead to label provisions for statins or roxadustat relating to recommended statin dose limitations. FibroGen’s Phase 2 data suggests roxadustat may reduce low-density lipoprotein (LDL), and reduce the ratio of LDL to high-density lipoprotein (HDL), but the data show that roxadustat may also reduce HDL, which may be a risk to patients. Vadadustat appears to allow for a flexible dosing schedule, with TIW dosing most convenient in dialysis CKD and QD being a better fit for non-dialysis CKD. Vadadustat also appears to have tighter hemoglobin control, and by working exclusively via HIF2 rather than both HIF1 and 2, vadadustat does not alter blood pressure or cholesterol. FibroGen's drug's half-life is also twice as long, which complicates controlling the dosing. Regarding MACE adjudication, there is a lack of uniformity in the Phase 3 roxadustat program; whereas the vadadustat Phase 3 program uniformly adjudicates MACE, and we believe that the FDA prefers uniformity. VEGF levels are also modulated via HIF1 and while Akebia has seen no changes to VEGF levels in the clinic, FibroGen has not shared clinical VEGF data despite having treated about 1,300 patients. Regarding other competition, GSK is about a year behind Akebia, and Bayer is a few years behind.

Exhibit 17: Global Phase 3 program with roxadustat

Source: FibroGen company documents


January 26, 2017 15

Exhibit 18: Mean hemoglobin change over time in the Phase 2b 041 trial


Exhibit 19: Mean hemoglobin change at the end of treatment in the Phase 2 017 trial



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Exhibit 20: Mean hemoglobin change over time in the Phase 2 047 trial


Exhibit 21: Treatment-emergent SAEs in two placebo-controlled Phase 2 trials, 017 and 047


AKB-6899 for oncology and ophthalmology

AKB-6899 is a preclinical stage HIF-PH inhibitor to be developed for oncology and ophthalmology. Akebia is free to initiate a Phase 1 trial with AKB-6899, an orally available HIF stabilizer, in oncology, and we anticipate a near-term trial start in a wide range of mixed solid tumor patients, and results in 2H17. AKB-6899 has minor structural differences from vadadustat, but possesses distinctive biochemical and physiological properties. Like vadadustat, AKB-6899 stimulates the production of erythropoietin in a similar manner. Moreover, in cells cultured at low oxygen levels, AKB-6899 was found to inhibit the expression of VEGF and phosphoglycerate kinase, both of which are associated with tumor growth; AKB-6899 was also shown to stimulate production of sVEGFr1, a potent inhibitor of VEGF, thereby preventing tumor growth. These properties indicate that AKB-6899 may be an effective treatment for certain cancers (ovarian, breast, colon, and possibly lung), alone or in combination with chemotherapy. AKB-6899 was already shown to reduce tumor growth and development of metastases in several animal models of cancer. Beyond oncology, AKB-6899 may also treat chemotherapy-induced anemia and VEGF-related eye diseases.


January 26, 2017 17

Intellectual property

Akebia has five issued patents and one pending application covering the composition of matter of, method of treating anemia with, and pharmaceutical compositions of, vadadustat in the US, as well as one issued and one pending patent in the EU and additional patents issued or pending in countries such as Japan, China, South Korea, Brazil, Mexico, Russia, Israel, and India. Composition of matter patents are expected to expire in 2028, exclusive of any potential patent term extensions or adjustments in each territory. The issued EU patent #2044005 was opposed by a third party in 2011, and final resolution of the opposition may take several years. Akebia also has issued patents and pending applications with respect to processes for manufacturing vadadustat, dosing regimens, formulations, polymorphs, and various other aspects of vadadustat, and they are expected to expire between 2032 and 2034, exclusive of potential patent term extensions or adjustments.

As for AKB-6899, Akebia holds four issued patents and one pending application directed to the composition of matter, pharmaceutical compositions, and methods of use in the US, as well as additional patents issued or pending in territories such as Europe, Japan, China, South Korea, Brazil, Mexico, Russia, and India. Composition of matter patents are expected to expire in 2028, exclusive of any potential patent term extensions or adjustments in each territory. As for method of treatment patents, Akebia has one issued patent covering the treatment of anemia with AKB-6899 that is expected to expire in 2028, one issued patent and one pending application covering the treatment of cancer with AKB-6899 that is expected to expire in 2032, as well as one pending PCT application covering the treatment or prevention of ocular conditions with AKB-6899 that is expected to expire in 2035. Other pending applications, including one directed to dosing regimens of AKB-6899 and one directed to polymorphs of AKB-6899, are expected to expire in 2034, exclusive of potential patent term extensions or adjustments.

Regarding patents issued to FibroGen, Akebia believes that currently issued FibroGen US patents claiming new methods of using previously known heterocyclic carboxamide compounds do not conflict with Akebia’s intellectual property rights. Akebia filed an opposition in 2013 to the European Patent Office requesting that an issued FibroGen EU patent #1463823 be revoked in its entirety. The #1463823 patent claims the use of a heterocyclic carboxamide compound that inhibits HIF-PH enzyme activity in the manufacture of a drug for increasing endogenous erythropoietin in the prevention, pretreatment, or treatment of anemia. In March 2016, the European Patent Office (EPO) revoked a patent from competitor FibroGen (the ‘823 patent) in its entirety, consistent with our expectation that FibroGen had no chance of obstructing Akebia’s freedom to operate, in the EU or elsewhere. The EPO also revoked FibroGen's HIF-related EP 1633333, granted in 3Q14, which claimed various compounds that were purported to stabilize HIFα for treating or preventing various conditions, including iron deficiency and specific forms of anemia. Given the favorable ruling for Akebia, FibroGen has clearly lost to Akebia in the EU. We believe that FibroGen will appeal the decision, but we do not believe that it will do FibroGen any good, given the global consistency of patent office actions to date. More specifically, we point to the inability of FibroGen to receive an issued patent to this same effect in the US, and to the office actions against FibroGen in Japan as they relate to FibroGen’s futile attempts to block Akebia’s freedom to operate. FibroGen’s issued Japanese Patent No. 4804131 was challenged by Akebia and in 2Q15 the Japanese Patent Office (JPO) found all challenged claims to be invalid. FibroGen responded by amending the ‘131 patent to exclude pyridine carboxamides (like vadadustat) from its scope, and in 4Q15, Akebia received the final trial decision from the JPO in which it accepted FibroGen's requested claim amendments.

Financials

Revenue. Our projected revenue stems from vadadustat sales for the treatment of anemia secondary to CKD in both non-dialysis and dialysis patients in the US. Akebia and Otsuka will jointly commercialize vadadustat in the US, and with an Asian partnership already in hand, we expect Akebia to at least partner vadadustat in Europe in the not too distant future. We project FDA approval and US launch for anemia in non-dialysis patients, the first indication of vadadustat, in 2020, followed by the approval and launch for anemia in dialysis patients in 2021. With an assumed annual US treatment cost of $15,000 (average ex-US cost of $12,000), we expect vadadustat to generate $487 million of US sales in 2022.

Expenses. Akebia will bear half of the expenses related to vadadustat in the US, as the company has recently partnered with Otsuka to develop and commercialize vadadustat in the US. We project the COGS for vadadustat to be 12% initially in 2020 and gradually decrease thereafter. We project R&D expense to increase given the ongoing Phase 3 program in dialysis-dependent and non-dialysis-dependent


January 26, 2017 18

anemia. We also project SG&A expense to substantially increase in 2019 and 2020 as Akebia ramps up for its part of the US vadadustat launch costs.

Bottom line. We project Akebia to be profitable in 2021, due primarily to vadadustat sales in the US. The 2021 diluted share count takes into consideration as of September 30, 2016: outstanding stock options, unvested restricted stock, and unvested restricted stock units, which can be converted to 3.5 million common shares. As of October 31, 2016, Akebia had about 38.3 million shares of common stock outstanding. Finally we are projecting no income tax through 2022, as NOLs are projected to take beyond that year to be consumed.

Balance sheet. Akebia had about $161 million in cash as of September 30, 2016. The company’s current cash position of $321 million, which we indicate in the table on page 1, includes the additional $160 million expected from partner Otsuka in 1Q17 and which should be sufficient to support Akebia’s activities into 1H19, by our projections.

Risks

• Clinical risk. Vadadustat and AKB-6899 could fail to deliver statistically significant results in late-stage clinical trials, substantially reducing the value of Akebia’s product candidates and therefore our target price.

• Regulatory risk. Vadadustat and AKB-6899, even if successful in the clinic, could fail to be approved by domestic and/or foreign regulatory bodies, which would reduce Akebia’s value and therefore our target price.

• Financing risk. Akebia will need capital to fund its operations, and thus is reliant on obtaining additional outside funding, which may not occur or which could be substantially dilutive to existing investors.

• Competitive risk. Even if vadadustat and AKB-6899 are approved, they may not be well adopted in a competitive marketplace, which would adversely affect Akebia’ value and therefore our target price.

• High stock price volatility. This issue is common among small-cap biotechnology companies with relatively low trading volumes.


January 26, 2017 19

Akebia Therapeutics, Inc.Income StatementFisca l Year ends December(in $000, except per share i tems)

2012A 2013A 2014A 2015A 1Q16A 2Q16A 3Q16A 4Q16E 2016E 1Q17E 2Q17E 3Q17E 4Q17E 2017E 2018E 2019E 2020E 2021E 2022EVadadustat rev&royalty in NDD-CKD 44,033 110,861 222,568 Vadadustat rev&royalty in DD-CKD - 53,485 105,890 Other revenue 26,500 26,500 39,000 39,000 131,000 156,000 78,000

Total Revenue 26,500 26,500 39,000 39,000 131,000 156,000 78,000 44,033 164,346 328,458 COGS 3,606 13,299 24,361R&D 5,632 10,782 25,399 44,721 20,235 30,877 31,238 34,362 116,712 36,767 39,341 42,095 45,041 163,244 171,406 173,120 129,840 84,396 67,517SG&A 2,891 5,152 12,541 16,792 5,811 5,311 4,944 4,993 21,059 5,093 5,195 5,299 5,405 20,993 25,191 36,527 43,833 46,024 46,484

Total Operating Expenses 8,523 15,933 37,940 61,513 26,046 36,188 36,182 39,355 137,771 41,860 44,536 47,394 50,446 184,237 196,597 209,647 177,279 143,719 138,363Operating Income (8,523) (15,933) (37,940) (61,513) (26,046) (36,188) (36,182) (39,355) (137,771) (15,360) (18,036) (8,394) (11,446) (53,237) (40,597) (131,647) (133,246) 20,627 190,095Interest income, net (1,645) (704) 206 713 248 409 219 197 1,073 320 300 280 260 966 869 782 1,173 1,760 3,520Other income, net (389) Extinguish. of debt and other l iab. 2,420 Reimbursements from Aerpio 1,971 1,050 700 84 Pretax income (8,196) (13,167) (37,034) (60,716) (25,798) (35,779) (36,352) (39,158) (136,698) (15,040) (17,736) (8,114) (11,186) (52,271) (39,728) (130,865) (132,072) 22,387 193,616Provis ion for income tax (benefi t) - - Net Income (8,196) (13,167) (37,034) (60,716) (25,798) (35,779) (36,352) (39,158) (136,698) (15,040) (17,736) (8,114) (11,186) (52,271) (39,728) (130,865) (132,072) 22,387 193,616Accretion on preferred s tock 3,323 55,886 86,900 - Net Income (11,519) (69,053) (123,934) (60,716) (25,798) (35,779) (36,352) (39,158) (136,698) (15,040) (17,736) (8,114) (11,186) (52,271) (39,728) (130,865) (132,072) 22,387 193,616EPS (27.82) (126.94) (8.04) (2.30) (0.70) (0.95) (0.96) (1.03) (3.63) (0.39) (0.46) (0.21) (0.29) (1.36) (1.00) (3.24) (3.20) 0.53 4.51EPS diluted, GAAP (27.82) (126.94) (8.04) (2.30) (0.70) (0.95) (0.96) (1.03) (3.63) (0.39) (0.46) (0.21) (0.29) (1.36) (1.00) (3.24) (3.20) 0.49 4.17Bas ic shares outstanding 414 544 15,406 26,434 36,874 37,811 37,898 38,087 37,668 38,278 38,469 38,662 38,855 38,566 39,632 40,425 41,233 42,058 42,899Di luted shares outstanding 414 544 15,406 26,434 36,874 37,811 37,898 38,087 37,668 38,278 38,469 38,662 38,855 38,566 39,632 40,425 41,233 45,607 46,448Source: Company reports, Opus National Capital Markets estimates


January 26, 2017 20

IMPORTANT DISCLOSURES: Opus National Capital Markets is a DBA for National Securities Corporation 410 Park Avenue, 14th Floor, New York, NY 10022 REG AC ANALYST CERTIFICATION The research analyst named on this report, Jonathan Aschoff, Ph.D., certifies the following: (1) that all of the views expressed in this research report accurately reflect his personal views about any and all of the subject securities or issuers; and (2) that no part of his compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by him in this research report. IMPORTANT DISCLOSURES This publication does not constitute and should not be construed as an offer or the solicitation of any transaction to buy or sell any securities or any instruments or any derivatives of the securities mentioned herein, or to participate in any particular trading strategies. Although the information contained herein has been obtained from recognized services, and sources believed to be reliable, its accuracy or completeness cannot be guaranteed. Opinions, estimates or projections expressed in this report may make assumptions regarding economic, industry, company and political considerations, and constitute current opinions, at the time of issuance, which are subject to change without notice. This report is being furnished for informational purposes only, and on the condition that it will not form a primary basis for any investment decision. Any recommendation(s) contained in this report is/are not intended to be, nor should it / they construed or inferred to be, investment advice, as such investments may not be suitable for all investors. When preparing this report, no consideration to one’s investment objectives, risk tolerance and other individual factors was given; as such, as with all investments, purchase or sale of any securities mentioned herein may not be suitable for all investors. By virtue of this publication, neither the Firm nor any of its employees shall be responsible for any investment decisions. Before committing funds to ANY investment, an investor should seek professional advice. Any information relating to the tax status of financial instruments discussed herein is not intended to provide tax advice, or to be used by anyone to provide tax advice. Investors are urged to consult an independent tax professional for advice concerning their particular circumstances. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, either expressed or implied, is made regarding future performance. National Securities Corporation (NSC) and its affiliated companies, shareholders, officers, directors and / or employees (including persons involved with the preparation or issuance of this report) may, from time to time, have long or short positions in, and buy or sell the securities or derivatives (including options) thereof, of the companies mentioned herein. One or more directors, officers, and / or employees of NSC and its affiliated companies, or independent contractors affiliated with NSC may be a director of the issuer of the


January 26, 2017 21

securities mentioned herein. NSC and / or its affiliated companies may have managed or co-managed a public offering of, or acted as initial purchaser or placement agent for a private placement of any of the securities of any issuer mentioned in this report within the last three (3) years, or may, from time to time, perform investment banking or other services for, or solicit investment banking business from any company mentioned in this report. This research may be distributed by affiliated entities of National Securities Corporation (NSC). Affiliated entities of NSC may include, but are not limited to, vFinance Investments, Inc., National Asset Management and other subsidiaries of our parent company, National Holdings Corporation. The securities mentioned in this document may not be eligible for sale in some states or countries, nor be suitable for all types of investors; their value and the income they produce if any, may fluctuate and/or be adversely affected by exchange rates, interest rates or other factors. Furthermore, NSC may follow emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. This report does not take into account the particular investment objectives, financial situation or needs of individual investors. Before acting on any advice or recommendation in this material, the investor should exercise independent judgment as to whether it is suitable in light of his/her particular circumstances and, if necessary, seek professional advice. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance. Additional information relative to securities, other financial products, or issuers discussed in this report is available upon request. Neither this entire report, nor any part thereof, may be reproduced, copied or duplicated in any form or by any means without the prior written consent of National Securities Corporation. All rights reserved. NSC is a member of both the Financial Industry Regulatory Authority (FINRA) and the Securities Investors Protection Corporation (SIPC). For disclosures inquiries, please call us at 1-800-417-8000 and ask for your NSC representative, or write us at National Securities Corporation, Attn. Richard Cohen - Research Department, 410 Park Avenue, 14th Floor, New York, NY 10022, or visit our website at www.nationalsecurities.com

Research Disclosures Legend Relevant Disclosures: 1, 7 & 10 1 National Securities (NSC) is a market-maker in the securities of the subject

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January 26, 2017 22

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Shares of this security may be sold to residents of all 50 states, Puerto Rico, Guam, the US Virgin Islands and the District of Columbia.

*Investment banking services provided in the previous 12 months MEANING OF RATINGS: BUY: the stock is likely to generate a total return of at least 10% over the next 12 months and should outperform relative to the industry. NEUTRAL: the stock is likely to perform in-line with the industry over the next 12 months. SELL: the stock is likely to underperform (from a total return perspective) relative to the industry over the next 12 months. NR: Not Rated SP: Suspended

Investment Banking*Rating # % # %BUY 27 51.9% 5 9.6%NEUTRAL 22 42.3% 3 5.8%SELL 3 5.8% 1 1.9%

Distribution of Ratings


January 26, 2017 23

Charts – AKBA

Source: Big Charts

AKBA Date Rating Price Target Initiation January 26, 2017 BUY $18

vadadustat: a differentiated drug that should attract a partner in … · 2017. 12. 21. ·...

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