Akebia, Trading M&A For an IPO, Follows Fast in Anemia Drug Race
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the additional iron doesn’t change the fact that the failing kidneys start losing their ability to make erythropoietin—a protein that signals to the bone marrow to make red blood cells. That’s why injecting variants of human erythropoietin made with recombinant DNA technology—first the drug Epogen, and later Aranesp and Procrit—was such a huge advance in health care when the drugs were first introduced in the late 80s.
“It was a miracle at the time,” says Butler, who was a sales rep for Epogen in 1991. “I’d walk into a dialysis center and a patient would find out I was from Amgen and come up and hug me.”
Sentiment has since shifted, however. By the mid-2000s, various studies had begun to link heart attacks and strokes to the use of the drugs. In 2007, Epogen and Aransep were shown to increase the risk of serious cardiovascular events. Another major use for the drugs had been to fight the anemia that cancer patients suffer from—until studies linked the drugs to faster progression of cancer. As the result of all the new findings, the FDA slapped tighter restrictions on the drugs’ use.
Now, the standard of care for chronic kidney disease patients not on dialysis is no longer biologics, Butler says, but rescue therapy. Clinicians will let patients’ hemoglobin levels dip very low, and then give them a smaller dose of recombinant erythropoietin to get their blood cell count up, according to Butler. Patients on dialysis are treated with the drugs more frequently, but Butler says even those numbers are down because of recent reimbursement changes that have bundled payments for the entirety of kidney failure treatment into a single Medicare payment. Even with these changes, the anemia market related to chronic kidney disease alone is still worth $7 billion annually, according to Butler, and Epogen alone still generates around $2 billion per year. “Physicians use [billions] of this product [annually] even though it is known to increase mortality risk in patients,” he says.
That’s why there’s a huge market opportunity for a safer drug.
Enter the prospective oral anemia pills. Instead of spiking peoples’ erythropoietin levels quickly like biologics do, the oral pills are supposed to do so more gradually. In theory, that should reduce the cardiac risks. The big challenge for all the competitors here, Akebia included, is to prove that safety advantage while producing comparable, or close to comparable, efficacy. They must also show that the new approach doesn’t have other worrisome side effects. “It’s a small molecule so you’re always going to be worried about safety and that’s the biggest question you have here,” Butler says.
If the new drugs leap all these hurdles, the companies then must convince nephrologists who have backed off prescribing the old biologic drugs for CKD to adopt these pills instead.
Betting on Akebia to meet all these challenges is, of course, a big risk. But it’s a risk that Akebia’s investors, through a series of strategic moves over the past few years, have shown they’re willing to take. Butler notes that “fundamentally there was a thought…that there would be the opportunity to sell the company” once the Phase 2a data came in on AKB-6548. That happened in April 2012, when drug hit its goal of a dose-responsive increase in hemoglobin levels over 42 days, and also showed signs of increasing patients’ iron levels.
Even before those data came in, though, Akebia had some reorganization work to do. If results were good and Akebia sold itself, Butler says, it wouldn’t have gotten any value for its other assets. So Akebia first split itself in two, creating Aerpio Therapeutics around its Tie-2 program and a few other assets.
“If we [sold] Akebia, then we’d still have this other company we can finance that and build those assets, where we wouldn’t have gotten any value for them in M&A,” says Butler, who was at Genzyme at the time, of the company’s investors’ plans before he got there. ”[This] was a very sound way of thinking I think—being on the other side of it, if Genzyme was looking at a company like this, [they wouldn’t be] giving any value to anything other than that which [they’re] interested in, which would be the lead compound.”
The official split was announced in January 2012. It was a clean break. Akebia didn’t keep any rights to the assets Aerpio took. Both Akebia and Aerpio were … Next Page »