Good day, ladies and gentlemen, and welcome to the Akebia Therapeutics Earnings Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the call over to our host for today, Nikki Hadas, General Counsel. You may begin.

Thank you. Good afternoon, everyone, and thank you for joining us today to discuss Akebia's 2015 year-end financial results. Today's call will be archived and a replay will be available after this call. This conference call includes forward-looking statements. Each forward-looking statement contained in this call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in such statements. Additional information regarding these factors appears under the heading 'Risk Factors' in our 10-K filing and press release, filed today with the Securities and Exchange Commission, and available at www.sec.gov and on our Web-site at www.akebia.com. The forward-looking statements in this call speak only as of the original date of this call and we undertake no obligation to update or revise any of these statements. I would like to now turn the call over to our Chief Executive Officer, John Butler.

Thanks, Nikki, and good afternoon everyone and thank you all for joining us today to review our 2015 financial results and corporate progress. During today's call, I will review our major accomplishments over the past year. Jason Amello, our Chief Financial Officer, will then review our financials. I'll close with our outlook for 2016 before opening the call for questions. Joining us for Q&A will be; Dr. Brad Maroni, our Chief Medical Officer; Nikki Hadas, our General Counsel; Michel Dahan, our Chief Business Officer; and Dr. Ramin Farzaneh-Far, our Vice President of Medical Research. 2015 was a transformative year for Akebia, marked by significant clinical, regulatory, intellectual property and corporate progress. We successfully executed all of our key objectives and are well-positioned to build on this momentum in the coming year, as we advance our global development and commercialization strategy for vadadustat and further demonstrate the therapeutic potential of HIF stabilization. As many of you know, vadadustat is a novel small molecule inhibitor of hypoxia inducible factor-prolyl hydroxylase or HIF-PH in development for the treatment of anemia related to chronic kidney disease or CKD. Vadadustat enables normal physiologic levels of EPO to be restored, allowing for a gradual, stable and controlled hemoglobin response. We believe that managing anemia through this pathway has the potential to translate into an improved safety profile over today's standard-of-care injectable erythropoiesis stimulating agents or ESAs, which has been shown to clearly increase cardiovascular events in CKD patients. Further, we believe that vadadustat's mechanism of action provides a specific response in the same manner as naturally occurs with a moderate increase in altitude. This response provides an enhancement in the normal daily variation of EPO and relative to other HIF compounds we believe has the potential to yield a best-in-class product profile. The data that has…

Thank you, John, and good afternoon everyone, So John outlined the significant progress we made in 2015 and our financial results follow in line [indiscernible] with progress. Today I'll focus on the full year 2015 results, but the details of the fourth quarter results are also included in our press release. For the year ended 2015, we reported a net loss of $60.7 million or $2.29 per share. That compares to a net loss of $123.9 million or $8.04 per share for the year ended 2014. Keep in mind that the majority of that 2014 net loss is due to $86.9 million of accretion expense on our preferred stock through March 25, 2014, which was the date of our IPO and the date in which the preferred stock and the accretive dividends were converted to common stock. Looking to the components of the P&L, on the revenue side, we entered into the collaboration agreement with Mitsubishi Tanabe in December. Although the transaction closed in December and provided for an upfront payment of $40 million, no revenue was recognized in 2015. The $40 million upfront payment was contingent upon the Company receiving certain tax residency certifications directly from the IRS, which we received in January of 2016, and accordingly the cash was received from Mitsubishi in January. Since it's a multiple-element arrangement under the revenue recognition guidance, that $40 million will not be recognized all in one period. We'll provide more specifics on the revenue recognition policy and the methodology in our first quarter 10-Q. Moving to our research and development expenses, for the full-year 2015, R&D expenses increased $19.8 million or 85% to about $43 million, compared to $23.3 million for the full-year of 2014, driven primarily by cost related to the continued development of vadadustat. To that end, we've…

Thanks, Jason. We're off to a great start this year. We have what we believe is potentially a best-in-class HIF candidate with vadadustat. We have a solid balance sheet that will likely benefit further from a potential European collaboration. We also have an experienced leadership team, strong IP and a commercial strategy designed to maximize the value of vadadustat in key markets. As we look towards 2016, we will continue to advance our clinical programs and further demonstrate the therapeutic potential of HIF stabilization. First, we'll advance our PRO2TECT program in non-dialysis patients. We also look forward to reaching alignment with both FDA and EMA on key elements of our INNO2VATE program in dialysis patients and then initiating the studies the middle of this year. We plan to initiate a study evaluating the potential of vadadustat in ESA hyporesponders and we're currently working with our clinical advisors on the design of that trial. We will expand our clinical experience with HIF-PH initiating a Phase 1 for 6899 in oncology. And finally, we'll continue to advance our collaboration discussions for vadadustat covering regions outside of the U.S. and not covered by our Mitsubishi deal. Our goal is to strike the right deal with the right partner. So the therapeutic potential of HIF biology is increasingly being recognized by clinicians, scientists and leading biopharma companies, and Akebia is really at the forefront in translating that promise into high-value therapeutics and we look forward to reporting our progress to you in the coming months. And with that, we'll open the call for questions.

[Operator Instructions] Our first question comes from Jonathan Aschoff from. Your line is now open.

I was wondering if any potential EU partners wanted any IP clarity regarding the FibroGen EU patent or if your victory last week was for them as well a foregone conclusion?

So I think that the folks who are looking at the opportunity were very much aligned with us, that this clearly was a patent that was properly revoked. But let's be clear, it's always a benefit when you get that ruling from the European Patent office. So that was something that was very much a positive for everyone looking at the opportunity.

Thanks. I was also just wondering, now when we may see perhaps initial results from this first 6899 trial that starts about midyear and could you describe that trial at all at this point?

So we expect to start the trial around midyear. Our expectation is that late in 2017 we'll have results from that trial. I don't know if, Ramin or Brad, you want to comment on the design a little bit?

Happy to comment. We're going to take a standard approach in the Phase 1 oncology looking at solid tumors. There is a dose escalation phase that's incorporated in those studies, which means that you can't necessarily clearly predict exactly when the study will end. There's a degree of judgement that comes as you're escalating the dose and looking at the effects of the compound. But it's going to be a very standard Phase 1 approach to oncological drug development in all kind of patients with solid tumors.

Our next question comes from Kennen MacKay from Credit Suisse. Your line is now open.

Quick question, maybe for Jason, on the financial guidance into Q2 2017, does not include additional payments from Mitsubishi Tanabe and any expectations for an EU partner there?

No. So the cash guidance that we gave to Q2 2017 includes basically the cash on hand at the end of the year plus the financing of $61 million that we did in January, and inclusive of that upfront payment. That cash alone would carry us to the second quarter of 2017.

Got you. Thank you for clarifying that. And then just one for John. On the EPO revocation of the FibroGen patent, I was just wondering a little bit about sort of the appeal process there, the potential for length of an appeal, and then from your sort of ongoing discussions with potential European partners, whether you think we could expect a partner to come on maybe prior to the resolution of that potential appeal?

Absolutely. So we do expect the ruling to be appealed. That's the expectation we're going in with. But the time to get through that process can be as much as three years or even more. But at the end of the day, last week FibroGen had the opportunity to present its best arguments for patentability and the opposition division found that the claims didn't meet that requirement. The OD does not like to revoke a patent and I think you can see from the fact that we spent two days on this process that they worked very hard to find a path forward for FibroGen to maintain a patent, but it simply did not meet the sufficiency requirement for being patentable, and therefore it was revoked. So we expect and we feel very, very confident that it will continue to be revoked and we certainly, you know as I mentioned before, the folks that we're talking to, the potential partners that we're talking to, expected the same and understand the process in Europe and we certainly don't expect to have to wait for the appeal process to work through before we will be able to sign a partner.

Got you. Okay, terrific. Thank you for that color and clarity. And then maybe one other question if I may, on the ongoing PRO2TECT study, is there anything you can comment on sort of enrollment in the studies, both the correction and conversion, as well as maybe how many sites have been opened on that trial?

So we're very pleased. It's very early days obviously, still in the first quarter of enrollment, but we are very pleased with how that's going and it's meeting our expectations. As I mentioned, we expect to have full enrollment in PRO2TECT towards the second half of 2017.

[Operator Instructions] The next question comes from Ed Arce from H.C. Wainwright & Co. Your line is now open.

So just a couple. If you could just talk us through the final preparations ahead of the initiation of INNO2VATE in the midyear and what's left there?

Sure. So as I mentioned, we are still in the regulatory process there. As I've mentioned previously, when you're trying to harmonize a study between the FDA and EMA, there is some back-and-forth that has to happen. I think we feel quite comfortable having described the overall program, the key components of the program to both agencies while we were going through the non-dialysis process. I think we feel very confident where we've disclosed what our expected patient numbers are, et cetera. But obviously there's details you want to make sure you have harmonized between the two agencies to make sure you're able to execute the global study, and we're well on the way with that and look forward to updating you shortly. So once we feel that we have that agreement between the regulators, then we go about finalizing the protocol, submitting that to IRBs, et cetera, and that's what will then take the time before we would initiate the first patient. And the expectation kind of based on the way the timeline is moving now, that in the July, maybe August timeframe, we will be dosing the first patient in INNO2VATE.

Okay. And then another on the plans for hyporesponders trial that you mentioned, if you could just give us a little more details around what you're thinking in terms of design for that and overall objective there?

So we are still working on the design. I'll let Ramin and Brad comment, but it is very much still a work in process, but very clearly the biology would support why a product like vadadustat would make a significant difference in the hyporesponder population. This is still a population where in dialysis providers use a significant proportion of the ESAs managing this 10% to 15% of patients. And we had a poster that was at the ASN this past November describing the complexity of this population and that even in a post-bundling environment, they are still, these patients are still using three times the average dose at initiation and 2x the average dose even a year later. So it's an important population for us to study and one that I think the providers particularly are looking for clarity around the impact that a product like vadadustat can have. But I don't know if, Ramin, you want to comment a little bit on how we're approaching design.

Happy to, and as mentioned, we are currently consulting with our clinical advisors regarding the best way to approach this population. There's clear consensus that the unmet medical need is high. Some of the challenges include defining exactly what the population is. Sometimes it's done 5 percentile, 10% to 15%, in terms of the dose of ESA required. So that's one of the issues that we're working through, as how best to define the target population. And then also just the timing of therapy. As you know, acute intercurrent illness can often contribute to this kind of hyporesponder situation, and just defining the length of treatment on the population in question are kind of the technical questions that we're currently working through and we expect to have an update later when we have a more firm trial design to present.

Great. And then if I may, just a couple of quick finance questions for Jason perhaps, on the G&A for the quarter, is that reflexive of sort of one-time litigation cost or is that closer to new level with higher headcount? And also if you could remind us, I didn't get the share count that you mentioned, basic and fully diluted?

From the G&A standpoint, I think the way you need to look at G&A, particularly as it relates to the patent, that we'll continue to invest in our patent protection, whether it's on litigation or not. So we will continue to invest to ensure that we have the strongest protection, now until the development of the drug. I wouldn't expect any particular decreases there. What you will see as a decrease is the percentage of G&A. Certainly as the R&D program gets underway more fully and the cost of that increases, our percentage of G&A of that total is going to be very insignificant. And then headcount, obviously we'll still continue to invest there as the trial expands. We won't be doubling our workforce but we will be increasing our workforce to make sure that we are meeting our timelines and goals. And on the shares, at the end of the year, share count was 30.7 million. After the January financing, it's 37.9 million. Those are the outstanding shares. There's about 2.2 million shares reserved for option. So our fully diluted count is around 40 million.

Our next question comes from Matt Roden from UBS. Your line is now open.

This is Jeff Hung in for Matt. I believe you previously said that early 2016 would be your expectation for getting a European partner deal done. So, has that changed and what are the gating factors that you need to clear in order to get European partner?

Sure. So we've never given a timeline for European partnership. We are obviously, we told you that we had started working on this last year and it's moving along very, very well. We are very pleased with the process, as we were with Japan. It's following a very similar cadence to that very successful process. So, there's no gating items, I mean this is a process that has to kind of work itself through now. Obviously we're very pleased with the ruling from the EPO last week. It simply confirmed what the potential parties believed, but that's always an important box to check. And so we'll continue working the process until we find a partner who we are as pleased with as we are with Mitsubishi Tanabe.

Our next question comes from Chad Messer from Needham & Company. Your line is now open.

Congratulations on all the progress that really has been great to watch. In addition to the right partner at the right time for your European deal, is one of your objectives to get the rest of the Phase 3 paid for, whether through upfronts or other economic contributions to the studies?

Yes, that's right. Our goal for this partnership will be financing the Phase 3 program. That is clearly kind of front and center. We obviously want to do that while maintaining as much of the backend value as we can, because we think that the upside of the product is tremendous, but we recognize that we have a significant Phase 3 program to finance and our goal through this partnership is to complete that financing.

And is it possible to give any estimate of about how much we're talking about in dollar terms?

We've disclosed what the cost of the Phase 3 is. We've told you it's about $80,000 per patient and that we're treating between the four studies, the two PRO2TECT and the two INNO2VATE, around 5,700 patients. So you're talking about $450 million to fully finance that trial. And as Jason pointed out today, we have about $240 million. Now I would say that some of that $80,000 per patient we've already spent in the run-up. Jason pointed that out as well. So it's a little less than that. But that will give you a perspective of what we need to finance.

Okay, great. Thanks. That's very helpful.

Our next question comes from Mike King from JMP Securities. Your line is now open.

Let me also add my congrats on a great 2015 for you guys. Most of my questions have been answered. Just maybe a couple of sub-topics within some other items we've talked about already. So with regard to the European partnership, John, I don't want to parse your words too finely, but you did say 'a partner'. So do you think you're going more towards more the direction of a single partner for Europe or would you still be considering multiple partnerships?

So, Mike, at this point I don't want to rule anything out. We know how complex it is to manage multiple partners in a development program. That's why we're so pleased that we're so close to initiating INNO2VATE, so the Phase 3 program is kind of off and running, but it is always more complicated to manage multiple partners. But as I mentioned during Chad's question, I mean our goal is to finance the Phase 3 and if the best way for us to do that with the best partnership is multiple partners, then we will. But we balance all of those pieces to give us the most, the greatest opportunity to finance the study and a partnership that will deliver the most in the long-term.

Okay, thanks for that. And just on 6899, are there any gating items or can you maybe enumerate the gating items now that the IND is allowed and what's standing between you and the actual first patient in, is it typical IRB or other matters?

No, Mike, actually it's really more internal resources. We really want to have people focused on getting PRO2TECT up and running and executing that well and getting INNO2VATE ready to go, and unfortunately we've decided that putting 6899 out a bit to the middle of the year is the right way to deploy our resources to maximize value. So that's the only thing that's really gating the start of that study.

Okay, makes sense to me. And then finally, I think you guys have done a great job managing the business in terms of clinical IP, et cetera. Just wondering if there's any way – we've seen other agents with improvements or benefits over standards of care that have had tough launches, and I'm just wondering, as you think about INNO2VATE, are there things that you can learn from things like either whether it's Omontys or [indiscernible] or Veltassa that can help you launch in a more robust way than sort of the typical new product entering the dialysis space?

Yes, so I think you have a variety of different types of launches that you referenced there, some that are extremely early stage that I think are actually going to do quite well. But I think it's our goal to learn from every one of these launches. I mean I went through the [indiscernible] launch, it was a long time ago, but we learned a lot from that, and every launch of every product in renal since then. I mean you've got a team here of people who've been quite intimate with most of the products launched in this space over the last 20 years. So I think we will take all of that learning and translate it into the launch of vadadustat and hopefully drive that to be a successful launch. I mean the data obviously will speak quite a bit to it and we have a couple of years to put those plans in place and learn more from the products that are launching today. But given the clarity around this market, I mean you think about the size of the renal anemia market compared to even something that's near and dear to my heart like phosphate control, I mean Renagel and Renvela, it's a billion-dollar product. We're talking about $7 billion category here that has significant focus from the providers as well as from physicians. So I think it's just a very different kind of market that we're going to launch into, competitive in a different way and so much is going to happen over the next couple of years in the U.S. with the potential to bring biosimilars into the market, what happens with development of the other compounds in the HIF class and how does the data compare, I mean so much of that will really influence how we approach the market. But I feel fortunate that we're starting from a perspective where we have phenomenal relationships with the providers, with dialysis providers, with [KLLs] [ph] in this space and with the practicing nephrologists and I've been working all of the above since about 1991 and I think Brad probably even longer than that. So I think we can use that experience to our advantage as we look to launch the product.

Thank you and that does conclude our question-and-answer session for today. I would now like to turn the call back over to John Butler, CEO, for any further remarks.

Thank you very much. I appreciate it. Thank you everyone for joining us on the call today. We're very pleased with the progress we made in 2015. I think we're off to a great start in 2016 and we look forward to coming back to you very soon with an update on our continued progress. Thanks for joining us today.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.