Good day, ladies and gentlemen, and thank you for standing by. Welcome to Akebia's Fourth Quarter and Fiscal Year 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will host a question-and-answer session and our instructions will follow at that time. [Operator Instructions] As a reminder to our audience, this conference is being recorded for replay purposes. It is now my pleasure to hand the conference over to Ms. Theresa McNeely, Senior Vice President, Corporate Communications and Investor Relations. Ma'am you may proceed.

Thanks, Brian. Good afternoon, everyone, and thank you for joining us today to discuss Akebia's fourth quarter and full-year 2016 financial results. Today's call will be archived and a replay will be available after the call. Before we begin, I’d like to remind everyone that this conference call includes forward-looking statements. Each forward-looking statement contained in the call is subject to risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Additional information regarding these factors appears under the heading 'Risk Factors' in our annual report for the year ended December 31, 2016 and in our press release which we issued a few minutes ago, both of which are available on our Web site at www.akebia.com. The forward-looking statements in the call speak only as of the original date of this call and we undertake no obligation to update or revise any of the statements. I'd now like to turn the call over to John Butler, CEO of Akebia. John?

Thanks, Theresa. Good afternoon everyone and thanks for joining us today to review our 2016 financial results and corporate progress. During today's call, I will review the major accomplishments over the past year. Jason Amello, our Chief Financial Officer, will review then our financials. And I'll close with our outlook for 2017 before opening the call for questions. Joining us for Q&A will be; Nikki Hadas, our General Counsel; and Michael Rabinowitz, our VP of Research. Michael is joining us remotely from a Hypoxia Conference in Canada. You may recall, Michael joined Akebia a few months ago after a long career at J&J where he led his programs and helped build the library of HIF compounds that Akebia recently licensed. 2016 was another year of major accomplishments for Akebia. Over the past year, we launched our global Phase 3 development program for vadadustat and establish two major development in commercial collaborations. One with Otsuka, where we will share the U.S market, and a collaboration with Mitsubishi Tanabe for Japan and certain Asian territories. Together these collaborations provide capital to fund our trials and the commercial strength that will position vadadustat for successful market introduction, continued to force upon approval by the regulatory authorities in those regions. In addition, we recently expanded our HIF portfolio through a research and license agreement with Johnson & Johnson for an extensive library of well-characterized HIF compounds and associated intellectual property. This significantly accelerates our research efforts and builds upon our understanding of the potential of the HIF pathway as we continue to develop treatments for patients with renal anemia and other serious diseases. As many of you know vadadustat is a small molecule inhibitor of hypoxia-inducible factor-prolyl hydroxylase or HIF-PH which we’re developing as an oral once-daily or three times weekly treatment for anemia…

Thank you, John, and good afternoon, everyone. Akebia's financial position reflects our progress in vadadustat's clinical development and the success we've had securing two collaborations. The Company reported a net loss of $37.9 million or $0.99 per share for the fourth quarter of 2016 that compares to a net loss for the fourth quarter of 2015 of $19.9 million or $0.66 per share. For the full-year, net loss was $135.7 million or $3.60 per share in 2016 that compares with a net loss for 2015 of $60.7 million or $2.29 per share. These quarterly and full-year results correlate with our having two Phase 3 studies up and running concurrently in 2016. As a reminder, and as John mentioned, our PRO2TECT study and non-dialysis patients began at the end of 2015 and our INNO2VATE study and dialysis patients commenced in August of 2016. Looking at the components of the P&L, on the revenue side, we now have two collaboration arrangements. It's important to point out that both of these collaborations are considered multiple element arrangements under the complex revenue recognition guidance. This generally means that fixed and non-contingent payments will be recognized over the life of the arrangement based on how activities under the arrangement are performed or delivered versus when the payments are actually received. Our collaboration agreement with Otsuka Pharmaceuticals, which was executed just before the end of the year on December 18, provides $265 million of committed funding, of which $125 million was received prior to the end of the year. In accordance with this revenue method -- revenue recognition methodology, we recognized approximately $1.5 million in collaboration revenue for the last two weeks of December in 2016. Collaboration revenue in connection with our agreement with Mitsubishi Tanabe, which was executed at the end of 2015 is expected…

Thanks, Jason. At Akebia we’re building to leading company in HIF biology and developing novel therapeutics for the treatment of renal diseases. We think vadadustat has the potential to set a new standard of care for anemia of CKD and in doing so make a meaningful difference in the lives of these patients. And with our recent licensing agreement with J&J that significantly expands Akebia's pipeline, we’re even in better position to deliver on our mission to develop new HIF-based treatments for a variety of other indications. 2017 is off to a great start and we expect a year of continued progress. In support of our Phase 3 vadadustat program, we will conduct a hyporesponder study designed to assess vadadustat in the subgroup of patients who do not respond to ESA. We anticipate beginning this Phase 2 trial in the first half of this year with results expected in 2018. We also plan to initiate a Phase 3 study of vadadustat with three times weekly dosing, the result s of which are also anticipated next year. Data from our ongoing vadadustat Phase 2 Japanese dosing studies will be available before the end of 2017. With respect to a European collaboration for vadadustat, our discussions for the EU and surrounding territories took a brief pause in order for us to complete the Otsuka deal. Now having established two major collaborations for vadadustat within 12 months we're confident in our ability to establish other valuable collaborations that also reflect the enormous potential of vadadustat. Turning to our pipeline as I mentioned, we expect to file an IND for AKB-5169 for IBD in the next 12 to 18 months. And you may recall that we also have a second compound AKB-6899, which is in preclinical development. We will now evaluate 6899 in light of the new portfolio of preclinical compounds from J&J with the aim of selecting the best compounds for the right indication as we advance towards the clinic. We will accomplish all of this from a position of financial strength, with over $260 million in our balance sheet, another $200 million plus in committed R&D payments from our collaborators over the course of the Phase 3 development program, and the opportunity to secure additional funding from potential future commercial collaborations. Akebia have a strong track record of execution and we fully expect to continue to deliver in 2017 and beyond. Now we will open the line for questions. Brian?

Thank you, sir. [Operator Instructions] Our first question will come from the line of Mike King with JMP Securities. Please proceed.

Hey, good afternoon, guys. Thanks for taking the question. John you referenced some of the FibroGen development compounds and I’m just wondering their call last week had indicated that they are increasing the size of some of their studies, not totally clear on why that is both in the CKD and non-CKD population. So I’m just wondering if you could care to comment about if there's any read through to Akebia study designs and implementation and whether you feel that a larger data stat on roxadustat puts you at any competitive disadvantage or not? Thank you.

Yes. Thanks, Mike. Thanks for the question. So I can't really comment on roxadustat's clinical trials and what they're doing. As I mentioned in my in my comments, we’ve -- we're targeting 5,700 patients for -- between our non-dialysis and dialysis programs, and that’s really based on driving to a number of MACE events and as I also mentioned, we will clearly continue to enroll patients. This really is about driving event numbers and so we’ve done the calculation of 5,700 patients is what we need to drive those events, but as long as enrollments going well, we'll continue to enroll patients as well. So I do expect at the end of the day that will more than 5,700 patients. But we will update you on that as we need to -- as we move forward.

And I just wonder if you could -- sorry, go ahead and finish up.

Yes, there was -- you’ve made the comment about a competitive disadvantage. And I really think that competitive differences are based on the data not the number of patients in the study and we obviously have to see -- we all have to complete our Phase 3 trials, right. So we will see the data at the end, but when you look at vadadustat data that we generated to date, I think we're extraordinarily well-positioned both against ESAs as well as against the other HIF compounds in development. So that different size of the program doesn't really bother me at all. Remember our program is a very simple straightforward design. Four studies, two in the non-dialysis, two in dialysis that are designed to be very similar, so that you can -- we have the same CRO, we have the same sponsor, we have the same design, same comparator darbepoetin for each, so that the statistical analysis is straightforward as possible and we think that’s really going to service well.

Right. I’m just wondering about -- if any thoughts about, I mean, I know you guys now have the -- you have the relationship with Mitsubishi and whether you're contemplating matching them so to speak on the China studies and -- or whether you feel like the other studies that you are undertaking are sufficient to serve the purpose of filing. I’m trying to or just trying to not to market you’re contemplating right now?

So China is the market that’s clearly is an interesting market, and China is not part of the Mitsubishi deal. So we still own the rights in China. We have not started development there. We do expect to do that through a partner and that is part of the ongoing discussions European and other Rest of World discussions that we have ongoing now.

Okay, great. Thanks very much.

Thanks, Mike.

Thank you. Our next question will come from the line of Jonathan Aschoff with Opus National Capital Markets. Please proceed.

Thanks. Hi, guys. I was wondering …

Hey, Jon.

…if there's any read through for Akebia's ongoing trials regarding the FibroGen's superiority testing of its primary endpoint in China trial in which the hemoglobin levels observed with rox was higher than what the curing [ph] EPO, that was CFO-37 [ph] or is that just some sort of population difference that you wouldn't expect to see something like that or maybe different dosing there versus here or any difference with curing [ph] EPO used or does it have to do with the 8 week endpoint?

Yes, thanks for the question, Jonathan. So, obviously all the data I’ve is what they had in their press release. So it's limited to really comment on that that data. I think what clearly is a positive read through is that this is another study that shows the HIF class works to increase say hemoglobin levels in these patients and that’s a quite a positive read through. When you think about the nature of the studies and you think about our Phase 3 program, you’re working to titrate hemoglobin response into a -- into quite a narrow range. In the U.S we are looking to titrate hemoglobin into a range of 10 to 11 and outside the U.S into a range of 10 to 12. So, in all of these cases the drugs are being titrated into a range. So, looking for that kind of superiority in the trial is really not what our Phase 3 is designed to do at all. We are very, very comfortable showing that it has -- that it's not inferior that we can manage hemoglobin into as tighter range as darbepoetin can.

Okay. And so FibroGen, they still talk about IP a lot because of their appealing judgments against them, so the basic question I had is can you tell us how confident you are in your IP because if you talk to them, it still sounds like it's anyone's call and they point to have in Europe the four active oppositions, two are under appeal, two are ongoing, but that will be three to four years until the appeals will be heard during which time they still have their patent in full force.

Nikki, do you want to take that?

Sure. Yes, you’re correct, as the appeal process is quite long. It is a two to three year process, but given that they raise no new issues on appeal, we’re very confident of our chances of success on appeal.

And anything with their patents and in license J&J portfolio?

I don't think there's any kind of overlap there. I think Jonathan it's important to recognize also that when you look at the European outcome this is consistent with the outcome that we saw in Japan back at the end of 2015 where they narrowed their patents to allow them to save [ph] so that they don't that vadadustat has -- doesn't infringe. And they’ve been working towards getting these patents, this anemia patent in the U.S for years and haven't been able to do that. So, when you look at the totality of the results that we've seen over the last year plus in these oppositions and validity proceedings globally, we feel very, very confident in our patent statement and in our ability to commercialize globally.

All right. Thanks, guys.

Thanks, Jonathan.

Thank you. Our next question will come from the line of Kennen Mackay with Credit Suisse. Please proceed.

Thanks for taking my questions. John, you mentioned the hyporesponder study could read out in 2018 and we’d also get data from the three times weekly dosing. Is that something that could be added onto regulatory submissions from INNO2VATE and PRO2TECT. Would you need separate Phase 3 studies there? Is that something that as you’ve discussed with regulatory authorities prior to getting study designs approved?

So the hyporesponder is a Phase 2 study. Certainly, obviously with the data in hand it will be part of our regulatory filings, because all of the data you generate is part of your regulatory filings, but we don't expect at this point to -- this is not a study we’re doing for registration. Let's see the outcome of the study and then we will decide how to proceed from there. The three times weekly on the other hand is very much a part of our registration strategy and it’s a Phase 3 study that we expect to have -- obviously as I said, we will have the data -- top line data from that before the end of next year and expect to include that in the regulatory filings.

Got you. Thank you. And then you had mentioned the enrollment for INNO2VATE and PRO2TECT were on track. Can you just remind us of those timelines?

I’m sorry, what’s the last …?

So, you’ve mentioned that INNO2VATE and PRO2TECT Phase 3 studies were on track. Can you just enroll -- remind us of the goals to have enrollment completed by?

Sure. So, PRO2TECT is scheduled to enroll 3,100 patients and we're targeting enrollment in that trial by the end of this year. And that’s -- and again as I said before I’m not saying complete enrollment, I’m saying targeting getting to 3,100 because our expectation as long as enrollment is going well, we will continue to enroll in the trial. And then INNO2VATE started six months after -- roughly after PRO2TECT and so it's kind of -- we expect that to be six months or less behind PRO2TECT in full enrollment. And then of course we -- at that point you’re looking to -- the trial will complete when you see the number of events that we need to read through.

Got you. Thanks so much for taking my questions.

Thanks, Kennen.

Thank you. Our next question will come from the line of Ed Arce with H.C. Wainwright. Please proceed.

Hi, guys. Thanks for taking my questions and congrats on all the recent progress. Just a couple questions on the studies that you’re planning, the hyporesponders and three TIW. I think you had mentioned earlier that there is a part of that one or the other or both that is on to your contracts with your partners. Could you elaborate a bit more on that?

Well, recall the Otsuka transaction, they’re reimbursing us for their share of the entire global development program. And so, both of those studies are included under that. So their share of the R&D costs will be -- for those programs they will be contributing their share. So I think what I mentioned was, one of the reasons we chose to start the hyporesponder trial little later than we had originally said was given the fact that we were completing the transaction, we thought it made sense to share that protocol with them, both of the protocol, both for hyporesponder as well as three times weekly before we initiate those trials. We’re very much on track to do it as we outlined today, we will start hyporesponder in the second quarter and TIW in the second half of the year. We're just at the very early stages obviously of developing our alliance with Otsuka and those -- that development plan talking to them about development plan is just at its early stages, but we’re still quite confident in the timing.

Okay, great. Just a couple more follow-ups. On PRO2TECT and INNO2VATE, how is your enrollments going? I know you mentioned it's on track, but if you could give us perhaps a little bit more detail on what you’re hearing from your trial investigators? And then, lastly on your recent deal with J&J. If you could just discuss how that fits with your in-house expertise in HIF biology and physiology, in particular with your preclinical asset for IBD? Thanks.

Thanks, Ed. So, the enrollment remains on track and we won't go into any other detailed anatomy. I have been to a number of investigator meetings and I can say that the investigators we spoke to really like the protocol, the active control, they know that their patients are going to be treated. We’ve made it as straightforward and streamlined the protocol as possible. So the feedback I've heard has been quite positive and you’re really, really excited about continuing it. And since we have Michael on the line, maybe I will ask Michael if you will jump on and answer Ed's second question about the J&J transaction and our new HIF portfolio.

Happy to John. Hi, Ed.

Hi.

I think your question was around how the J&J compounds fit in with current Akebia expertise in biology and the background that we have. Well, of course Akebia has a number of compounds from its earlier research program that’s stemmed out of Procter & Gamble. But the HIF-PHD compounds that come in from Johnson & Johnson are very, very structurally distinct and very distinct in their physical chemical properties and really augment the compound collection that was already present at Akebia, allowing us to accept potentially many more disease indications and targeting other therapies that perhaps we couldn't entirely address with the previous existing portfolio. And as these compounds come out of research that I had done with my team at Johnson & Johnson, I would have to say this is a very good fit.

Great. I appreciate it. Thanks again.

Thanks, Ed.

Thank you. Our next question will come from the line of Chad Messer with Needham & Company. Please proceed.

Great. Thanks for taking my question and congrats on a great year of execution, both operationally and on the business development side. I was hoping you could talk a little bit more about the three times per day Phase 3 which you're going to initiate. Maybe just tell us what that study looks like and what the real importance and need is here. Are you -- you just want to show that three times works as well to give patients more options, or is there something beyond that?

No, it's -- you’re quite close. I mean, it is in today’s environment, in the U.S particularly with reimbursement being bundled for and our expectation is that that we will be part of the bundle. The dialysis providers are responsible for the compliance of their patients and so they prefer to be able to deliver the drug to the patient in the dialysis unit and not give the patient the drug to take home where the patient has to -- they have to rely on the patient to be compliant. So, as I mentioned with that as a backdrop, we added that arm to our Phase 2 trial to show that you can dose the drug three times weekly and we really just the Phase 3 and I won't talk in detail about the protocol design at this point, because we are just in the early stages of sharing it with our partner, we want to make sure they have a chance to comment, but we wanted -- we want a design that that looks quite a bit like our other Phase 3 trials, so that there is real consistency in our ability to analyze that data in comparison to the once-daily data out of INNO2VATE. And so, we will have as many common elements to the design of the trial as possible. But we will be able to come back to you after we’ve had the opportunity to speak to Otsuka with more detail about the design of both trials.

And can you maybe just comment on what we know about the pharmacokinetics of vadadustat and half licensings that make you confident in [technical difficulty] dosing?

Yes, thanks for that. I think I’ve mentioned in the past, I mean, we’ve the half-life in the CKD population and it's in the 7 to 8 hour range. And in the dialysis population, because there is some renal clearance, it is extended to about 10 to 11 hours, and that’s one of the things that gives us confidence that we will be able to deliver the drug successfully three-times a week and that’s what gave us confidence to initiate that arm in our Phase 2 trial and the Phase 2 data that does support moving into Phase 3 with that as a dosing administration option for patients. And what's also important for dialysis providers, we’ve done a Phase 1 that looks that the PK of the product in the dialysis population. And what you’re -- what you see there is the drug isn't dialized out. And that also is important for the dialysis providers from a convenience standpoint that they can deliver the drug before dialysis after dialysis and don't have to worry about the drug being dialyzed out. At the end of the day, it really is about offering as much flexibility as possible for the physician. For instance, 10% of the patients in the U.S are peritoneal dialysis patients. For them having a once to day option is exactly what they want. For the in center hemodialysis patients three-times weekly is what the provider wants and in non-dialysis population, once-daily treatment is the most convenient dosing regimen. And we’re going to be able to offer all, if we’re successful in our Phase 3.

All right. Great. Thanks. Thanks for that additional information.

Thanks, Chad.

Thank you. Our next question will come from the line of [indiscernible] with Aegis. Please proceed.

Hi. Good afternoon. Thanks for taking my question. Just a couple. The first one is on IP litigations. Are there only four patents being involved? And so I’m trying to think through the implication on these litigations. So my understanding is that these litigations will go its parallel paths and at the end of the day, neither Akebia nor FibroGen will actually be hindered from commercialization if they were able, if both of you’re able to get your products approved.

Sure. So there are four, a total of four FibroGen patents that we challenged. The three that we most recently challenged are all in the iron, what we call the iron family. One was heard back in December and two -- the remaining two will be heard later this year. So there is a total of four that were challenging in Europe. And one of the -- equivalent to one of those patents we challenged also and were successful in Japan.

Yes. So I’m looking -- I’m trying to look, let's say three years down the road when both of you have your product approved. Will these patent litigation in any way hinders the ability to commercialize, or it's really just a parallel fight?

We do not believe that these litigations will inhibit our ability to commercialize vadadustat.

Okay. Okay. Thank you. So another question is on commercialization that even how this drug works is, the mechanism of action is so different from the current standard of care. And we knew from maybe for about seven or eight years now, the usage of ESA has gone down. So do you think for this drug, it will -- it might potentially have a quicker uptake -- uptick only because there are so many patients out there who should have been treated, but yet they're not being treated because of the safety concerns?

So of course the Phase 3 data ultimately determines the uptake, but it is very much our contention that using this different pathway, this -- where we’re able to restore this normal daily rhythm of EPO and not expose patients to those extremely high EPO levels that we have the opportunity to show a differential profile of vadadustat to the ESA. So we certainly think, particularly you really have to think differently about the dialysis population versus the non-dialysis population. Dialysis patients are being treated. 85% plus of dialysis patients in the U.S are being given ESAs. The doses have come down in the last few years post the inclusion of ESAs in the bundle. That’s very much stabilized. You saw iron doses go up. You saw ESA does go down, but you’ve really seen that stabilized to actually I think last year you even saw them increase a little bit, which really does make sense. And so those patients are being treated, but if we show a differential profile for vadadustat very much we do expect that that shift in usage from ESAs to a product like vadadustat will occur. The non-dialysis population where you saw the TREAT trial and the CHOIR trial show this increased cardiovascular risk, which was much clearer in the non-dialysis population. In the U.S., these patients are no longer -- are frequently not being treated chronically. Very few patients are being treated chronically who are non-dialysis patients in the U.S. And that's where the opportunity really does exist to change that treatment and have these patients treated chronically and have their anemia managed more effectively and that’s we're having the kind of commercial strength, the muscle, I always call it, that Otsuka brings will be quite helpful for us. And frankly that’s a situation where with multiple products on the market -- when you’re changing treatment paradigm, remember the ESA has been available in the U.S since 1989 and when you're looking to -- you have a new class of drug that has a different profile, hopefully an improved profile, having more than one company out there talking about that difference, sharing the heavy lifting is actually quite important to the speed of adoption that you see for the product.

Thank you. Our next question will come from the line of Ed Arce with H.C. Wainwright. Please proceed.

Hi. Thanks for taking my follow-up. I just wanted to ask you if you could give us an update on any progress on the study in Japan, which you expect to read out by the end of the year and remind us there what the goal is with that study? Thanks.

Yes. So, these are Phase 2 study, there is two studies, one in dialysis, one in non-dialysis patients. Dosing, kind of dose escalation trial, I mean, it's very straightforward study, much like a two way trial and that will read out by the end of the year, again very much on track from a enrollment standpoint. And the goal with the outcome of those studies is to go back to PMDA and get confirmation on inclusion of Japanese subjects into the global Phase 3. So that’s -- those are quite important from that perspective. And again, we’re very much on track to have that data before the end of this year.

Great, thanks. Thanks, John.

Thanks, Ed.

Thank you. There are no further questions. So now it is my pleasure to hand the conference back over to Mr. John Butler, Chief Executive Officer for closing comments or remarks. Sir?

Thanks, Brian, and thanks to everyone for joining us today to discuss Akebia's results. We look forward to updating you again in the future. Thanks for joining. Have a great day.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude the program and you may all disconnect. Everybody have a wonderful day.