Akebia Therapeutics, Inc. (AKBA) Q4 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen thank you for standing by and welcome to the Akebia Fourth Quarter and Full Year 2019 Financial Results and Business Highlights Conference Call. At this time, all participants' lines are in a listen only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference to your host today Kristen Sheppard. Please go ahead ma'am.

Thank you and good morning. My name is Kristen Sheppard, Vice President of Investor Relations with Akebia. Thank you for joining us to discuss Akebia's fourth quarter and full year 2019 financial results and our recent business highlights. The press release containing the company's financial results for the fourth quarter and the full year was issued earlier this morning and is available on our Investor Relations website. For your convenience, an audio replay of today's call will also be available on our website shortly after we conclude today's webcast. Joining our call today are John Butler, President and Chief Executive Officer; and Jason Amello, Chief Financial Officer. Before we begin, I'd like to remind everyone that 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 described in these statements. Additional information regarding these factors is described in the Risk Factors and Management's Discussion and Analysis sections of our most recent quarterly and annual reports filed with the SEC. The forward-looking statements on this call speak only as of the original date of this call and we do not undertake any obligation to update or revise any of these statements. With that I'd like to turn the call over to our CEO, John Butler. John?

Thanks Kristen. Good morning everyone and thanks for joining us today. 2019 was a year of considerable progress for Akebia as we continue to advance our global Phase 3 program for vadadustat and position Akebia for the future. More specifically, we made great strides executing on our global Phase 3 program for vadadustat having achieved full enrollment in PRO2TECT and INNO2VATE over 7,400 patients. In Japan, our collaboration partner Mitsubishi Tanabe submitted a JNDA for vadadustat. If approved, this is expected to lead to the first launch of vadadustat worldwide this year. We added team members to our senior team and bolstered our capabilities by successfully integrating a 140-person nephrology-focused commercial organization and we executed on our financing strategy, strengthening our balance sheet with a $100 million non-dilutive term loan. As a result of these achievements, we entered 2020 well-positioned with significant opportunities to continue advancing our mission to better the life of each person impacted by kidney disease and build long-term value for our shareholders. With many significant milestones on the horizon, 2020 is already shaping up to be equally if not more exciting than 2019. We've developed what I think is an exciting path forward for vadadustat. So, let me summarize the big picture at Akebia and what we're focused on in the coming months and throughout the year. Our highest priority remains the successful execution of our global Phase 3 program for vadadustat. Our investigational HIF-PHI being developed for the treatment of anemia due to CKD, which we believe is our largest value driver. To that end I'm excited to say that the countdown to our data has begun. In just a short time, next quarter in fact Akebia plans to provide the first readout of our global Phase 3 program for vadadustat. We expect to report topline data from INNO2VATE our studies in patients with anemia due to CKD on dialysis in Q2. We expect to follow that with topline data from PRO2TECT, our studies in non-dialysis patients with anemia due to CKD the middle of this year. It's incredibly energizing to all of us at Akebia to consider how close we are to the data readouts and to the potential introduction of vadadustat into our nephrology-focused commercial engine subject to regulatory approval. Akebia has an incredible opportunity to make a difference in the lives of patients with anemia due to CKD. An estimated 5.7 million people in the U.S. suffer from anemia due to CKD. Essentially every organ in the body is affected by this disease most notably the kidneys and heart. There are limitations to the current standard-of-care in treating and managing this disease including the risk of cardiovascular events. Our goal is to establish vadadustat upon regulatory approval as a new oral standard-of-care to address important patient and prescriber needs with a differentiated safety profile compared with the current standard-of-care ESAs. We have a tremendous amount of confidence in our clinical development program and believe it's designed for clinical, regulatory and commercial success. Very importantly, we expect clear data readouts for efficacy and safety. First, both INNO2VATE and PRO2TECT are designed to assess non-inferiority for efficacy and cardiovascular safety for vadadustat using an active control darbepoetin alfa and injectable ESA, which is the current standard of care. Simply put, we believe that in order to change the standard of care you need to compare to the standard of care. We believe this will enable a straightforward collection and analysis of major adverse cardiovascular events or MACE across the relevant studies and ultimately a clear and understandable data readout on both efficacy and safety, setting us further apart from our competition. Going a little deeper into what differentiates vadadustat. If successful with these studies, we expect vadadustat to be the first drug of its class in the U.S. and EU markets with clear data directly comparing its outcomes to the current standard of care in both dialysis and non-dialysis patients. We believe these data will be highly informative for physicians, patients and payers as they make important decisions about patient care. And a key consideration when differentiating between HIF-PHIs in the class. We have thoroughly and thoughtfully constructed a global Phase 3 program, which was designed after extensive dialogue with the FDA and European regulators. We have a straightforward statistical analysis plan in place, a prospectively defined and agreed to non-inferiority margin with the FDA and EMA, and we also agreed with the FDA on the key components of our statistical analysis plan, all of which further increase our confidence in the success of our program. So this is a very exciting program on multiple levels and we believe all of this sets up an incredibly important period in the Akebia story this year, expected top line data readouts from our global Phase 3 program for vadadustat. Consistent with the timelines we set forth over a year ago, we expect to report top line data from INNO2VATE next quarter, followed by top line data from PRO2TECT the middle of this year. As you would expect as the time approaches, we'll move into a quiet period with respect to our communications with investors and analysts so that we can analyze the top line data and prepare for release. We plan to submit additional data from these studies for presentation at future scientific venues and publication in peer-reviewed journals. And that's not all. As I mentioned earlier, we've developed what I think is an exciting path forward for vadadustat. Recently, we announced an agreement with our partner in dialysis Vifor Pharma to potentially access a Priority Review Voucher or PRV for the vadadustat NDA with the FDA to expedite review. While there's more work to be done, we believe this path would meaningfully enhance the potential of bringing vadadustat to patients as quickly as possible subject to regulatory approval. Finally, we believe we are well positioned for a very strong vadadustat launch upon approval with our partner Otsuka sharing the launch costs and responsibilities, and a distribution agreement with Vifor Pharma that facilitates access to up to 60% of the dialysis patients in the U.S. coupled with our existing nephrology-focused commercial organization. I'm very pleased with the strength of our partnerships and I'm encouraged by the confidence and enthusiasm our partners continue to demonstrate in both vadadustat and Akebia. These partnerships continue to allow us to creatively and cost effectively advance vadadustat in ways that we believe have the potential to drive significant value for our investors. When you take all of these efforts, our depth of experience, the design of our clinical program, the potential to accelerate our NDA with a PRV and our launch plans, you can see why we're so excited about the future. I'll stop there and let Jason take you through the numbers.

Thank you John and good morning. As John mentioned, our highest priority is executing on our global Phase 3 program for vadadustat. We're also making significant progress in further developing our commercial strategies and capabilities to maximize the value of vadadustat subject to approval. As we go through the financial results for the fourth quarter and the full year of 2019, it's important to keep in mind for comparison purposes that are merger with Keryx Biopharmaceuticals closed on December 12, 2018. And as a result, 2018 only reflects 18 days of Keryx operating results through December 31, 2018. So, starting with revenue. Total revenue was $69.6 million for the fourth quarter of 2019 compared to $59.9 million for the fourth quarter of 2018 and $335 million for the full year 2019 compared to $207.7 million for the full year 2018. Our collaboration agreements are both highly strategic and important elements of our financial strength and given that, our collaboration and license revenue continues to be a significant source of revenue for us, reflecting the value we are creating as we continue to execute and advance our programs. The majority of our collaboration revenue for both periods related to our Otsuka agreements. Historically, Otsuka had funded 52.5% of our Phase 3 development costs of vadadustat and starting in Q2, 2019, Otsuka begin funding 80% of these costs. Collaboration revenue was $40.6 million for the fourth quarter of 2019 compared to $53 million in the fourth quarter of 2018 and $223.9 million for the full year 2019 compared to $200.9 million for the full year of 2018. The change in both periods is due to the timing in which vadadustat development expenses are incurred and the associated revenue being recognized on a percentage of completion basis. With continued progress, future collaboration revenue will also come in the form of additional milestones and royalties, which I'll discuss in a moment. Net product revenue for the sales of Auryxia was $28.9 million for the fourth quarter of 2019 compared with $6.8 million for the 18 days of 2018 and $111.1 million for the full year of 2019 compared to $6.8 million for the 18 days of 2018. If you would add the unaudited sales recorded by Keryx before the merger, pro forma net product revenue from the sale of Auryxia for the full year of 2018 would have been approximately $96 million. Cost of goods sold associated with the manufacturer of Auryxia was $38.1 million for the fourth quarter of 2019, which includes noncash charges related to the application of purchase accounting as a result of the merger with Keryx of $18.8 million to inventory step-up and $9.1 million for the amortization of intangibles. Cost of goods sold was $145.3 million for the full year 2019, which includes noncash charges of $70.4 million for inventory step-up and $36.4 million to amortization of intangibles. Moving further down the P&L. R&D expenses were $80.4 million for the fourth quarter of 2019 compared to $87.1 million for the fourth quarter of 2018 and $323 million for the full year of 2019 compared to $291 million for the full year of 2018. The change in both periods is largely attributable to a change in cost associated with our research and development programs including our PRO2TECT and INNO2VATE Phase 3 studies as they advance towards readout this year. It is important to keep in mind that 80% of our Phase 3 costs are reimbursed by Otsuka which gets recorded as collaboration revenue as I mentioned earlier. Selling, general and administrative expenses were $44.9 million for the fourth quarter of 2019 compared to $55.1 million for the fourth quarter of 2018, which included $41.7 million of merger-related expenses in 2018. For the full year of 2019, SG&A was $149.5 million compared to $87.1 million for the full year of 2018, which included $49.5 million of merger-related expenses in 2018. Excluding the merger-related expenses in 2018, the increase for both periods over 2018 is primarily attributable to having a full year of Auryxia commercialization-related costs in 2019 versus only 18 days in 2018. As a result of the foregoing operating results, the company reported a net loss of $94.5 million for the fourth quarter of 2019 compared to $60.1 million for the fourth quarter of 2018 and $279.7 million for the full year 2019 compared to $143.6 million for the full year of 2018. Again, I want to point out that the net loss for the fourth quarter and the full year of 2019 includes the impact of noncash charges to cost of goods sold of $27.9 million and $106.8 million respectively, related to the application of purchase accounting for the merger with Keryx that I mentioned earlier. Looking ahead, assuming approval of vadadustat in Japan, we expect to receive a $15 million regulatory milestone -- milestone payment from Mitsubishi Tanabe this year. Also, as we move past our INNO2VATE and PRO2TECT readouts that are expected in Q2 and mid-2020 respectively, we expect both associated R&D expenses and revenues to decrease. Separately, I'll note that subject to the terms of our collaboration agreements with our strategic partners, Akebia has the potential to receive development and regulatory milestone payments from Otsuka upon the approval of vadadustat in the U.S. and in Europe. Lastly, given the pending litigation and fundamental impact that CMS' non-coverage decision continues to have on our business we are not providing guidance on Auryxia revenue and continue to be cautious in our planning for Auryxia net product revenue for 2020. We encourage you to do the same. Over the longer term, we remain optimistic about Auryxia's growth prospects. With respect to our capital position cash, cash equivalents and available for sale securities were $147.7 million at December 31, 2019, we are pleased to have extended our cash runway well into 2021, with disciplined spending in the identification of operating efficiencies, coupled with the receipt of a $15 million regulatory milestone from MTPC, assuming approval of vadadustat in Japan and the additional sales of common stock under our ATM facility with Cantor Fitzgerald. The company received net proceeds of $73.5 million upon the sale of 10.7 million common shares at a weighted average price of $7.04 per share, of which $16.8 million was received in Q4 of 2019 and $56.7 million was received this quarter. In line with good corporate governance, we expect to file a new ATM this quarter. Lastly, we ended the year with approximately 121.7 million shares outstanding. With that, I'll turn it back to the operator for questions.

Thank you. [Operator Instructions] Our first question comes from Chris Raymond with Piper Sandler. Your line is now open.

Hi. Thanks. Just a couple of questions. On the Priority Review Voucher, I wonder if you could just talk about your confidence, I guess, in the regulatory package that makes you, again, sort of confident that in an eight-month review, just kind of comparing this to the decision by your competitor, not to pursue that, I'm kind of just curious in terms of signals, feelings you get maybe from FDA, et cetera, obviously, you must have had some degree of confidence to do this. Just can you talk about that little bit?

Sure, Chris. Thanks very much for the question. Really, this goes back to the program, right? I mean the clarity of the data that we expect to get from our Phase 3 program for both INNO2VATE and PRO2TECT. We've been saying this for years now about our expectation around how we will be able to analyze, interpret our data and by extension how we expect the agency will be able to do that in an efficient manner as well. And that gives us a tremendous amount of confidence that taking on a PRV and accelerating that review will pay great dividends in the future.

Okay, good. And then, just, maybe a housekeeping issue. We found on clinicaltrials.gov, you guys just recently posted a Phase 1 trial in healthy volunteers to assess. I think, it's looking at the effects of phosphate binders on the PK of vadadustat. Can you maybe talk about the reasoning there? And is that a gating factor at all in your package? Or is this more of a marketing study, if you will?

Yes, we decided to add a drug-drug interaction studies with phosphate binders. We have done a number of DDIs in the past and made the decision with our partner that it made sense to do this. These are pretty quick studies. This won't be a gating item in our filing at all.

Cool. Thanks very much.

Thanks, Chris.

Thank you. Our next question comes from Eric Joseph with JPMorgan. Your line is now open.

Hi. Good morning. Thanks for taking the questions. Can you talk a little bit about where things stand in terms of vadadustat manufacturing in CMC, whether there are any scale up or stability requirements that are required to move through ahead of launch and, I guess, related to that, to what extent you might have Asia or China exposure for vadadustat manufacturing? Thanks.

Thanks, Eric. So, yes, we're, obviously, hard at work on getting everything prepared for filing. Our expectation for filing for vadadustat is that we will have multiple API and drug product manufacturers as part of our initial label and all of the work that we need for registration is completed. And obviously, we also have to have validation work done for Japan from PMDA. So that work obviously is completed as well as that's well under review. So we feel very confident about where we are with that. We don't think that there's any impact from China. We do have manufacturing second source in China, but that validation work is ongoing now and we expect that there won't be any impact on timing for review or approval. And it is obviously the -- the coronavirus obviously a constantly evolving situation and we will continue to monitor that as well. And frankly, at the end of the day, I mean the most important thing for us is patient safety. And when we think about the U.S. even that's really where our primary thought is. This is a very fragile population, the dialysis population who we deal with. But we haven't seen any impacts from it at this point, but we'll continue to monitor.

Got it. That's very helpful. Thanks for taking the question. I guess maybe a follow-up here. Just -- is it -- is there any way that you can kind of help guide us to anticipating data within second quarter from INNO2VATE. In your opening comments, you made a remark about kind of moving into a quiet period. Does that reflect sort of visibility that you're seeing on that accrual right now? And I guess is there a way to sort of narrow down and within second quarter we can anticipate top line data? Thanks.

Thanks, Eric. So the second quarter has been our guidance for I think over a year now and that's where we are maintaining guidance. Really with INNO2VATE this is no longer about vadadustat study actually is it about accrual of MACE events? And we are very confident that we have achieved or about to achieve the number of -- target number of MACE events. So it's really about the time to clean the data, lock the database, analyze et cetera. So -- and obviously that can take differential amounts of time. So I think sticking with second quarter just is very comfortable for us to know we have the time to do this right.

Got it. Okay. Thanks for taking the questions.

Thank you.

Thank you. Our next question comes from Difei Yang with Mizuho. Your line is now open.

Hi. Good morning, and thanks for taking my questions. Just a quick one with regards to the evolving COVID-19 situation. With that from risk management perspective that in any way might change the time line on readout -- on top line readouts just because of the potential disruption at different hospitals et cetera et cetera?

Yes. No, thanks for that question Difei. So right now, we don't anticipate or see any significant impact that COVID-19 might have on the readout. But I said an answer to Eric's question. I mean this is really about what's best for the patients and making sure that that remains our focus. It's -- again, we don't anticipate any change, but it's such an evolving situation that we're constantly kind of evolving with it. But as of now, we feel confident.

Okay. Thank you. Now a more of a technical question relative to NDD setting for vadadustat. I think in the past, we talked about how ESA being used and being tested. We are just wondering from the top line readout perspective would we see any potential benefits with regards to delaying the progress from stage 3 to stage 4 and so on? Or should we just be expecting really very top line results on inferiority?

Thank you Difei again for that question, it gives us the opportunity to make sure we clarify what to expect in topline readout. Topline readout is just that it's topline. So if you recall for INNO2VATE and then you'll see the same for PRO2TECT you have a primary efficacy endpoint for each of the two studies, the incident, patient, population and the conversion population in INNO2VATE and you'll see a topline primary efficacy endpoint readout for each of those, and of course you combine the MACE events and have one top line safety readout and that's primary endpoint. And that's what you will see in topline data along with general safety. I mean if you look back at our old press releases from data that we presented, you'll get a sense of the completeness with, which we present data but it will be topline. So things like progression et cetera that we will be saving for future scientific meeting and publication.

Thank you John for the clarification.

Thank you Difei.

Thank you. Our next question comes from Chad Messer with Needham. Your line is now open.

Hello and this is Gill [ph] on for Chad. Just a question about -- in previous presentations, you guys discussed new CMS rule about transitional drug add-on payment adjuster. Could you provide additional detail how this would improve your market access? Thank you.

Thanks for the question. So TDAPA, Transitional Drug Add-on Payment Adjustment is a rule that was published by CMS late last year. And it will -- according to the final rule, it will apply to any new drug that is introduced for the dialysis population. Of course vadadustat would be included in that. And what that allows for dialysis is for payment for the drug on an ASP basis outside of the bundle for two years. So this is obviously really meant to encourage innovation for dialysis patients and it's incredibly helpful for driving uptake and adoption at the dialysis centers. So we do expect that we'll be able to access that for vadadustat. This is -- when you pair TDAPA with our relationship with Vifor, which again I mean we put in place to drive revenue quickly because of the relationship that they have with Fresenius Medical Care plus another 20% of small and medium sized dialysis providers. When you pair those two, we think that is an incredible opportunity for vadadustat to accelerate its launch revenue.

Just to make sure that my understanding is correct. So for the first two jurisdictions using the rule out of CMS would be getting drug at cost?

So the way it works is that dialysis providers will purchase vadadustat and then on a calculated ASP basis, the same way it's done for other kind of Part B covered drugs they would be reimbursed for that drug at an ASP plus zero level, right? Now normally ESAs today are in the bundle. And so whatever price they pay that's incorporated into the bundle. They will still be getting that full bundle payment but be able to get their ESA med, vadadustat in this case outside of the bundle. Now all of this of course there's details around exactly how this will work. There hasn't been a drug yet incorporated into this outside of the Parsabiv and cinacalcet, so some of this detail still remains to be worked out by CMS. But if you think about it, the opportunity to be paid for your drug for ES -- for anemia outside of the bundle creates a great economic incentive for the dialysis providers and obviously a great opportunity for patients to benefit from the drug.

That makes sense. Thank you so much for the clarifications.

Thank you. Our next question comes from David Lebowitz with Morgan Stanley. Your line is now open.

Thank you for taking my question. Would you be able to, I guess run us through for the two Phase 3 trials. What -- based on the number of patients in the studies, what -- how many events need to take place I guess in each arm, I guess for it to actually meet non-inferiority? And is there -- on the MACE side of things, is superiority something really being considered?

Thanks for the question, David. So we've not disclosed the number of events that we're targeting. Obviously, all of the modeling we've done is looking at a hazard ratio of one. I mean a kind of pure non-inferiority measure. And that's what we're looking for. That's what our expectations are, is that we will see non-inferiority between the two treatments. And the great thing is, when you look at what physicians are expecting, what they're looking for when it comes to choosing a new drug to treat anemia versus what they've been using for years? Vadadustat is really the ideal product to compete there and differentiate from the ESAs. And it's not about superiority on MACE. It's mostly about maintaining EPO in the physiologic range. And that is when you look at the EPO data that we've already published, you can see that that is what vadadustat accomplishes. And it positions well not only versus the ESAs, but versus other HIFs that are in development in the class as well. Then when you add that to the fact that we increase hemoglobins in a slow and steady pace versus fast and furious, what you see with other products and we minimize hemoglobin cycling and importantly excursions these are all the areas that physicians want to see. These are all things we've demonstrated in prior studies already including most recently in our Phase 3 data out of Japan. So we think we're incredibly well positioned from a commercial perspective and non-inferiority is what we're expecting from the MACE trial.

Thank you for taking my question.

Thank you. Our next question comes from Ed Arce with H.C. Wainwright. Your line is now open.

Hi everyone. Thanks for taking my questions and congrats on the recent PRV agreement. So, just a couple of questions for me, just sort of on a modeling basis here, given that Otsuka now for a better part of three quarters has been paying the higher 80% reimbursement and recorded as collaboration revenue. I wanted to see if you could remind us, how that will ultimately impact your future profit sharing as that has to be sort of backed into ultimately that number? And then I have a follow-up.

Sure. Ed, it's Jason. Yes. So as R&D expenses start to decline the collaboration revenue, obviously as a percentage of that will start to decline. We're constantly evaluating the post data, post-approval cost that we'll have in other studies that we'll be doing relative to vadadustat. So that will constantly be modulating based on forecast and so forth. But in the near term, as you see the trial coming to an end and R&D going down, you'll see a downtick in the collaboration revenue as well.

So remember the -- when you look at that difference between the 51% and the 80% that is revenue they will be able to call back through milestones and royalty in the future. But we also created in the contract that they can't take down any more than 50% of any payment in the year. So it moderates the timing over which they'll get that payment back.

Okay. All right. Great, and just another follow-up. You mentioned the $15 million milestone that you expect later this year upon approval in Japan. Are there any other external milestones or payments between now and sort of your -- at the end of year run rate that you might expect?

Yes. So we have obviously through the partnerships with Otsuka for both U.S. and Europe there are development and regulatory milestones that get paid upon approval. So that will depend on the timing of the data, the quality of the data and so forth. So those are sizable milestones that will happen upon approval with Vifor assuming that vadadustat is in the bundle through the Vifor arrangement to the $25 million milestone with that as well.

Great. Thanks, again.

Thank you. Our next question comes from Bert Hazlett with BTIG. Your line is now open.

Thanks. Yes. Just a point of clarification what Ed just asked. The milestones are due on the timing and the quality of the data. Could you just go into that quality part a little bit more? And then I have a second one.

There's different criteria that results in different milestones. So it depends on what the label says, it depends on where we fall from a competitive position standpoint, things like that. So it's more around not just okay you have approval but what type of approval is it and the milestones are different based on each of those types of outcomes.

Can you go in a little bit more into the degree of difference of the milestone depending upon what they are?

No we haven't disclosed that yet. We have to see the data before we will disclose anything like that.

Okay. Well just on the data then in terms of -- you're preparing for similar results for your company. We've got a sequential readout NNO2VATE and then PRO2TECT. How should we be thinking -- we're going to get the top line data with INNO2VATE, how should we be thinking? And how should we -- investors be considering how INNO2VATE can inform PRO2TECT results? I know it's going to be complicated. I know there's a lot of moving parts but just in general terms if you could frame that for us that would be helpful.

Sure Bert. Thanks for the question. Obviously, every data point informs the next, right? This is MACE data in a fragile population and INNO2VATE and so seeing positive results there. I think our -- will be informative certainly will for me, as to what we'll see in PRO2TECT. Just like seeing competitive data, MACE data I think as complicated as the analysis there was I think informs us and reduces our risk. Our Japanese Phase 3 data on the efficacy side informs the INNO2VATE data. And I think the INNO2VATE data will I think certainly inform PRO2TECT as well. But it's a different patient population. So they're -- and there always still has -- you still have risk until you see the data readout but I certainly will be more encouraged about what PRO2TECT can show when I see positive INNO2VATE data.

Okay. Thank you. Just a couple of quick ones. I know that you have said this before, how long would you expect in the case of positive data? How long would it take you to file the NDA in the U.S. and the EU? And then just with regard with the ATM, I think you said $56.7 million this quarter. And could you give us the shares outstanding again that are currently out? Thanks.

Yes. So on the ATM, it was $17 million raised in Q4 and $57 million this quarter in Q1. And the total outstanding shares currently inclusive of all of that is $121.7 million.

That's end of the year.

That was the end of the year. So you add $57 million to that, of that probably 10.7 million shares that was raised in total I can tell you how much was in 2019 given that ratios...

So Jason is getting that updated number for you Bert. I'm sorry what was your second question again or the first one?

What’s the timing on the NDA and in the U.S. and the EU?

Yes. Well, we are going to move as quickly as possible. And I think that's the safest way to say it. We'll have INNO2VATE. We'll be working on that and then it's about when we'll get PRO2TECT and how quickly we can pull all of that together into a filing. I mean, if we are going to be moving extremely quickly, my expectation -- we're looking to file them as close to simultaneously as possible. My expectation is that the NDA will come first. But we're -- obviously, there's a tremendous amount of overlap between the packages. So we're -- we'll be working with Otsuka on that and we have a very robust plan. But it is -- we won't let any grass grown under our feet.

Okay. We look forward to the data. Thank you very much for taking the questions.

Bert, just to give you the share count. So if you add this figure -- extra number of shares that were sold in Q1 that will bring the new share count to 129.7 million.

Okay. Thank you.

Thanks.

Thank you. [Operator Instructions] Our next question comes from Kennen MacKay with RBC Capital Markets. Your line is now open.

Hi. Thanks for taking the question. I had two questions. One on statistical analysis. Is the -- I was just hoping, if you could describe how a superiority analysis would be run? So it's the non-inferiority and then superiority analysis hierarchical even if we're not sort of expecting the superiority? And can you just remind us of the definition of non-inferiority? Sort of how the analysis could be conducted?

Yeah. So, answering from the perspective of not being a statistician. But the superiority analysis is the same analysis as of the non-inferiority analysis. Important -- and again, I want to make sure that the main point that everyone takes away is that this is a non-inferiority study that's the outcome we're expecting. And you're superior simply, if you -- the lower bound of your 95% confidence interval doesn't cross one. And again, that's not our expectation for the study, but that's kind of the definition of it. And I don't believe it's considered a hierarchical analysis, because it's the same analysis.

Got you. Okay. Thanks, John. And then maybe on hemoglobin and differentiation versus the MACE endpoint there, so we know Aranesp hemoglobin goals and protocols those are set. But can you remind us the protocol for vadadustat hemoglobin levels? Is it possible to even get superiority on hemoglobin given that you're treating to a set goal there?

Yeah, I would be very, very surprised to see that. And I think when you've seen that with a competitor most physicians kind of discount calling it superiority, because you know with an ESA, if I want to hire hemoglobin, I give more, right? So that's not at all the goal. What -- with both vadadustat and Aranesp in our studies physicians are treating to the same range. In the U.S., they're treating to maintain the hemoglobin within the range of 10% to 11%. And outside of the U.S. maintain it within a range of 10% to 12% for both products. So you -- again, when you look at what differentiates vadadustat it's this idea that you have the slow steady increase in hemoglobin and you avoid cycling and excursions. If you think about an analysis for -- your primary endpoint is the average hemoglobin between week 24 and 36. And you don't get penalized for having hemoglobin that's too high. That's an excursion beyond, where you expect it to be. So I think with all of that you're just expecting to see non-inferiority for hemoglobin is -- will be perfect. It will be just what we want to show in the study, just like we showed it in the Japanese study or our partner Mitsubishi did.

That's very helpful. Thank you very much.

Thanks, Kennen.

I'm not showing any further questions at this time. I'd now like to turn the call back over to John Butler, CEO for closing remarks.

Thanks very much, Joelle, and thanks everyone for joining us today. I hope you'll agree that, we have an incredibly exciting time coming up in the very near-term. And we look forward to keeping you updated on the progress and speaking to you next quarter about the results of our INNO2VATE Phase 3 program. Thanks very much. Have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.