Akebia Therapeutics Inc (AKBA) Shares Soar on Partnership Deal; Top Analyst Lifts Price Target

Akebia Therapeutics Inc (NASDAQ:AKBA) shares are soaring over 15% as of this writing, after the drug maker announced that it had entered into an exclusive distribution agreement with Vifor Pharma for North America. As per the agreement, Vifor’s commitment to exclusively distribute vadadustat to Fresenius Medical Care (FMC) North America is contingent on two factors: (1) vadadustat is approved by the FDA; and (2) vadadustat is included in a bundled reimbursement model. Also contingent on those two factors is a $20 mil payment from Vifor to Akebia. The agreement does not impact commercialization plans for vadadustat in North America, for which the responsibility still lies with Akebia.

This agreement is structured as a profit-sharing arrangement between Akebia and Vifor Pharma, on all U.S. sales of vadadustat to Fresenius. While Vifor Pharma acts as the exclusive distributor of vadadustat to Fresenius, Akebia retains “the vast majority” of the split with Vifor Pharma. Then, of the that amount, under the existing agreement with Otsuka, Akebia splits it 50:50 with Otsuka.

Akebia CEO John P. Butler said, “This agreement provides the opportunity to build greater commercial momentum for vadadustat in the U.S. rapidly upon launch […] We are pleased that Vifor Pharma has selected vadadustat as its exclusive HIF product for distribution to Fresenius Medical Care, one of the largest dialysis providers. We believe that this commitment provides significant further validation of vadadustat`s potential.”

H.C. Wainwright analyst Ed Arce commented, “We view this as a substantial, landmark win for Akebia given that Fresenius currently treats over 185,000 dialysis patients, representing nearly 40% of the estimated $3.5B U.S. CKD anemia market. Critically, by taking this strong, early lead, Akebia has effectively locked HIF competitors FibroGen and GlaxoSmithKline out of 40% of the key U.S. market. In addition to the commercial value this deal brings (we find it hard to over-estimate its importance as a competitive advantage), this agreement, coming as it does over a year before pivotal Phase 3 data, also speaks to the robust clinical profile of vadadustat, in our view, as data-driven Fresenius is known for its cautious, thorough due diligence process. Indeed, as we see it, this top-tier validation of vadadustat (and Akebia) by strategic partners Vifor Pharma and Fresenius directly refutes the comparative analysis of HIF inhibitors in development by AKBA bears.”

As such, Arce raises his price target for to $25 (from $21), while reiterating a Buy rating on AKBA. The new price target represents a potential upside of 67% from where the stock is currently trading.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, 5-star analyst Ed Arce has a yearly average return of 27.4% and a 52.5% success rate. Arce has a 23.4% average return when recommending AKBA, and is ranked #115 out of 4572 analysts.

Out of the 8 analysts polled in the past 12 months, 7 rate Akebia Therapeutics stock a Buy, while 1 rates the stock a Hold. With a return potential of 29%, the stock’s consensus target price stands at $19.29.


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