- Kidney disease specialist Akebia Therapeutics will merge with Boston-based Keryx Biopharmaceuticals in an all-stock deal, creating a $1 billion company that blends Keryx's small commercial presence on the renal market with Akebia's development pipeline.
- The combined company will retain the Akebia name and be led by current Akebia CEO John Butler. Per deal terms, shareholders in Keryx will own 50.6% of the new Akebia, slightly more than the 49.4% stake to be held by current Akebia shareholders.
- Hedge fund Baupost Group, which is Keryx's largest shareholder, has agreed to support the merger and will convert its $165 million in outstanding convertible notes of Keryx into Keryx common stock. The deal is expected to close by the end of 2018.
Merging clinical potential with commercial presence, Akebia and Keryx aim to better stand up against larger players in the multi-billon dollar renal market.
Investors, however, did not appear impressed by the new company's chances. Shares in Akebia dropped by nearly 20% in Wednesday morning trading while Keryx stock fell by a similar 18%.
Keryx currently markets Auryxia (ferric citrate) for two indications related to chronic kidney disease (CKD): iron deficiency anemia in patients not dependent on dialysis and high phosphorous levels in those who are. The drug doesn't bring in much in sales, earning only $21 million over the first three months of 2018.
But Keryx does offer an existing commercial infrastructure that could be tapped if Akebia's closely watched experimental drug vadadustat, currently in Phase 3 for anemia due to CKD, gains approval in the U.S. In pitching the deal, the companies tout the potential of the two drugs to complement each other, offering oral options for both dialysis and non-dialysis patients.
Akebia expects enrollment to complete by year end into two Phase 3 non-inferiority studies testing vadadustat against Amgen's Aranesp (darbepoetin alfa). Known as PRO2TECT and INNO2VATE, the trials will measure both change in hemoglobin from baseline and major cardiovascular events.
If all goes according to plan, Akebia anticipates reading out results in 2019 with a market launch to follow in 2020 if the FDA approves vadadustat.
It's worth noting that, under a 2016 collaboration deal with Otsuka, Akebia will split any profits from vadadustat in the U.S. with the Japanese pharma.
For Keryx, the merger with Akebia comes two months after the then-company head Gregory Madison resigned as CEO, replaced by interim chief Jodie Morrison.
The two companies expect the merger to save costs as well as boost competitiveness, highlighting an expected $250 million in cost synergies to result five years from deal closing. Further specifics, such as whether or not those savings would involve layoffs, weren't disclosed in the statement on the deal.
Once the deal closes, the new Akebia will hold a pro forma cash balance of $453 million on its balance sheet — an ample warchest to fund launch activities for vadadustat.
The funds will be needed, too, as Akebia will be going up against a competitive field. In addition to on-market incumbents like Amgen, rival drugs for CKD-related anemia from Fibrogen, Bayer and GlaxoSmithKline are advancing through Phase 3 testing.
Fibrogen's study of its compound, called roxadustat, recently completed enrollment, and the company aims to submit the drug for approval if data are positive by the first half of 2019.
Fewer details are available for the drugs from Bayer and GlaxoSmithKline, but listings on the clinicaltrials.gov database suggest data could be available in 2019 and 2020, respectively.