2023 Q1 Form 10-K Financial Statement

#000162828023007539 Filed on March 10, 2023

View on sec.gov

Income Statement

Concept 2023 Q1 2022 Q4 2022
Revenue $40.13M $55.18M $292.6M
YoY Change -34.96% -7.42% 37.0%
Cost Of Revenue $19.48M -$11.25M $84.80M
YoY Change -37.84% -126.56% -44.72%
Gross Profit $20.64M $66.43M $207.8M
YoY Change -31.99% 285.43% 245.28%
Gross Profit Margin 51.44% 120.39% 71.02%
Selling, General & Admin $25.22M $30.65M $138.7M
YoY Change -43.1% -31.63% -20.36%
% of Gross Profit 122.18% 46.13% 66.74%
Research & Development $19.69M $31.90M $129.1M
YoY Change -55.09% 7.94% -12.67%
% of Gross Profit 95.36% 48.02% 62.13%
Depreciation & Amortization $9.409M $9.419M $1.654M
YoY Change -0.2% -0.36% -14.17%
% of Gross Profit 45.58% 14.18% 0.8%
Operating Expenses $45.58M $71.56M $286.9M
YoY Change -48.7% -14.19% -11.85%
Operating Profit -$24.94M -$5.128M -$79.12M
YoY Change -57.37% -92.25% -70.18%
Interest Expense -$1.561M -$1.636M -$15.69M
YoY Change -69.16% -67.81% -21.31%
% of Operating Profit
Other Income/Expense, Net $282.0K $434.0K $3.146M
YoY Change -75.13% -22.5% 30.32%
Pretax Income -$26.22M -$7.552M -$92.56M
YoY Change -58.0% -89.31% -67.27%
Income Tax $0.00 $0.00
% Of Pretax Income
Net Earnings -$26.22M -$7.552M -$92.56M
YoY Change -58.0% -89.31% -67.27%
Net Earnings / Revenue -65.34% -13.69% -31.63%
Basic Earnings Per Share -$0.14 -$0.51
Diluted Earnings Per Share -$0.14 -$0.04 -$0.51
COMMON SHARES
Basic Shares Outstanding 184.2M shares 184.0M shares 182.8M shares
Diluted Shares Outstanding 184.8M shares 182.8M shares

Balance Sheet

Concept 2023 Q1 2022 Q4 2022
SHORT-TERM ASSETS
Cash & Short-Term Investments $56.95M $90.47M $90.47M
YoY Change -67.37% -39.61% -39.61%
Cash & Equivalents $57.00M $90.47M $90.47M
Short-Term Investments
Other Short-Term Assets $25.38M $33.54M $33.54M
YoY Change 5.22% 1.21% 1.21%
Inventory $20.60M $21.76M $21.76M
Prepaid Expenses $15.60M
Receivables $17.78M $39.18M $39.18M
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $120.7M $184.9M $184.9M
YoY Change -60.12% -32.01% -32.01%
LONG-TERM ASSETS
Property, Plant & Equipment $4.816M $5.214M $34.37M
YoY Change -25.34% -22.8% -15.35%
Goodwill $55.10M $55.10M
YoY Change 0.0% 0.0%
Intangibles $72.08M
YoY Change
Long-Term Investments
YoY Change
Other Assets $5.238M $5.372M $5.372M
YoY Change -86.71% -89.2% -89.2%
Total Long-Term Assets $156.1M $166.9M $166.9M
YoY Change -32.89% -34.18% -34.18%
TOTAL ASSETS
Total Short-Term Assets $120.7M $184.9M $184.9M
Total Long-Term Assets $156.1M $166.9M $166.9M
Total Assets $276.9M $351.8M $351.8M
YoY Change -48.29% -33.05% -33.05%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $12.58M $18.02M $18.02M
YoY Change -35.39% -46.35% -46.35%
Accrued Expenses $46.37M $71.00M $71.00M
YoY Change -57.72% -32.03% -32.03%
Deferred Revenue $0.00 $3.738M
YoY Change -100.0% -82.12%
Short-Term Debt $0.00 $0.00 $0.00
YoY Change
Long-Term Debt Due $24.00M $32.00M $32.00M
YoY Change -75.47% -67.19% -67.19%
Total Short-Term Liabilities $82.94M $124.8M $124.8M
YoY Change -67.33% -51.36% -51.36%
LONG-TERM LIABILITIES
Long-Term Debt $26.30M $34.08M $34.08M
YoY Change
Other Long-Term Liabilities $12.64M $12.16M $183.7M
YoY Change -83.74% -85.26% -4.65%
Total Long-Term Liabilities $38.94M $46.24M $217.7M
YoY Change -49.91% -43.97% 13.05%
TOTAL LIABILITIES
Total Short-Term Liabilities $82.94M $124.8M $124.8M
Total Long-Term Liabilities $38.94M $46.24M $217.7M
Total Liabilities $291.2M $342.5M $342.5M
YoY Change -42.81% -23.74% -23.74%
SHAREHOLDERS EQUITY
Retained Earnings -$1.579B -$1.553B
YoY Change 3.7% 6.34%
Common Stock $1.565B $1.562B
YoY Change 1.03% 1.66%
Preferred Stock
YoY Change
Treasury Stock (at cost)
YoY Change
Treasury Stock Shares
Shareholders Equity -$14.35M $9.342M $9.342M
YoY Change
Total Liabilities & Shareholders Equity $276.9M $351.8M $351.8M
YoY Change -48.29% -33.05% -33.05%

Cashflow Statement

Concept 2023 Q1 2022 Q4 2022
OPERATING ACTIVITIES
Net Income -$26.22M -$7.552M -$92.56M
YoY Change -58.0% -89.31% -67.27%
Depreciation, Depletion And Amortization $9.409M $9.419M $1.654M
YoY Change -0.2% -0.36% -14.17%
Cash From Operating Activities -$17.54M -$54.68M -$73.15M
YoY Change -18.88% -12.94% -71.08%
INVESTING ACTIVITIES
Capital Expenditures $0.00 $0.00 $114.0K
YoY Change -100.0% 93.22%
Acquisitions
YoY Change
Other Investing Activities $0.00 $0.00
YoY Change -100.0%
Cash From Investing Activities $0.00 $0.00 -$114.0K
YoY Change -100.0% -100.29%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -$15.97M -1.000K $14.60M
YoY Change -133.58% -100.02% -89.08%
NET CHANGE
Cash From Operating Activities -$17.54M -54.68M -$73.15M
Cash From Investing Activities $0.00 0.000 -$114.0K
Cash From Financing Activities -$15.97M -1.000K $14.60M
Net Change In Cash -$33.50M -54.68M -$58.67M
YoY Change -229.81% -4.75% -26.01%
FREE CASH FLOW
Cash From Operating Activities -$17.54M -$54.68M -$73.15M
Capital Expenditures $0.00 $0.00 $114.0K
Free Cash Flow -$17.54M -$54.68M -$73.27M
YoY Change -19.31% -12.94% -71.04%

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Nature of Organization and Operations<div style="margin-top:6pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">Akebia Therapeutics, Inc., referred to as Akebia or the Company, was incorporated in the State of Delaware in 2007. Akebia is a fully integrated biopharmaceutical company with the purpose of bettering the lives of people impacted by kidney disease. The Company has one commercial product, Auryxia</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:6.5pt;font-weight:400;line-height:112%;position:relative;top:-3.5pt;vertical-align:baseline">®</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%"> (ferric citrate), which is approved by the U.S. Food and Drug Administration, or FDA, and marketed for two indications in the United States: the control of serum phosphorus levels in adult patients with chronic kidney disease, or CKD, on dialysis, or DD-CKD, and the treatment of iron deficiency anemia, or IDA, in adult patients with CKD not on dialysis, or NDD-CKD. Ferric citrate is also approved and marketed in Japan as an oral treatment for IDA in adult patients for the improvement of hyperphosphatemia in such patients with DD-CKD and NDD-CKD under the trade name Riona (ferric citrate hydrate).</span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">Vadadustat, the Company’s lead investigational product candidate, is an investigational oral hypoxia-inducible factor prolyl hydroxylase, or HIF-PH, inhibitor designed to mimic the physiologic effect of altitude on oxygen availability. On March 29, 2022, the Company received a complete response letter, or CRL, from the FDA. The CRL provided that the FDA had completed its review of the Company's new drug application, or NDA, for vadadustat for the treatment of anemia due to CKD in adult patients and had determined that it could not approve the NDA in its present form. In October 2022, the Company submitted a Formal Dispute Resolution Request, or FDRR, with the FDA. The FDRR focused on the favorable balance between the benefits and risks of vadadustat for the treatment of anemia due to CKD in adult DD-CKD patients in light of safety concerns expressed by the FDA in the CRL for dialysis patients related to the rate of adjudicated thromboembolic events driven by vascular access thrombosis for vadadustat compared to the active comparator and the risk of drug-induced liver injury.</span><span style="color:#000000;font-family:'Calibri',sans-serif;font-size:10pt;font-weight:400;line-height:112%"> </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">In February 2023, we received a second interim response from the FDA to our FDRR. On May 12, 2022, the Company received notice from its former collaboration partner, Otsuka Pharmaceutical Co. Ltd., or Otsuka, that Otsuka had elected to terminate the Collaboration and License Agreement dated December 18, 2016, or the Otsuka U.S. Agreement, and the Collaboration and License Agreement dated April 25, 2017, or the Otsuka International Agreement. On June 30, 2022, the Company and Otsuka entered into a Termination and Settlement Agreement, or the Termination Agreement, pursuant to which, among other things, the Company and Otsuka agreed to terminate the Otsuka U.S. Agreement and the Otsuka International Agreement as of June 30, 2022 (see Note 4 for further details). In October 2021, Otsuka submitted a Marketing Authorization Application, or MAA, for vadadustat for the treatment of anemia due to CKD in adult patients with DD-CKD and NDD-CKD to the European Medicines Agency, or EMA</span><span style="color:#0000ff;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">. </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%"> In connection with the Termination Agreement, Otsuka transferred the MAA for vadadustat with the EMA to the Company. Vadadustat is approved in Japan as a treatment for anemia due to CKD in both DD-CKD and NDD-CKD patients under the trade name Vafseo</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:6.5pt;font-weight:400;line-height:112%;position:relative;top:-3.5pt;vertical-align:baseline">TM</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">,</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:6.5pt;font-weight:400;line-height:112%;position:relative;top:-3.5pt;vertical-align:baseline"> </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">and marketed and sold in Japan by Mitsubishi Tanabe Pharma Corporation, or MTPC.</span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:115%">In addition, the Company continues to explore additional development opportunities to expand its pipeline and portfolio of novel therapeutics. </span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Since inception, the Company has devoted most of its resources to research and development, including its preclinical and clinical development activities, commercializing Auryxia, and providing general and administrative support for these operations. The Company began recording revenue from the U.S. sales of Auryxia and revenue from sublicensing rights to Auryxia in Japan from the Company’s Japanese partners, Japan Tobacco, Inc. and its subsidiary Torii Pharmaceutical Co., Ltd., collectively JT and Torii, in December 2018. Additionally, following regulatory approval of vadadustat in Japan, the Company began recognizing royalty revenues from MTPC from the sale of Vafseo in August 2020. In February 2021, the Company entered into a royalty interest acquisition agreement with HealthCare Royalty Partners IV, L.P., or HCR, or the Royalty Agreement, whereby the Company sold its right to receive royalties and sales milestones under its Collaboration Agreement with MTPC, or the MTPC Agreement, subject to certain caps and other terms and conditions (see Note 6 for additional information). The Company has not generated a profit to date, and may never generate profits, from product sales. Vadadustat and the Company’s other potential product candidates are subject to long development cycles, and the Company may be unsuccessful in its efforts to develop, obtain marketing approval for or market vadadustat and its other potential product candidates. If the Company does not successfully commercialize Auryxia, vadadustat, if approved, or any other potential product candidate, it may be unable to achieve profitability.</span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Going Concern</span></div><div><span><br/></span></div><div><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">The Company’s management completed its going concern assessment in accordance with Accounting Standards Codification, or ASC, 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, or ASC 205-40. Pursuant to the requirements of ASC 205-40, the Company’s management must evaluate whether there are conditions or events considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one </span></div><div><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">year after the date the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued.</span></div><div><span><br/></span></div><div><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">The Company’s operating plan during 2022 included the planned completion of several operating changes that the Company implemented over the course of the year.</span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:12pt;font-weight:400;line-height:112%"> </span><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">These assumptions pertained to cost avoidance measures and the reduction of overhead costs that would result from the planned amendment of contractual arrangements with certain supply and collaboration partners, and the reduction of operating expenses, which were outside of the Company’s control. Over the course of 2022, and completing in the fourth quarter, the Company executed on certain of these cost avoidance measures and reduction of overhead costs from the amendment or termination of contractual arrangements with certain supply partners as well as the reduction of future operating expenses, which is consistent with the Company’s plan to fund operations with existing cash resources and cash from operations.</span></div><div><span><br/></span></div><div><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:107%">Examples of these reductions include the amendment, assignment and termination of certain supply agreements for both vadadustat and Auryxia. For example, on December 22, 2022, the Company and BioVectra Inc., or BioVectra, entered into a Termination Agreement, or the BioVectra Termination Agreement, pursuant to which the parties agreed, among other things, to terminate, effective immediately, any and all existing agreements entered into between the parties in connection with the manufacture and supply, by BioVectra to the Company, of Auryxia drug substance. Under the terms of the BioVectra Termination Agreement, the Company agreed to pay BioVectra a total of $32.5 million consisting of (i) an upfront payment of $17.5 million and (ii) six quarterly payments of $2.5 million commencing in April 2024, totaling $15.0 million. Pursuant to the BioVectra Termination Agreement, each of the Company and BioVectra have released one another from all existing and future claims and liabilities and the return of certain materials and documents. Furthermore, as it relates to all open purchase orders, BioVectra is relieved from any obligations to manufacture any product or perform services under any such open purchase orders, </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:107%">and the Company is relieved from any obligations to purchase any product under such open purchase orders</span><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:107%">. The Company is also relieved from any obligations to pay any outstanding invoices related to performance by BioVectra of services and all other obligations under the agreements. </span></div><div><span><br/></span></div><div><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">Additionally, on December 16, 2022, the Company, Mitsubishi Tanabe Pharma Corporation, or MTPC, and Esteve Química, S.A., or Esteve, executed the Assignment Agreement, pursuant to which the Supply Agreement between the Company and Esteve was assigned to MTPC. The Assignment Agreement transferred the rights and obligations of the Supply Agreement to MTPC, specifically including the obligations under certain purchase orders issued by the Company and accepted by Esteve. As such, the transferred purchase orders will continue to have a binding effect on MTPC to take delivery of the product from Esteve in accordance with the terms of the Supply Agreement. The Company will have no further obligation to take delivery of or pay for product delivered by Esteve under the transferred purchase orders.</span></div><div><span><br/></span></div><div><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">In relation to cost avoidance measures, in November 2022, the Board of Directors approved a reduction of the Company’s workforce by approximately 14% consisting solely of individuals within the commercial organization as a result of the Company’s decision to shift to a strategic account management focused model for its commercial efforts. This shift is due to multiple factors, including the maturity of Auryxia®, the continued impact of the COVID-19 pandemic on dialysis centers and the phosphate binder market and that, if the Company is successful in its appeal of the complete response letter for vadadustat with the U.S. Food and Drug Administration, the Company’s commercial focus for vadadustat will be limited to the dialysis patient population for the foreseeable future. </span></div><div><span><br/></span></div><div><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">As of December 31, 2022, the Company had cash and cash equivalents of approximately $90.5 million. </span><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">Based on its current operating plan, the Company believes that its cash resources will be sufficient to allow the Company to fund its current operating plan through at least the next </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">twelve months</span><span style="background-color:#ffffff;color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%"> from the filing of the Company’s 2022 Annual Report on Form 10-K. If the Company’s operating performance deteriorates significantly from the levels achieved in 2022, it could have an effect on the Company’s liquidity and its ability to continue as a going concern in the future. </span><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:112%">The Company expects to finance future cash needs through product revenue, potential strategic transactions, public or private equity or debt transactions, operating expense management, or a combination of these approaches. Assuming the Company is successful in executing its operating plan, the Company will require additional funding to fund its strategic growth beyond Auryxia or to pursue later stage development and commercial activities for its product candidates and any additional product or product candidates, including those that may be in-licensed or acquired. There can be no assurance that the current operating plan will be achieved in the time frame anticipated by the Company, or that its cash resources will fund our operating plan for the period anticipated by the Company, or that additional funding will be available on terms acceptable to the Company, or at all.</span></div>
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<div style="margin-top:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Use of Estimates</span></div><div style="margin-top:6pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates. Estimates are used in the following areas, among others: prepaid and accrued research and development expense, operating lease assets and liabilities, derivative liabilities, refund liabilities to customers, other non-current liabilities, the excess purchase commitment liability, stock-based compensation expense, product and collaboration revenues including various rebates and reserves related to product sales, non-cash interest expense on the liability related to sale of future royalties, inventories, income taxes, intangible assets and goodwill. </span></div><div style="margin-top:6pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in estimates are recorded in the period they become known. The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.</span></div>
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<div style="margin-top:18pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:700;line-height:120%">Concentrations of Credit Risk and Off-Balance Sheet Risk</span></div><div style="margin-top:6pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Cash, cash equivalents, and accounts receivable are the only financial instruments that potentially subject the Company to concentrations of credit risk. The Company maintains its cash and cash equivalents with high quality, accredited financial institutions and, accordingly, such funds are subject to minimal credit risk. The Company’s investment policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk. The Company has no significant off-balance sheet concentrations of credit risk, such as foreign currency exchange contracts, option contracts or other hedging arrangements.</span></div><div style="margin-top:12pt"><span style="color:#000000;font-family:'Times New Roman',sans-serif;font-size:10pt;font-weight:400;line-height:120%">Accounts receivable represent amounts due from the Company’s customers and collaboration partners. As part of its credit management policy, the Company performs ongoing credit evaluations of its Customers and generally does not require collateral from any customer. The Company also monitors economic conditions of its collaboration partners to identify facts or circumstances that may indicate that any of its accounts receivable are at risk of collection.</span></div>
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