Vafseo And VALOR Study Will Open New Treatment Markets

Key Takeaways

• Early success of Vafseo and reimbursement coverage expansion likely to drive strong revenue growth and market access.
  
• Advancing approval for non-dialysis patients may significantly expand market potential and boost long-term revenue prospects.
  
• Akebia faces revenue challenges with declining Auryxia sales and operational issues, while relying on Vafseo uptake and the VALOR study amid regulatory uncertainties.

Catalysts

A biopharmaceutical company, focuses on the development and commercialization of therapeutics for patients with kidney diseases.

• The successful early launch of Vafseo, a new treatment for anemia due to chronic kidney disease for patients on dialysis, indicates strong initial demand and market penetration, with expected net product revenue ahead of analyst estimates. This is likely to positively impact future revenue growth as the product gains traction in the market.
  
• Plans to advance Vafseo’s approval for the non-dialysis CKD patient population through the upcoming VALOR Phase III clinical trial could significantly expand the addressable market, potentially boosting long-term revenue prospects.
  
• Integration with small to medium dialysis organizations and plans to extend operations to larger organizations promise to widen market access, likely driving revenue growth as more protocols are operationalized in these organizations.
  
• The Voice study, which aims to generate data on potential additional benefits of Vafseo, such as reduction in hospitalization, could enhance the drug's adoption and treatment protocols, possibly improving net margins if successful.
  
• Increasing reimbursement coverage, especially from Medicare Advantage and other payers beyond Medicare fee-for-service, and plans for broadening this reach, could reduce barriers to access and facilitate revenue growth by expanding the payer base for Vafseo.

Akebia Therapeutics Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Akebia Therapeutics's revenue will grow by 31.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from -43.3% today to 11.6% in 3 years time.
• Analysts expect earnings to reach $42.2 million (and earnings per share of $0.15) by about April 2028, up from $-69.4 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $102.7 million in earnings, and the most bearish expecting $-58.5 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 68.4x on those 2028 earnings, up from -9.0x today. This future PE is greater than the current PE for the US Biotechs industry at 19.8x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.93%, as per the Simply Wall St company report.

Akebia Therapeutics Future Earnings Per Share Growth

Risks

• Akebia is experiencing a decline in revenues from its previous product, Auryxia, due to reduced volume, which could negatively affect overall company revenues unless offset by new product sales.
  
• There are operational challenges related to transitioning patient prescriptions to specialty pharmacies, and despite improvement, any future logistical issues could impact revenue recognition and market penetration.
  
• Akebia's financial performance is strained with increasing net losses year-over-year, largely impacted by lower revenues and non-cash interest expenses, which could affect earnings and pressure margins.
  
• The successful commercial uptake of Vafseo is contingent on the protocol implementation within larger dialysis organizations, which might delay market traction and revenue growth.
  
• The company's future expansion into non-dialysis markets relies on the successful design and execution of the VALOR study, involving regulatory uncertainties, which could delay approval and affect future revenue streams.

Valuation

• The analysts have a consensus price target of $7.375 for Akebia Therapeutics based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $10.0, and the most bearish reporting a price target of just $6.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $364.5 million, earnings will come to $42.2 million, and it would be trading on a PE ratio of 68.4x, assuming you use a discount rate of 6.9%.
  
• Given the current share price of $2.38, the analyst price target of $7.38 is 67.7% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.