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Akebia Therapeutics Announces Preliminary Full-Year 2018 Financial Results and Business Highlights

– Substantial revenue growth opportunity for Auryxia following robust
2018 commercial performance –

– First regulatory submission for vadadustat expected in 2019 in
Japan, following positive top-line results from pivotal phase 3 studies
in Japanese subjects with anemia due to chronic kidney disease –

– Multiple vadadustat phase 3 readouts expected over next 18 months –

CAMBRIDGE, Mass.–(BUSINESS WIRE)–Akebia
Therapeutics
, Inc. (Nasdaq: AKBA), a biopharmaceutical company
focused on the development and commercialization of therapeutics for
patients with kidney disease, today announced preliminary financial
results for the full year ended December 31, 2018 and business
highlights.

“2018 was a transformational year for Akebia,” said John P. Butler,
President and Chief Executive Officer of Akebia Therapeutics. “We
successfully executed a number of strategic initiatives to advance our
mission, and with the recent completion of our merger with Keryx, we
have emerged as a leading, fully-integrated renal company with the
potential to greatly improve care for patients with kidney disease. We
are pleased with the robust growth we have seen with Auryxia®
(ferric citrate) during 2018. Looking ahead, we see the potential for
substantial revenue growth in both the hyperphosphatemia and iron
deficiency anemia markets.”

Mr. Butler continued, “With respect to vadadustat, our lead product
candidate, we believe that it has the potential to set a new standard of
care for patients with anemia due to chronic kidney disease with a
differentiated clinical profile. We recently announced positive top-line
results from two pivotal phase 3 studies in Japan conducted by our
collaboration partner, Mitsubishi Tanabe Pharma Corporation, which adds
to the body of data supporting vadadustat’s potential to serve as a
much-needed therapeutic option for patients with anemia due to chronic
kidney disease. In addition, we continue to drive our global phase 3
program for vadadustat, with enrollment completed in the larger of the
two INNO2VATE studies and enrollment expected to complete in
the smaller INNO2VATE study by April 2019. The next 18 months
will be a very busy time, with significant catalysts ahead of us.”

Business Highlights

Auryxia

    • Pro forma unaudited Auryxia sales in 2018 were $96 million,
      representing 72% growth over 2017.
    • Total Auryxia prescriptions for 2018 were approximately 163,000,
      representing 85% growth over 2017.
    • Exit market share for Auryxia tablets in 2018 was 6.6% compared to
      4.2% in 2017, exceeding the share gain of all other phosphate binders
      (branded and generic) in the same period.

Vadadustat Japanese Phase 3 Program

    • Announced positive top-line results from two phase 3,
      active-controlled, pivotal studies evaluating vadadustat in Japanese
      subjects with anemia due to chronic kidney disease (CKD).
    • Data from these two pivotal studies as well as from two additional
      single-arm studies in peritoneal dialysis and hemodialysis subjects,
      also recently announced, is expected to serve as the basis for a
      Japanese New Drug Application (JNDA) submission by Mitsubishi Tanabe
      Pharma Corporation (MTPC), expected in 2019.

Vadadustat Global Phase 3 Program

    • Enrollment in the larger of the two INNO2VATE studies (the
      “Conversion Study”) was completed in February 2019, with a total of
      3,554 subjects enrolled. Enrollment in the smaller INNO2VATE
      study (the “Correction Study”), enrolling approximately 350 subjects,
      is expected to be completed by April 2019. The company expects to
      report top-line data from both INNO2VATE studies in the
      second quarter of 2020, subject to the accrual of major adverse
      cardiac events (MACE).
    • The company expects enrollment in the PRO2TECT studies to
      complete in 2019, with up to approximately 3,700 subjects expected to
      be enrolled. Top-line results are anticipated in mid-2020, subject to
      the accrual of MACE.
    • The two INNO2VATE studies evaluating dialysis-dependent CKD
      subjects and the two PRO2TECT studies evaluating
      non-dialysis dependent CKD subjects are global, phase 3,
      active-controlled, open-label, non-inferiority, cardiovascular outcome
      studies of vadadustat for the treatment of anemia due to CKD.

Preliminary Financial Results (unaudited)

As a result of the completion of the company’s business combination with
Keryx Biopharmaceuticals, Inc. (Keryx) on December 12, 2018 and the time
required to complete the allocation of the merger consideration to the
fair value of the acquired assets and liabilities as well as the
assessment of the associated tax impacts, the company is announcing
preliminary results for the full year 2018, which are based on currently
available information and are subject to revision, as further discussed
below. The company anticipates a delayed filing of its Annual Report on
Form 10-K for the fiscal year ended December 31, 2018 (Annual Report)
and plans to file a Form 12b-25, Notification of Late Filing, with the
Securities and Exchange Commission, which will provide the company with
a 15 calendar-day extension.

Net product revenues for Auryxia from December 12, 2018, the date of our
merger with Keryx, through December 31, 2018 were $6.8 million. The
company did not have any product revenue prior to our merger with Keryx.

Collaboration revenues for the fourth quarter of 2018 were $53.0
million, compared with $90.6 million during the same period in 2017. The
decrease was primarily due to $42.9 million of deferred revenue
associated with the MTPC collaboration agreement being recognized as
revenue during the fourth quarter of 2017, as the criteria for revenue
recognition were satisfied in that quarter. No revenue was recognized
under the MTPC collaboration agreement in the fourth quarter of 2018.

Collaboration revenues for the full year 2018 were $200.9 million
compared to $181.2 million for the full year 2017. The increase was due
to increased revenues recognized under the collaboration agreements with
Otsuka Pharmaceutical Co. Ltd. (Otsuka). Through 2018, Otsuka has funded
52.5% of the company’s phase 3 development costs for vadadustat, and in
the second quarter of 2019, Otsuka is expected to increase its
contribution to 80%.

Cost of goods sold was $6.3 million for the period from December 12,
2018 through December 31, 2018, consisting primarily of costs associated
with the manufacture of Auryxia and $4.8 million for the fair-value
inventory step-up as a result of the merger accounting.

Research and development expenses were $87.1 million for the fourth
quarter of 2018 compared to $68.4 million for the fourth quarter of
2017, and $291.1 million for the full year 2018 compared to $230.9
million for the full year 2017. The increase for both periods is
primarily attributable to an increase in external costs related to the
continued advancement of the PRO2TECT and INNO2VATE
phase 3 program, as well as increased headcount and consulting costs
required to support our expanding research and development programs.

Selling, general and administrative expenses were $55.1 million for the
fourth quarter of 2018 compared to $7.6 million for the fourth quarter
of 2017, and $87.1 million for the full year 2018 compared to $27.0
million for the full year 2017. The increase in selling, general and
administrative expenses is primarily attributable to merger-related
costs of $49.5 million, of which $41.7 million was incurred in the
fourth quarter of 2018, including a non-cash expense of $13.4 million
related to the issuance of shares to Baupost Group Securities, L.L.C. in
connection with its conversion of Keryx convertible notes. The increase
for both periods was also attributable to an increase in costs to
support our research and development programs, including headcount,
information technology and compensation-related costs.

Akebia reported a pre-tax net loss for the fourth quarter of 2018 of
$88.4 million, as compared to a pre-tax net income of $15.5 million for
the fourth quarter of 2017. The pre-tax net loss for the fourth quarter
of 2018 includes total merger-related costs of $46.5 million. The
pre-tax net income reported for the fourth quarter of 2017 was
attributable to $42.9 million of collaboration revenue recognized in
connection with the MTPC collaboration agreement, as the criteria for
revenue recognition was satisfied in the fourth quarter.

For the full year 2018, the Company reported a pre-tax net loss of
$171.9 million, as compared to a pre-tax net loss for the full year 2017
of $73.7 million. The pre-tax net loss for the full year 2018 includes
total merger-related costs of $54.3 million.

Akebia ended 2018 with cash, cash equivalents and available-for-sale
securities of $321.6 million. The company expects its cash resources,
including the prepaid quarterly committed cost-share funding from its
collaboration partners, to fund its current operating plan into the
third quarter of 2020.

AKEBIA THERAPEUTICS, INC.

Consolidated Statements of Operations

(in thousands except share and per share data)

(unaudited)

Three Months Ended Twelve Months Ended
December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017
Revenues:
Product revenue, net $ 6,824 $ $ 6,824 $
License, collaboration and other revenue 53,026 90,559 200,918 181,227
Total revenues 59,850 90,559 207,742 181,227
Operating expenses:
Cost of goods sold 6,251 6,251
Amortization of intangibles 1,434 1,434
Research and development 87,113 68,382 291,068 230,893
Selling, general and administrative 55,121 7,567 87,061 27,008
License expense 67 67
Total operating expenses 149,986 75,949 385,881 257,901
Operating income (loss) (90,136 ) 14,610 (178,139 ) (76,674 )
Other income, net 1,766 913 6,235 3,003
Net income (loss) before taxes $ (88,370 ) $ 15,523 $ (171,904 ) $ (73,671 )

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