Akebia Therapeutics (NASDAQ:AKBA) stock is up 24% at 2:10 p.m. EST after signing a deal with Japanese drugmaker Otsuka Pharmaceutical to develop and sell vadadustat, Akebia's oral hypoxia-inducible factor-prolyl hydroxylase (HIF-PH) inhibitor to treat anemia associated with chronic kidney disease.
The deal calls for Otsuka to pay $125 million upfront and $35 million in the first quarter of next year. The companies will split the cost of development, of which Otsuka has committed to pay at least $105 million. And Akebia Therapeutics has the potential to make up to $765 million more if undisclosed development and commercial milestones are met.
Akebia will continue to take the lead developing vadadustat, which is being tested in two phase 3 clinical trials. Assuming those are successful and the drug gains FDA approval, the companies will split costs and revenue from U.S. sales equally.
Shares of FibroGen (NASDAQ:FGEN), which is developing a treatment called roxadustat that works by targeting the same protein, are up 2.2% today. Normally you'd expect a company to trade down when its smaller competitor got a helping hand from a large pharma, but FibroGen is ahead of Akebia with phase 3 results expected in 2018 and already has marketing deals with Astellas and AstraZeneca. FibroGen's investors clearly see Otsuka's backing of Akebia as further evidence that there's potential in developing HIF-PH inhibitors, which seems reasonable given FibroGen's lead position.
The deal is certainly good news for Akebia, but now it's back to waiting for investors, as it'll be awhile before the phase 3 trials are fully enrolled and the last patient is treated for 36 weeks.
Akebia does have another HIF-PH inhibitor -- AKB-6899 -- that it's planning on testing as a potential cancer treatment because it lowers the expression of VEGF, which stimulates tumor growth. VEGF is also involved in age-related macular degeneration, so the drug could be used as a treatment there, too. Unfortunately AKB-6899 is still in preclinical development, so it'll be awhile before Akebia has proof-of-concept data for its second compound.
At least Akebia won't have to worry about funding for awhile.