Please ensure Javascript is enabled for purposes of website accessibility

Why Akebia Therapeutics Stock Is Skyrocketing Today

By George Budwell - May 16, 2017 at 12:02PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Akebia Therapeutics gets a sizable equity investment from Vifor Pharma as part of a supply agreement for the experimental anemia drug vadadustat.

What happened

Shares of Akebia Therapeutics (AKBA -7.15%) have jumped today, rising 17.8% as of 11:49 a.m. EDT, following the announcement that Akebia and Vifor Pharma Group have agreed to an exclusive license agreement with Fresenius Medical Care (FMS -0.68%) for the experimental anemia drug vadadustat. Vadadustat is presently in late-stage development as a treatment for anemia associated with chronic kidney disease (CKD). 

Rocket.

Image source: Getty Images.

So what

The big-ticket item for Akebia is that Vifor Pharma agreed to make a $50 million equity investment in Akebia at $14 per share as part of this deal. In other words, Vifor just became one of Akebia's largest stakeholders, which should be a stabilizing influence on this small-cap drugmaker's share price moving forward. 

Now what

According to the press release, Akebia stands to make an additional $20 million upon vadadustat's approval in the United States and inclusion in a bundled reimbursement model. More importantly, though, this licensing agreement largely assures that vadadustat will get off to a hot start once it enters the market. Fresenius, after all, is the largest kidney dialysis provider in the U.S., with a 40% market share -- implying that the deck will be stacked in the drug's favor right out of the gate. 

Akebia appears to be building a solid foundation for growth through vadadustat's robust late-stage development program. So, even though it does have to share a portion of the drug's profits and milestone payments with its U.S. collaborator Otsuka Pharmaceutical Co. Ltd, this up-and-coming drugmaker may be worth checking out.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Akebia Therapeutics, Inc. Stock Quote
Akebia Therapeutics, Inc.
AKBA
$0.35 (-7.15%) $0.03
Fresenius Medical Care AG & Co. KGaA Stock Quote
Fresenius Medical Care AG & Co. KGaA
FMS
$24.94 (-0.68%) $0.17

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
317%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.