The race to treat anemia with a pill, not an injectable biologic, just took a new turn.
Akebia Therapeutics (NASDAQ: [[ticker:AKBA]]), which is battling with FibroGen (NASDAQ: [[ticker:FGEN]]) to bring an anemia pill to market, has just announced plans to merge with kidney drug disease developer Keryx Pharmaceuticals (NASDAQ: [[ticker:KERX]]) in an all-stock deal that values the combined firm at $1.3 billion.
Keryx shareholders will get 0.37433 Akebia shares for each Keryx share they own and end up with a majority 50.6 percent stake in the combined company. Akebia stockholders will own the remaining 49.4 percent. Top Keryx stock and debtholder Baupost Group, which own 21.4 percent of the company, supports the merger and will convert its notes into Keryx shares before the deal closes. The new Boston company will keep the Akebia name and be run by the firm’s current CEO, John Butler. Keryx will appoint a board chairman.
The merger is meant to create a kidney disease specialist, offering pills for patients with failing kidneys who either are or aren’t on dialysis. Akebia is developing a drug, vadadustat, which is being tested in anemia patients with chronic kidney disease. Keryx already sells a drug, ferric citrate (Auryxia), for patients with failing kidneys and either hyperphosphatemia or iron deficiency anemia—and thus already has a sales force in place that targets kidney disease experts.
Ferric citrate has been approved since September 2014 but has struggled commercially and Keryx has suffered net losses, most recently a $163.4 million loss in 2017. Sales have recently ticked up, however. Ferric citrate generated $55.8 million in sales in 2017, about double the year before. And in November 2017 the FDA approved the drug for patients with CKD who aren’t on dialysis, expanding its potential reach.
“Combining Akebia and Keryx creates a leading renal company and provides it with the infrastructure to maximize the market potential of Auryxia and build launch momentum for vadadustat in the United States, subject to FDA approval,” Butler said in a statement.
The combined company will have $453 million in cash. Akebia and Keryx said the merger will produce $250 million in expected “cost synergies” over five years but didn’t provide details. The merger should close by the end of the year.
Akebia shares closed at $10.38 on Wednesday. Keryx shares were worth $4.48. Both ticked up slightly in pre-market trading Thursday morning.
The deal comes as Akebia and FibroGen sprint towards the finish line in a race to bring anemia-fighting pills to market. These drugs are meant to be possible alternatives to biologics like epoetin alfa (Epogen), which have generated billions of dollars over the years but are also dogged by safety problems. The reward could be massive if these drugs succeed: The global market for such drugs is expected to reach $11.9 billion by 2020, according to a report by Allied Market Research.
Akebia and FibroGen are developing similar-type drugs that essentially trick the body into thinking it’s in a low-oxygen environment, which stimulates the production of more red blood cells. And each has aligned with larger pharmaceutical companies to help fund the massive studies to test the drugs. FibroGen is ahead. Data from Phase 3 studies of its roxadustat should produce data this year. Akebia should have three Phase 3 trials of its own completed by the end of 2019.
Akebia and Keryx are holding a joint conference call this morning to discuss the merger.
