Where goes reward, risk follows. Biotech investors must be aware that this is the case because that is the segment where the two are most pronounced. Sometimes that risk rewards in abundance, but other times, the outcome is painful to take. And such was the fate that befell investors of Akebia Therapeutics (AKBA) this week.
On Wednesday, the shares crashed by 66% after the FDA rejected the NDA (new drug application) for vadadustat, Akebia’s candidate for the treatment of anemia due to chronic kidney disease (CKD). The regulatory body issued a complete response letter (CRL) which stated that the therapy did not show a favorable benefit-risk in both dialysis and non-dialysis patients.
More to the point, the CRL mentioned safety worries around the failure to meet non-inferiority in MACE in non-dialysis patients, dialysis patients’ greater risk of thromboembolic events, and the danger of drug-induced liver injury.
The way to address these issues, says the FDA, is to undertake new clinical studies. But that comes with a hefty cost, notes Needham’s Serge Belanger.
“Recall,” the analyst explained, “the vadadustat phase 3 program consisted of over 7,500 patients and took ~4 yrs to conduct from start to finish. Additional trials would likely require a significant investment and represent lengthy delay.”
In the meantime, the company will go over the issues highlighted in the CRL with its collaboration partners and will request an FDA meeting. “Based on usual timelines for type A FDA meetings to discuss CRLs,” says Belanger, “we would expect an update on vadadustat in 2H22.”
For now, given the lack of clarity on a “viable path forward” for the drug, Belanger downgraded Akebia’s rating from Buy to Hold, while also taking the price target off the table. (To watch Belanger’s track record, click here)
Belanger’s rating appears to be the prevalent one on Wall Street. Barring 1 Buy and Sell, each, all 4 other reviews are to Hold, providing this stock with a Hold consensus view. That said, somewhat confusingly, while most remain on the fence, the majority see huge gains in store; going by the $3 average target, shares are anticipated to climb ~198% higher over the next 12 months. (See Akebia stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
