Anemia specialist Akebia merges with Keryx on the eve of a blockbuster brawl with FibroGen

Akebia is going into its head-to-head late-stage fight with FibroGen with a little more firepower.

Two months after Keryx $KERX CEO Gregory Madison abruptly resigned and left the company, the biotech has followed through today by agreeing to a merger with Akebia $AKBA, a biotech with a closely-watched anemia drug in late-stage development.

John Butler

The combination of the two companies will bring together two drugs designed for patients with chronic kidney disease. Keryx markets Auryxia, which accounted for the lion’s share of about $22 million in Q1 revenue. That drug is used to fight iron deficiency anemia in patients with chronic kidney disease.

The deal didn’t add up for investors, though. Both biotechs’ shares were down about 25% in mid-day trading.

That downturn may have had something to do with Akebia’s update on its development timeline, with crucial data now not expected until 2020. In the view of Jefferies’ Michael Yee (in FibroGen’s camp):

AKBA has delayed the Phase III data to 2020, putting the merged company 1-2 years behind FGEN, in our view.

Akebia, meanwhile, has been lining up a slate of global partnerships in anticipation of eventually marketing vadadustat to treat anemia in CKD patients. But analysts expect they’ll have a battle on their hands, with many giving the advantage to FibroGen, which started the day with a market cap 10 times what Akebia had.

Greg Madison

Just a few weeks ago FibroGen and its partners at Astellas reported that their 4th Phase III study of the rival roxadustat in Japan had ended with positive results. And FibroGen is well into Phase III in the US as well.

Keryx and Akebia, meanwhile, say that after the merger the biotech should be worth $1.3 billion. Keryx shareholders will wind up with a slight majority of the new shares while Akebia CEO John Butler will stay at the helm. Keryx will name the chairman and the company will be called Akebia.

All that probably explains a lot about Madison’s departure.

Butler explained his strategy:

The strategic and financial drivers of this merger are compelling. The combined company will have an expanded and highly complementary nephrology portfolio, with Auryxia, a product with significant growth opportunity, and vadadustat, an investigational late-stage HIF-PHI that has the potential to provide a new oral standard of care to patients with anemia due to CKD. 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.

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