Otsuka Pharmaceutical has given notice to end its alliance with Akebia Therapeutics after the FDA sternly rejected an anemia drug it partnered with, and the Japanese drugmaker hopes to get out of the deal as soon as possible.
The agreement signed in 2016 gave either company the right to terminate the agreement if the other breached its obligations. Such termination must be given 12 months’ written notice. Although the FDA rejected the partner drug vadadustat, it remains under regulatory scrutiny in Europe. Still, Otsuka gave a one-year notice last Thursday to cancel the alliance entirely, according to a source. Akebia Regulatory Filings. Otsuka alleges a material breach of the agreement, which it believes could lead to the agreement being terminated as early as mid-June, making communications essentially a month’s notice. An early end to the alliance could save Otsuka from paying hundreds of millions of dollars for a drug it now wants to wash hands.
The two companies developed the drug vadadustat to treat anemia caused by chronic kidney disease. This anemia can be treated with older medications in the form of injections. Vadadustat is a small-molecule pill designed to be more convenient for patients. late March, FDA rejects drug, flags cardiovascular risk, risk of blood clots and liver damage in people on dialysisTo address these concerns, the FDA said Akebia needs to conduct another clinical trial.
Otsuka paid Cambridge, Massachusetts-based Akebia $125 million in 2016 to begin a partnership with vadadustat. The transaction enables Akebia to receive up to $65 million in regulatory milestone payments and up to $575 million in commercial milestone payments. In 2017, the partners expanded the scope of the agreement to cover the development and commercialization of vadadustat worldwide, including markets in Europe, Russia, China, and others. While Akebia led Phase 3 testing of the drug, Otsuka submitted a marketing authorization application to the European Medicines Agency last year, and the revised agreement makes it responsible for funding much of the drug’s development worldwide.
Under the terms of the original agreement, Akebia and Otsuka have been sharing the drug’s development costs. These costs have been rising.In its 2021 Annual Report, Akebia said that as global development costs exceeded a certain threshold in the second quarter of 2019, it asked Otsuka to increase its share of the financing of those costs. Instead of funding 52.5% of these costs, Akebia let Otsuka cover 80% of the costs. The funds will be used to pay Akebia’s future payments, but now it’s money coming out of Otsuka’s pocket.
Rather than waiting for a European regulatory decision on vadadustat, Otsuka is seeking to end its Akebia alliance as soon as possible. According to Akebia regulatory filings, Otsuka accused Akebia of material breaches in the U.S. portion of the agreement, claiming it enabled it to terminate the agreement by June 12. The breaches were not specified, but the agreement states that following written notice, the breaching party has an unspecified period of time to remedy the breach.
Akebia plans to dispute Otsuka’s move, saying in its regulatory filing that it “does not agree with and intends to contest Otsuka’s allegations of material breach and does not believe Otsuka has the right to terminate the Otsuka U.S. Agreement for material breach,” It is therefore held that the termination of the Otsuka U.S. Agreement shall not be effective prior to the effective date of the U.S. termination.” Disputes may be submitted to arbitration. Under the terms of the agreement, as long as Akebia notifies it that it contests the grounds for termination, the agreement will continue until the arbitrator decides.
Managing Otsuka’s move to end the vadadustat alliance is just one of Akebia’s headaches.Shortly after FDA rejects anemia drug, Akebia announces it is layoffs About 42% of employees are located in all areas of the company. The biotech’s slump posed another problem. On May 12, the same day Otsuka provided the termination notice, Akebia received a letter from Nasdaq notifying the company that it was in danger of delisting, the company said in a regulatory filing. Shares of Akebia plummeted after the FDA rejection. Stocks that have traded below $1 for more than 30 consecutive business days have failed to meet the exchange’s minimum bid price requirement. Nasdaq has given Akebia until Nov. 8 to return to listing requirements. Shares of Akebia opened at 35 cents a share on Monday.
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