Leerink raises Akebia stock to outperform with $7 target

On Monday, Leerink Partners initiated coverage on Akebia Therapeutics (NASDAQ:AKBA) stock with an Outperform rating and set a price target of $7.00. The coverage comes as Akebia’s stock shows strong momentum, with InvestingPro data showing a 77.6% return over the past year and a recent 15% surge in the past week. Leerink’s coverage begins with a positive outlook on the biopharmaceutical company, citing several key factors behind their investment thesis. Current analyst targets range from $6 to $10, suggesting significant potential upside from current levels.Want to make more informed investment decisions? InvestingPro subscribers get access to exclusive real-time data, Fair Value analysis, and comprehensive research reports for over 1,400 US stocks, including Akebia Therapeutics.

Akebia’s lead commercial product, Vafseo, is recognized for its potential to significantly advance anemia treatment for chronic kidney disease (CKD) patients on dialysis. Vafseo, as a novel HIF-PH inhibitor and a convenient oral alternative to erythropoiesis-stimulating agents (ESAs), has a strong position in the market, especially since Akebia has secured contracts with dialysis providers that cover nearly all CKD dialysis patients in the United States. With current annual revenues of $160.2 million and a solid financial health score of GOOD according to InvestingPro metrics, the company appears well-positioned to execute its growth strategy. Leerink forecasts that Vafseo could achieve peak sales of approximately $415 million by 2035 for its current indication in the dialysis setting.

The firm also notes Akebia’s commercial strategy, often referred to as a "coiled spring," which has been successful in driving early use of Vafseo in small and medium dialysis organizations. This strategy is expected to lead to larger dialysis organizations adopting the drug, potentially resulting in significant volume growth as its use becomes more widespread.

Furthermore, Leerink highlights Akebia’s efforts to extend Vafseo’s market reach through pivotal trials. The VOICE study aims to demonstrate Vafseo’s potential in reducing hospitalizations and showing non-inferior mortality compared to ESAs. The VALOR Phase 3 study seeks to expand Vafseo’s indication to CKD patients not on dialysis, which could double the drug’s addressable market. Sales for this potential expanded indication could reach around $600 million by 2035, according to Leerink’s non-risk-adjusted forecasts.

The analysis also considers the impending generic competition for Akebia’s product Auryxia following its intellectual property expiration post-March 2025. However, Leerink suggests that management’s strategic contracting might mitigate some of the financial impacts as Auryxia transitions into the End-Stage Renal Disease (ESRD) payment bundle.

Lastly, Leerink takes a conservative stance on the valuation of Akebia’s partnerships for Vafseo outside the United States and assigns limited value to these collaborations. With the company’s next earnings report scheduled for May 12, investors will be watching closely for updates on international partnerships and pipeline progress. The firm also does not currently ascribe value to Akebia’s early pipeline assets, which are in pre-clinical stages, but acknowledges that these could offer additional upside to their valuation in the future.Get deeper insights into Akebia’s financial health, valuation metrics, and growth potential with InvestingPro. The platform offers exclusive ProTips, comprehensive research reports, and advanced analytics to help you make better investment decisions.

In other recent news, Akebia Therapeutics has received a positive recommendation from the European Medicines Agency’s Committee for Medicinal Products for Human Use (CHMP) for its drug XOANACYL, aimed at treating chronic kidney disease in adults. This endorsement is a crucial step toward gaining full approval from the European Commission, expected by mid-2025. Jefferies has initiated coverage on Akebia with a Buy rating and a $6.00 price target, while H.C. Wainwright maintained its Buy rating with a $7.50 target, reflecting confidence in Akebia’s strategic initiatives and potential regulatory approvals. Piper Sandler also reaffirmed its Overweight rating with a $6.00 price target, driven by Akebia’s recent financial moves and Vafseo’s strong initial market performance.

Moreover, Akebia has launched a public stock offering, with Leerink Partners and Piper Sandler & Co. managing the process. This offering follows a shelf registration statement filed with the Securities and Exchange Commission. The company is focusing on expanding the reach of its lead product, Vafseo, for treating anemia in dialysis-dependent patients. Akebia’s strategic plans include targeting the non-dialysis-dependent chronic kidney disease market with a Phase 3 trial slated for mid-2025.

Additionally, Akebia’s partnership with Averoa aims to commercialize XOANACYL in Europe, aligning with the company’s focus on renal therapies. The company’s efforts in advancing treatments for kidney disease continue to attract attention from analysts and investors, who are closely monitoring these developments.

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