Why Akebia Therapeutics Stock Is Skyrocketing Today

By George Budwell Markets Fool.com

What happened

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Shares ofAkebia Therapeutics (NASDAQ: AKBA)have jumped today, rising 17.8% as of 11:49 a.m. EDT, following the announcement that Akebia andVifor Pharma Group have agreed to an exclusive license agreement withFresenius Medical Care(NYSE: FMS) for theexperimental anemia drugvadadustat. Vadadustat is presently in late-stage development as a treatment foranemia associated with chronic kidney disease (CKD).

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So what

The big-ticket item forAkebia is thatVifor Pharma agreed to make a $50 million equity investment in Akebia at $14 per share as part of this deal. In other words, Vifor just became one ofAkebia's largest stakeholders, which should be a stabilizing influence on this small-cap drugmaker's share price moving forward.

Now what

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According to the press release,Akebia stands to make an additional $20 million uponvadadustat's approval in the United States and inclusion in a bundled reimbursement model. More importantly, though, this licensing agreement largely assures thatvadadustat will get off to a hot start once it enters the market.Fresenius, after all, is the largestkidney dialysis provider in theU.S., with a 40% market share -- implying that the deck will be stacked in the drug's favor right out of the gate.

Akebia appears to be building a solid foundation for growth through vadadustat's robust late-stage development program. So, even though it does have to share a portion of the drug's profits and milestone payments with its U.S. collaboratorOtsuka Pharmaceutical Co. Ltd, this up-and-coming drugmaker may be worth checking out.

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George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.