Why Akebia Therapeutics Is Worth $10 Per Share, But Needs More Visibility

In a report publsihed Thursday, Morgan Stanley analyst Andrew S. Berens initiated coverage of

with an Equal-weight rating and price target of $10. The analyst prefers to remain cautious till the data for the lead dialysis drug becomes available in Q3. "We expect key data for Akebia's lead anemia drug, AKB-6548, from a dialysis trial in Q3.This release needs to restore investor confidence in the drug's safety profile after a similar trial in pre-dialysis patients showed a disproportionate number of serious adverse events," Berens said. The Alpha Wise survey conducted in July 2015 on 50 nephrologists in the US revealed that for a drug to be viable in dialysis, it needs to follow an "every other day dosing" schedule. The current trial for AKB-6548 has been testing this dosing schedule for the first time. The analyst believes that there is only modest revenue potential in the longer term for Akebia's lead drug, given that the it does not seem to be meaningfully differentiated from roxadustat by

, "which has the support of a large pharma company and a significant first-mover advantage." "Our probability-weighted scenario analysis suggests AKBA is fairly priced heading into this event, suggesting a neutral risk/reward," the Morgan Stanley report stated.