Hi, good morning, and welcome to day one of the Jefferies London Healthcare Conference. My name is Dennis Ding, biotech analyst at Jefferies, and I have the pleasure of having Ardelyx here with us, the entire team here, actually, which is great to see. Maybe just to start off, level set us in terms of what you guys are doing. You're selling two drugs, and just talk about some of the progress there over the last year.
Sure. Dennis, thank you for having us and Jefferies to be here. So just going back to the beginning, we founded the company back in 2007 with a really simple idea to develop non-absorbed drugs that worked in the GI tract. In 2008, we came up with the idea to block sodium. At that time, we were looking at constipation. You keep sodium in the lumen of the GI, you're going to improve bowel movements. That was the concept. We learned then that that mechanism as well was improving the discomfort, the pain, and the challenges that you faced with IBS-C. So that allowed us to then move into IBS-C development. And although the company had actually been founded, Dennis, with the idea of finding a small molecule that worked in the GI tract to block phosphorus, a bunch of us came from that background.
We serendipitously discovered the NHE3 mechanism also blocked phosphorus. So as Pasteur said, chance favors the prepared mind. And we were able to then develop both for IBS-C and hyperphosphatemia, both incredibly unmet medical needs where we've now moved forward with both programs approved. We've been on the market now just over two years with Ibsrela for IBS-C. And in our last earnings call, we reaffirmed our perspective that we will do between $145 million and $150 million. And I realize it's narrow with the progress that we've had for this year and Xphozah is doing exceedingly well. I think with a lot of people skeptical or uncertain in the view of what's coming potentially with the bundle as to what that business looks like. So we're continuing our efforts, Dennis, to make sure that this drug is available, Xphozah, for all patients on dialysis who need it.
Perfect. That's a great background. So Ibsrela is obviously doing very well. Like you said, $145 million-$150 million guidance for 2024. That's very good. But Xphozah, like you said as well, has had a tremendous launch just in its first year. Talk about the bundling situation that you alluded to. Talk about what's going on in Congress. Talk about how that could impact the company in 2025.
You mean generally in Congress?
Yeah.
Because I can't opine on that. No, I mean, so Xphozah's done exceedingly well. And what it demonstrates is the clear need that these patients have. We've only had one mechanism in the history of dialysis. Dialysis programs started in the United States in the early 1970s by Richard Nixon. And the only mechanism was binders, which think of it as a magnet or a sponge that absorbs the phosphorus from food and that's excreted in the feces. That's the only mechanism for 50 years that we've had. And if you are on dialysis, you're limited to maybe two or three liters of fluid a day. That's all you can drink. So if you're having a handful of pills, which is binders, and you're on 10 other oral medications, your ability to be adherent and compliant is taxed.
What is remarkable about what we have is just two little pills, each about the size of a Tic Tac a day. That blocks the absorption of phosphorus in the GI tract. Simple idea, but no one really understood how to do this. The mechanism by which we do it is tightening a little bit of the junctions between the cells. Mechanistically, it is a really important thing for us to be able to demonstrate that you can, in fact, address this unmet need through different mechanisms and binders. We did, as you recall, in 2021, we had a CRL, fought the FDA, won that battle through an AdCom, and ultimately have now the drug on the market since November of last year.
And what we're seeing both anecdotally and what we hear directly from patients and physicians is for the first time, many of these patients are now able to control their phosphorus. It's an independent predictor of morbidity, mortality, and dialysis patients. So it's a critically important thing that we've been able to accomplish. In the face of that, starting in 2008, MIPPA, which was what put in place the prospective payment system for dialysis. And for all of us, what that means is a capitated system for a dialysis patient going to a dialysis provider gets a flat fee for all of the services that are part of that. Oral meds shouldn't be part of that. That is a big part of the arguments.
And oral-only medications that aren't delivered during the dialysis service have always been intermittently delayed from being put into that bundled payment system because it actually doesn't make sense. So we continue that battle. There's a House bill as well as a companion Senate bill of the 15,000 bills that have been submitted in the 118th Congress, of which I think less than 50 have actually been approved. So that's a comment on Congress that this is the fifth most researched bill in the Library of Congress. So there's a lot of interest in this. The Patient Act, which is the act I'm speaking of, has a coalition of supporters from patients, unions, physicians, some providers. No one's really against this. And now it's just the inertia of our system that needs to see this over the goal line.
And that is to push out inclusion in the bundle in this bill, as is, for another two years. That allows us to continue the work. However, as you've heard me say, Dennis, a number of times, and I think you've done an excellent job articulating this in the reports that you do, God forbid it ends up in the bundle, there's still a critically important business there for those patients that are not Medicare patients. So this is a reimbursement issue, not an access issue. We chose not to file for TDAPA, but to ensure that we could maintain that access for the non-Medicare patients versus the downward death spiral best price that you would do if you were not doing what we did. So it's orthogonal. It's something that people are confused about.
We will continue to work through all the processes that we put in place to make sure that we maintain that option for patients to have this medication.
Right. And I think it's really important because XPHOZAH has had such a strong launch. I think well north of $130-$140 million in the first year. And obviously, people are wondering if that growth trajectory will continue in 2025. And this whole bundling issue, if XPHOZAH were to be included in the bundle, that would certainly be a major headwind to growth, at least in 2025.
It'd be a headwind to reimbursement for Medicare. I don't believe the growth changes because the patients still need it, and I think it's an important distinction is the growth, I believe, is going to continue to be strong. It's just part of your patient population will not have reimbursement.
Right. So from a volume perspective, because patients really need it, and given the value proposition of a twice daily pill, very small, that should still continue to drive demand. But on a net revenue basis, that would hit your income statement. That would be kind of a headwind in 2025.
Absolutely.
Now, you emphasize access and not reimbursement. So talk about how you are going to, assuming that this bill does not get passed in Congress, talk about ways that you are looking forward to doing to maintain that access, maintain that demand so that even in the non-Medicare population, which you guys would still book revenue for, will continue growing.
So I'll ask Eric to comment a little bit as well. Eric joined us as Chief Commercial Officer just over 90 days ago and share some of the perspectives of what he's seeing in the field. So what we're encouraging nephrologists and everyone to understand is don't change anything that you're doing today. For a patient that's adjudicated through our Ardelyx Assist program today, if they cannot afford the drug and they fall into our business rules as to what non-revenue drug access would look like, any patient that can't afford the drug or doesn't have coverage would go through the same process. So it's trying to keep the system uninterrupted as it is today. And the adjudication on the back end is what we will then do through our hub.
And for those patients that qualify to get patient assistance, they will qualify and get the drug shipped to them through TPS, our partner pharmacy that manages this. And those who have reimbursement, have coverage, will then follow the normal if they have a prior authorization path. All of that will happen as it does today. So the goal of what we do is to not change what you, the nephrologists, are doing today, but to maintain that and let us deal with the adjudication and all those issues on the back end.
Yeah, thanks, Mike. Yeah, and that is really important because we know that the physicians do not distinguish between Medicare and non-Medicare. They're serving their patient base, and so that's exactly what our focus will be as we move into 2025, making sure that we maintain, if not increase, the share of voice around patients having access to XPHOZAH. That's the critical message that we're out there talking to physicians about today, and we'll continue that in 2025 and not distinguishing between Medicare and non-Medicare. As it relates to non-Medicare, there are segments within there, and we need to make sure that we do our due diligence and have a good plan around those non-Medicare segments. That's exactly what the team is working on now, which gives us confidence as we move into 2025 that we'll continue to have access for those patients that need it.
You guys are already out there talking to doctors about this upcoming potential change in how Xphozah or just phosphate binders in general are being reimbursed.
Yeah, and it's not a surprise for them. They know that the bundling happens. I think what they're enthusiastic about, although they're learning and understanding, is unlike other drugs that have been put into the system where you as a nephrologist may think it's the best thing for your patient, and then that gets taken away after the TDAPA period, you're hurting patients. So the fact that Eric and his team can go out and say exactly, keep doing what you're doing is very important.
Yeah. What has been the level of awareness out there among the doctors around this upcoming reimbursement change? And when you talk with them and tell them, hey, keep doing what you're doing, keep prescribing it as you would, what has been the feedback been?
Yeah, I think the level of awareness is fairly high. I mean, they're in tune with their practice. I've been quite surprised at just how in tune they are with their practice, even at the patient level. So it's about having a conversation. It's not just a one-time message, one and done. So the field is able to talk to the physician about access. Of course, it piques curiosity, and they do have some questions around how will that patient have access. Just as they do today, we have patients, Medicare patients that go through our patient assistance program. And so it takes a little bit of messaging and continuing the conversation with the physician just to reinforce that for them to really get it and understand it. And once they do, they're comfortable and they're able to move forward. So that's what we've seen so far.
How much of the decision-making do you think happens at the doctor level versus at the dialysis level, who can sometimes put limits on drugs and start gating the actual utilization, setting up more barriers, more stringent criteria to actually prescribe it?
Well, one quick comment on that, and then I'll ask Eric to comment. That is not the issue for Xphozah. Without filing for TDAPA, they have no control over utilization of Xphozah, which was a critical part of the decision. We've taken that decision out of a DO. You can't protocolize us necessarily because you have no influence over it. You, as a clinician, continue to do what you're doing today.
Yeah. Yeah, I mean, I think it's a good question because there are certainly multiple stakeholders in the process. And what we've seen today is the DOs, they're very focused on the binders as they should be and how they will be able to manage those in the future. But as far as Xphozah goes, they're leaving that decision-making to the physician. You also have the renal dietitian that is a stakeholder as well. So the team is out working with all three of those main stakeholders, making sure that we're pulling through those messages. And everybody is crystal clear in terms of what they need to do. But at the end of the day, just as Mike said, the message is for the physician that they continue to write Xphozah and there will be access for their Medicare and their non-Medicare patients moving forward.
And I think we should recognize that the DOs have an interest in making sure that serum phosphorus is lowered. It's good for their patients. It's the right thing to do. And they too were confused when we chose not to participate in TDAPA. And what we're hearing now is in the protocols that they're putting in place for the binders, which will be protocolized and in the bundle starting January 1st, is they're saying, these are selected binders that we're going to use. And for Xphozah, it's available through the manufacturer. That's good. For them to be putting in their own systems that it's available through Ardelyx helps the messaging.
Does it change whether you're talking to a large dialysis network versus a medium-sized or even smaller centers?
I think what I just described, we've seen beginning to emerge across all sizes of providers.
Yeah.
Okay.
Yeah, I would agree.
So we can talk about the near-term kind of uncertainty all we want and we do it for 30 minutes or an hour. But how do you think about the long-term strategy here for Xphozah? Because we're talking about Congress, it's a two-year delay. If it passes, we'll probably revisit this in two years. And you recently filed a lawsuit against CMS in July, and we had some updates there. So talk a little bit about that. Talk a little bit about the long-term vision on where Xphozah can eventually grow.
Yeah, so let's start where we just finished the last part of the conversation, is the fact that patients will continue to access Xphozah with physicians doing as they do today is a critical component of it, then it becomes a reimbursement question. What is it that we can do to ensure that all patients have equitable treatment with reimbursement as they go forward? and that is first the bill, which we touched on, then we touched on a patient assistance program, which will be there for a number of patients, and third is the legal approach that we've taken, where we did file a lawsuit and you saw the dismissal just recently, we're not done there. We think that there's ways to challenge and appeal as things ultimately come out, something that we will discuss in greater detail, but we will continue fighting on all prongs.
This is the right thing to do for patients, and it is making a huge difference. So that's why we continue doing it this way. We're stubborn. I don't know how else you want to characterize us, but it's the right thing to be doing.
Got it. If we can talk a little bit about Ibsrela because that's obviously a second drug that you guys are commercializing and obviously doing very well. Talk about the progress you made this year as well as your third quarter results.
Yeah. Eric, do you want to talk about it?
Yeah, so thanks for the opportunity to talk about Ibsrela. Oftentimes, we get lost in focusing on Xphozah, but there's tremendous opportunity and potential with Ibsrela. So just this year, we've expanded the sales force to address that unmet need that's out there to be able to cover at least 50% of the TRx market. So we've expanded into non-GIs, high prescribing, as well as high prescribing GIs and APPs, which play a critical role in our success. So we started that process in Q2. We finished it in Q3, and we're already starting to see some of that traction from the new sales team that came on in Q2. Obviously, increased engagement and activity leads to increased productivity. So we've seen that in the way of new writers, repeat writers, new prescriptions, and total prescriptions all exceeding Q2.
So certainly, a lot of positive momentum, and that's what gives us confidence with the addition of the new team in Q3 that we're going to continue to see that as we move forward.
Maybe remind us what the treatment paradigm is for IBS-C, where you guys are typically used, first line, second line, etc. And just talk a little bit about what's really driving the growth. What are the fundamental drivers of demand?
Yeah, so just a reminder, our label is first line. We can be used first line. So we do actually see that out in the market. But typically, a physician will go through a GC-C agonist. And then once that patient, let's just say, fails therapy or is not satisfied, which we know only about 25% of patients actually say that they are very satisfied on that first-line treatment. So again, a real unmet need out there for patients to have a different option. Ibsrela is in a different class and so works differently. And so we feel confident that when those patients move off of their initial therapy, that they've come to Ibsrela, pardon me, that they'll be able to get the relief that they're looking for in the form of reducing pain and improving bloating.
Okay. And as you have gone through the year and you guys just reported third quarter and you updated your guidance, you timed it. When we did the math, it seemed like it was really conservative in terms of what Q4 would be. So talk about what drove that conservatism, what drove you to tighten guidance to that new range, and if there's anything that we're missing.
Yeah, I mean, I think what you've learned from us is we're going to be thoughtful about the kind of guidance that we give. We're not going to get over our skis prematurely to do anything like that. And for us, tightening the guidance, we hope, sends a very strong message about the confidence that we have in the business. When we did the expansion, we said the expansion would be fully on board starting at the end of the third quarter. That is the case. We've not yet seen the full impact of what that increase by 60 people is going to have in the field. So I don't want to say what that might look like until I know that I can support it. But I feel extraordinarily good about the tightening from the 145 to 50.
Okay. And the incremental 60 reps, I mean, you're essentially doubling your sales force. Are those extra 60 sales reps calling on the same doctors just more frequently, or are they branching to new territories or new states or whatever? Just talk about the incremental value that those reps can provide.
Yeah, so the incremental value for us is we've been able to go deeper into the prescribing physicians, HCPs that are out there. Like I said, the non-GI physicians, that was instrumental to us in this expansion. So with the addition of the 60 territories, we have new territories, new business opportunities to be able to go out and identify new writers. And those physicians that are currently writing increase or further increase their adoption to get greater depth. So we're seeing success across both metrics, some all-time highs, if you will, in terms of number of new writers coming on, but then also continuing to increase depth. So having smaller territories gives us the focus that we need to be able to expand our reach, but then also get that depth of prescribing that we know that we're going to need long-term.
Sorry, can you clarify? So the territories for the original 60 reps, have they gotten smaller with the addition of the?
Yeah.
Okay. So it's basically.
It's better efficient.
Yeah. So think of it in the sense of there's 64 territories. We add 60. We essentially realigned everyone to a smaller territory base to allow them to get greater reach and depth within their respective territory.
Okay. Got it. That's helpful. So these are all GI docs, or are you guys reaching out to the primary care or family offices?
We've been able to expand into high prescribing non-GIs, which was really critical to be able to give us greater reach in that total prescribing market for IBS-C.
Okay. And then with the extra sales reps, when do you kind of expect all of them to kind of fully ramp up? Is it in early 2025? Is it mid-2025? Just give a little bit of color around that.
Yeah. Well, we're very pleased in the fact that we've finished the expansion. So that was priority number one. We've done that. Priority number two is getting them out there in the field, meeting their HCPs, establishing relationships, making sure that they're selling on clinical conviction for the benefits of Ibsrela, and identifying patients. So Q4 is always a bit tough because we've got some holidays in there, but we know that they're out there full-speed, trained, ready in the field. And so we expect over the next couple of quarters to continue to see that growth, just like we saw in Q3 with about 75% of the field. Now we're at 100%, and we expect to see that over the next couple of quarters and that continued growth to resonate in 2025.
Okay. As we get into 2025, the company has typically given full-year guidance at the beginning of 2025. I appreciate there's a lot of uncertainty with Xphozah, but for Ibsrela, how should we think about guidance, or how are you guys thinking about guidance? What are the pushes and pulls on that number?
I think it's exactly what Eric just described. I want to see how we exit and what the trajectory is in Q4. And based upon that trajectory, with the sales force fully on board, we'll be in a much better place to give the guidance that we expect to early next year. And for Xphozah, you're right, just too many balls in the air right now to say what that might look like. We're going to continue to try to give you all perspective in terms of what that business is going to look like in and out of the bundle. But I think it's going to be premature for us to give a specific number until we know that outcome.
Okay. In the scenario where the bill is not passed in Congress, when do you feel like there's enough time where you could give a little bit better visibility to investors?
The battle won't be over. It'll just be different. I mean, 119th Congress is just a different effort that we would have to undertake. Given the success that we've had in 118th, it would be a little bit different than we've done now, but we would continue that effort. We recognize that the curiosity and I don't even want to characterize it as uncertainty because for me, the non-Medicare business, I understand. I think you've done an excellent job showing what that business could look like outside with the non-Medicare business. I think we can lean into a little bit more whether or not we give you firm numbers for 2025. It's premature to say.
Okay. And on Ibsrela, last year, you gave this long-term peak sales guidance of $1 billion. Remind us when you expect to achieve that. And again, what are some of the drivers around that?
It's interesting. When you always look at proxies in terms of time to peak, and you can look at novel mechanisms going into established markets, and you can look at five-year and seven-year peaks, and you can look at markets like what GC-C agonists have, which have yet to peak. A growing market that continues to grow. If you look at the number of patients that are out there, both with IBS-C and CIC, and the overlap between those two, that is a growing cohort of patients that are getting prescription therapy. How we judge that is part of the process that we're going through. Likely, we can give some perspective on those things at some point next year as well.
But again, it was conservative, I think, is the way we provided it to you initially as we began to learn about the business to give you those numbers.
Okay. And I know we have one minute left, and I do want to touch on something that I think people rarely talk about, which is the pipeline. So you guys are commercializing two very successful drugs, but what about the pipeline? How are you thinking about that? I think it's been a little bit of time before since the last time you really invested in R&D. You guys recently just, I believe, pulled down another $50 million of debt. Is that meant to fund the pipeline, or are you going to be doing some more BD to in-license some promising drugs? What are some of the different scenarios?
Yeah. I think the strength of the balance sheet that Justin has been so instrumental in helping us build allows us those opportunities. You look at what we've done historically in our own research, a number of opportunities that sit on the shelf that we will provide clarity on as we go into next year. About a year ago, Mike Kelleher joined us to run corporate development and strategy. Clearly, there are efforts there as we look at in-licensing. As we strengthen our balance sheet and the work that we're doing, we clearly are going to be bringing more in and/or developing our own markets.
Okay. Very cool. All right. I think that's all the time that we have, but thank you guys so much for being here and joining us. Hope you have a great conference.
Thanks, guys.
Thank you.