Welcome, everyone, to the Leerink Global Healthcare Conference. My name is Roanna Ruiz. I'm one of the senior biotech analysts here at Leerink. It's my pleasure to welcome the Ardelyx team. I have Eric Foster, CCO, and Justin Renz, CFO. Thanks for joining us.
Good morning, Williams.
Yeah, morning. Plan for today, I'll start off with some bigger picture questions and then drill down to more detailed questions across the different programs. I'll start off with, for investors who are new or revisiting the story, could you give us an overview of where things stand on your commercial business, R&D pipeline, and some of your top priorities for 2025?
Sure. Good morning. Thank you, Roanna, for having us. Good morning, everyone. Justin Renz, Chief Financial Officer; Eric Foster, Chief Commercial Officer. Delighted to be here. Ardelyx was founded with a mission to discover, develop, and commercialize novel medicines. We are so fortunate over the past few years, we've been able to get two approved and launched. We have a drug called IBSRELA approved for irritable bowel syndrome with constipation, which is now in its third, starting its fourth year of sales. We got it approved in 2019 and started selling in March of 2022. Last year, we did $158 million in net product revenue. We have a second drug called XPHOZAH for hyperphosphatemia. We were successful in getting that approved in October of 2023. We had a tremendous launch last year into about $161 million in net revenue.
Two developed by our team, commercialized, and doing quite well under Eric's leadership. We have a very strong balance sheet. We finished last year with about $250 million in cash, which gives us a position to build a company. That's our goal, to build a great company. We are focused on internal assets as well as looking at perhaps licensing external assets to help build a pipeline at all stages of development.
Sounds good. I'll start with XPHOZAH. We often get a bunch of questions about that program because there's a lot going on. Could you talk about the value proposition for XPHOZAH? How can it position itself in the hyperphosphatemia treatment paradigm? Do you think it could move earlier line in therapy?
Yeah, thanks for that question. It's good to be with everybody this morning. XPHOZAH is a great story. It received its approval in Q4 of 2023 and last year had an exceptional launch year. When you think about the unmet need for patients on dialysis that continue to have elevated phosphorus levels, we know that more than 70% of the patients out there continue to have elevated target phosphorus levels despite treatment with binders. There is a true unmet need here. XPHOZAH is indicated in addition to therapy with binders. We saw significant uptake in 2024 and feel very confident about our position moving forward. Like most products when you launch, typically physicians tend to reserve it for the more severe type patient.
We've had a tremendous amount of anecdotes talking about XPHOZAH's use earlier in patient times to be able to help patients get their phosphorus levels down to be under management. We are very excited about that and the opportunity ahead.
Yep. And kind of sticking with that point, what's the feedback been from KOLs, physicians, and even patients in using XPHOZAH?
Yeah, with our representatives out in the field, our teams in the field, I talk to customers frequently. There continues to be high interest, awareness, and just overall satisfaction with its use. We also do research and look at public Spherix data. You can see clearly that physicians do believe it's an advancement in care over what the binders are able to provide. We know that XPHOZAH works on that phosphorus absorption pathway and works differently for patients to be able to have an alternative option for them to help manage their phosphorus levels.
Got it. Getting into the details here, given CMS's decision to include oral phosphate binders in the dialysis bundle, how do you plan to preserve access and drive growth for XPHOZAH in the Medicare segment or in the commercial segment? How are you thinking about those different pieces?
Yeah, first and foremost, access for all patients, all appropriate patients, is what's most important for us. We made the decision not to file for TDAPA so that we could continue to have physicians continue to have access to XPHOZAH. In 2024, if a patient was covered under Medicare Part D, the big difference in 2025 is they no longer have coverage under Part D. We have a patient assistance program where physicians are able to send the prescription into Ardelyx Assist, which is our patient services program in transition pharmacy, adjudicate that claim. If the patient qualifies, they're able to receive that product through our patient assistance program. That was the strategy that we set out and the plan that we set out in 2024.
Very happy to be sitting with you here today that we have actually seen that happen and seen that plan is working. It's still very early on. We are continuing to look at the data just like everybody else. We are excited to be able to know that patients are continuing to have access to XPHOZAH despite what their coverage looks like.
Yep. I know you guys have put a lot of effort into your patient assistance programs across your different commercial drugs. Maybe could you spend a minute just talking about how much planning and strategy goes into that?
A lot. I joined the company in August of 2024. I have just been here a little more than six months. This has been a key focus and priority for me since I joined. The team was already working on it. We know that the healthcare system is complex and it can be challenging, not just for offices, but for patients that are out there. We made the decision for XPHOZAH and for IBSRELA to expand our field access manager team, which is a part of Ardelyx Assist. We have field representatives working with physicians and patients to help pull them through once they have been identified. It is a key priority for us. We are very proud of the success of Ardelyx Assist and what they have been able to do. We know our work is not done.
We are going to continue to work on behalf of patients and make sure that they have access to these incredible drugs.
Sounds good. Could you remind us the current split between Medicare versus non-Medicare for XPHOZAH? Just directionally, how are you thinking about gross to net in 2025 and beyond for the product?
Sure. Historically, the market's been approximately 60% Medicare and 40% non-Medicare. The non-Medicare mix is primarily commercial and Medicaid. There are other patient populations, including VA, TRICARE, and Indian Affairs. The preponderance is in commercial and Medicaid. Medicare has the most favorable gross to net. XPHOZAH actually all in in 2024 had a gross to net deduction of around 20%. The Medicaid and commercial programs are going to have a less favorable gross to net for us in 2025. The Medicaid statutory rebates are higher on top of our other gross to net items.
Commercial, as Eric mentioned, we do our best to accommodate our commercial patients by having a copay buy-down program where, to the extent the plan allows it, we'll do everything we can at the point of sale to make it as cost-effective and, if not free, depending on the plan for the commercial patients. The amount of the copay varies, of course, by plan. With the patient mix now being commercial and Medicaid and Medicare patients no longer being in that gross to net patient mix, our gross to net will decline. It'll be less favorable in 2025. We are anticipating a balance. We started around 30, so maybe 30-35. We will see where it goes. It's still early for us to know. That's kind of where we're at right now.
Yep. Got it. Thinking about the pushes and pulls of getting to your longer peak sales guidance for XPHOZAH of about $750 million. Could you talk about what goes into that? I know we got a lot of questions about it after your recent earnings. What should we think about going ahead?
Yeah, so good question. As Justin mentioned, 60% of the business was Medicare, 40% was non-Medicare. If you just look at that 40% in terms of those patients that are paid or revenue-generating scripts, that's approximately 220,000 patients that are out there. We've done market research before launch, before the Medicare Part D loss coverage, and then also in 2025. What we see consistently is peak demand share is roughly 30-35%. If you just do the wrong math there and you look at the population that is eligible and physicians hitting that peak share, you can get the $750 million peak year guidance.
Okay. Got it. This is a little bit of a multi-part question. What impact, if any, has CMS's decision had on any contracting discussions with commercial and non-Medicare payers? Curious if gross to net discounts in non-Medicare trend higher as a result. I'll follow up to that.
Okay. Want to give the floor to the latter?
Sure. We have a payer accounts team, and we continue to be involved in talking with payers. Certainly understand the question. It is something that we are very close to. Right now, we have not heard anything with regards to commercial or non-Medicare payers kind of changing their approach. We know that patients are continuing to get access. Being able to maintain that gross to net profile right now is the same as it was previously and in prior years. We will continue to monitor that and work with payers in the non-Medicare segments. Should we have to change, we certainly have room to be able to do that. We will address that if and when it happens.
Yep. Go ahead.
Yeah, I was just going to say our focus is always on getting patients access to the drug. As a point of reference, for the Medicare patients who no longer are revenue patients, we do everything we can to get them the drug as well. Costs for that program flow through our SG&A and are actually not a gross to net deduction.
Yep. What's the tone of some of these conversations with the non-Medicare payers? Do they understand the value proposition of Exfosa? Could you just give us a little bit of background around how those go typically?
Yeah, I mean, I think the payers do see the value of XPHOZAH. As I mentioned, there's a significant unmet need out there. You have a medicine that is a true benefit for patients. It's safe. It's effective, proven in use in combination with binders as it's indicated. I think the payers do see that value. For us, it's really important that all patients, regardless of coverage, that they have access to XPHOZAH. That's why we made the decision not to file for TDAPA and allowing the patients on Medicare to have access to our medicine in the patient assistance program. Right now, I feel confident that the market, the payers, patients, physicians really do see the value.
For us, it's continuing to have that high level of share of voice, given the change, given the disruption that's out there in the binder market, that we continue to keep our message consistent and clear with physicians that regardless of payer coverage, patients have access to XPHOZAH.
Makes sense. I know investors have been following the Script trends like IQVIA closely for XPHOZAH since launch. Do you think that you've reached sort of the bottom per se for XPHOZAH sales? Will they begin to stabilize? What's your estimate for trends going forward with Scripts?
Yeah, so it's very hard to comment on week-to-week trends. Trust me, we look at them very closely as well. It is important to take a step back and understand really the disruption, the change, the turmoil that's going on out there. It is a shift for physicians and for dialysis organizations as it relates to access to binders. For XPHOZAH, there continues to be access, but we understand we're in that market. Physicians will experience, as they're experiencing that disruption, it could bleed over for them. We need to continue to make sure that we're just focused on our messaging, highly empathetic with what's going on out there in the dialysis organizations and the nephrologists, and then just continue to be consistent in our messaging.
It is still a little too early, I think, right now to make any conclusions. We're continuing to monitor that. I think probably a quarter or two for us to allow to see some trends and really have confidence. Once we do, we'll be able to communicate more.
Yep. Fair enough. I'll switch gears to your other commercial product, IBSRELA in IBSC, which is also showing a pretty strong launch. Similar question to what I asked for Exfosa. Could you just elaborate a bit on the pushes and pulls behind your $240-$250 million guidance for IBSRELA in 2025? What steps or levers need to be pulled to get IBSRELA to your long-term peak sales guide of about a billion?
Yeah, this is one where I'm very excited about it as someone relatively new coming into the organization. There's a tremendous opportunity here for patients. If you think about the IBS-C market, 6.3 million prescriptions on an annual basis, growing double-digit for the past four years. There is a very sizable market here. Linzess positions themselves first line, and they provide discounts to payers to be able to get that first-line position. For us, we realize that there is a real need for a secondary product here, and we embrace that position. If you think about patients that are on Linzess, products have been out more than 10 years that are on Linzess and continuing to not be satisfied. We know only about a third of the patients out there on a GCC agonist are satisfied with their treatment.
Patients are looking for something different, looking for something to help with their pain and their bloating and their constipation. IBSRELA has demonstrated its efficacy and safety there. We feel very confident in that second position and to be able to achieve that peak guidance of a billion dollars. When we think about the pushes and pulls, I think clearly out of the gate, driving awareness and clinical conviction with our physicians was important. Last year, we expanded our sales force. It allowed us to increase the number of physicians that we were covering. Not only high-riding gastroenterologists, but high-riding non-GIs and APPs or advanced practice providers, the nurse practitioners and the PAs. Because we expanded the number of HCPs that we're calling on, we expanded the sales force. That was complete in Q3.
We really saw the uptake of the full sales force in Q4 of last year. We are excited about that. We also really know that this is a very engaged and motivated patient population. We can just see that with access to our website. For us, it is really about amplifying that voice of the patient. You will see a little bit more of that in terms of our marketing efforts in 2025. As I mentioned earlier, it is really important that you help the patient and the physician as they navigate this complex journey to have access to the medicine. For us, we expanded that field access team in Q1. They will be fully in the field in Q2.
We feel like we've got an expanded sales team that's really driving the top of the funnel, driving clinical conviction, patient identification, amplifying the patient voice. When they go into the office, they're able to effectively communicate with the physician their dissatisfaction with the products that they're on and continuing to have symptoms of the disease. We've got a field team that works to help the patients have access to the product.
We had quarter-over-quarter growth in each of the four quarters in 2024 with a very solid Q4 that Eric spoke of with the growth and the team being fully in place. With the first quarter historically in the space, independent of IBSRELA, there's challenges in plan resets and getting prior auth done. Q1 is often the most difficult quarter from a revenue perspective for all the players in the IBS-C space. With our guidance, we like to be measured and methodical. When we looked at how we ended the year and how our trajectory was looking for 2025, we thought that $240 million-$250 million was a reasonable range of something that we could achieve and we believe in.
Yep. Got it. Got it. Tagging on to the last commentary, thinking about physician and patient feedback to IBSRELA use, I guess where does it stack up thinking about IBSRELA versus Linzess, Amitiza, etc.? Are there specific complaints with some of the entrenched products that make patients gravitate towards IBSRELA? What's that dynamic like?
Yeah. As I mentioned, about a third of the patients out there are not currently satisfied on their current GCC agonist, on their current treatment. Those patients are continuing to experience pain, bloating, and just probably overall impact to their life, their quality of life. What they're looking for is a different option. IBSRELA is in a different class. It's a different option for those patients to be able to help with the pain and bloating and that constipation that they have. We see primarily use second line, like I mentioned, and we certainly embrace that. We have seen some utilization, a small amount of first-line therapy. As you think about the experience that the physician has, they're continuing to increase utilization and see the real benefits of IBSRELA for patients.
We feel like that confidence in that physician, they're starting to use some more first line. It's great to be able to see more access for patients. We will continue to embrace that. Our focus really is on those patients that aren't satisfied with their current treatment.
In terms of these patients that are least satisfied and presumably more durable in staying on IBSRELA, could you describe just what does that patient profile look like in terms of what they're going for? How sticky is it that staying on IBSRELA in terms of these patients as well?
Yeah, I mean, I think it's fairly sticky. I mean, IBSRELA, we know that it works fast and it provides symptomatic relief for these patients. If you think about a middle-aged woman, she works, she continuously experiences pain and bloating. It impacts her quality of life. She's a very busy woman, professional. She also tends to the home, works as the leader in her family with her children. For her, it's really important that she's able to do the things that she needs to be able to do. When you talk to patients and you hear the impact that IBS-C has on their life and the impact on their quality of life, that they're not able to do the things for their family and for themselves that they want to do, it's a really profound impact.
We know that IBSRELA can help those patients and provide a different option for them. We need to continue to work hard every day so the women and men out there that need this product have access to it.
Fair enough. I know you mentioned talking about sales force expansion for IBSRELA. I guess in the future, would you consider doing this again? Are there any triggers or signs that you would look for that would motivate you to upsize the field force again?
Yeah. We just completed the expansion in Q3 of 2024. We feel like this was the right size. There is no clear set number. Typically, I look for a range, and we are within that range where we are. As I mentioned, why did we expand? We wanted to increase the number of HCPs, high-riding GIs, high-riding non-GIs, so primary care, internists, and the APPs. That allowed us to reach 50% or so of the majority of the prescription market, that 6.3 million that I talked about earlier. I feel like we are properly sized right now. We have a clear focus and strategy to getting to the $1 billion. We will continue to make progress towards that. If in an event that we accelerate, which is certainly my goal, we will make the necessary decisions that we need to if we need to expand.
I do feel very confident in the sizing that we have right now and the opportunity and the ability to achieve that opportunity in terms of getting to the billion with what we have right now.
Yep. Got it.
We currently have 124 sales reps. I'm just targeting about 14,000 of the high writers that Eric spoke of.
Okay.
For XPHOZAH, we have 60 reps targeting around 8,000 target writers.
Yep. Another question for you, Justin. Similar to the XPHOZAH question, just thinking about gross to net, if you could elaborate on how that looks for IBSRELA. I know that Linzess is going generic as well. Does that have any impact at all on gross to net or discussions for IBSRELA going forward?
Sure. I'll take it in order. Our patient mix for IBSRELA historically has been around 50% commercial, around 30% Medicare, then 15-16% Medicaid, and then the rest cash and others. A different mix than we have for XPHOZAH with IBSRELA. IBSRELA's gross to net historically has been, as I like to say, 30% plus or minus 5%, so less favorable in Q1. We have seen 33.5%, 33.8% in the last couple of Q1s that we have had. It worked itself down over the course of the year. The primary difference in gross to net favorability has to do with our commercial copay amounts. As you might imagine, most folks are on plans that are calendar year.
Plans reset with high deductible plans and other things of that nature so that the variability in the commercial copay amount in our gross to net is around 5 or 6 percentage points over the course of a year. Therefore, it's in the 33-35% range in Q1 and 27-29% in Q4. It kind of works itself down. As you mentioned, we believe that Trulance, pardon me, and Linzess will be first-line treatment because of the payer relationships they have. When they go generic, that probably won't change too much. We're essentially second line to both. We have a first-line approval. Our clinical profile is excellent and is a first-line treatment. It's the payers that put us second. That won't change. We're not going to negotiate with plans to try to get ahead of Trulance and Linzess.
That's not what we're trying to do. We want to be an option for these patients when they're not satisfied with their existing treatment. I believe Linzess goes generic in 2029. We still have a few years away from that. We're optimistic that our drug's clinical profile and utility will not change at all whether Linzess is approved generically or not.
Yep. You mentioned potential price negotiations with Linzess as well. I think that's very real. They just were on the list of products that were selected. I think the same thinking applies, though. If they continue to provide discounts off of their net price for Medicare population, they'll continue to be used first line just like they are today for the vast majority of patients that are out there. As I mentioned, we position ourselves as second line. We're indicated first line, but position ourselves purposely as second line and think that that would not shift that much if that were to happen. Yeah. Just to confirm, you were talking about selection for IRA for Linzess.
Yes.
Yep. Got it. Okay. Interesting. Thinking about IBSRELA, just drilling down a little bit more, I've gotten this question from investors just talking about PCPs or generalist physician prescribing versus specialist prescribing. Could you talk about that split there? Are there certain drivers in one group versus the other in terms of prescribing of IBSRELA?
Yeah. Yeah, it's a really good question. I mean, if you think about the gastroenterologists, they're a busy specialist. They do a lot of their time doing procedures. They rely a lot on advanced practice providers, APPs. That's why we made the strategic choice to make sure we included them in terms of how we approach our customers. We really put those two together. We've seen a very positive response from the APP community, particularly in Q4 with the expansion of the sales force. When you think about the high-riding non-GIs, they're very busy as well. They're very busy. They don't have a lot of time. For us, it was important that we make sure that we had the right number of representatives to be able to reach them and then also provide the frequency with them as well.
We are absolutely starting to see traction in that targeted population that we're focused on. As Justin mentioned, we have about 14,000 overall targets, give or take. We have been able to see growth in each one of those segments last year. Certainly, that's what we're focused on in 2025.
It is a pervasive problem, though, to your point, over 100,000 physicians and treatment agents all write at least one script every year, which is amazing. It's that ubiquitous.
Yeah. Nice. Sounds good. I'll zoom out a little bit. I think you alluded to this at the beginning of the discussion. Just what are some of the high-level thoughts for Ardelyx, possibly building out the pipeline, doing BD, internal development, etc.? How could you balance this with your current cash position and outlook there?
Sure. We, for the last few years, have been focused on commercial execution. That still is focus one and focus two. We would want to make sure we drive IBSRELA and XPHOZAH growth, as we've talked about. Now that we're in a good position financially, where, as I mentioned earlier, we have about $250 million in cash, we're in a position to finally look at our internal assets, assess them, look at unmet need. We want to be in that space where the novel mechanism, long IP opportunity, and truly something where there's unmet need for the patients that we believe a novel mechanism can assist. That's where we play. That could be in GI, that could be in renal, and it could be adjacent to both of those general treatment options. We do have some internal candidates we've been assessing.
We have a team that really does an evaluation of what is the opportunity, what is the need, and can we be successful there clinically and then, of course, commercially. Externally, we now have a business development team that Mike Calhart joined about a year ago, and he has started to build out his team. We are looking truly across the globe for opportunities. There are a lot of companies that are underfunded and may need help in partnering or in licensing. We are looking at every stage of development, so clinical stage all the way through late stage. A commercial product would have to be a perfect fit. That is probably less likely in the near term. We want to find something that really complements what we do already.
Yep. You talked about GI and renal areas, something that ties in well with your current portfolio in terms of possible BD. Are there any other validation metrics or hallmarks that you look for in terms of bringing in some new product?
Definitely long IP life because that's going to be important for us. Again, something that we would be really proud to have as part of our pipeline. We are so, I don't know if proud is, I hate to use that word, but that we discovered, developed, and got approved the drug. We really want to keep that culture and that we don't want me too drugs. That's really going to be important for us to see that it can make a difference to patients in an area where there's truly unmet need.
Yeah. I mean, I think clearly we have deep insights in GI and in nephrology. It makes sense to look there or in areas of adjacency. The biggest thing for us is we want to make a difference for patients. We are looking at areas of high unmet need that we know that we can commercialize these products. When you think about GI and nephrology, they are very different. What we have shown is that we can commercialize successfully in both of those markets. We feel like we have got strong marketing capability, strong sales execution capability, and then with Ardelyx Assist to be able to provide patient services to patients and physicians to help those patients get on medicine. When you think about that in totality, really the commercial execution gives us the opportunity to look even broader if we need to.
Clearly, from a good starting point, having those deep insights in GI and nephrology for those adjacent areas, that's a good place to start.
Got it. I know we have a couple of minutes left. Last question before I close out. Just what do you think investors might not be fully understanding or fully appreciating right now across the portfolio, and anything that we should keep in mind going into 2025 and beyond?
We're a commercial execution story right now. Eric and the team have demonstrated over the last couple of years that we really can make this happen with both products. Last year, the two products combined for over $319 million in product sales, which is truly an excellent achievement. We're very proud of that. The disruption in the hyperphosphatemia space in the binder community is challenging. It's bigger than Ardelyx. We are going to make sure that we're there for the patient and the kidney community. I think there's concern that we'll get back to a reasonable level. There truly is unmet need in this space. 40% of the patient population is non-Medicare. We believe there truly is a $750 million product opportunity.
With IBSRELA, we believe, with, again, Eric mentioned the 6.3 million prescriptions that were written for IBS-C indicated drugs last year, if we can get a 10% market share, that's over $1 billion at peak. We believe we can do combined over $1.75 billion in sales. I think there's skepticism right now in the space. I think the life science space is under a lot of pressure, like many others. Right now, we're in a disruptive time. Our space is even more disruptive because of the changes with Medicare reimbursement for the kidney community. For us, it's all about execution. We got to just keep executing, executing, executing. I think we'll be fine.
Okay. Sounds great. Thanks again, Justin and Eric, for coming down. I really appreciate your thoughts here.
Great. Thank you, Roanna.
Thank you for having us. Thank you.