We're going to start the afternoon session. I'm Yigal Nochomovitz, biotech analyst at Citi. This is our Back-to-School Biopharma Summit in Boston. If you have questions, if you're in the audience, just, you know, you can chime in with the microphones. And also, for those listening online, welcome. So the next session is with Ardelyx, and I have with me the senior management, Mike Raab, President and CEO, Justin Renz, CFO, and Eric Foster, CCO. So thank you all very much. Great to see you. Thanks for coming in. So I guess maybe to start out, Mike, if you want to just kind of summarize where you are with the business, two products that are gaining momentum.
Sure. Thanks, Yigal, and to Citi for inviting us. You know, I think we're at an incredibly exciting time for the evolution of the company where, you know, you look at the decision that we made to not participate in TDAPA. First, let's get that off the table because that's certainly a question that we get a lot of, that that strategy is working. We're seeing since February, month-over-month growth of prescriptions. And you see the total prescriptions, whether they are patient assistance and commercial and Medicaid, that we're reading that we're meeting the place where we had more prescriptions written than previous months. So the growth is there. Is it growing as fast as we would like? Not yet. But I think the turmoil that the dialysis community is experiencing really speaks to why that is happening.
But you do see the conviction of physicians to get their patients on Xphozah, so very excited about that. I think with what you're seeing with Ibsrela, the growth that we saw in Q2 only continues, and our enthusiasm for having Ibsrela be a billion-dollar drug clearly is there if you look at the growth rate and how that continues, so $1 billion is certainly on the horizon for us and with Ibsrela, and excited about the $750 million that we're confident we will meet with Xphozah.
Okay. Well, maybe we can start with Ibsrela. You know, what are some of the forces in the market that are contributing to the strength? And, you know, how are you messaging in terms of the value proposition relative to, you know, others that have been, you know, more entrenched in the marketplace longer than you?
Sure. Eric, why don't you go ahead?
Yeah. Thanks, Yigal. Great to be here. You know, the IBS-C market is a large market and a fast-growing market. It's well-established. In the past couple of years, it's grown more than double digits. So we're very pleased to see that and certainly feel that Ibsrela has contributed to that. In terms of when you look at the opportunity and really the patient need in the IBS-C market, you know, traditionally, patients have really only had one class of drugs, secretagogues, that they could go to to help with their IBS-C. And we know that only about 25% of those patients are satisfied or very satisfied with their treatment. So the opportunity for us is really a different mechanism of action, one that provides similar efficacy and safety.
So for those patients that are out there that are not satisfied, whether it be through lack of efficacy of the product or safety or tolerability, we know that Ibsrela really can help those patients out and meet that need for those patients. So we've been really pleased with the growth trajectory that the brand has been on. Obviously, Q2 was a great quarter, a lot of momentum as we head into the back half of this year.
How do you identify those patients? Because, you know, you can have people that are not satisfied with the drug, but then they may not know what else is out there, right? So how do you get to them?
Yeah. Great question. So, you know, we certainly have our sales force, which, you know, as you know, completed its sales force expansion at the end of Q3 last year. So we've got three, four quarters under our belt and really feel like they're hitting their stride. We also have great omnichannel marketing that's out there that's bringing awareness, greater awareness of Ibsrela out there, not just to patients, but also to physicians. And for us, it's a fairly simple diagnosis, if you will. So does the patient have IBS-C? Are they currently on a treatment for IBS-C? And are they continuing to be experiencing symptoms, or are they not satisfied with that treatment?
Maybe IBS-C is getting in the way of their daily activities, and the patient is looking for something else and looking for something new. That's really where we know that Ibsrela can come in and really be a help for those patients that need it.
I mean, the thing to think about, Yigal, with that is not until the launch of Ibsrela was there anything really different that a physician could offer a patient. So it got to a place where, why would patients keep asking for something when there wasn't a there there? So I think the work that Eric and the team are doing to educate both the physicians, but also the APPs and the staff of gastroenterology practices. Finally, they now see that there is something different. There's an option that they can try. And as a physician, you can imagine they never would have offered something that wasn't. They didn't have an option to offer something different.
So I think what we've seen in these three years since launch where we're beginning to gain that foothold that you need and the growth that we're seeing out of it in terms of 75% of these patients are not satisfied. They're not getting the relief that they need. And it really interrupts their livelihood and the lives that they can lead. So for us, getting that communication out there and the omnichannel work that Eric's team is doing, very engaged, informing patient population to make sure that they ask the physician, is there anything different? I've heard about Ibsrela. Can I try that?
That sounds like a lot of the growth is coming from essentially the switch market, or is there growth from new starts as well?
Yeah. Yeah, good question. I mean, we certainly do see some first-line utilization. You know, I think as physicians have gained confidence and experience with Ibsrela, they've gone to it more first-line, but due to payer dynamics and our internal positioning of the product, we typically position ourselves after a secretagogue, because we know that there's a tremendous opportunity out there. Patients need something else. It's a multifactorial disease, and so you need drugs with different mechanisms of action, and there's a clear position for Ibsrela out there, and, you know, we feel like that's the right path in terms of focusing after a failure with a secretagogue. But yes, we do see some first-line utilization for sure.
Of course. So there are many dynamics to growing the market, and, you know, we can get to each of them. But what about just the overall persistence on therapy? Are you seeing what does the data show you in the market as far as time on therapy versus what the prior options that were not working for people?
I mean, what's interesting is you look at the secretagogues, whether it is a relapsing remitting disease or tachyphylaxis that happens with an agonist from a biological perspective, you do see five or so scripts a year, generally. With an inhibitor, you don't get necessarily tachyphylaxis. And, you know, our objective and what we see is more refills over time. That persistence is there.
Okay, and then you mentioned the billion number. You've been saying that for a few.
Since launch.
A while. Yeah. So that's coming from what you've described, the growth in the switchers. And then, I mean, what about just, I mean, price, I guess, has a little bit of an impact, maybe not huge. What else? Is there just an overall growth of the market, period, for everyone?
Honestly, the market, and Eric and I talk about this all the time. The market could stop growing and we get to $1 billion. Because if you look at the millions of patients that are being treated today for IBS-C, given our price, given our position in the market, you need way fewer than 200,000 patients in order to get to that $1 billion. So if you look at it on a patient basis, it is nowhere near the number of patients that are currently on the GCC agonists. And with 75% of those patients not satisfied with their current therapy, there is ample room to grow within the established market. But as Eric pointed out, we're seeing organic growth through first-line therapy. Our clinical trial was a first-line indication. We made the decision, knowing the dynamics of the market, that we would play in the second-line space.
So at the moment, are you doing any sort of post-marketing studies, or you don't need that at this point?
We do have the pediatric indication post-commitment that you make to the FDA. We'll always explore other things if it makes sense, but at this point, we're not, besides the pediatric studies.
Okay. Okay, and so you still have presence at conferences and so forth in regard to keeping up the marketing.
We'll be at ACG later this year and absolutely go to both local and international conferences.
Towards the goal of a billion, you haven't said sort of like when, right? Or have you given any range as far as like, is this by the end of the decade, or is this by a certain time, or?
No, I mean, and I think that's certainly in the next phase for us to lean into that and give you some more perspectives on it. But at our growth rate, with the guidance that we've given just for this year, either we need to slow way down after this year to wait to get to a billion, or if we keep at the rate of our growth, we'll get there before LOE for sure. So that's where I think as we're trying to get people to understand in terms of the opportunity that Ibsrela presents, that some of the conservative views of how this business grows, that's our job to change those minds.
Okay, and remind us what the guidance you raised it a little bit, right?
Yeah.
Just remind everyone what it was and what it is now, and did you give it for each product or total?
No, we gave guidance for Ibsrela from $250– $260– $255– $265. Xphozah, we're not yet giving guidance. Given the turmoil that the market has, what we have done is spoken about our confidence that Xphozah will be $750 million. We've not given the timeframe for either one of the two for peak.
Okay. As you grow the product, what else are you learning about, you know, as you scale? Are there new challenges as you scale, or is it more of the same blocking and tackling, just finding more people, getting more people on therapy?
Yeah, I mean, that's a good question. I mean, we think the opportunity is there. We know the patients are there. So, you know, if you think about our path to a billion, you have a sizable market that continues to grow. As Mike said, we don't need it to grow necessarily to hit the billion, but it is continuing to grow. We've expanded our sales force to really drive to the top of the funnel. So now we're calling on more high-prescribing GIs, more high-prescribing non-GIs, and more APPs, so nurse practitioners and physician assistants. So feel really good about that sales force expansion. But it's equally important to make sure that you're focused on pulling those patients through. So when the physician identifies a patient, that they're able to get access. And so, as we said earlier, we expanded our field access manager team.
We saw early signs of success of that in Q2 around resubmissions and approval rates. That's still very early in its expansion. That just started April 1 this year. So this is, we're moving now into our second quarter of that expansion. And then I think, as Mike mentioned, we know that we have a very active and engaged patient. So we need to find out ways to better engage them so that when they raise their hand and they ask for Ibsrela, that the physician is aware of it and they're able to grant that.
You know, for us, I wouldn't say it's new learnings, but I think it's just getting more efficient and tighter around those key components around driving to the top of the funnel, pulling those patients through, driving greater awareness with patients so that they can go in. They can talk to their physician about that new option that they need with Ibsrela. In fact, they can get the medicine that they need, that the physician feels that they need. We feel really confident about those elements of the business.
We all hear about it all the time and have our own experiences of how difficult it is to get prescriptions filled, right? And it is the dynamics around retail pharmacies are. It's a terrible business, very low margin for retail pharmacies, so any distraction getting a prior authorization filled is taking away from what it is that they're doing day in and day out. So that's why the FAM team that Eric has put in place is so critically important because the sales force is driving the input at the top end and pulling those prescriptions through is critical, and the system is set up in such a way that it makes it pretty difficult to do that.
What about going from the patient side? Is that something you do much, like on the social media platforms directly to consumers? I mean, I see so many pharm ads on CNN. It's unbelievable. Every commercial break, right?
Yeah.
But I don't think I've seen Ibsrela yet.
No, I don't think you're going to see us on CNN right now. You know, we're always looking at different media channels and ways to reach patients, and certainly, we need to make sure that we're driving awareness for these patients. To your point, though, yeah, we absolutely do have a presence on social media. We see high engagement there and very pleased with the results that we see, and we're continuing to evaluate those channels to see where we can get the right mix, because driving patient awareness and driving them into the office is definitely a priority of ours and one that we're going to be focusing on a bit more in the future.
We do know that the rate of if I'm a patient going to see you as my physician, my asking you for Ibsrela or another therapeutic has a high rate of acceptance. Getting that patient who are already extraordinarily engaged in their disease to be asking for Ibsrela is certainly an important part of it that we do.
Is that trackable data to know that? Because that's interesting, right? If you could know how that therapy was initiated, whether it came from the patient's suggestion, I don't know if that's information that can be captured.
Yeah, I mean, we do kind of your standard ATU, so awareness, trial usage, internal market research data, where we look to understand how many patients are aware, you know, when a physician comes in or when a patient comes in and they ask for the brand, what percentage of those patients are granted. But those are internal research numbers that we use to help kind of guide our marketing strategy and our tactics.
Yeah. Okay. So you kind of notched the guidance a little bit, but you're obviously watching. Justin's probably watching every day. I think I know he is. So, you know, is there a potential to go a little higher with the guidance, or you just feel good about it for now?
Feel good about it now. And certainly, our objective is always to overperform, right? I mean, it is, I think you've known me and known us a long time where it has become a drinking game for the company that I'm not going to get out of my skis, right? I'm going to give you numbers that I have great confidence that we're going to meet. And our objective is to make sure that we show you that we can do better.
And just, you know, we went into the year at 240–250. And then with a really strong quarter, we really felt like we've got good momentum and we were able to move that to the 250–260 range. So just to clarify that number that we moved to 250–260.
Right. Okay. Okay. And this was when did you first introduce the Ibsrela guidance? Just to give us the history.
So it was a year after launch when we first gave guidance for Ibsrela. And that is not an unfamiliar path to us. Just we want to make sure that we're confident on the trajectory of where we are. And you look at a non-Medicare business for Xphozah, it's on the trajectory that we think it needs to be on. We want to see a bit more time as the DOs are going through the TDAPA process for binders. It is a distraction for them looking at what we're offering, right? Because we need those dieticians. We need the information from the DOs in order to put in front of insurers the justification and rationale for filling your script.
Yeah, well, remind everyone what the status is outside of the United States with this product.
We have a partnership with Kyowa Kirin in Japan for hyperphosphatemia only. And in China, we have a relationship with Fosun Pharma for both indications. And then in Canada for both indications.
Okay, and how are those helping the P&L right now?
Canada is a small market, so you know, de minimis. But if you look at KKC, and Justin can address on this, that is a supply agreement that we have with them as, you know, if you recall when we were going through the valley of death after the CRL, we monetize the milestones and royalties. So there's nothing today but some manufacturing benefit.
Correct. We supply them right now, the active pharmaceutical ingredient that they tablet on their own and sell. They've had very good success since launch. They got approved actually right before we did, the fall of 2023. They've been doing well, and we provide product revenue from our sales to them every quarter, and so we supply them on a regular basis, and it has a modest margin, but it's profitable.
So they can take that API and they can go for IBS if they wanted to.
No, so they only have rights to hyperphosphatemia.
They can't. Okay. So that's open then.
It is open, and it's actually the second largest market outside of the U.S. for Linzess. I think one of the dynamics we all need to be aware of as this kind of question is the right one is with MFN. One needs to be very thoughtful for the chance of MFN occurring. One needs to be very thoughtful whether or if you out-license outside the United States.
Yeah. You don't want to jeopardize market, obviously, despite possible short-term upside.
Exactly right.
What about Europe?
Same thing. I mean, if you look at.
Same story.
Same story.
Okay, so you're being very judicious about what to do.
It's the unintended consequence, right, of the discussions that are occurring. It will potentially prevent patients to benefit from the innovations that happen.
Okay. Well, speaking of MFN, obviously the related topic is supply chain and manufacturing. Just where does it all happen with your API and your fill and finish?
So Europe broadly. And then it's brought to the States where we do tableting and packaging.
For both indications.
Correct.
Yeah. Okay. Okay. All right. So let's talk about XPHOZAH. So you've characterized it as kind of like a relaunch, which essentially is what it is, although it's going well. Is it simpler now with this situation? I mean, is it easier or in some sense, or is it?
That's why I keep trying to convince Eric, because this is a cakewalk, no problem.
Yeah, I'm not sure that it's easy, but I'm really proud of the team and what they've been out there doing. I think just the continuous contact and messaging around access, regardless of who the payer is, patients have access to Xphozah. You know, we started that messaging in late last year, been very persistent in Q1 and Q2. You know, for me, Q1 was really about understanding is the strategy working. In Q2, it was, can we start to grow the market? And can we start to grow the non-Medicare payer segments?
As you heard me say in our earnings call, we have seen very positive signs, more new riders, so growth in new riders, Q2 versus Q1, new and refill prescriptions growth, Q2 versus Q1, and more patients as a percent going on product, whether they're through our patient assistance program or the non-Medicare payer segments are going on product in Q2 versus Q1.
And now this, you know, what's going on behind the scenes with some of the legal maneuverings, you know, you've characterized that as kind of just a pure upside, don't expect it, but if it happens.
I mean, if you look at our TAM, which before the TDAPA period was 550,000 patients, get rid of 330,000 or 60% of those patients, which are Medicare, our new TAM is 220,000 patients. And you know, the vast majority of patients are underserved with binders, but self-reported by physicians, they think 30% of their patients are in need of an additional product for managing hyperphosphatemia. So if you look at that TAM, those reports from physicians, you need 60,000 patients to get to $750 million. So we have plenty of room within the 220,000 patients to generate the revenue that we've guided to and continue to be able to afford giving patient assistance to those patients that are on Medicare.
Right now you're at, what, you're at obviously a small percentage of the 60.
Oh, absolutely. Yeah, yeah, yeah.
Okay. But I mean, it's very well understood that, I mean, everyone knows it's not a binder and that's not a debate anymore, right? Or never was.
People get confused still, but yes.
What about some of the competitors? I mean, now I'm trying to remember. I mean, Auryxia is old now. That's been out since, what, 2018 or something?
Yeah, and it's part of the TDAPA period.
That's okay, and there's another one.
Renvela.
Velphoro. How do those, are those competing with you or are they just not really, you're going to add them into the company?
So if you look at our label, it's for add-on therapy or when people can't tolerate the binder. And you know, if you look at where we are in a study that we ran for Optimize, we called it Optimize, where you look at a base therapy of binder, you cut the binder in half, keep it the same, or eliminate it, add Xphozah, far more patients got to goal. So we can work well in concert with binders, which is the vast majority, because binders alone, 80% of patients never get to the goal that they need to have. And hyperphosphatemia is an independent predictor of morbidity and mortality in these patients. So if you can get more people to goal, theoretically, you then are going to improve their outcomes.
Hyperphosphatemia is something that is poorly treated at this point with just one mechanism, which is the benefit that Xphozah brings.
Are you collecting any other RWE real-world evidence?
We do have an ongoing RWE study. We expect it could read out later this year.
What would be in that? What kind of metrics would be?
I think it's serum phosphorus first and foremost. And we're going to collect all the outcomes that you can get in that period of time. But it's, you know, since launch and certainly through TDAPA this period, you know, this is not going to be something you file to the FDA. This is something that's just giving a perspective of what the benefits are that you get with Xphozah.
You know, I remember one of the debates back at the, was it the first time that the adcom, you know, the whole question of not know outcomes data with this phosphate biomarker, is there still a push in academics amongst the academics to ever do that? I mean, it would be, obviously, if you had that, it would be a big tailwind.
Sure. And this is a patient population that dies awfully 20%-25% a year, right? So to truly determine a specific cause of death and an intervention, statistically, it's almost impossible to do and would take forever. Academically, there's always an interest, right? As a physician, they want to know that the medicine that they are giving their patients is going to have a benefit. We do know if you look over time, and certainly now in the period that they're in greater utilization of calcium-based binders, that's really bad for patients because then it gets deposited in the soft tissue. And non-calcium-based binders are important, clearly have with sevelamer have taken over the vast majority of the market. And still, you're not getting patients to goal with Xphozah you can.
Yeah. Yeah. Well, remind me on the, just what is the LOE again for the product?
It's April of 2034.
Okay, so you still basically have a little less than a decade. So good.
Yeah. Plenty of time.
For both, this would be for.
August of 2033 is composition of matter, that's Ibsrela, and then use is April of 2034.
Okay. And did you ever explore, were there other indications that you could, would explore or could explore?
For Xpozah?
For tenapanor or just in general?
Oh, gosh, yeah. I mean.
Where else would, I mean, that's, you know, I know you don't want to deploy new capital to new projects right now, but I'm just curious.
Yeah, I mean, we're getting to the place where that is within the line of sight given where we think free cash, when free cash flow is going to come. But sure, if you look at diversion of sodium tightening junctions in the GI tract and the other benefits that you see with NHE3 inhibition, there's 100 or more places that we looked at over time. And you know, we think that NHE3 inhibition writ large has a potential benefit for a lot of patients.
Yeah. Portfolio expansion, business development? I mean, I know you look at a lot of things, I'm sure. Say no to most things, which is pretty smart.
Yeah, I mean, for business development, you have to kiss a lot of frogs, right? You just have to. That's the name of the game. Brought on Mike Kelleher about a year ago and the team that he's built, we're looking at a lot of things where clearly associated therapeutic areas make sense, our specific therapeutic areas make sense, and we'll be opportunistic as well. We also, back in 2021, when we got that CRL, we did put on to the side a couple of different programs that we found interesting, right? The science that created tenapanor has created a number of other molecules that we will hopefully be able to revive.
You had something in, was it hyperkalemia?
We had hyperkalemia and metabolic acidosis, both of which we put to the side, just given the challenges of that market, and frankly, some of those probably would go straight into a bundle, which the lack of alignment in terms of innovation for patients and what CMS is trying to do is exactly what we're fighting against. Because your incentives are against actually developing the things that might end up being in there.
I mean, I know that, you know, no one should expect that this to reverse with the whole proceeding with CMS in the bundle, but I'm sure you have very good attorneys. So like, you know, what is the case that is being made? And is it a case that you think is going to, you know, resonate with the whatever circuit of appeals you're dealing with right now?
Yeah, I mean, whether or not it'll resonate is one question. The basis of our argument is that CMS overstepped its remit. This goes back to the Chevron case that the Supreme Court decided, where the rules that, or the laws that were established by Congress with MIPPA in 2008 did not include oral-only drugs as the definition of a dialysis service. And that's the basis of the argument, that per Chevron, they've overstepped their remit and that should be changed as a result. That's the argument.
Okay, and there is something coming up very soon.
Yeah, so September 25th is the hearing in front of the district court and.
What are the scenarios there? It's like just up or down?
Up or down. Would be our estimation. And when that happens, there's no statutory requirement for them to report in a certain period of time. So it could be quick, but it could take longer too.
And then wouldn't you invest, like if they decide to turn it down, you would appeal or you would just leave it? Or how does it work? I mean.
I mean, certainly you can continue to, that's the whole beauty theoretically of our system is you can continue to appeal all the way to the Supreme Court. That's not a decision that we have yet made.
Okay. All right. What other, so obviously the quarterly guidance and the sales is critical right now. Any other catalysts that we should be aware of in terms of just, you know, maybe on the OpEx side or just anything that we should be aware of in terms of.
I'm obviously biased and I'm sitting in the seat that I sit in, that, you know, I think a very simple catalyst would be even for Ibsrela to get the proper attention and value that it should. I think we have delivered again and again the numbers that we say we're going to. And I think the vast majority of the sell-side don't yet see a billion-dollar opportunity with what we're doing with Ibsrela. So let's say Xphozah is on the side for a billion-dollar drug, given where we are trading today, I think shareholders would benefit from understanding that there's an upside to Ardelyx and certainly Ibsrela at a minimum with what we've been executing. And the same then holds true with Xphozah.
When you add that into the portfolio of what it is that we're doing, revenue that we're generating, profit on the horizon, and how we would reinvest that free cash flow with the kind of excellence that we've demonstrated in commercialization development, that's something that I think needs to begin to resonate.
What have you said about the timelines for the breakeven and getting, have you talked about that?
We've not gotten specifics into it. Certainly we will, but the math's pretty straightforward if you look at our performance, and you know, we tell you our top line, tell you what our expenses are. It's not that far on the distant horizon.
Yeah. The other thing I've seen some companies do is, you know, they'll give guidance for the year, but then they'll sort of give more, you know, a little bit less in-focused guidance, kind of saying a range that we're going to get to the number that you're saying by X to Y, right? Or give a CAGR. Like that kind of.
No, and I think those are coming.
Is that something? Those are interesting things you're thinking about?
Oh, absolutely. No, I mean, it's the beauty of the business that we've built, it's relatively simple at this stage, right? So that's why, you know, you just look at the math, you get there pretty quickly. And then factoring in reinvestment of that capital, how and when we do that, absolutely important.
Okay. Very good. Do we have questions from anyone in the audience? All right. Well, thank you all. Appreciate it.
All right, you all. Thank you very much.
Very good. Thank you.