... All right. Hello, everyone. Welcome to day two of Cantor's Global Healthcare Conference. My name is Prakhar Agrawal. I'm a biotech analyst at Cantor, and for our next session today, we are very excited to host the team of Ardelyx. Representing Ardelyx, we have, Eric Foster, Chief Commercial Officer, and Justin Renz, Chief Financial Officer. Gentlemen, thank you for coming in.
Good morning.
Obviously, great, great 2 Q, and lots to talk about across your commercial products, but maybe just start off with an overview of some of the key priorities for the company right now.
Good morning. Beautiful day in New York, and thank you for having us, Prakhar. A great conference here in New York City. Ardelyx was founded with a mission to bring novel mechanisms to patients with unmet medical needs, and it is a very challenging and impressive thing to do that we have done it twice. We have brought two medicines to market. We have a drug, IBSRELA, approved for irritable bowel syndrome with constipation in adults, and a drug called XPHOZAH for hyperphosphatemia. These are patients with end-stage renal disease on dialysis and need phosphate monotherapy. We are very proud of our accomplishments. We launched IBSRELA in the spring of 2022, and it's been successful ever since.
We have given guidance of $2.05 billion-$2.06 billion in net product sales revenue this year, and XPHOZAH is doing very well. Eric will get into the details, but we believe it has potential to get to $750 million at peak prior to patent expiry. We're really excited about that, so our goal is to grow the revenue of both products. We are very much working for additional ancillary, if you will, indication products to in-license, as well as looking at some of our own internal assets to see if we can move those forward, and to really build out a great company. We're well-resourced for the future, and so we're delighted to be here and talk about our story.
Yeah. Maybe we can start with IBSRELA, and before going to some of the trends around the product, I want to touch on the market first, because I think one sort of underappreciated factor is the market is still growing today. So maybe if you can provide your perspective on what you're seeing in the IBS-C market and what's really driving that growth.
Yeah. Thanks for the question. Great to be here this morning. As you said, the IBS-C market has been growing double digits for the past couple of years. It's a large, established market, pretty much dominated by the secretagogues. Linzess is the primary player there, primary medicine there. And so we really feel like there's a big opportunity there. We know that only about a quarter of patients are satisfied with their current treatment. So that leaves about 75% of the patients out there that are looking for something else. They're looking for new relief and something different. IBSRELA is unique in that it has a different mechanism of action, similar efficacy and safety profile.
And so it affords an opportunity for those patients that are looking for additional relief, or they need something different. It's a great option. It's a great option for them. You know, there's a lot of investment that's gone into that market, and I think what we're seeing here is recognition of the disease and the impact it has on patients. So seeing earlier diagnosis and certainly moving more to pharmacologic treatments versus over-the-counter, which is helping to grow the market.
And is this double-digit growth really sustainable long term? And you talked about early diagnosis, more patients maybe cycling through therapies. Like, what's your perception over the long term?
Yeah. You know, right now, we're not really seeing any particular headwinds that might slow it down. However, I would say that, you know, the way that we look at this business is really as an opportunity for those patients that are seeking something different. And we know, even if there's a limited market growth, there's a tremendous opportunity out there for patients, tremendous size of the market. So even with limited market growth, we still feel confident in being able to hit our more than $1 billion in peak sales, which we've communicated externally. So the market growth is good. I think it speaks to the investment and recognition that physicians have around the seriousness of this disease, being able to find the right treatment for them.
So we're very focused on making sure that, you know, as that second or third-line treatment, preferably on the second-line treatment after failure or treatment with Linzess, that they have an option, a good option.
Right. And maybe on the product profile, maybe folks who are a little bit newer to the story, what's really resonating well on IBSRELA in the patient community?
Yeah. I mean, I think first and foremost, you have to start with safety and efficacy. So if you think about the product now, it's been out for, as Justin said, since 2022. Got a very well-established safety profile. And then from an efficacy standpoint, I mean, these patients are sick. These are individuals that typically, they don't have bowel movements during a week, sometimes could be up to a month, and they know that taking IBSRELA, it's gonna work. And what we've seen is, as physicians generate more experience, they get greater confidence. We're also starting to see some first-line use of the product as well. And it is important to note that actually, the indication of the clinical trials were more first-line use. So it's well within reason for a physician to go to first-line use.
It's more around our strategy and our positioning and the payer dynamics that we see in a unique post-Linzess. So we're very confident in the positioning that we have. Clearly, physicians have confidence in the product, its safety and efficacy profile. So we're getting some first-line use, but at the end of the day, it's really the sales team, increased call activity. Messaging is resonating around the safety, efficacy, a different class of medication for these patients, and it's multifactorial. So physicians like to have different products with different mechanisms to be able to treat their patients, and that's exactly what IBSRELA is.
That first-line use is, I think, an important dynamic. So maybe, like, is this something that you're seeing more recently as physicians are getting comfortable with the product, or has this all, this sort of share in the front line has always been there... And where the trouble?
Yeah, you know, I don't think it's always been there. I mean, it's something that we, we keep our eye on, obviously, as we're looking at prescription trends. And we've seen some growth there. It's not significant, but again, you know, as we look at where this growth and where this utilization is coming from, like I said, it's as we're expanding that prescriber base, as we're getting more depth, prescribing physicians are getting more confident, they're seeing the benefits, therefore, they're going to it sooner than-
Okay. And in Q2, you raised guidance. So what really drove that confidence on making that guidance, but just went right?
Yeah. I'll just take everybody back to kind of Q4 2024. So you know, we did raise guidance from $240-$250. We raised it from $250-$260. You know, in Q4, really, that was the first quarter after our sales force expansion. So we knew that with a full team out there, it was gonna make a difference, and that was our highest demand quarter that we'd ever seen. Move to Q1. I think we communicated it was our second highest, but not by far behind Q4. So what that told us is the underlying fundamentals are really strong for the business, and then we start to see the sales force as they generate momentum, they build relationships, they're getting into the offices, they're starting to establish their reach and frequency.
We also expanded the field access manager team in Q2. So all of that came together in Q2: increased activity with the sales team, focus on prescription pull-through with the field access manager team, and what you saw there was our highest demand quarter that we had seen to date. Of course, that translated into a great net sales quarter as well.
Okay. And on the sales force expansion, how much was the expansion, if you don't mind, folks?
Yeah. So we went from sixty-four to a hundred and twenty-four. So in essence, we doubled the sales team, and the reason why we did that was to increase our reach to greater to a greater part of the market. So right now, we're covering about 50% of the total TRX market for IBS-C. It allowed us to expand into high prescribing non-GIs, APP, so advanced practice providers, like nurse practitioners, physician assistants, which, you know, play a critical role in diagnosing and treating patients with IBS-C. And then also the GIs, the high prescribing GIs, which I think most people are familiar with.
Right. And so how are you tracking metrics internally on this ROI for the sales force expansion? You mentioned some of the new position segments. Anything else that you can help us with on this?
Yeah, I mean, you know, certainly we look at the demand generation.
Yeah.
And so that, that's kind of the ultimate measure. But some of the more leading measures that we look at are new writers. So, you know, we saw in Q2, our highest new rider total. So highest new writers , highest total number of writers , in addition to the call activity. So we're seeing increased activity. It's leading to increased number of prescribers, and it's leading to record new and total refills for the product. So when you put all of that together, those are great leading indicators that tell us that our strategy is working, the team's executing well. And then on the field access manager, some of the things that we look at there are resubmission rates, and approval process or approval metrics, and we saw improvement in both of those.
Mm.
Very early, I think, for the field access manager too, but enough to give us confidence again to kind of raise that guidance for 2025 to $250-$200.
Right. And as we look towards second half of this year, what could be the headwinds and tailwinds? Say that, what could be the headwinds and tailwinds?
Oh, yeah.
Yeah.
Yeah, so, you know, from a tailwind standpoint, you know, I do feel good about the commercial momentum, the implementation of the field access management team, and really the momentum that they have. When you think about, you know, headwinds, so just kind of thinking about seasonality in the business and kind of the ebbs and flows or the rhythm of the business, you know, typically, Q1 it's kind of the slower quarter. Lots more challenges there with reverifications, patient renewals, insurance challenges. And this is not just specific to IBSRELA. This is a market dynamic-
Right
... I've actually seen this in other therapeutic areas as well, and then you get a nice rebounding in Q2. As you move into Q3, you're working off a bigger base, so potentially slower rate of growth overall. You're also dealing with the summer months, and, you know, here we are now in September, everybody's back to school, then you start to see things pick up, and then things kind of rebound again in Q4, so you know, that's typically what we've seen in the market. IBSRELA now has started to generate enough momentum where it's starting to act like the market. You know, I think early on, we were able to push through some of those headwinds, but now we're starting to see some signals that we're acting more like the market.
But nonetheless, we still have a lot of confidence, enough again, to kind of raise that guidance for the year.
Yeah. I mean, the scripts continue to look really good, even in 3Q. So I guess the seasonality impact for the market overall is that similar to what you would expect in prior years or has it been changed for this?
Yeah. Yeah, I mean, I think when you go back and you look historically at how the market has acted, I mean, it, it's been fairly consistent, certainly in the time that IBSRELA has been there over the past two to three years. So, you know, we feel confident in the direction that we're going. Whether or not our demand will follow that, we don't quite know.
Right
... but, but yeah, I mean, that's, I think that's something we've seen overall in the market over the past few years.
Yeah. So can you talk about the gross-to-net discounts for Q2, and what could be able to for rest of the year?
Sure, so IBSRELA, just to go back to the first quarter, the first quarter is traditionally our least favorable quarter, so we were just under 35%, at around 34.8%. We have a general generous commercial co-payment program where we always try to take it, make it as least financially painful as possible for the patients. So we offer this co-pay assistance, and as you might imagine, many plans have high deductible amounts related to them, and so it's least favorable in the first quarter and improves over the course of the year. The second quarter of gross to net was close to 32%, around 32.2%, and that 2.5, 2.6 difference is primarily the commercial co-pay.
So we have the usual deductions that everyone else has, and that is our biggest variable quarter to quarter. And so for the rest of the year, you know, I think it'll be slightly declining to closer to 30%. So all in, we'd like to say it's 30%, ± 5%.
Okay.
That's been consistent since launch.
Got it. And, how should we think about the growth to peak? Especially as you, you know, you have said, your ambition and to get to, like, a $1 billion in peak sales, what are some of the assumptions that you have talked about?
I mean, again, we feel very confident in being able to reach that greater than $1 billion in terms of what we've expanded the sales force, which is helping drive more patients in through the top of the funnel, which is absolutely important. The next part of that is we need to make sure that every patient that a physician feels needs to go on IBSRELA actually has access and go on IBSRELA, and that you've seen our commitment to the field access manager team. Again, that's relatively early, just Q2, we're now in our second quarter there. Really making sure that we can pull through those patients that have been identified, and we continue to improve, there is gonna be really important.
The other thing that, you know, we've really just kind of scratched the surface, that we're really looking at moving forward is really how do we engage with these patients? We know that it's a large patient base. They're very active, very engaged. They're seeking treatment. We know that they're responsive to some of the media that competitors have put out to the market. So taking all those factors into place, I mean, we certainly feel like there's probably more that we can do there. And I think, you know, as we think about the rest of this year and moving into the future, certainly planning to focus more on the patient, how do we engage them and kind of pull them?
Is that direct-to-consumer something that we can see more of? Like, we obviously see the ads all the time.
Yeah, yeah.
Is DTC campaign or a more focused social media targeting the channels something that we could explore, like we skip some initial steps?
Yeah, and it's really not even exploring. We're actually out there doing that right now, more on the social media side, less on the DTC.
Mm-hmm.
And linear TVs. But we certainly, you know, we're certainly out there. Social media, again, when you think about this demographic patient, 35-55-year-old female, very engaged in social media, highly responsive. We're seeing good metrics there. So, you know, we already have a presence there, search and other omni-channel media that we're-
Yeah
... that we're focused on. We'll continue to do that. Then in terms of exploring a broader type strategy for our media to be able to engage more patients, definitely something that, you know, we're looking into. No, no commitments and no firm investments at this point in time, but always trying to find a way to reach more, reach more patients.
Okay. Maybe we can move on to exposure now. Obviously, a lot has happened in terms of payer dynamics in that market. So what's the latest thinking on the market first, the hyperphosphatemia market, what you're seeing?
Yeah, I mean, this has been probably one of the biggest challenges I've had in my career, but certainly one that's very rewarding. If you think about being able to make sure that these patients that need access to XPHOZAH, that we focus in a way that continues to provide that access, that's exactly what we... You know, it's a fairly large market. 550,000 patients are on dialysis on an annual basis. You know, if we think about 60% of those are in Medicare. So if you take that off, it gives you a TAM opportunity of over 220,000. You know, we know that in our internal research with regards to share, looking at around 30% or so.
That's about 60,000 patients who we've communicated to be able to hit our external guidance around $750 million. Certainly, we feel like that is a sizable business. For us in Q1, it was about ensuring that our strategy is working. Our strategy is really to ensure patients have access regardless of who the payer is. If a patient comes in and they're a Medicare patient, they can go through our patient assistance program. The physician has confidence, and then if they have coverage through their pharmacy benefit, through Medicaid, through commercial or potentially a VA, there's coverage there as well. At the end of the day, the physician can feel confident. Regardless of who the payer is, the patient has access. We were able to establish that in Q1.
In Q2, the question was, "Can we now grow it?" What you saw was we were able to grow that. We saw growth in our non-Medicare payer segments. We saw growth in new writers and total writers, and that led to growth in new and refill prescriptions. In a relatively short amount of time, we've been able to establish the strategy is working, and we can start to grow that. Now, I will tell you, the market is still experiencing some disruption there, and we just need to continue to put our best foot forward, repetition, frequency of messaging, and making sure that physicians have that confidence and access, and that's where our team is focused.
Yes, maybe you can elaborate on that, since it's been two quarters now-
Yeah
... on, like, what, what are the key elements of the strategy that's performing well, that you'd be seeing more of, as well?
Yeah. You know, I think for me, one of the important things to look at is the non-Medicare payers. So here I'm talking about commercial Medicaid. You know, when you think about Q1, just some of the dynamics that we talked about with the IBSRELA, patients have to get re-verification.
They change their-
They change their commercial plan. So a lot of that still has to be worked through in Q1, and that's what we saw this year in a disrupted market. And so it was probably heightened a bit more for exposure in Q1. And one of the things that we saw in Q2 was we started to see growth in that non-Medicare payer segment. So again, commercial and the Medicaid. So that's really important, I think, for us, because that, that is the paid opportunity for us, and that's what's gonna get us to that $750 million. So for us, that's probably one of the bigger metrics.
... Got it. And maybe a similar question as I asked for IBSRELA, like, what are some of the key product attributes for XPHOZAH that maybe, you know, is resonating well with the physicians and the patients?
Yeah. Well, I mean, XPHOZAH is a great product. It's innovative, NHE3 inhibitor. You know, it, it's in a class by itself. It's considered a blocker, whereas the others are considered a binder. So, it has a unique mechanism of action, phosphorus absorption inhibitor. And for patients, it's one pill twice a day versus the binders that they have to take with every single meal. And we know that when XPHOZAH is given in addition to a binder, it can even further lower their phosphorus levels. And this is important because about 70% of patients have been shown to not be able to achieve their target phosphorus levels. And so again, think about that total addressable market. 70% of them are not able to reach the target levels with their current therapy.
So adding XPHOZAH to it, they're able to then reach those target levels. It's really a phenomenal medicine, and it's one, you know, that we have a lot of confidence in, and that's why we decided. The strategy that we put forth, because we wanna make sure that patients have access to it, because we know the vast majority of them need something else.
Yeah. And, on the XPHOZAH scripts, you talked about the strategy. Which, you know, obviously, the script have stabilized, but we haven't still seen a clear inflection point, right, in script. So it's what will it take? Is it just a sufficient of time lag, or is there anything else that has to happen for that inflection in script?
Yeah. It's a really good question. I mean, I think-
Make sure you have good time-
... You know, it does take time, and trust me, I mean, I'm working hard with the team to get it to happen sooner rather than later. But it does take time, it takes repetition. Representatives need to continue to be out there, making sure that they're messaging around the access, identifying the right patients. You know, there are plenty of patients out there that continue to have elevated phosphorus levels, and then working with the DOs. But you know, in the current environment, you know, the DOs in terms of how they have access to binders, it's very different than it is for XPHOZAH right now. So, you know, we have a bit of a headwind in terms of you know, being different, something unique and a different way of going about it.
So we just need to make sure that we're continuing to be in front of our customers. They're starting to write the product, or they're continuing to write the product. They have the confidence that it's there, they have access to it. And I think over time, you're starting to see that confidence build, and, you know, I think we saw a little bit of that in Q2.
Got it. And maybe if we talk about the level of investments that you're making for XPHOZAH, obviously, let's say for IBSRELA, be the sort of expansion, yeah, anything that we can talk about, investments in XPHOZAH.
Yeah. Yeah, it's a good question. I mean, especially given that 60% of the market from a paid standpoint went away. But remember, we're still focusing on that full physician panel that we were focused on before, and we wanna make sure that any patient, regardless of their payer, has access to XPHOZAH. So we have not made any changes from an investment standpoint. We still have a full sales team that's covering the same nephrologists that we're reaching last year, and they're continuing to focus on them this year. You know, we're always assessing and looking at things, whether it's up or down, and, you know, how to refine and optimize. But right now, we feel confident with what we've got out there in the field, and again, starting to get some of that momentum. It's giving us more confidence.
Is this level of investments enough to get to that $750 million peak sales that you hope to achieve with XPHOZAH?
Yeah, that's a really good question. I mean, it's hard to answer that right now. I mean, you know, if you think about patent expiry, it's April of twenty thirty-four. So we've got a little bit of time. Markets are gonna change, dynamics are gonna change, payers are gonna change. So we know right now, I think we feel comfortable with what we have, continuing to look at different ways, different levers. And I think, you know, over time, if we have to make some different decisions and some investment allocation, I think we will. It's nothing that we take for granted, for sure. I wouldn't say that we're gonna be stagnant here until, you know, patent expiry.
Right.
But it's something right now that, you know, we're responsive to the market, just like we showed that we were this year, and we'll continue to do that moving forward.
Yeah. And on that peak sales number, $750 million, obviously, the street is way below that. I mean, my model is below that as well. So, there are obviously assumptions around share that we make. Pricing is pretty standard. I don't think that's enough for debate. So what, what is the street missing? Is it the population around the diagnosed patients, share number? Like, what, what's driving that confidence that you have around the numbers versus more conservatism, including myself, making to the-
Yeah.
-peak sales?
Yeah. And just in general, we need to execute. As Eric said, we are always been thoughtful about our investments, and it's important to note that Tenapanor, IBSRELA, and XPHOZAH are both fully owned assets for Ardelyx. So, we are really excited about our opportunity to get there on our own. And so we have made incremental investments in IBSRELA. We went from 34 - 64- 124. XPHOZAH, we launched with 60. Eric has added to the team with a few access managers and things of that nature to make sure that we have the support that he needs. We always look thoughtfully at marketing, so we make sure samples are available for all physicians to have to try out. As Eric said, the safety and efficacy profile is fantastic, so we really just need to really drive more and more awareness.
You know, it's still relatively new. XPHOZAH was approved in October 2023. That's not even two years ago. So there seems to be time, as Eric said, we have almost nine more years left until patent expiry, and so there's great opportunity for us to get there. We need to just make you and others more confident that we can do it. You know, it's a small company, you know, with big aspirations, and, you know, we try to deliver quarter- over- quarter. Q2 was an excellent print, and I think we just need to keep demonstrating that we can do it and get you and others to believe in us.
Yeah. I mean, I would go as far as turning the question around on you. You tell me, what do you—what is it that you need to see? I mean, I think our position is we are undervalued. When you think about IBSRELA, it's a sizable market. We've got a winnable position. We've got a nice runway all the way until LOE, for that is August of twenty thirty-three. We've communicated more than $1 billion, and the market is there. And so, we're very optimistic and confident on that side of the business. On the XPHOZAH side of the business, I mean, we've put together a couple of quarters here.
We've got been able to show some growth in Q2, showing good signs in terms of new writers, total writers, new prescriptions, total prescriptions, that non-Medicare payer segment starting to grow. I realize it's early on, but clearly, I mean, you can see with almost $50 million in Q1 and Q2, there is a business there.
Yeah, I think the scripts and the steady growth in scripts is probably what really will drive the upside to revenue across the board.
Yeah.
Yeah. Maybe on the financials, how are you thinking about cash flow, break even, and profitability from here?
Yeah, thank you for asking. So we finished the second quarter with around $238 million in cash. We're very well-resourced to drive our operations. We always are thoughtful about how we raise capital and how we spend capital. And I think we're in really good shape, as you saw in Q2, our loss narrowed compared to Q1, and so we're getting closer and closer to that break-even moment. We now have, and I mentioned this just a minute ago, we have fully paid off our prior obligation, AstraZeneca. And so our cost of goods sold will improve by 10% Q3 versus Q2, which is fantastic. So another lever that is getting us closer and closer to profitability. So, we're getting there.
We're not going to give a specific date yet, but we know we're getting close, and shareholder value creation is very important to us, so we thought to be thoughtful about that. We wanna just not give guidance till we know that we're going to be consistently, prospectively profitable.
Right. And maybe on the guidance part, because you have a guidance for IBSRELA, for XPHOZAH, is there anything that you would hope to see before sort of start giving out guidance for that product as well?
I think we just need a little more time, right? And as Eric said, the market reset on January first, and so the team is out there doing everything they can. You know, Q1 was disruptive, irrespective of exposure, and the exposure with that. Q2 was definitely an improvement. We're getting there. I think we just want to see a little more data, a little more information to be sure, because when we give guidance, we really, really, really want you to hold us to it. We talked about analysts and expectations and estimates, and we want you to believe in our information we give you. And so we want to have a little more information that we're fully confident we know we can deliver.
Okay, great. And we have spoken about building a pipeline as well beyond these two products. Maybe just talk about that. What-
Yeah.
What are you hoping to see?
Absolutely. So, in 2021, when we had the unfortunate setback and a delay with the original CRO for exposure, we basically stopped research. But we had a number of molecules in our refrigerator, proverbially, to look at, and so now we're finally at that point. You asked about cash resource probably, but now we can start looking into that. So we are looking at lifecycle management. We're looking at some new molecules, some next-generation ideas internally, and then externally, we've really built a fantastic corporate development, business development team, and they are really combing the world, looking for undervalued assets that we can really supplement our pipeline with. So there's a number of active work streams on that, and we'll probably start off with, I'll say, GI adjacent or, you know, nephrology adjacent, because that's where our team's expertise is.
And so we're actively looking at a number of molecules, and we want to be thoughtful. So it'll probably be what I'll call a string of pearls, a situation where we're not gonna do any, you know, large bet the farm deals at all. We want to be thoughtful, given our asset allocation and capital utilization. So, look for us to, you know, have more to share later this year.
It is better. And is GI and nephrology, will those be the therapeutic categories that could be?
I mean, that's, that's our primary idea, but again, to the extent it's a novel mechanism with unmet need, we have a lot of really talented people that can pivot to, you know, adjacent indication.
Yeah. I would say, you know, we have deep insights in both of those therapeutic areas.
Right.
But we also know that we have strong commercial execution as well.
Yeah.
And so, you know, if you think about GI and nephrology, they're actually very different. What brings them together is the commercial team, the strategy, positioning, and execution. So I think as we think about business development, definitely gastroenterology, nephrology, we've got deep insights there, but we also feel confident in commercial side of things. Of course, I'm a bit biased there, but certainly feel like if we did go adjacent to any of those, we could be successful.
Right, and so what about the stage of development? Because you have this commercial infrastructure already, there should be a lot of synergies in terms of-
It's all about value. So again, shareholder resources, company talent, and the novel mechanism and unmet need of that particular molecule that we'd be looking at. So, you know, it's likely to be more earlier in the phase Ib, phase II stage right now, but again, we try to be as very pragmatic and open-minded as we can be.
Right. Pleasure speaking with you both. That's all the time we have today. Thank you for joining us, and thank you to the audience for listening in.
Thank you for coming.
Thank you. Thank you for having us.