Ardelyx, Inc. (ARDX) Q3 2025 Earnings Call Transcript

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Overview

The company's strong revenue guidance for IBSRELA and XPHOZAH, coupled with strategic market plans and financial flexibility, indicate positive momentum. The raised guidance for IBSRELA and the company's confidence in achieving sales targets for XPHOZAH are positive indicators. Despite a slight increase in net loss, cash reserves remain strong. The Q&A reveals confidence in market strategies and potential growth areas. The market cap suggests moderate volatility, leading to a positive prediction for stock price movement.

Key Financial Performance

Product Revenue $105.5 million in the third quarter, representing 15% year-over-year growth. This growth signals strong demand across the portfolio.

IBSRELA Revenue $78.2 million in the third quarter, a 92% increase over last year. The growth is attributed to broad-based demand, expanded reach, and deeper prescriber engagement.

XPHOZAH Revenue $27.4 million in the third quarter, a 9% increase compared to Q2. Growth is driven by improved patient access, strengthened clinical conviction among nephrologists, and increased prescription pull-through.

Total Revenue $110.3 million for the period ended September 30, 2025, an increase of 12% compared to $98.2 million in Q3 of last year. Growth was primarily driven by IBSRELA's performance.

Gross to Net Deduction for IBSRELA Approximately 31% in the third quarter, showing slight improvement over Q2.

Gross to Net Deduction for XPHOZAH Approximately 29%, consistent with the second quarter.

R&D Expenses $18.1 million for the third quarter of 2025, compared to $15.3 million for the same quarter of the prior year. The increase reflects investment in growth.

SG&A Expenses $83.6 million in the third quarter of 2025, compared to $65 million in the third quarter of last year. This reflects continued investments in commercial activities to drive growth.

Net Loss Approximately $1 million or less than $0.01 per share in the third quarter, compared to a net loss of approximately $800,000 in the same period of last year.

Cash Position $242.7 million of cash, cash equivalents, and short-term investments at the end of the quarter.

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Operating Highlights

IBSRELA Revenue: Generated $78.2 million in Q3 2025, a 92% year-over-year increase. Expected to generate $270-$275 million in revenue for 2025.

XPHOZAH Revenue: Generated $27.4 million in Q3 2025, a 9% increase compared to Q2. Long-term peak guidance of $750 million.

New Product Development (ARDX-10531): Announced ARDX-10531, a next-generation NHE3 inhibitor. Preclinical data shows high potency and solubility. Phase 1 study preparation underway.

IBSRELA Market Expansion: Broad-based demand growth with increased prescriber engagement and patient satisfaction. 88% of surveyed patients reported treatment satisfaction.

XPHOZAH Market Expansion: Increased total writers and prescriptions. Growth in non-Medicare payer segments and improved prescription pull-through.

Financial Performance: Total revenue of $110.3 million in Q3 2025, a 12% increase year-over-year. Strong cash position with $242.7 million in cash and investments.

Operational Efficiency: Improved gross-to-net deductions for IBSRELA and XPHOZAH. Investments in field access manager teams enhanced prescription pull-through.

Pipeline Development: Reentry into product development with ARDX-10531. Focus on leveraging internal assets and exploring external opportunities.

Leadership Transition: Welcomed new CFO, Sue Hohenleitner, bringing strategic expertise to the team.

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Risk or Challenges

Regulatory Risks: The company acknowledges that forward-looking statements are subject to risks and uncertainties, and actual results may differ significantly. This implies potential regulatory hurdles or compliance challenges that could impact operations or financial performance.

Market Dynamics for XPHOZAH: The XPHOZAH team is navigating a dynamic market, which could pose challenges in ensuring patient access, strengthening clinical conviction among nephrologists, and driving prescription pull-through. These factors could impact the product's growth trajectory.

Pipeline Development Risks: The company is investing in ARDX-10531, a next-generation NHE3 inhibitor, which is still in preclinical stages. There is inherent risk in pipeline development, including potential delays, high costs, or failure to achieve desired outcomes.

Financial Risks: While the company reports strong financial performance, it is also increasing expenditures in R&D and SG&A. This could pose risks if revenue growth does not meet expectations or if unforeseen expenses arise.

Competitive Pressures: The company operates in a competitive market, particularly for IBSRELA and XPHOZAH. Maintaining market share and achieving growth targets could be challenging amidst competition.

Supply Chain and Prescription Pull-Through: The company is focused on improving prescription pull-through rates and addressing critical aspects of the patient and physician journey. Any disruptions in these areas could impact product availability and patient access.

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Guidance & Outlook

IBSRELA Revenue Guidance: The company has raised its guidance for IBSRELA revenue, expecting to generate between $270 million and $275 million in revenue for the year 2025. This reflects strong demand and continued momentum.

XPHOZAH Growth Expectations: XPHOZAH generated $27.4 million in revenue in Q3 2025, a 9% increase compared to Q2. The company expects its contribution to the business to grow over time, with a long-term peak guidance of $750 million.

Pipeline Development - ARDX-10531: The company announced ARDX-10531, a next-generation NHE3 inhibitor, as a new development program. Preclinical and manufacturing activities are underway, with plans for a Phase 1 study. This investment reflects a disciplined approach to pipeline expansion.

Future Financial Position: The company expects meaningful revenues in 2026 and beyond, positioning it to invest in commercial endeavors and pipeline growth.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:What is the current market share of IBSRELA in the IBS-C market, and how is it performing as a first-line therapy?

A:IBSRELA has a mid-teens share in the IBS-C market overall, but its first-line share is in the single digits. The company initially positioned IBSRELA as a second- and third-line therapy due to PBM and formulary constraints. However, it is seeing organic growth and some first-line utilization due to its efficacy and physician confidence.

Q:What are the potential indications for the new molecule 10531, and what is the company's approach to its development?

A:The company is exploring potential indications for 10531, including hypertension, heart failure, and diabetes, but it is too early to determine specific targets. The molecule's solubility and potency are being studied in preclinical work to understand its potential applications.

Q:What is the company's strategy for expanding the sales force for IBSRELA?

A:The company is constantly evaluating data to drive growth and value. While the current sales force has been effective, the company remains open to expanding it further if needed. They also emphasize a team effort, including marketing initiatives and field access managers, to drive growth.

Q:What factors could impact the company's ability to meet its new guidance for IBSRELA?

A:The company is confident in its strategy and has provided guidance based on conservative estimates. Factors like the high unmet need in the IBS-C market and the drug's proven safety and efficacy profile are driving growth. Over 85% of patients are satisfied with IBSRELA, which supports the company's confidence in meeting its guidance.

Q:What is the company's approach to business development and pipeline expansion?

A:The company is open to exploring both internal and external opportunities. They are focusing on assets that align with their current therapeutic areas and commercialization strategy. The new molecule 10531 is a key focus, but they are also considering other opportunities as they build their financial strength.

Q:What is the market potential for IBSRELA in pediatric patients and CIC?

A:The pediatric market for IBS-C is relatively small and is included in the total market prescriptions. The company has not yet committed to pursuing CIC but considers it a potential area for future investment.

Q:What is the company's strategy for achieving $750 million in sales for XPHOZAH?

A:The company aims to capture one-third of the total addressable market (TAM) of 220,000 patients. They are focused on improving access for both Medicare and non-Medicare patients and addressing the unmet need for effective phosphorus management.

Q:What are the gross-to-net dynamics for XPHOZAH, and how might they evolve?

A:The gross-to-net for XPHOZAH was approximately 29% in Q3 and is expected to remain consistent in Q4. The company will provide updates on 2026 dynamics in early 2026.

Q:How are prescriptions for XPHOZAH being filled, and what is the patient journey like?

A:Prescriptions for XPHOZAH are primarily filled through ArdelyxAssist and specialty pharmacies. Medicare patients can access the drug through the patient assistance program, while non-Medicare patients use their prescription benefits. The company has seen increased access for patients compared to previous periods.

Q:What is the company's perspective on its current market valuation and long-term potential?

A:The company believes the market is underestimating the potential of IBSRELA and XPHOZAH. They attribute this to an overemphasis on XPHOZAH and a lack of recognition for IBSRELA's growth and profitability. They are focused on demonstrating consistent performance to gain market confidence.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the potential indications for 10531, stating it was too early to determine targets. They also did not provide specifics on gross-to-net dynamics for XPHOZAH beyond Q4 or on the timing of clinical trials for CIC. Additionally, they were vague about the types of assets they are considering for business development and pipeline expansion, stating only that they are open to various opportunities.

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Earnings Word Cloud

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The earnings call highlighted strong financial performance with a 61% revenue increase and optimistic guidance, including a $10 million increase. Despite some management evasiveness in the Q&A, the overall sentiment was confident, with expectations of continued growth and strategic market positioning. The market cap of $1.5 billion suggests moderate volatility, supporting a positive stock price reaction in the 2% to 8% range.

ARDX Report

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