ARDX - NASDAQ

Welcome to the Ardelyx Fourth Quarter 2025 Earnings Conference. [Operator Instructions] I would now like to turn the conference over to Caitlin Lowie, Vice President of Corporate Communications and Investor Relations. Caitlin, you may begin.

Thank you. Good afternoon, and welcome to our fourth quarter and full year 2025 financial results call. During this call, we will refer to the press release issued earlier today, which is available on the Investors section of the company's website at ardelyx.com. Please note that we are also including a slide presentation to accompany today's remarks. You can view the material by accessing the webcast version of today's call on the Investors section of ardelyx.com. During this call, we will be making forward-looking statements that are subject to risks and uncertainties. Our actual results may differ significantly from those described. We encourage you to review the risk factors in our most recent annual report on Form 10-K that will be filed today and can be found on our website at ardelyx.com. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so even if our views change. Our President and CEO, Mike Raab, will begin today's call with opening remarks followed by Eric Foster, Chief Commercial Officer, who will provide an update on the performance of IBSRELA and XPHO

Thank you, Caitlin, and good afternoon, everyone. It's great to be with all of you here today. 2025 was an extraordinary year for the company as the team delivered on every single one of our strategic priorities. That performance establishes a strong foundation for what we will accomplish in 2026. We will continue growing XPHO

Thank you, Mike. It's great to be with you all again. 2025 was an outstanding year. It was marked with incredible commercial execution and performance. We grew IBSRELA by more than 70% versus the prior year with record highs across all key performance metrics. For XPHO

Thank you, Eric. I'm really pleased to join you today. In addition to all the great work Eric shared with you in support of IBSRELA and XPHO

Thank you, Laura. Four months ago, I joined Ardelyx as it was clear to me that I had a unique and incredible opportunity to become part of building a great company, helping patients and creating real value for shareholders. On one of my first days with Ardelyx, I heard Dr. Laura deliver a powerful message that resonated deeply with me, the patients are waiting. To me, that phrase reflects urgency, purpose and accountability. When we deliver with excellence for patients, shareholder value creation follows. Since October, my conviction has only gotten stronger that we are at a turning point for our company's future. We are turning our commercial momentum into a multibillion-dollar opportunity, a once sparse pipeline into a robust development portfolio and a strong organization into an extraordinary one by elevating our game and building the capabilities required to compete and win. Furthermore, we're turning a disciplined capital allocation into a clear strategic advantage and investing with purpose. This is more than progress. We are turning a critical corner as we drive towards profitability and meaningful cash flow generation, allowing us to strengthen our balance sheet, fund our ambitions and build long-term shareholder value. Now let me walk you through the financials. For 2025 results, I'll be focusing my commentary on the full year performance. However, you can see the fourth quarter results on the slide and in the press release we issued earlier this afternoon. We had significant year-over-year total revenue growth of 22% with full year 2025 revenues of $407.3 million compared to $333.6 million in 2024. That growth was driven by a significant increase in IBSRELA demand, which grew revenues to $274.2 million, an increase of 73% compared to the full year of 2024 and finishing 2025 at the upper end of our most recent guidance range. As Eric outlined, that growth was driven by increases in total prescription volume. We also reported $103.6 million of XPHO

Thank you, Sue, and I'm thrilled to welcome you to these calls. Your perspective further strengthens our confidence as we communicate the clear growth trajectory that we're on. As you heard from Eric, Laura and Sue, our priorities are focused and execution-driven, significantly grow IBSRELA, maintain XPHO

[Operator Instructions] And our first question will come from Dennis with Jefferies Company.

This is Anthea on for Dennis. Could you talk about your level of confidence on the underlying volume growth for IBSRELA to get to your $410 million to $430 million IBSRELA guidance? What's really driving that outside of big TAM? And how much of that guidance assumes improvements on the pull-through and the shift to specialty pharmacies?

Yes. First, I mean let me address that from a top line, we wouldn't give you the guidance. We have great confidence in reaching that number. As we've talked over the years, Anthea and with Dennis, is if you look at the size of this market, and the number of patients that are needing a new alternative versus what they have with secretagogue, there's a vast patient population out there to access this. So our confidence is significant and hasn't wavered, honestly. Eric, if you can go some of that, too.

Yes. Thanks very much for the question. As Mike said, we've got tremendous confidence in the guidance that we've given for 2026. In order to drive volume, we're continuing to optimize our sales force. Last year, the team did an excellent job in execution was able to drive the 73% growth. And we'll continue to optimize that so they can drive top of the funnel. As Mike said, 77% of the patients out there on secretagogue are currently continuing to experience symptoms. So we know that the market is there. As it relates to pull-through, we are going to double our field reimbursement manager team. We know that they provided significant value to us last year and relates to increase in approvals and resubmission rates. So we know that we can continue to improve there, and we've got a team that's going to expand and refocus there. With regards to the IBSRELA Pharmacy network, we're really excited about this opportunity. It's actually something that we started to work on towards the end of last year. And we know that these patients, they need high touch and a more patient-centric option to go to a retail pharmacy. So what we put in place is the opportunity for them to get the care that they need to work closely with them and the physicians to make sure that we get a higher rate of fulfillment. So when you think about all those 3 things together, we feel really good about 2026 and what we're going to be able to deliver.

And our next question will come from Allison with Piper Sandler.

First, just for Sue. Following up on some of the prepared remarks on expenses, just could you provide any more color on the cadence of the RV and SG&A step-ups for '26? And just with those increases, how should we be thinking about the path forward or the path toward sustained cash flow positivity? And then just on the $410 million to $430 million guidance for this year and going to $1 billion for IBSRELA in '29. Do you feel your existing commercial infrastructure is sufficient for hitting that longer-term guidance? Or just how should we be thinking about incremental investments on that front?

Yes. Thank you, Allison. I'll start out with your questions around OpEx. So yes, we are going to be increasing our OpEx about 25% year-over-year based on the guidance, where our top line is going to grow more than 38%. So good news is we are growing the OpEx, but not necessarily as much as we are growing the top line momentum. In terms of what we're doing, these investments that we're making, this is really all about growth, growth not only in the commercial business, but also within the R&D pipeline that Laura talked all about. A lot of the sales and marketing that we're going to be investing in, these are not relatively new programs. These are things that are proven, high ROI programs that are really going to drive that growth. We are going to be and continue to be significantly disciplined and in all that we do. And the other thing I would like to note, too, is as the year has already started, we have already begun these investments. So the clip that we're on is a pretty good clip to get to do that. In terms of cash flow positivity, we have been cash flow positive. We're very proud of that the last 2 quarters, and we'll continue to do what we can to drive that. We're not really guiding to positivity at the moment, but stay tuned.

I guess the other thing I would note is, and I'll have Eric comment on it. As you've seen throughout -- when we started the IBSRELA program 3 years ago, we started with 30 people. We expanded to 60. We expanded to 124. We now see the benefits of the fans and the field-based folks out there. So understand that we always look at how to optimize and invest, and that's something we will continue to do as this program continues to expand. And certainly, you can imagine the future with CIC that there's other opportunities to continue to expand in this organization. Eric?

Yes. I would say in terms of really maximizing the return from the investment, we're recognizing that we do have an opportunity to improve on reach and frequency. So you may have seen we posted some positions online for the ABD role, where we're going to be going up around 15 to 20 roles. As I mentioned, we will be doubling the size of the field reimbursement team. And I feel pretty confident over that over the next couple of years. We are starting those investments now so we can maximize the return that we're going to be able to get in 2026, as well as into 2027. And so I don't anticipate too much changing there. But of course, we are always looking at -- always looking at the market and our performance and see ways that we can be better for patients. The other thing that I would just call out from a marketing standpoint, the team has really done a nice job of digital marketing and making sure that we're engaging with physicians, reaching that population that's out there. And so this year, you will see a concerted effort and focus on the patient. As Mike mentioned, you know that it's a sizable patient population out there, and we have an opportunity to reach out, engage with them. We know when they are aware of IBSRELA, they go into the office and the physician will write that prescription. So we want to make sure that we're pulling through not just on the sales side, but also on the marketing side, the team has already started that. And the investments that we're making in Q1, you'll see those will be fairly consistent throughout this year.

We'll move next to Chris with Raymond James.

This is Sam on for Chris. Just one on the CIC trial. Can you talk more about the 2 lower doses you're testing? If I recall correctly, these dose levels weren't quite as efficacious in IBS-C. So what are your expectations for how these dose levels will perform in this trial? And is having multiple dose options part of your strategy in CIC? Or are you trying to find just one optimal dose?

Yes. I think at the end of the day, we want to obviously make sure that as we evaluate safety and efficacy that we are able to actually look at a dose that we don't expect to provide as much, right? You typically want to look at the least effective dose. And so that is the lowest dose. We don't expect a lot from that. But I think as I said earlier, CIC seems to be the less difficult condition to treat. And so it makes sense for that middle dose of 25 milligrams BID. And then the 50-milligram dose is obviously the dose that we use and the data that we use in our T3MPO trials to actually provide us some probability of success for this trial. So it's a nice way to look at dose response in a single Phase III well-designed, robust study.

And I'll just highlight that, too, is we're going to follow the data, right? And what these 3 different doses tell us will tell us what we move forward with.

And next, we'll hear from Matthew with H.C. Wainwright.

Great to see the successful quarter. So with IBSRELA offering its differentiated NHE3 inhibitor profile, what do you see being the greatest distinctions in the future for the CIC market when we think about the other GCC agonists or serotonin receptor agonist mechanisms, for instance? Really just any color on the unmet need and the differentiation there?

Thanks for the question. It's a great question. I think at the end of the day, what we talked about before was the fluidity, right, between these 2 conditions, IBS-C and CIC. And so just as we've seen with IBS-C, the need for a different mechanism of action, right, because a number of patients on other drugs are still symptomatic. And so that is important also with CIC. And I think that really speaks to the potential utility of tenapanor in that patient population.

And you look at the evolution of how CIC, functional compensation, IBS-C are characterized by the Rome Foundation, it is continuing to evolve over time. And notably, the CIC population is certainly larger, but many of those patients early on are well-treated by over-the-counter medications. And if you look at the prescriptions that we talk about where there isn't a differentiation in IQ or other data in terms of what is for IBS-C or CIC, you're seeing a mix between the 2. So that's why the continuum that Eric mentioned of how we can speak to IBSRELA and NHE3 inhibition as a different choice versus all the secretagogues, which is basically it. And the serotonin is a motility drug, completely different mechanism and impact on the patient. So this seems for us, and I think as we hear from the work that we're doing, that it is right for this to be going into CIC because there is such a continuum between CIC and IBS-C.

Next, we'll hear from Roanna with Leerink.

So I was curious for CIC, what will prescribers focus on most in terms of the primary and secondary endpoints in the Phase III study? And is there an efficacy bar that you're thinking about for defining a highly successful trial in CIC?

One comment then I'll probably go too far with it, I'll ask Eric to comment [indiscernible] in the field. What's interesting is when you talk to gastroenterologists about this, they know how to make people have bowel movement, right? They know that they can do that. And if they're going to have a hard time succeeding with the different over-the-counter and other things that they do, they move to pharmacological intervention. And so those patients that are not getting relief this primary endpoint of CSBNs are ultimately in a durable response that Laura described in the endpoint, that's what you want to see in a patient that's having these challenges with bowel movements. And that's what you look for. Secondary endpoints, quality of life benefit. But at the end of the day, someone with chronic idiopathic constipation, you want them to be able to have bowel movement.

Yes. I would just add, these patients are chronically constipated, as Mike said, and it has a significant impact on their life. So first and foremost, from a primary endpoint, we want to make sure that it can work in constipation and have a lot of confidence there. From a secondary endpoint, as Mike mentioned, quality of life, patient-reported outcomes, those are areas that we're going to focus on to be able to show that we can treat not just the CIC, but the patient as a whole and feel really good about being able to do that. And lastly, as Laura mentioned, with a differentiated mechanism of action, these are multifactorial conditions and patients need options. And so we want to be that option for them just like we are with IBS-C. We've got a good position there and feel like we will be able to create a similar market and opportunity for CIC.

And next, we'll hear from Yigal with Citigroup.

This is Jin Kim on for Yigal. Congrats on the progress. Maybe just a quick one from us. Any additional color you can provide on additional patents or other layers of protection you could -- you're thinking about building up in the future?

Yes. I mean I think as I said in my opening comments, our job in this business is to continue to strengthen our intellectual property position for products like XPHO

And maybe just one more, if I could. How are you thinking about long-term XPHO

I remind you, Medicare base rate and phosphate binders, we do not benefit from that. We made the decision, as I noted in my opening comments that 18 months ago, we made a determination not to participate in that. So our business is focused on in terms of the revenue-generating business, Medicaid and Medicare -- Medicaid and commercial, excuse me. And the Medicare segment is what Sue referenced to as well is to make sure that any patient that is appropriate and needs XPHO

Our next question comes from Laura with Wedbush Securities.

This is Thomas on for Laura Chico. So perhaps one question for IBSRELA. So historically, you've positioned IBSRELA for later lines of treatment for IBS-C. But as you're now projecting over $400 million in revenue for this year, just wonder if there might be more leverage to reengage with payers and reexploring how frontline use can fit into the picture. And to that end, I wonder if frontline utilization, how much if at all factors into your 2029 peak revenue target?

Sure. No, thanks for the question, Tom. And it's interesting. We've talked about this before is it's 50,000 new patients coming on to IBS-C indicated therapies a month. There is over 7 million prescriptions written last year for IBS-C therapies. We need a small fraction of that in order to get to our aspirational numbers. So we're extremely confident in the market opportunity there that's for our indication without having to go to frontline. Notably, however, our clinical work, our package insert is a first-line therapeutic. The payer dynamics, which continue to be the fuddling to me in this industry and the challenges to get good medicines to patients are the challenge that we all face. I think the work that Eric and our market access team and the leadership that we have there is having us be very thoughtful about how we ensure appropriate market access and lessening as many hurdles as possible. Going after frontline is not an objective that we have and is not factored into the numbers. Although as we've noted in other calls, there is some organic growth in first-line use because I think people have conviction the benefits this product is providing their patients. You want to add, Eric?

Yes. I would say last year, one of our priorities on the commercial side was building out our payer and market access team. We've done a nice job of bringing in the right team. These individuals are engaged with payers, and they continue to put hurdles in place, and we are working with them to make sure that patients can have access to our products. So we don't aspire to have first-line therapy at this point in time. You mentioned kind of later line utilization. And I would say when we look at our internal market research, it's typically around second in third line. So our goal is to be the first branded product post the brand or generic utilization. And so that's the team what they're messaging out there. And based on the tremendous amount of success that we saw last year in 2025, we continue to feel that that's the right position. But yes, we continue to work with all of the stakeholders that are out there to make sure that patients have access to our products. And again, we'll continue to invest in those areas and feel good about the direction we're at.

And we'll move next to Julien with BTIG.

Congrats on the progress. First, can you talk about how the recently issued 299 patent contributes to your overall IP strategy for tenapanor? Wondering if the patent covers unexpected effects or any other features that you believe help strengthen the patent. And then I thought I heard in prepared remarks that CIC labeling could potentially bolster your ongoing efforts in IBS-C. Just wondering if you could expand on that some more, what dynamics would you expect to be at play there?

Sure. Just a brief comment on the intellectual property. This is a formulation patent, very clear and straightforward. It's now Orange Book listed. It goes back to 2042. And that's the important thing to focus on is building that sort of [ bulwark ] of support as we continue to build this business. So feel good about it and ultimately, other IP that we will pursue. But this is a strong formulation patent for the commercial formulation of the 2 products.

Yes. And I'll take the second part of that question as it relates to CIC and IBS-C. So as Laura mentioned, I mean, these 2 conditions are closely related, and we know that physicians use the screening docs in both indications. And so as we gain experience and if approved, an indication in CIC, we know that it will improve physician confidence across both CIC and IBS-C because we feel like we can be the product of choice for those physicians. So when we did our research, not only did we see improvement in the CIC, but we also saw increased confidence in the IBS-C side, and that's what continues to feed into our optimism as we think about really the true value that IBSRELA can provide for those patients out there with CIC and IBS-C.

And we'll move to our next question from Aydin with Ladenburg.

Congrats on a great quarter. I've got a couple. So first, IBSRELA question. So you guide now 2029 $1 billion plus. So you consistently got $1 billion, but we previously assumed I think that would occur in 2033. So do you have any comments, any forecast, any sort of guidance as it comes to 2033, how -- what should we expect for that year? And when do you think that PPA actually may happen for IBSRELA? And the second question I'll ask is about the CIC trial. So those -- as you mentioned, those are -- those have always been interrelated indications. And so you decided to start the trial. Just curious to understand how the things changed over the past several years. So was it previously you didn't start the trial because of financial constraints? Or what are other potential reasons that sort of simulated.

Sure. I mean I'll answer the second part first, but then actually ask Laura to address it as well. [ I'm cheap ] and wanted to make sure that we had enough capital to do the work we need to do. Honestly, that's the very simple calculus that got us to where we are today. The fact that we ended last year with more cash than we did the year before gave me the confidence that we can do this and invest appropriately into the pipeline. And then for your first question, the fact that we gave you the numbers, $1 billion in '29, I would argue that our internal projections might have been close to that, and we were not yet -- we decided to not yet provide that. We will continue to grow thereafter. LIN

And we'll move next to Peyton with TD Cowen.

This is Peyton on for Joe. I guess just a quick one for me. Could you talk about how the CIC trial is powered? And then what proportion of patients need to be CDSM responders and that you're targeting?

Yes. So the powering, it's a pretty robust sort of sample size calculation. We powered it at 95%. So we feel really comfortable there. And when you couple that with the data that we saw in our T3MPO studies, it gives us a lot of confidence in terms of the probability of both technical and regulatory success. So as I said before, the sample size is about 700 patients, and obviously, that reflects the 4 sort of treatment arms, right, 3 active doses and placebo. And again, that's about 173 patients per arm.

And the proportion of patients that need to be CDC responders per arm?

Yes. Our initial -- when we looked at the data in terms of our T3MPO studies, we saw about at least a 20% difference between placebo and tenapanor. And so our sample size calculations are such that we're looking really about around the same sort of difference, 18% to 20% difference between placebo and active drug. And that is for the 2 that for the 25-milligram and 50-milligram dose.

And our next question comes from Jennifer with Cantor Fitzgerald.

This is Jennifer on behalf of Prakhar Agrawal from Cantor. I wanted to ask about IBSRELA. Can you talk about the IBS-C market where you're finding the greatest opportunity? And what is driving the market growth of double digit? And how long do you think this is sustainable? And on XPHO

Sure. IBSRELA market, I'm sorry, if you could repeat the question. I didn't hear you clearly.

So with the IBSRELA drug on IBS-C, I wanted to understand where is the greatest opportunity? And what is driving the market growth of double digit? And how sustainable do you think it's going to be?

I think in the previous question that I answered with 50,000 patients coming in every month from the GCC agonist already, there is a -- and 7 million patients already on therapy. There's a very small percentage of that, that ultimately we need to get to $1 billion. So confidence in there is high, particularly given our clinical differentiation. And with the XPHO

And this concludes our question-and-answer session. I'd like to turn the conference back to our host for any additional or closing remarks.

Thank you, operator. To our investors, our employees and really especially our patients, thank you for your continued engagement and support. We're encouraged by the progress we've made and excited about the opportunities ahead. We remain focused on discipline execution and long-term value creation and we appreciate your continued confidence as we move forward. With that, we can now end the call . Thank you operator.