ARDX - NASDAQ

Welcome to the Ardelyx First Quarter 2026 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Lisa Caperelli, Senior Vice President of Corporate Communications and Investor Relations. Lisa, you may begin.

Thank you, Ross. Good afternoon, everyone, and welcome to our first quarter 2026 financial results and business update call. Earlier today, we issued our earnings release, which can be found on the Investors section of our website at ardelyx.com. Slides that accompany today's call can also be found on our website. On today's call, I'm joined by Mike Raab, President and CEO of Ardelyx, who will share our Q1 progress towards our 2026 priorities. Eric Foster, Chief Commercial Officer, will provide an update on the performance of IBSRELA and XPHO

Thank you, Lisa. Good afternoon, everyone. It's great to be with all of you today. Before we dive in, I want to take a moment to welcome Lisa to the team. We're excited to have her on board leading our IR efforts as our new Head of Investor Relations. 2026 is poised to be another significant year of growth for our company, and we're already off to a great start. At Ardelyx, we're building an innovative pipeline of medicines for patients with unmet medical needs. Our first quarter's performance reinforces our confidence in the strategy we've laid out and in our ability to capture the opportunities ahead to create long-term value. As we build on this momentum, our focus is on executing on our 4 key priorities: accelerating the growth of IBSRELA, maintaining the XPHO

Thank you, Mike. It's great to be with you all again. In Q1, we continued to build upon the incredible commercial momentum and execution and performance from last year. IBSRELA grew in total writers, new and refill prescriptions and total prescriptions year-over-year. For XPHO

Thank you, Eric. As you heard from Mike and Eric, we are continuing to advance our commercial momentum to drive significant value creation. We are leveraging disciplined capital allocation into a clear strategic advantage by investing with purpose and commercial growth and building our pipeline. We are driving towards profitability and meaningful cash generation, allowing us to strengthen our balance sheet, invest in growth and build long-term shareholder value. Now let me walk you through the financials. Our quarter-over-quarter total product revenues were $93.4 million compared to $67.8 million in the same period last year, representing 38% growth. That growth was driven by a significant increase in IBSRELA demand with Q1 2026 revenues of $70.1 million, an increase of 58% compared to Q1 of 2025. The Q1 2026 demand for IBSRELA increased despite the expected Q1 seasonal dynamics that were further exacerbated by the winter storm. We continue to expect IBSRELA revenues to grow quarter-over-quarter for the remainder of the year. Revenue for XPHO

Thank you, Sue. As you heard, we're focused on executing on our priorities, significantly grow IBSRELA, maintain XPHO

[Operator Instructions] And our first question comes from Roanna Ruiz from Leerink Partners.

A couple for me. First one, I thought it was interesting, you mentioned IBSRELA demand increased despite the storms and seasonality. How should that flow through to the next quarters and in light of your current guidance?

Sure. I'll ask Eric to comment a bit on it. But for us, seeing what we all went through in the first quarter, which is normal seasonality in those 2 storms, seeing that continued growth in demand only strengthens our conviction in terms of where we're seeing this business grow and very, very pleased with those results. Eric, anything to add?

Yes. Thanks, Roanna, for the question. Very pleased with what we saw in terms of demand in Q1 and very similar to the patterns that we've seen in the past. We expect to continue to see quarter-over-quarter growth as we move forward. I feel very confident with the team that we have in place and continuing to invest in access and making sure that all patients that are written a prescription can get fulfillment. So I feel very comfortable about the strategy that we have in place and our ability to be able to continue the strong execution, and you should see that continue to grow as we move through the year.

Great. And the other question I had, I was curious about any color you could share about OpEx throughout 2026? How should we think about this with the Phase III CIC study ramping up as well?

Sue?

Yes. Thanks, Roanna. Yes, I would say that we've said before we were going to guide and we are up to about $520 million in total OpEx, and that would be consistent throughout the quarters. So you saw in the first quarter that we recorded about $122 million of that OpEx expense. So what I would see is a bit of a ramp-up then as we move through. And yes, as we continue to enroll the patients in the study, you will see more of those expenses come through the rest of the year.

And then to be clear, that was all factored into the guidance that we gave, the expectation of the spend that we would have on CIC.

And our next question comes from Yigal from Citi.

This is Jin-Wook Kim on for Yigal. Congrats on the progress. Maybe just a quick one from us. As you track towards your December enrollment completion target for the Phase III CIC trial, can you provide any color on the pace of enrollment relative to internal expectations so far? And are there any learnings from the IBS-C TEMPO enrollment experience that are helping you optimize recruitment?

Interesting question with regards to TEMPO. As I stated in my comments that we have all the preconceived sites up and running, right? And that pace of enrollment of the sites was wonderful to see and it was on par with what we expected out of the TEMPO program. As I also noted, the enthusiasm both by treating physicians and patients is evident, and that enrollment continues at pace. So we're very confident with the time frame that we have shared where we'd be able to expect both for it to be completed and the data to be shared.

And our next question comes from Dennis Ding from Jefferies & Company.

I had several questions around IBSRELA. So number one, so Q1 has some seasonality. And on a quarter-over-quarter basis, there was a bigger step down relative to last year, which is totally fine because it's a bigger base. But in terms of the recovery, should we also expect a bigger recovery than what we saw last year as well? I believe consensus for Q2 assumes about like a $30 million quarter-over-quarter recovery for Q2. Question number two, just specifically around the specialty pharmacy dynamic. Can you share if that shift away from retail is working out in terms of better fill and reauthorization rates relative to last year? The channel is around 30% of the mix, but how much higher can that go? And then I have one more follow-up.

All right. Let me just quickly address some of those and I'll ask Eric to comment. I think the Q2 recovery, I think, rather than recovery is just a normal course of business. And I think that term is an important one to think about. It's what we expect and what we plan for given the predicted and expected dynamics that everyone sees in Q1. Now the surprise was the storm, the 2 storms, both the Mid-Atlantic one and the in the Northeast. And that clearly had a meaningful impact in that sector of the country. And if you think about where many distribution centers are, they were smacked out in the middle of Ohio River Valley, where much of that was hit. So one can't predict. We're not weather people and they are wrong 50% of the time at least. So we don't try to predict storms, but it is one thing that's notable. I'm very confident with the data that you show every week, that we're on the path to what we expected out of Q2. And I do think, again, just to reemphasize, it's not a recovery rather just the pattern of the business. I'll ask Eric to comment a little bit more on that in terms of what they saw in the field. But the IPN, IBSRELA Pharmacy Network, is a fundamental important part of our strategy moving forward, given Eric's comments in his opening statements. It is better for patients. And I'll let him talk about the dynamics in terms of the shift. And I think at this point, it's early for us to say what we think the ultimate potential of percentage of the business that would go through that. It's probably a little bit too much to tell that will become evident through the data that we know is imperfect, but that will become evident over time. Eric?

Yes. Thanks, Mike, and thanks for the question, Dennis. As far as Q1 goes, we had talked about the seasonality. And as Mike said, for us, we've got the experience and the knowledge to know most of that that's coming. What we were not aware of, obviously, were the storms. So we feel like the team planned accordingly. We were able to push through the temporary disruption there. And just like we saw last year, we really started to see the acceleration in the back half of the quarter, and we certainly see that, which gives us great confidence as we moved into Q2. With regards to the IBSRELA Pharmacy Network, we continued to be very excited about that opportunity and really to bring IBSRELA to patients that are prescribed IBSRELA. So if we think about the fulfillment rate, and your question around, is there better fulfillment, absolutely, there is when it goes to the IBSRELA Pharmacy Network. And that's really the driver for us to make sure that patients that are prescribed IBSRELA can get access to the treatment. So we'll continue to work on moving business into the IBSRELA Pharmacy Network. We expect that to continue through the year. And also, it's important to note, when that happens, there is an additional on average prescription written or refill written in that year. So it's really great for patients. You get a higher fulfillment rate, you get better refill rate as those prescriptions go through the IBSRELA Pharmacy Network.

Yes. And the one thing I would add, Dennis, you kind of talked about the guidance. I think we were pretty overt about Q1 with kind of a soft guide, but that was all factored into our full year, and that's all factored into our full year guidance. But we aren't going to provide similar color. We felt like that was appropriate for Q1 just given the storms and some of the volatility. But I think as we go forward, as we said, we're going to continue to grow quarter-over-quarter.

Okay, perfect. And then as my follow-up. So Lilly is running a Phase II with its GIPR agonist for IBS-C, data might be in 2027. So I'm curious how you're thinking about that study and the durability of the IBSRELA franchise over the long term in 2030 going to be well north of $1 billion in revenue?

Yes. I mean, I think for us, what we need to do is follow the data. And anything that helps patients is a good thing. I think that is just a fundamental way that we and I look at this business. Anything that's going to help patients is the right thing to do. The realities are, if you look at the potential patients that could, should or might be taking GLP-1s, it's a relatively small percentage who actually are versus those who would benefit from it. So I wouldn't imagine there's going to be a massive degradation of the market given the positioning that we have for IBSRELA in that market. I don't see that as a massive threat on the horizon. Is it better for patients if it works? Of course, it is, and that's something we should all cheer.

And our next question comes from Chris Raymond from Raymond James.

So we've talked to some KOLs who indicate they're already using IBSRELA to some extent in CIC. Mike, I know you don't want to -- you're not going to want to give too much color here, but just maybe in broad strokes, can you guys talk maybe about what kind of CIC use you're seeing in the field? I mean, Linzess, Trulance, Amitiza, they all have CIC on their labels already. So maybe a second part of that question is, would the competitive dynamic in this indication be maybe similar to what we've seen with IBS-C or are you thinking something different?

So yes, what's important about what you said is all the others have dual indication. And clearly, we have heard and understand what you've described as well in your KOL clinician discussions. As you know, physicians in the art of what they practice can prescribe things off label. We cannot promote things off label, and we won't and don't. That is a fundamental part of this business as everyone understands. If a physician feels it's appropriate for CIC, they should. And what's really interesting, if you haven't looked at Rome V, which was just published, the changing definition of CIC, functional constipation, IBS-C, which we know given our experiences on the front lines, is a continuum of care. And understanding how the Rome Foundation has evolved its definitions is one of the fundamental reasons why we moved into the CIC program is it's a natural course. And I think as we've spoken over the years, would we have loved to had both indications at launch, of course. But as you know, I'm cheap and we didn't have the money to invest in both indications. And now that we are in a place that we can, we are to provide those benefits and try to eliminate some of the barriers in the way that physicians think about this and the further hurdles that the prior authorizations will put them through if it's an off-label indication. So I agree with everything that is the genesis of your question. And I think what we're doing with the CIC program is specifically designed to address that, coupled with what's happened with Rome V.

And our next question comes from Allison Bratzel from Piper Sandler & Company.

This is Ashley on for Ally. Congrats on the quarter and all the progress made. So just 2 questions from us. You talked about it in your prepared remarks, but could you talk a little more about the IBSRELA pediatric trials and just the workings of the potential 6 months of additional patent life and how meaningful those additional 6 months could be for IBSRELA? And then also just wondering, once the IND is filed, do you have any line of sight into time lines around getting 531 into the clinic? And how quickly do you plan to move if the IND studies are positive?

We will work at pace if those studies are positive because it's the right thing to do. But fundamental, again, to what we do is we follow the data. And all this pre-IND work is really critical for us to understand. Remember, Ashley, let me remind you that when we created tenapanor back in 2009, it was based upon a huge amount of preclinical work that we had done to understand all aspects of where this molecule engages certainly with animal models and ultimately into man. So we have good experience in this, and there are very tried and true approaches that one takes in order to make the decision to or not to file an IND. And the data tell us what the right thing is to do. With regards to the pediatric indication, this is a tried and true practice that everyone does in the industry. One of the things that the FDA put in place was the pediatric act to encourage companies to develop drugs for the pediatric populations. Now it is pretty hard in IBS-C given different age groups, the inability or challenge to describe pain, it's subjective. So it's a harder population. It's a smaller population. But the mere operational effort to put this in place primarily to show safety is one of the fundamental tenets of pediatric development is it allows you flexibility to treat the younger patients if you demonstrate the safety that we expect to demonstrate given our long history of utility of this molecule. So the benefit of that 6 months, you look at whatever peak it is that you guys have modeled, just look at each incremental month of value that, that will generate and that will tell you the value in your modeling of what those 6 months are worth. It's significant.

And our next question comes from Joseph Thome from TD Cowen.

Maybe a little bit of extension of a prior question, but can you walk through the physician touch point differences between CIC and IBS constipation? I guess, if you are successful in CIC, would you need to go a little bit more maybe into a primary care segment or anything like that with your sales force or by the time they're presenting to the level of getting IBSRELA, they may be in a GI office? Anything around that would be helpful. And then you mentioned a couple of times, obviously, on the call, can you talk a little bit about the company's willingness to maybe lever up the balance sheet given what your expectations are for the growth of IBSRELA to do something maybe a little bit larger in size?

Sure. Let me address the first one and then ask Eric to comment, too, is I think as we said when we announced the ACCEL program is the CIC market is significantly larger than the IBS-C market. However, the vast majority of those patients are effectively treated with over-the-counter medications. So I think that's an important distinction as you look at the epi in these populations as to what the differences are and not get over your skis in terms of what that market sizing might be because it's an important distinction of those that are not served by OTC meds are the ones that end up going and being referred to other offices. And Eric, do you want to comment a little bit on what we would do in the field, if anything, differences?

Yes. Thanks, Joe, for the question. So as you know, today, we focus on high-writing GIs, APPs and high-writing non-GIs. So that does put us in more of the primary care setting and feel really confident about the targeting that we have right now for IBS-C, and you can see a lot of the great momentum that we have. With regards to CIC, I do think you're correct. As Mike mentioned, it is a bit of a larger patient population, and we do see and expect more patients to be going to their primary care. So at some point, as we're continuing to look at that patient population and making sure that we have the right reach, we'll make that decision at that time. But certainly, I can see that there is more utilization in the primary care market, and that's something that we definitely will consider as we look at the rightsizing of the team as we get closer to product being approved in the market.

And Joe, I think a fundamental part of that is, Eric has talked about this in the past, we call on 50% of the HCPs today that write for IBS-C and frankly, CIC indicated drugs alike, and that's the 14,000 HCPs. The other 50% is 182,000 HCPs, and we're not going to cover them all, right? So it's going to be an optimization of those who might be writing disproportionately amount for CIC, which you can find through the data. But a little bit of a cautionary note not to take this as though we're going to double or triple the size of the organization, but rather an optimization as you've seen us do this year. With regards to levering the balance sheet, we're at such an incredible pivotal time for the evolution of the company, where not really reading between the lines, Sue has said explicitly, we're going to generate more top line than expense. So that journey that we're on, that horizon is not that far away with what we're trying to do. So I'll ask Sue to comment. I'm not sure how much leverage is needed versus execution in the way we're doing. But certainly, we're not afraid of doing the right thing for opportunities that present themselves.

Yes. And as Joe, you heard that we already did do a refinance of our debt. We still have access to an extra $100 million of that loan. So we've got that. We've got plenty of options to do that if and when it's necessary or a great opportunity presents itself.

And our next question comes from Laura Chico from Wedbush Securities.

Three for me. First, I thought I heard Eric mention an expansion of the field manager level. And I'm just trying to understand if that's more impactful on the depth of prescribing or the breadth of prescribing? And which of those 2 levers impacts hitting the upper range of guidance or kind of impacts the guidance swing there? And I have 2 quick follow-ups.

Yes. Thanks for the question, Laura. So I hate to say, but both actually. It's very hard getting the physician to write that first prescription. And so we want to make sure when they write the prescription that they have confidence that it will be filled. And that's what the field reimbursement manager does. They work with the physician's office to ensure as they navigate the payer dynamics that they're able to pull through and get that prescription filled. With regards to physicians as they continue to increase their depth of prescribing, that same confidence is important that not just the first one goes through, but subsequent ones. So that team is really focused on helping the prescriptions get pulled through, whether it's the first prescription or subsequent ones. I think you heard me say in my prepared remarks, we saw increase in writers as well as increase in depth of prescribing as well. So we are having impact across both of them, and that's why I kind of go to both of them to say that it's important to make it happen across both.

Laura, when Eric first started talking about hiring the skill set, one of the things that really opened my eyes is really a very simple example. If I'm a salesperson, I worry that, that script is going to be filled. That's the way you're going to compensate me. So if I'm spending my time looking at Dr. Foster and whether or not that script is actually getting filled, I'm not calling on Dr. Raab because I'm worried about that. So bringing on the field access managers allows the ABDs to have confidence that they can drive the top of the funnel and that there will be those there to help pull through at the bottom of the funnel, resulting in compensation ultimately in incentive comp, right? So it is -- I don't think I would ever imagine not having both in the launch of a drug going forward.

Okay. And I guess 2 quick follow-ups then kind of related to that. I think in the prepared remarks, I heard that the XPHO

Once the site is up and running, we don't pay any attention to it. No, you're right. I mean for the quality of the patients, it's really, really important, right? And as you get the enthusiasm of start-up, there's training and reminding people of why you started in any clinical trial, you have screen failures that happen and then the sites get better and better at identifying the patients. So that's just a natural progression of clinical development and recruitment. So Rajani, a couple of weeks now on to the job is into this with both feet and both arms, and we all feel very good about both the quality of the sites as well as those sites learn and get better at enrollment that we see those failure rates begin to taper, which is something you factor into your projections of how you enroll. So I think we all feel very good about what we've said, and ultimately, the quality of the patients are going to be there defined by our inclusion/exclusion criteria. So we feel very good about that quality that Rajani's team is ultimately and our CRO is following through with. And with regards to your first question, I think what's important is on a GAAP basis, of course, the year-over-year quarters look similar. It is so important what Sue reminded everyone is that $3.8 million return reserve reversal that we did in Q1 should be excluded as you look at the base business that we've defined, which is a non-Medicare business, which grew by 19%. And if you look at our sequential growth, even since we started in this effort to not participate in TDAPA because we believe what we are now seeing is ultimately what was going to be true, is proving out. And the growth that we're seeing in that non-Medicare segment with all the challenges that dialysis organizations are facing further emphasizes the value of this program and the product for patients in the phosphorus management. So it's an opaque and difficult business that we've chosen to partake in the way that we have. But the numbers are showing that actually we're helping the patients that we anticipated that we would.

And our next question comes from Prakhar Agrawal from Cantor Fitzgerald.

Congrats on the quarter as well. Maybe firstly, on XPHO

Thanks, Prakhar. That's a lot for me. So let's see if I can hit it all. So in terms of the high-value opportunities with XPHO

We appreciate the question of wanting trajectory quarter-to-quarter, but we're not going to get into the practice of quarter guidance. I think the yearly guidance that Sue just went through is really important.

And our next question comes from Matthew Caufield from H.C. Wainwright.

With the investor focus on sales execution, is there further granularity that you could share on IBSRELA growth between the new patient starts versus refill persistence trends? And then where things may stand presently for the total penetration among target prescribers there? Just thanks for any color there on execution overall.

Yes. I think that's getting into detail that we probably wouldn't get into specifics on. You can begin to look through your script data in terms of NRxs versus TRxs and tease that out to some extent with what you do. I recognize that it's going to be imperfect data. But suffice it to say, with Eric's prepared remarks that we're seeing both with the other question that was asked, breadth and depth. So we're seeing great refills and we're seeing lots of new prescriptions coming through as well. Eric, anything to add?

No.

And our next question comes from Julian Harrison from BTIG.

This is Andrew Kassin on for Julian. Congratulations on the results this quarter. On IBSRELA, which are the growth drivers would you say do you believe still has the most room to grow writers, new prescriptions, refill or pull-through?

I think Eric will probably say yes. It's all of the above. I think what's interesting is for the 7 million prescriptions for IBS-C-indicated products that I referenced in my opening remarks, it's a very small percentage of the market that one needs to penetrate in order to get to our guidance of peak. So there is massive opportunity out there. And I think, Eric, any granularity around the specifics would be great.

Sure. Yes, I'm very excited about all of them as you list them. So as we think about the IBSRELA opportunity, as Mike said, there are 7 million prescriptions written for IBS-C on an annual basis, and we continue to see that market grow. We feel very confident in the position that we have, a winning position sustainable over time that we've had for the past 3 years. And we continue to see an increase in writers, total writers, new writers as well as depth of prescribing, and that's really important. So what that tells you is physicians continue to have confidence in IBSRELA and look at it as a viable option for their patients that are in need. So of those patients, we know that 77% continue to have symptoms despite treatment with a secretagogue. So very healthy market, strong position for IBSRELA, continuing to go writers as well as depth of prescribing and feel really good about the opportunity we have moving forward. When you think about the IBSRELA Pharmacy Network and being able to improve the fulfillment rate as well as the number of refills for patients, it really is -- really leads to success across the business in those important drivers of the business. And that's really what gives us that confidence to that $1 billion in 2029 and beyond.