Kimberley Minarovich - VP, IR, Burns McClellan, Inc. Mike Raab - President and CEO Jeremy Caldwell - EVP and Chief Scientific Officer David Rosenbaum - SVP, Drug Development Mark Kaufmann - CFO.

Kennen MacKay - Citi Mike King - JMP Securities Jason Gerberry - Leerink Partners.

Hello, ladies and gentlemen. Thank you for standing by and welcome to Ardelyx’s Second Quarter 2015 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder today’s call is being recorded.

It is now my pleasure to turn the floor over to Kimberley Minarovich, Vice President of Investor Relations at Burns McClellan, who will make introductory comment..

Thank you, Shannon. Good morning and welcome to Ardelyx’s second quarter 2015 earnings conference call. Earlier this morning Ardelyx issued a press release providing the details of the company’s second quarter 2015 financial results as well as a corporate and clinical update.

The press release is available in the investor relations sector of the corporate website at ir.ardelyx.com. Today’s call will be led Mike Raab, Ardelyx’s President and Chief Executive Officer.

He will be joined by Jeremy Caldwell, Executive Vice President and Chief Scientific Officer; David Rosenbaum, Senior Vice President of Drug Development; and Mark Kaufmann, Chief Financial Officer. As a reminder during today’s call Ardelyx will be making certain forward-looking statements.

To the extent that statements discussed on this call are not descriptions of historical facts regarding Ardelyx they are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the Safe Harbor of the Private Securities Reform Act of 1995, including the potential for tenapanor in treating IBS-C patients, the potential for tenapanor in treating hyperphosphatemia in dialysis, Ardelyx's future development plans for tenapanor and the timing thereof, the potential for RDX022 in treating hyperkalemia, Ardelyx's future development plans for RDX022 and the timing thereof, the potential of RDX009 in treating chemotherapy induced diarrhea and the potential timing for filing an IND for RDX009, and the potential of Ardelyx's drug discovery and design platform.

Such forward-looking statements involve substantial risks and uncertainties that could cause the development of tenapanor, or Ardelyx's future results, performance or achievements to differ significantly from those expressed or implied by the forward-looking statements.

Such risks and uncertainties include, among others, the uncertainties inherent in research and the clinical development process, Ardelyx's reliance upon AstraZeneca for the timely delivery of clinical trial material required for the initiation of the Phase 3 clinical program in IBS-C and the Phase 2b clinical trial in hyperphosphatemia, and Ardelyx's reliance upon AstraZeneca to facilitate a complete and timely transition of the tenapanor program from AstraZeneca to Ardelyx.

Ardelyx undertakes no obligation to update or revise any forward-looking statements.

For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Ardelyx's business in general, please refer to Ardelyx's current report filed on Form 8-K with the Securities and Exchange Commission on July 14, 2015 and its future periodic reports to be filed with the Securities and Exchange Commission, including its quarterly report for the second quarter 2015 expected to be filed on or about August 12.

At this time, it is my pleasure to turn the call over to Ardelyx’s President and Chief Executive Officer, Mike Raab. .

Thank you, Kimberley. Good morning everyone and thank you all for joining us. On today’s call, I will review some of the achievements from this past quarter. The team and I will share some recent clinical progress and also discuss important clinical milestones that we expect in the coming months.

Mark Kaufmann, our Chief Financial Officer will then discuss financial results from the quarter. Ardelyx achieved strides this past quarter, both in terms of advancing our clinical development programs, as well as in the progress of our company as a whole.

During the quarter, we reacquired from AstraZeneca all right to our lead product candidate tenapanor and our NHE3 program, and in June we raised $74.4 million in net proceeds after all costs from the sales of common stock and warrants bringing our cash balance to approximately $141.5 million at the end of second quarter.

Also during the quarter we announced results in two separate clinical trials for tenapanor, providing additional clinical support for the use of tenapanor in the treatment of Irritable Bowel Syndrome with constipation or IBS-C and for the treatment of hyperphosphatemia in dialysis patients.

We also announced our development plans for RDX022 for the treatment of hyperkalemia based on positive results reported in the pre-clinical model. Based on our discussions with the FDA, we intend to pursue an accelerated 505(b)2 development pathway for RDX022.

In May at the Digestive Disease Week conference we presented data from our Phase 2b clinical trial evaluating tenapanor and IBS-C in a presentation entitled Efficacy and Safety of Tenapanor patients in patients with constipation predominant Irritable Bowel Syndrome, a 12 week double-blind, placebo controlled, randomized Phase 2b trial.

Tenapanor met the primary end of an increase of complete spontaneous bowel movements or CSBMs and saw a significant responder rate with a 60.7% of patients receiving 50 mg or tenapanor twice daily, achieving CSBM response as opposed to 33.7% in the placebo group.

The study also showed a response in the reduction of abdominal pain, other key secondary end points that exhibited significant improvements for patients receiving 50 mg of tenapanor twice daily compared to placebo included improvement in abdominal discomfort, abdominal bloating, straining, stool consistency, CSBM per week and spontaneous bowel movements for a week.

Subsequently, we presented from the phase 2b demonstrating a sustained or durable overall responder rate was 14.6 rated in the placebo group. Based on the strength of these results we plan to begin a phase 3 clinical program in IBS-C patients by the end of this year.

In addition to these promising in IBS-C, tenapanor has also demonstrated significant potential for the treatment of hyperphosphatemia in dialysis patients.

In an exploratory analysis from our phase 2b clinical trial in hyperphosphatemia that we highlighted during a recent R&D day in July, we observed significant reduction in fibroblast growth factor 23 or FGF23 in patients treated with tenapanor.

The FGF23 is a key factor involved in the regulation of phosphate and other burn related hormones and minerals. High FGF23 levels have independently been associated with cardiovascular disease and left ventricular hypertrophy in both chronic kidney disease patients and more recently in individuals with normal renal function.

Based on these results as well as the results that we have seen today demonstrating tenapanor’s ability to lower serum phosphorus, we plan to begin our phase 2b clinical trial in dialysis patients with hyperphosphatemia in the fourth quarter of this year and expect results from this problem in the second half of 2016.

Other R&D highlights that we presented during our inaugural R&D day included a proof of concept in an animal model of chemotherapy-induced diarrhea or CID for RDX009, a TGR5 agonist that stimulates local secretion of GLP1 and GLP2 in the gut.

We are targeting an IND filing for RDX009 in the second half of 2016 and that we are evaluating several potential indications for RDX009. We are most excited about its potential in CID, a very difficult condition prevalent in certain cancer patients that is not currently well managed with any marketed agents.

We also presented proof of concept demonstrating that several agents from our RDX013 program, potassium secretagogue increased potassium secretion in to the gut in an animal model. Though we expect this program to be challenging, we are encouraged that we were able to demonstrate a potential feasibility of this new approach to treat hyperkalemia.

We also presented several new R&D programs including NHE3 program based on our growing understanding of the broad and complex biology mechanisms and physiology involved in NHE3 modulation. We expect to expand our clinical footprint by evaluating new indications for tenapanor and other NHE3 inhibitors.

We look forward to providing updates on these promising programs. As you know, during the quarter we reacquired the global rise to tenapanor and our portfolio of NHE3 inhibitors.

With this transaction we are now in greater control of our own destiny, as we retain the vast majority of the economics from the family of NHE3 inhibitors that we had previously licensed to AZ. Now under our direction, tenapanor’s clinical development is accelerating with two trials planned to be initiated later this year.

This transaction represents one important element in the series of activities that have transformed Ardelyx’s [story] derivative of a relationship with AstraZeneca to one of the company with three late stage clinical programs on the path towards commercialization in GI and cardio-renal diseases, a substantial pipeline of earlier stage product candidates and a strong balance sheet to achieve our near-term objectives.

Overall, in the first half of the year and particularly the second quarter was exciting and extremely productive.

As we look towards the second half of 2015, we will continue to expect important advances in the clinical pipeline including the initiation of three clinical trials in the fourth quarter, a phase 3 study of tenapanor and IBS-C; a second phase 2b study in tenapanor for hyperphosphatemia; and pharmacodynamics study for RDX022 in hyperkalemia.

In conclusion, this has clearly been a transformation quarter of Ardelyx; one that sets the foundation for our company to become a commercial biopharmaceutical company. I will now turn the call over to Mark Kaufmann, Ardelyx’s CFO, who will review the second quarter 2015 financials. .

Thanks Mike. Now as we’ve done in the past, rather than review all of the information disclosed in the press release, I’d like to focus on a few specific financial highlights. We started the quarter with $98.3 million of cash and cash equivalents and ended the quarter with a 141.5 million.

The changes in cash during the quarter were primarily affected by three different events; first, the termination of agreement with AstraZeneca, which resulted in the return to us of worldwide rights to tenapanor and our NHE3 program, and included aggregate upfront payment of $25 million to AstraZeneca.

Second, the sale of common stock and warrants at a private placement that we completed on June 07 for net proceeds of $74.4 million to the company after all costs. And lastly the operating cash burn during the quarter. I’ll talk about each of these in turn.

Regarding our termination agreement with AstraZeneca; Ardelyx has agreed to pay AstraZeneca certain amounts for the return of the rights to tenapanor and our NHE3 program including $15 million upfront, which was paid during the quarter, royalties equal to 10% of net sales of tenapanor or other NHE3 inhibitors by Ardelyx or a licensee and 20% of non-royalty payments that Ardelyx receives from a new collaboration partner should we elect to license or otherwise provide rights developing commercialized tenapanor or another NHE3 inhibitor with all such amounts not to exceed $90 million.

During the quarter, Ardelyx also paid AstraZeneca an additional $10 million upfront in R&D cost and in consideration of the acceleration of the transfer of information data and material to Ardelyx.

In addition, AstraZeneca is obligated to complete the manufacture of clinical trial material necessary for the phase 3 clinical program in IBS-C patients, and Ardelyx has agreed to purchase the phase 3 clinical trial material and other drug product inventory from AstraZeneca for up to $10 million.

Second, on June 7, we closed a private placement equity transaction with net proceeds after all costs of 74.4 million.

The purpose of this financing was to [show up] our balance sheet and show we are able to achieve some substantial clinical milestones over the near-term and provide additional cash to support the termination of agreement with AstraZeneca.

The resale of the common stock issued in connection with the private placement, as well as the resale of those shares that may be issued upon the exercise of warrants or a [something] probably registered with the SEC in the filing on July 13.

Finally, regarding our operational activities, we’ve continued to modestly expand our base R&D capabilities and several non-cash items were prominent during the quarter.

We had a net income in the second quarter of 2015 of $9 million or $0.43 per basic and $0.42 per diluted share, primarily because we recognize all of our outstanding deferred revenue from AstraZeneca as a result of the termination agreement.

Deferred revenues were 43.1 million at the end of the first quarter, and this was offset primarily by the $25 million of aggregate payments to AstraZeneca, resulting in licensing revenues of 17.7 million in the second quarter.

A research and development expense to the second quarter of 2015 was 6.2 million and general and administrative expense was 2.9 million.

A total of 9.1 million represents primarily our base operational expenses for the company, and has increased over the same period last year, primarily because of the increase of couple of R&D activities and our being a public company.

This amount is expected to increase in the second half of 2015 as we purchase up to $10 million in clinical supplies of tenapanor from AstraZeneca as set forth in our termination agreement, execute manufacturing agreements for our RDX022 potassium binding polymer, and begin to work with large clinical research organizations to commence the clinical trial for our lead program.

And so our balance sheet is strong and we build a strong team to support the promise of our growing pipeline. We expect to keep you abreast of our financial activities as we move forward in clinical trials and advance our program to multiple late stage programs over the next 12 months. .

Thank you, Mark. With that we would like now to take any questions that you may have. As a reminder, we are also joined today by Jeremy Caldwell, Executive Vice President and Chief Scientific Officer, and David Rosenbaum, Senior Vice President of Drug Development, if you have any questions related to our clinical programs.

Operator, we are now ready to take questions..

[Operator Instructions] Our first question is from Kennen MacKay with Citi. You may begin..

I was wondering if you could speak just a little bit more on the disconnect between the phosphate effect and diarrhea and if in the new dialysis trial, the hyperphosphatemia trial, if there is any way to determine diarrhea risk and potentially avoid these patients. .

Okay. As we showed in the slide deck that we presented most recently, we’ve been able to show that there are 50% of the individuals who have a phosphate level effect show no adverse events of any loose stools or diarrhea.

In our upcoming hyperphosphatemia clinical trial, we are going to try to look at not only an ease but the actual stool frequency and form of individuals during this whole clinical trial. And that way we will be able to look at the actual effect of the drug on stool form in this ESRD patient population. .

One other note is when you all were out in California for your [first] tour, one of the things that we talked about was we’ve actually run two trials in ESRD patients. The first one was the 2a in interdialytic weight gain, and with that patient population had far more insight in terms of what the potential pharmacology of the drug might be.

If you recall, the mean dose there was far higher at 34 mg twice a day. So we think what they will do with this trial is educate the patient in terms of what the effect of the drug is, so if something that they anticipate versus the fixed dose that we saw in the 2b, it will have a significant difference in terms of response..

Got it.

In that same trial, can you talk a little bit about how titration will be done there?.

Yes, and so what we are planning to do and this is still in the planning stage right now, is we are planning to start at a higher dose. So let’s say at 30 mg BID and based on individual stool form tolerability, they’ll be able to titrate in a stepwise manner from like 30 to 20 to 10 to 5, in that type of way.

So that will be very similar to that first ESRD clinical trial that Mike just referred to..

Got it. Okay, terrific. And then just in terms of cash burn, is there anything you can comment on the cost of the two phase 2 trials you’re expecting to start later this year - I am sorry the phase 2 and the phase 3. .

This is Mark. We have not disclosed any details on the specific cost over the next 12-18 months except to say that the overall program is 60 million to 85 million to get to an NDA. We may be giving more guidance on cost in the future but we’ve said not to do that for now. .

Our next question is from Mike King with JMP Securities. You may begin. Mike King your line is open, please check your mute button..

I just wanted to ask you if [Technical Difficulty] support on the asset transfer from AstraZeneca just in terms of documentation as well as API and then [set around] that, where are we in that process [Technical Difficulty] will be complete..

(inaudible) you are fading in and out Mike, but I believe you want an update in terms of the process of transfer of the asset from AstraZeneca. It’s all going incredibly well.

A lot of those folks have taken quite a bit of time off on vacation in the summer months, so you can imagine that was a bit of a challenge, but throughout whether it is the manufacturing we have been in Europe meeting the contract manufacturer, we have been in Sweden on the clinical side and the scientific side exchanging mechanism of action; all the things that we’d want to see.

So everything is following as expected from the negotiated timeline, and thus far there have been no hiccups whatsoever. So it is going quite well. .

And what do you think Mike, would you be done with whole process in September or are you going to be that [very near]..

I think what’s important is that we retain the relationship with them, because in the ongoing presentation that they had found and co-offer 99% of this will be done before the end of the year, but there’s going to continue to be offer-ships in those sorts of interactions that will continue. .

Okay, great. And just further to that, can you talk about what gain items lie between the transfer from AstraZeneca and the actual commencement of the phase 3 process for IBS-C..

So if I understood that right, you’re fading out again is the timing of the phase 3. What we’ve said it’s in the fourth quarter, it’s when the program begins. What I can tell you is with David and the team taking it, it’s accelerated from where it otherwise would have been. That is completely on track and process is going forward as any..

Can you hear me better now?.

Yes..

Okay, sorry. I think my headphone’s on the way out. The question what other items (inaudible) in between getting assets [analysis] and actually starting phase 3 for IBS-C..

So the only thing that complete is on our end, everything from the transfer is done and needs to be transferred. So we are set to go, and it’s just finalizing contracts and those sorts of things..

Finally just with regard to the prior question about diarrhea, are you guys going to make any dietary and/or hydration proposals or requests in the phase 3 design to perhaps improve human factors in order to reduce the incidence with severity of diarrhea..

Yes, Mike the phase 3 in IBS-C we had a very low rate of diarrhea there. We don’t expect to need to do anything like that in the phase 3 clinical trial..

And what’s [going] on through the phase 2 trial for hyperphosphatemia?.

Yeah, still there is no - we never had to do guidance like that. If you recall it has a very [fast on and off]. So if you have loose stool and it’s something that you want to stop. If you start taking the drug, it goes right away. So there is no need for any medical intervention at all. .

And Mike I think that’s important, why we are doing another phase 2b is to do the titration and to follow along after the [10X] BID. When you talk to during our R&D Day, folks like Geoff Block, and he has treated 40 patients of his in the trials that we’ve run with tenapanor does not see diarrhea as being a problem.

And I think what we are sometimes talking around is the process by which (inaudible) is reported in the context of a clinical trial versus what it’s like in the real world. A physician is going to be working closely with their patients.

So we are pretty confident, but yet we still believe the right thing to do is to run a phase 2b just to confirm what it is that we feel about the drug and get these data for the titration under our belts before we embark on a substantial phase 3 program..

[Operator Instructions] Our next question comes from Jason Gerberry with Leerink Partners. You may begin..

Just on RDX022, I’m just curious to get your commentary, how de-risking your view of the pharmacodynamics study as it relates to the type of differentiation you want to show in your pivotal.

It looks like if I just look it like or (inaudible) pharmacodynamics study, it’s just measuring a mean serum potassium reduction at a couple of time points very short term evaluation. I think you are going after tolerability and more convenient dosing versus the potassium scavengers.

So just trying to understand exactly with the pharmacodynamics study what we expect to learn there..

So I think by the nature of its title we are looking at pharmacodynamics. I think qualitatively we will get some other things that we would want to. We actually don’t have to do many of these kinds of studies because it’s a 505b(2).

But because of the kind of clinical work you are referencing, and the fact that it actually has nothing in its package insert talking about the level of potassium that can be lowered. We felt that it was important to treat this as though it were a comprehensive clinical program.

And so we clearly get pharmacodynamics results, qualitatively we will see some of the tolerability issues that we believe we have benefit for, and David can address some more too. .

Yes. The way I look at it, would be kind of foolish of me to jump right in to a large phase 3 clinical trial. I think based on the in vivo work that we have done, we want to ensure that we have the right service range. We think that the drug may work even better.

So it’s a good idea for us to get a good understanding of what the pharmacodynamics properties are in this small pharmacodynamics study, and then we will be all set for the right dose ranges in our phase 3. .

And if I kind of shift gears to the IBS program; just kind of curious your guys thought Synergy to sanitize report to that of another. CIC study I realize it’s a different population but it looks like the rates of diarrhea with that [GCT] is a bit lower in the 4% to 5% [pool] range from the two phase 3 studies.

So just curious how you guys are thinking about differentiation of your product and potentially any tweaks you might make to your phase 3 secondary endpoints to elucidating of the additional benefits of tenapanor. Thanks. .

Yeah, sure. I look at that in two different ways, one, is if you look at plecanatide, it has a lower rate diarrhea than (inaudible) but it also has a lower rate of efficacy. They work by the same mechanism so I haven’t really much of a difference between the two.

As far as tenapanor, we released information that we looked at the sustained responder or the durable responder effect, and that was the same endpoint that plecanatide used in their CIC clinical trial. If you look at the affect there and as you know there’s a huge overlap between the CIC patient population and the IBS-C patient population.

If you look at our durable responder rate there which is the 9 of 12 weeks responder, plus a response in three of the last four weeks. We had an extremely good response, much higher than what they’ve shown. So I think our phase 3 clinical trials, if we are able to repeat what we showed in our phase 2b, that will have a much more efficacious drug. .

I’m showing no further questions at this time. I’d like to turn the call back over to Mike Raab for closing remarks. .

Thank you, Shannon. The second quarter was an exciting one for Ardelyx, and we look forward to continued progress in the second half of 2015, with several expected milestones to detail. On behalf of the entire Ardelyx team, we appreciate your support and look forward to continuing our dialog with all of you. Thanks again for joining us.

You may now disconnect. .

Ladies and gentlemen this concludes today’s conference. Thanks for your participation and have a wonderful day..