Ardelyx, Inc. (ARDX) Earnings Call Transcript & Summary

Good afternoon, everyone. Welcome to the next session on Ardelyx. As a reminder, I'm Ami Fadia. I cover biopharma and generics at SVB Leerink. And if you have any questions that you'd like me to ask during the conversation, please feel free to send it over through the dashboard. It's my pleasure to have Mike Raab, who's the President and CEO of the company today with me. Mike, thank you for taking the time for doing this. Maybe if we could -- if I could ask you to just kick us off with giving an overview of the company, your lead product and the other therapeutic areas you're looking to explore?

Sure. Well, thank you, Ami. I really appreciate the invitation, and we've had a great day on Zoom meeting with a lot of a bunch of investors. So really appreciate the invite from you and SVB. So we've created Ardelyx in 2007 to do exactly what we're about to demonstrate with 2 months and 5 days from now with our PDUFA date looming for tenapanor for hyperphosphatemia. And the idea was seemingly a simple one that said, binders are no longer and cannot do what they need to do for patients on dialysis who have hyperphosphatemia. And that the epithelia the GI tract had transporters and mechanisms by which phosphorus is transported from food into the body, and that could be what we're targeting. Fast forward to what we've done with tenapanor. Tenapanor is a drug that blocks the primary pathway of absorption or phosphorus via the paracellular space. It's involved an important set of biology that we were able to deconvolute through our science and show that by using tenapanor, you can block a remarkable amount of phosphorus and have an impact with just 2 tiny pills a day versus these handfuls of material, be it iron, calcium, polymer, whatever it might be that is impossible for these patients to take in order for binders to work. So we're about to see the fruits of our labor presumably with an approval around our PDUFA date and then embark on the commercialization for the product with the team that we have hired is in the midst of training and ready to go out in the field soon and continue the disease awareness campaign that we have underway. To take that further, we've also focused on hyperkalemia with our RDX013 program, where that is entering Phase II. We shared some Phase I data during our Analyst Day late last year, showing that, again, with a small molecule -- we can do with a small amount of material, small molecule can do with handfuls or glassfuls of a slurry with the potassium binder accomplishes. And we also shared RDX020 which is a pre-lead program focused on metabolic acidosis. So our objective is to do with small molecules, what binders have been doing as a legacy technology.

Okay. That's a great overview.

Why don't you talk about the value proposition of tenapanor. And especially I think relative to binders, it's clear. I think a question that we often get is how do we think about what it reached to the table relative to some of the other products that were launched such as Auryxia or Velphoro, how should we be thinking about that?

Well, the way I would think about any of the binders is they are in a class, right? They all do the same thing. They have a different backbone, but they have basically same efficacy and the same mechanism, and that is a binding of dietary phosphorus as it transits the GI, meaning you need to have these binders on board every single time you put food in your mouth. That's the optimal way to manage your phosphorus if you were taking a binder alone. So the value proposition for tenapanor is really -- it's a targeted therapy. What you're looking at is the first in a class of a drug that is going to be targeted towards the transport of -- and the absorption of phosphor through a phosphate absorption inhibitor. So this is a completely new and important way of managing serum phosphorus in these patients. And what that then means is that you, as a clinician, would consider using something that's going to block the absorption first. And then if, in fact, you need for those refractory patients or the fact that you're going to go to a birthday party or you're going to have something during a holiday and know that you're going to ingest more phosphorus as a patient that you're going to use some adjunctive binder as a result at that point. We've demonstrated in our clinical work that we make binders better that you don't need these handfuls of binder when you have tenapanor as the foundational therapy. You can add 1 or 2 tablets of whatever your favorite binder is a day versus these handfuls with every single meal. So the value proposition here is we will likely with tenapanor if we demonstrate in the real world what we see in our clinical programs, the ability to get far more patients into the normal range than we've ever been able to do for any patient on dialysis in history, not just recently, but in the history of phosphate management, we've been unable to get patients near on a consistent basis, their target levels.

And then you've talked a lot about the inability of patients to get to goal with the existing binder options that are available. How well understood is that amongst providers? And do you think you would need to educate them much with regards to what tenapanor brings to the table?

Well, so there's multiple audiences and there's, obviously, the providers, both from the dialysis provision, provider from a payer perspective, the educators that are nutritionists, the nurses and all the treatment team that is part of helping dialysis patients. It is clear if you look at KDOQI and KDIGO guidelines that whenever these guidelines have been written for metabolic bone disease, they have begun to move much more closely towards saying we've got to get these patients to normal. The current guidelines say, get them forge normal because it is known and multiple publications have demonstrated albeit retrospective analyses that as your serum phosphorus increases, there is a distinct increase in your relative risk of death and hospitalization that correlates to that increase in serum phosphorus. So it is well known, well understood by all of those on the treatment teams that lowering serum phosphorus in the patients is a critical objective that we've been insufficient and unable to accomplish thus far prior to what we expect we can see with tenapanor.

Would you expect a change in the guidelines once tenapanor becomes available?

Well, I think we're going to work with the organizations that publish these guidelines, and it's obviously going to be based on data, right? So if you think back, as we've spoken many times, we have already done Phase IV trials. We're not yet approved. But our concept in this was your approvable trials, your 2 pivotal trials that you submit your NDA for are insufficient to give a clinician the road map and the information they need to make the decisions to properly provide and treat their patients. So we've got a variety of different studies that we've done that go, for example, to amplify for those refractory patients who are compliant for taking massive numbers of binder pills that you could add tenapanor to those refractory patients and get 50% of those patients to normal. That's not something that we've seen before, and we saw week of the trial. We then looked at normalize as the extension of the PHREEDOM study as a Phase IV. And in normalize, we see that like our Japanese partners, KKC, demonstrated, you can significantly down-titrate binder utilization to again that 1, 2 or 3 tablets per day with tenapanor as foundational therapy and get a huge percentage of your patients, the majority of patients into the normal range. And then we've got optimized that we have started as another Phase IV, where what we're going to do there is look at incident patients, prevalent patients, switch cold turkey, so automatically switch to tenapanor alone, down-titrate your binders and add tenapanor. So you, as a clinician, would know all the options available to you in order to make a switch from the standard legacy binder therapies to tenapanor.

Maybe this is a good time to ask you about how the FDA review is coming along and your confidence level in a timely approval, especially considering that at least in the last couple of months, some companies saw a delay due to COVID. Do you worry about that at all?

Yes. I mean we always worry because you don't know until you know. And I think we've got confidence in this, though, because remember that this is -- tenapanor has already been approved for another indication. So this NDA is what the FDA has already seen. And in fact, cardiorenal division consulted the GI division for the approval of IBSRELA for IBS-C. Now IBSRELA is sitting on the shelf, but the benefit of that process we went through, both with the inspections that we went through as well as cardiorenal having seen a good portion of this package gives us confidence the PDUFA date of April 29 is not something that's at massive risk. All the interactions that we've had thus far with the agency are standard ones that you have throughout the process of requests that they have for data or clarifications. But there's been nothing [ unpoured ] and anything that causes us concern. But you don't...

Yes, of course. And you don't expect any inspections, right?

At this stage, no, we wouldn't. But I think we're realistic that post-approval, all those sorts of things are likely to happen at some point. Now our contract manufacturers are well-known international and domestic manufacturers that have whatever we've been inspected for a lots of other drugs besides ours. So that is of less concern for us as well.

Fun. So as we think about the launch, what would be some of the metrics that you would be sort of evaluating the launch again? Then how should we be tracking that?

Sure. I mean prescriptions, obviously, are the most important that you're going to be looking at. And we aren't going to block those. Those are things that you're going to see and everyone is going to be able to see. I think as we work through the launch -- this is a stub year. We will be put through our paces by the payers. We expect that we're going to be a specialty drug, not in any preferred tier. And our patients and the physicians will be put through the prior auth process. We will have in place ArdelyxAssist, which is -- will be our patient assistance program to make sure that we help patients get through the put out there. So I don't think we're going to have anything that's different than any other launch of a novel drug like this, but we're putting in place all the systems and processes and programs to facilitate that. What of that we hear with you during our calls, I think is something that we're still working through that at least give you as much perspective as you can on the calendars that we're facing the opportunities that we see and the success that we're having.

When should we start to see a ramp in revenues? I understand that at least initially, you will be supporting patients through a transition or through an add-on of tenapanor on top of whatever treatment they would be on. And while you're also working through the negotiations with payers, what's the time frame that we should be thinking about for getting a substantial amount of coverage for the patient population?

Sure. Well, they will be covered. It's just that they're going to have to go through prior auth, right? I mean so it's not that there's not going to be coverage. I think that's an important distinction is our patients who you as a physician say that I, as a patient require it, I can get it, but it may be hurdles that I need to go through. So it won't necessarily be only add-ons. We're going to try to because we think it's appropriate in the clinical data to demonstrate this is appropriate for any patient that has hyperphosphatemia. So we will be going through all that work with the providers, the physicians and the patients to do that. We will be put through our paces by payers, as you point out. And we will cthe demand. And the prior authorization process is evidence of demand for the payers. So what we will see over the next stub year of '21, I wouldn't anticipate there's going to be a whole lot of change in simply doing prior auths. But you'll see in '22 that we begin the contracting process with payers and PBMs. And I would anticipate by the end of '22, we're in a far more steady-state situation where we would have most of all that in place.

Got it. What type of a prior auth requirements would you anticipate?

Well, you're curious, right? I mean step edits would be an interesting way to think about it. Well, most patients have been on one or multiple binders and have failed. So does that mean that they're going to step through a binder again? Those are the kinds of discussions that we'll be having with payers because they've been stepping through binders again and again and again that aren't working, but they had nothing substantive to step to, which, in my mind, would be tenapanor. So we think that the experience that the patients were currently having will give us an awful lot of opportunity as we go through the prior auth process. We could use those data to help them get approved for tenapanor.