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

Good morning, and welcome to Ardelyx conference call. [Operator Instructions] Today's conference title is FDA Advisory Committee update. [Operator Instructions] As a reminder, today's conference call is being recorded. At this time, I would like to turn the conference call over to [indiscernible], Vice President, Corporate Communications and Investor Relations. You may begin.

Thank you, and good morning, everyone. Last night, we issued a press release announcing the positive outcome of the FDA and Committee meetings for XPHOZAH. During this call, we will refer to yesterday's press release, which is available on the Investors section of the company's website at ardelyx.com. . On the call with me today with prepared remarks are Mike Raab, President and CEO; Dr. Laura Williams, Chief Medical Officer; and Susan Rodriguez, Chief Commercial Officer. Justin Renz, Chief Financial Officer; Rob Blanks; Chief Regulatory Affairs and Quality Assurance Officer; and David Rosenbaum, Chief Development Officer, will join us for the question-and-answer period. During this call, we will be making forward-looking statements that are subject to risks and uncertainties. Our actual results may differ materially from those described. We encourage you to review our risk factors in our most recent quarterly report or on Form 10-Q, which can be found on our website at ardelyx.com, where we may elect to update these forward-looking statements in the future. which specifically disclaims any obligation to do so if our views change. With that, let me pass the call over to Mike.

Thank you, Katelyn, and good morning to everyone. It is a great pleasure that we are here today to discuss the positive vote from yesterday's advisory committee meeting, the results of which reinforced what we already knew that XPHOZAH benefits patients. This is an extraordinary milestone for Ardelyx underscoring that we are delivering on our commitment to discovering, developing and commercializing innovative new therapies for patients. More importantly, this is a pivotal moment for patients in the given community. Yesterday, strongly positive vote by the FDA's cardiovascular and renal drugs advisory benefits of XPHOZAH outweighs risk for the control of serum phosphorus in adult patients with CKD on dialysis. This further validates the results from our comprehensive clinical development program and is consistent with our unwavering belief in the importance of XPHOZAH as a new, highly differentiated treatment option for patients. I want to start by thanking and applauding our entire team here at Ardelyx, led by our Chief Medical Officer, Dr. Laura Williams; and Rob Blanks, our Chief Regulatory Officer, who worked tirelessly for over 6 months in preparing for yesterday's meeting, resulting in a strongly positive vote. We presented a compelling review of our existing data supporting XPHOZAH and made a clear case for the unmet needs of patients. Patients, physicians and members of the advocacy community also shared their valuable insights, and I want to recognize and thank them for their time and effort. This was an important next step in the process of securing FDA approval. To remind you, we do not currently have an active NDA as the advisory committee was convened as part of our formal dispute process following the issuance of the CRL last year. At this time, we await a response on our appeal in the office of new drugs. There are two potential favorable results for our appeal, both of which require a resubmission of our NDA. If the appeal is granted, the resubmission would take us directly to labeling discussions. The appeal could also be denied, but with a clear path forward, in which case we would resubmit following the direction provided in the appeal letter. If ultimately approved, we are confident that XPHOZAH will provide patients and their health care providers with a new, highly differentiated treatment option in a therapeutic area with significant unmet need. Hyperphosphatemia is a serious condition that is associated with cardiovascular morbidity and mortality. The stark reality is that almost 80% of patients on dialysis are unable to consistently achieve target serum phosphorus concentrations over a 6-month period of time and need additional treatment options. The clinical data supporting our NDA involved more than 1,200 patients from 3 Phase III trials, including two monotherapy trials in a study of exposed in combination with phosphate binders. The results demonstrate the benefit of XPHOZAH can provide patients. We appreciate the opportunity to present the advisory committee. We are grateful to the clinical trial participants and their family members. The clinician community, the patient advocates and the countless others who remain committed to creating new and innovative treatment options for patients with CKD who are on dialysis. With that, I'll turn the call over to Laura to review the data that we presented at the advisory committee yesterday. Laura?

Thank you, Mike. The receptivity of the Advisory Committee is truly a rewarding milestone. As a reminder, XPHOZAH discovered and developed by Ardelyx is a first-in-class phosphate absorption inhibitor for the control of serum phosphorus in adult patients with CKD on dialysis. XPHOZAH has a unique mechanism of action that blocks paracellular phosphate absorption via local inhibition of the sodium hydrogen exchanger III. I emphasize this differentiated mechanism because it is the foundation of our innovative products, which we designed to enhance the daily lives of patients. Entering yesterday's advisory meeting, we and FDA agreed on the following: Hypophosphatemia is a serious common complication in patients on maintenance dialysis. Based on biological plausibility and existing observational data, FDA accepted serum phosphate as a valid surrogate. Surrogate, which forms the basis for treatment guidelines in clinical practice and for FDA approval for all phosphate binders. And we agree that there is a real unmet need for safe and effective therapies that lower peel burden and allow more patients to achieve guideline-directed treatment goals, a milestone that most patients on maintenance dialysis are currently unable to consistently achieve despite widespread use of phosphate binders. With this as a backdrop, our mission was to clearly communicate our data. We conducted three Phase III registration trials. All three studies were successful, meeting their prespecified primary efficacy endpoints. For BLOCK and FREEDOM monotherapy trials, the results showed a mean treatment difference in serum phosphate reductions between XPHOZAH and placebo of minus 1.4 and minus 0.8 milligrams per deciliter, respectively. These studies employed a randomized withdrawal design, consistent with the FDA guidance on enrichment strategies. Further, there was a significant mean difference shown in the AMPLIFY combination study, where XPHOZAH was added to the treatment regimen for patients on maintenance dialysis, whose serum phosphate remained inadequately controlled despite being on a stable dose of phoshphate binder therapy. As such As such, the treatment difference was not surprisingly smaller than monotherapy, but still statistically significant and clinically meaningful as a greater proportion of patients on combination therapy were able to achieve targets serum phosphate goals than those of phosphate binders alone. In answer to the FDA's question, do the benefits of control of serum phosphate with tenapanor in CKD patients on maintenance dialysis outweigh its risk as monotherapy and/or in combination with existing phosphate binder treatment? Our position was unequivocally yes, based on our data. XPHOZAH is a first-in-class phosphate absorption inhibitor that has demonstrated the requisite safety and efficacy and reducing serum phosphate in patients on maintenance dialysis and has a more simplified dosing regimen with fewer smaller pills dosed as a single pill twice daily. Not only did we meet the prespecified efficacy endpoints in all three well-controlled registration studies with statistically significant and clinically meaningful mean treatment differences versus placebo, but also many patients achieved clinically meaningful reductions in serum phosphate that align with those referenced for phosphate binders in the setting of a positive control. Across our clinical development program, diarrhea intended to be more of a tolerability issue that was appropriately managed and the overall safety and tolerability profile was acceptable. When evaluating all the data, the benefits of this new treatment option to lower serum phosphorus outweigh the risk of potential downstream consequences of diarrhea, thus yielding a positive benefit risk assessment. I would like to extend my thanks to the FDA for the opportunity to present our data to the advisory committee. We are pleased with the advisory committee's vote recognizing the positive benefit risk assessment for XPHOZAH. I appreciated their questions and active dialogue to understand the unmet patient need and the potential for XPHOZAH to address those needs. I share Mike's enthusiasm that the positive endorsement from the advisory committee is of pivotal moment for the entire community of patients on maintenance dialysis who suffer from hyperphosphatemia. With that, I'll now turn the call over to Susan to review the commercial landscape in hyperphosphatemia. Susan?

Thank you, Laura. Before I turn to the market landscape, I want to express my deep appreciation to and respect for our discovery and development team for the transformative innovation XPHOZAH represents. Based on our research expertise in characterizing the paracellular pathway as the primary mechanism of phosphate absorption, we have created the first and only phosphate absorption inhibitor to control serum phosphorus in adult patients with CKD on dialysis in a field and has seen little innovation for over 20 years. We are thrilled that the Advisory Committee vote recognized the novel nonbinding blocking mechanism of XPHOZAH and its favorable benefit risk with the dosing of just one pill twice daily. As you may recall, last year, we reported comprehensive market research that we conducted over a 15-month period, which provided insights into the high unmet need in hyperphosphatemia and the significant market receptivity to the product profile for XPHOZAH. Specifically, in our research, 72% of nephrologists reported a high level of unmet need. The majority of nephrologists rated the product profile of XPHOZAH favorably across all key parameters: Efficacy, tolerability and dosing, and reported their intent to use XPHOZAH broadly. In addition, independent research undertaken by Spherix, a premier market research firm that publishes quarterly reports on nephrology market dynamics, reported last year a high level of awareness of XPHOZAH with 40% of nephrologists intending to adopt XPHOZAH immediately, if approved, with an additional 29% intending to adopt within three months of approval. As a commercial company actively marketing Amitiza for the treatment of IBS-C, we have a proven comprehensive commercial structure in place that enables a smooth and rapid ramp-up to launch XPHOZAH, if approved. This includes marketing, payer access, patient services, sales operations and distribution capabilities, all that can be easily activated for XPHOZAH with the leadership team highly seasoned in the nephrology space that can rapidly build the dedicated nephrology sales force to bring XPHOZAH to patients. Turning now to market dynamics. There are approximately 550,000 patients with CKD on dialysis, a population which is growing at 3% annually. At least 80% of those patients are treated with phosphate lowering therapies, with the majority not meeting guideline established phosphorous targets. This creates a current and growing addressable market of 440,000 patients. This is a market that is very accessible with 8,000 nephrologists in the U.S. accounting for the vast majority of phosphate lowering prescriptions. I am confident that my highly experienced team, many of whom have proven launch experience in this space and who already have well-established relationships and strong reputations within the nephrology community, can mobilize quickly to launch XPHOZAH, if approved. I will now turn the call over to Mike for some concluding remarks. Mike?

Thanks, Susan. Yesterday was an important day for Ardelyx. While we await feedback from the office of new drugs on our appeal, the recognition from the advisory committee on the favorable benefit risk assessment of XPHOZAH is further validation of our innovative science and its place and potential to make a difference in the lives of patients. I'd like to express my heartfelt gratitude to Dr. Williams, Rob Blanks, Dr. Rosenbaum, Dr. [indiscernible], Dr. [indiscernible], the entire Ardelyx team and incredible support from 3D communications and [indiscernible] for their tireless work and are enduring and unwavering belief in XPHOZAH. . In addition, we all want to thank and recognize the overwhelming support from the patients, advocates and physicians in the open session. Their commitment to help raise the awareness and the significant unmet need in hyperphosphatemia, their support of the data and the product profile for XPHOZAH and their willingness to share perspectives from the actual users and potential beneficiaries of having XPHOZAH available in the marketplace was tremendously valuable. And lastly, we want to thank the advisory committee members for their thorough review of our data that led them to a favorable vote. We look forward to receiving and sharing the FDA's response to our appeal following the advisory committee's vote, which we expect within 30 days. As we make advances with XPHOZAH, I would also like to emphasize that we have an established commercial team that has successfully launched IBSRELA, a commercial infrastructure, poised to launch XPHOZAH if approved. We are at a significant collection point and positioned for growth and value creation for all of our stakeholders, and I look forward to keeping you apprised of our progress. With that, I will now open the call to questions. Operator?

[Operator Instructions] Our first question comes from Yigal Nochomovitz from Citigroup.

First of all, congratulations on the very strong growth. That's terrific. Just a few sort of actually clarifying questions, Mike. So you outlined two potential pathways, obviously, the appeal granted or the appeal denied. And then if the appeal is granted, you're going to labeling discussions. But -- and you mentioned you don't have an active NDA. So would you -- assuming the appeal is granted, do you physically have to resubmit the NDA? Or does that actually not happen? And then what would be the time lines for the approval with the appeal granted? And would the FDA actually grant a new PDUFA date? Or it doesn't work that way with this pathway?

Yes. So let me make a couple of opening comments and then I'll have Rob Blanks to give you a little bit more detail, is we do not have an active NDA. This whole process we've been going through was post the CRL. So there is not an active NDA. So in any scenario, NDA needs to be submitted. And it's going to give us a clear -- the letter that we received in 30 days is clarity in terms of which path we're pursuing going forward. It could also technically include a denial, but with a clear path forward to resubmission of the data that was presented yesterday that was not part of the original package. So what we're trying to do is just give you all some perspective as to what that path forward might look like. And none of us really know yet what that's going to look like until the 16th. Rob, anything to add to that? .

No, Mike, I think you covered it. I just let you know. Once we do have to resubmit, as Mike just said, in any scenario. And obviously, once we submit, the FDA comes back and let's us know whether it's a 2-month or a 6-month review.

Okay. Got it. And then on some of the commentary, there was quite a bit of interest in the optimized study yesterday amongst the pen. And I think at some point we thought we had put it in the NDA and then it was clarified that it was published study. What was the reason that, that wasn't actually included in the NDA itself?

It hadn't been completed, Yigal, until after the NDA was submitted. So both that normalized, we're -- typical of us, right? So we started Phase IV studies post traditional post-approval studies prior to approval because we thought it was important to have the optimized data which is to optimize how whether your normal therapy, how much binder you use, all those things were designed into that study to give physicians a better understanding of this new mechanism and how to utilize it in the real world. And when normalized, what does it look like to try to get your patient to normal? Neither one of those two studies, although we believe are going to be critically important, ultimately, commercialization were in the NDA as they were ongoing.

Okay. Got it. And then just one other one. There's also a lot of discussion obviously today with respect to the pill burden. And although I think generally understood that the pill burden is improving. There were still quite a few specific questions from the panelists looking for prospective data proving that a forward-looking [indiscernible]. Just wondering, is that assuming to get approved is that the type of post-marketing study that you think would be valuable for -- to prove the thesis on fiber? Or is that not something you would really want to do?

Yes. I'll -- let me make a couple of comments, and I'll ask Laura to weigh in as well. I think what they were getting a little bit confused around is the AMPLIFY study was not designed to decrease binder burden, but it was the background of an established dose that did not change upon which you added tenapanor placebo. So the intent was never to optimize, which why we call the next study that phase were optimized the pill burden that was there. So I think the OPTIMIZE study will help with physicians understanding that clearly, our Japanese partners have done a study demonstrating a significant change in pill burden. And I think as we go forward, we'll all learn more and whether it requires additional post-market work or investigator-sponsored studies, we'll see when we got there today. Laura, any other thoughts to add?

Yes. I think the only other piece that I would add is that in our two monotherapy studies, Block and Freedom, certainly, there were a meaningful number of patients who actually achieved serum phosphate reductions that were very similar to what we historically seen with phosphate binders. And the important thing to note in both of those studies, we did that with two small pills per day as opposed to a median, particularly in the larger study of 9 large binder peels. So we actually have data within our clinical studies that have already been completed that we just need to sort of communicate that data going forward.

Our next question comes from Chris Howerton from Jefferies.

I got to offer my heartfelt congratulations. I'm just really happy that you guys got that positive vote. Sorry, I'm being awkward. The -- so I guess the two questions for me, I think. The first one is probably pretty simple. In terms of the readiness for a launch after, obviously, the expectation that there would be an approval, what are the gating steps that you need to do, if any, on the CMC side to make sure that you have supply ready? So that's the first question. And then the second question that I have is related to reimbursement for the combination with phosphate binders. So I guess I just don't know how that will work in the concept of the ESRD bundle or TDAPA. So if you have any visibility on how that might work, that would be really helpful.

Yes. Let me just make -- let's do that in two steps. Comment on CMC. We will be ready. And we're going to wait and see what happens on the 16th with that letter, and that will define when we pull certain triggers, but we will be ready with supply. Justin, anything to add?

No. Just that we do have the active pharmaceutical ingredient available. And so, of course, we would tablet that in the appropriate dose driving for per phosphatemia compared to irritable bowel syndrome with constipation when approved. And then, of course, the final wave wing and packaging will be determined in a future date. So that would be the final step with our packaging CMO to get that ready to go. But we will be on top of it and as expeditious as possible once we get the appropriate approvals in place.

Yes. In terms of reimbursement, I would like Susan to comment as well, but let me address a little bit about what you were saying in terms of the bundle. Remember, we're not in the bundle. It's slated -- binders were slated to be in the bundle in 2025 with the likelihood of [tanapa]. That, as you all know, is something that has been pushed off multiple times and there's no reason to believe that, that potential of an extension doesn't exist for various reasons. So understand the question, but I think it's still important for Susan to address without the bundle, reimbursement in the context of the data that we generated and what the potential might be if XPHOZAH is approved in our interactions with payers.

Yes. Thank you, Mike. So Chris, we would really be very centered on engaging our payers to present the Novel mechanism profile of XPHOZAH and differentiating it from any of the available treatment today. So that would really be our priority. We need to anticipate as every established market where there are low-cost alternatives available, and then there are branded products available. So we would need to just work with payers to ensure that we could optimize our access position, and most importantly, work with our providers, work with the nephrology community to make sure that they really drive the demand for XPHOZAH and work with the payers to document, which very clearly in hyperphosphatemia is quite straightforward to demonstrate the need for these patients since they have been unable to achieve their target phosphorous level. So that would be our commercial priority.

Our next question comes from Chris Raymond from Piper Sandler.

And congrats from us as well, guys, a lot of fortitude on your part to get through this. So anyway, just from us. Maybe just a couple of questions. I know you kind of addressed this already a little bit, Mike. But just in terms of -- I'm getting a lot of questions from folks about what happens if the FDA limits use to combination use. And I know you guys have referenced the Spherix work. And speaking with them last night, they seem to feel like it really wouldn't matter in terms of uptake because there's an awful lot of use in combination already and enforcement is kind of a question. So I guess maybe first and foremost, maybe setting aside your situation with Tenapanor, maybe describe the market a little bit, if you will, in terms of how binders are used today and sort of the payer enforcement mechanism that may or may not exist About potentially a premium price to existing binders. Can you maybe talk about whether or not that dynamic has changed at all?

So what I would say, Chris, is I think it's early to begin those discussions until we have a real feedback from the FDA on the 16th and what the path forward looks like. And I think it's a win for patients either way, when we look at what the need is out there, whether we expect that given the vote that there's the opportunity for patients to have both mono and combo, but I don't want to speculate at this stage. We want to actually marinate a little bit in the success and how good it feels to have accomplished what we did yesterday. And from a pricing perspective, obviously, Susan is well versed and quite skilled in the commercial aspects and the pricing strategy as we've demonstrated with IBSRELA. So I'm going to hold that off also until we know what the path forward looks like on the 16.

Our next question comes from Laura Chico from Wedbush Securities.

I have two. So first, could you remind us in the prior interactions with FDA through the prior review, were there discussions regarding specific population restrictions. So was there any discussion kind of levered towards just monotherapy or add-on usage?

So there -- if you recall, when we received the CRL, we had been in the midst of labeling negotiations. The only thing that we had yet to discuss was exactly the question that you are asking, so we had submitted our NDA with a broad indication in adult patients with hyperphosphatemia in dialysis. And we're ready for request or discussions with the agency on whether it was binder failures and/or in combination, those sorts of things. So again, as I said to some of things Chris was asking, I don't want to speculate too much at this point until we know the path forward on the December 16, but certainly sees that there is that option and clearly, clearly our data demonstrates that there is opportunity for both mono and combo.

Okay. That's helpful, Mike. And then maybe I might follow up one more question here. Just trying to think through the potential timing scenarios, and I know this has been asked a couple of times. But assuming an appeal granted letter in December, an NDA resubmission, let's just assume a 6-month review, that puts you at a second half '23 commercial launch, assuming approval. You already mentioned the binder potential change is supposed to be implemented in '25. So I don't know if that's going to happen. But there's also potential for generic arrhythmia, I believe, in '24. So I'm trying to think about how that -- I realize not too many changes right now, but what is the base case kind of assuming a late '23 market entry and perhaps against the backdrop of generic arrhythmia?

Yes. So as we look at again, on the 16th knowing so much more, the range of resubmit and go to labeling discussions with type 1. That's a 2-month review to a denial resubmit with the path forward that's a 6-month review. I would rather wait and see versus speculating at this point. So let's see what Dr. Stein comes back to us with on the 16th. The most commonly used binder right now is [indiscernible] with the majority of the market, and it's a generic. I don't believe that [indiscernible] is going to have a meaningful difference because remember, the discussions yesterday all centered around the challenges binders cause or conditions pace with binder only approach to phosphate management and how differentiating tenapanor isn't helping them do something that previously is almost impossible for them to accomplish. So a generic for arrhythmia is not a meaningful impact, frankly, and wouldn't have any discussions yesterday, given the market dynamics. Susan, anything to add to that?

No, Mike. Exactly. I mean the bottom line is that the data clearly shows in the 6-month period, 77% of patients are unable to maintain target phoshoprus levels, so. Overall, the existing therapies that are all limited to binders, whether they're branded or generically available are just not doing the job. So there's a high unmet need and the market dynamics are really favorable for the entry and the novel mechanism therapy like XPHOZAH.

[Operator Instructions] Our next question comes from Joseph Thome from Cowen & Company.

Congrats on yesterday's results. Maybe the first one, just in terms of the appeal response. I guess how much information is typically included in these type of responses? I guess, in the scenario that maybe it's not granted but denied that there is a clear kind of path forward for the resubmission. Would you then need to have a sort of a type B meeting with the FDA before resubmission? Is that even a possibility? Or would you just have to go off that letter?

So I will ask Rob Blanks to weigh in on this, but as you probably seen some of the notes have been out there in comments is what we've accomplished is actually quite special and unique. I think it speaks to the data and what we have done to go through the FDR process is an important thing to do. So we will be learning along the way, but with the guidance as I thanked with groups with whom we've been working, we'll learn more from the latter. And understand what kind of resubmission is going to be required in the time frame. Rob, anything to add to that?

No. I think that you've covered it, Mike. Obviously, those letters can be very detailed or -- so in the past, they have been as you can actually see from the FDA briefing book. And obviously, there's a chance for us to talk to the FDA that they've been very open to conversations with us.

Great. And then maybe just one more related question. If they do grant the appeal and you can go into labeling distension after resubmission, can you still submit those additional analyses in that scenario? And I guess, would you modify the NDA from the first time at all they do grant the appeal. Obviously, if they don't and they provide another path, you mentioned you would maybe submit some of those additional analyses. But in the other scenario, how are you thinking about that?

Again, I'll ask Rob to comment. But we are going to have to resubmit regardless and at a minimum, update safety data just given the time it's passed and safety data has been collected with our partners as well as IBSRELA. So that's at a minimum what needs to be there. Whether or not we would submit some of these additional studies, I think would -- if we have a 2-month review, I think, would extend it. So that would be a strategic call that it would make at the time. Rob, what are your thoughts?

Mike, I completely agree. I mean it's obviously a little bit early, but if it affects our review time, we would, obviously, consider that into what we submit. I mean it's up to us to resubmit. So we have the option to submit what we want.

Our next question comes from Matt Kaplan from Ladenburg Thalmann.

Congratulations on the outcome yesterday. I guess a little more on the mechanics of the process in terms of just the appeal is denied, can you talk about what could be in the request for potentially in their request for the FDA. I guess, is an outcome study totally off the table now? Or is that still potentially one of the things that FDA could ask for again?

My opinion at this point is that that's highly unlikely. I think the more likely scenario is, frankly, sort of the pro forma denial of the appeal, which kind of shuts down that process. where in the letter and like the penultimate paragraph of the letter, there's going to be a description of path forward, which would be resubmission and that would describe whether or not it includes additional recommission of the data we presented on optimize and we could choose to put normalized and other things in there. So I think that's more of a technicality. But I think requesting or requiring a brand-new study, including an outcome study, unlikely. Laura, your thoughts.

No, I would agree, Mike, completely.

Okay. That's helpful. And then your Japanese partner recently started a study. Do you plan to wait for the outcome of that study to include in your resubmission?

Well, what we would include or potentially include is based on, I believe, it's 4 Phase III studies that they presented a lot of day to day [indiscernible] and they've submitted their NDA in Japan, which resulted in milestones coming to us. So that is something that we would look at, again, similar to the previous question of whether or not we would include all that in a resubmission.

At this time, I show no further questions. And I will turn the call back to Mike Raab for closing comments.

Thank you. Thank you again for your questions, and thanks everyone who joined today's call. I know I can speak to the entire team at Ardelyx when I say that we are excited about what the future holds. Today is an important step forward for XPHOZAH and further progress demonstrating our company's ability to discover, develop and commercialize innovative treatment options that bring much needed benefits to patients. This builds off the success we are seeing with IBSRELA it really is an important product that should not be overlooked. Once again, I want to thank the team. We could not be here where we are on IBSRELA and XPHOZAH without their tireless efforts on behalf of patients. I look forward to sharing more in the weeks and months ahead. With that, we can close the call. Thank you, operator.

Thank you. You're welcome. Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.