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

Good morning, and welcome to Ardelyx's conference call. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the call over to Caitlin Lowie, Vice President, Corporate Communications and Investor Relations. You may begin.

Thank you, and good morning, everyone. This morning, we issued a press release announcing the FDA Office of New Drugs' decision regarding the New Drug Application, or NDA for XPHOZAH from the Cardiovascular and Renal Drugs Advisory Committee meeting convened on November 16, 2022. During this call, we will refer to today'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; and Susan Rodriguez, Chief Commercial Officer. Dr. Laura Williams, Chief Medical Officer; Justin Renz, Chief Financial Officer; and Rob Blanks, Chief Regulatory Affairs and Quality Assurance 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 on Form 10-Q which can be found on our website at ardelyx.com. While we may elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our views change. With that, let me pass the call over to Mike.

Thank you, Caitlin, and good morning. To say that I'm excited to be here with you today would be an understatement. After more than 1.5 years of appeals and discussions with the FDA, we are now at the point where we can clearly see a path to bringing XPHOZAH to patients. The FDA has granted our appeal to the complete response letter for the XPHOZAH NDA. That in and of itself is a significant milestone and a powerful message about the need to bring innovation to patients on dialysis who struggle every day, at every meal, to control their phosphorus levels and yet many are unable to do so. I am pleased and appreciative that the FDA took into consideration, the overwhelmingly favorable outcome of the Advisory Committee, recognizing the importance of providing a novel therapy for patients. This is a remarkable step forward in Ardelyx's journey to bring XPHOZAH to patients, one we have been on with a broader kidney community for the past 10 years. The response letter we've received from the office of new drugs provided guidance on a few things I want to walk through. First, they granted our appeal to the CRO and we will be submitting our NDA to the Division of Cardiology and Nephrology for review and labeling discussions. As a reminder, we do not currently have an active NDA with the FDA. Second, the letter stated that the OND has directed the Cardiorenal division to work with Ardelyx to develop a label. After reviewing the letter, we believe a label could reflect an indication for patients whose hyperphosphatemia is insufficiently managed on binder therapy. This is a huge win for patients. For the past 60 years, patients on dialysis have had only one option, phosphate binders to help control their serum phosphorus. And published data reflecting the results from a large patient chart audit indicates that nearly 80% of patients treated with binders are unable to consistently maintain target phosphorus levels over six months period of time. Finally, we will be requesting a meeting with the Cardiorenal division to discuss the information that will be the basis of the resubmission of our NDA. Based on the overwhelmingly positive vote from the Advisory Committee and the fact that OND has granted our appeal, we're very confident that the resubmitted NDA for XPHOZAH will be approved and that we will be bringing this novel mechanism therapy to patients. So what comes next? Just to level set, this is what we now know. The first step in the process is to request a meeting with the Cardiorenal division to discuss what will go into the resubmission, and we will request that meeting as quickly as possible. We expect it to be a Type A meeting, which is typically held within 30 days of the meeting request. After the meeting with the division, we will finalize the resubmission. We expect that resubmission to happen in the first half of 2023. Then, within 30 days of receiving our NDA, the FDA is expected to confirm the classification of the submission, which could be a Class 1 submission with a 2-month review cycle or a Class 2 submission with a 6-month review cycle. At that time, we expect that the FDA will also provide a review goal date. These timelines are our current best understanding and we expect to launch XPHOZAH following approval in the second half of 2023. This represents an extraordinary step in our journey to FDA approval for XPHOZAH. More importantly, this is a key development for the kidney community and especially for the more than 400,000 patients who are not sufficiently managed on current treatment options and who have waited for innovative new therapies to help control their serum phosphorus levels. Upon approval, XPHOZAH would also be the first and only phosphate absorption inhibitor to manage hyperphosphatemia and feel that it has seen little innovation for more than 20 years. We believe that XPHOZAH is a safe and effective therapy and has the potential to allow more patients to achieve guideline established treatment goals. This could not have been accomplished without the support from the members of the kidney community who spoke at the Advisory Committee meeting about the significant unmet patient need and the vital role XPHOZAH could play in the hyperphosphatemia treatment paradigm. We are looking forward with the FDA to bring this important medicine to patients and their treating physicians. In the meantime, our team will be ready. Rob and the regulatory teams have already begun preparing to request a meeting with the FDA. We have sufficient stock of our active pharmaceutical ingredients and are prepared to rapidly begin tabulating operations for the hyperphosphatemia dosage forms. And we have established highly capable commercial infrastructure ready to support the launch of XPHOZAH. Their proven track record, combined with a pent-up demand for a new non-binder treatment option for hyperphosphatemia, gives us confidence in our ability to successfully commercialize XPHOZAH upon FDA approval. With that, I'll turn the call over to Susan. Susan?

Thank you, Mike. We are thrilled that the FDA has granted our appeal and will be working with us to approve XPHOZAH, bringing this much needed novel therapy to patients. As Mike mentioned, our comprehensive and proven commercial capabilities support a strong readiness for a successful launch of XPHOZAH upon approval. The market research reflects that nephrologists support a high unmet need for new treatments to manage hyperphosphatemia, have a high levels of interest in XPHOZAH and view key aspects of the XPHOZAH product profile favorably. As an established commercial company now with the launch of IBSRELA, our ability to commercialize first-in-class mechanism therapy and disrupt markets will serve patients well with the launch of XPHOZAH. Our commercial strategy centers on the following key therapeutic area dynamics, market dynamics and nephrologists prescriber dynamic, all which predict that the market is right for the launch of a novel mechanism therapy like XPHOZAH. There are more than 550,000 patients with CKD on dialysis. Approximately 80% of those patients are treated with phosphate-lowering therapy, with the majority not meeting guideline-established phosphate target. This creates a current and growing potential market of more than 400,000 patients. Market belief in the need for novel treatment and interest in XPHOZAH is high. Comprehensive market research conducted with more than 200 physicians indicated that 72% of nephrologists reported a high need for new treatment to manage hyperphosphatemia. The premier independent research firm Spherix, who has been tracking this hyperphosphatemia market, reports that current interest in XPHOZAH is high with 72% of nephrologists in the fourth quarter of 2022, reporting high interest with the novel mechanism of action noted as the most appealing aspect of the product profile. 30% of nephrologists reported an intent to adopt XPHOZAH immediately if approved and an additional 26% reported intent to adopt within 3 months. This is a highly concentrated and extremely accessible market with 8,000 nephrologists in the United States, accounting for the vast majority of phosphate-lowering therapy prescriptions. From a payer landscape perspective, we anticipate that XPHOZAH, like most other newly branded drugs entering an established market, will require a prior authorization. The provider community who care for these patients are well accustomed to submitting prior authorization to secure assets for the drugs that they believe their patients need and will have the support of our Ardelyx patient services team. With today's announcement, we are mobilizing to launch as quickly as possible upon XPHOZAH approval. We are in a fortunate position that we have a proven, comprehensive commercial structure in place as Ardelyx is a commercially-facing company actively marketing IBSRELA for the treatment of IBS-C. All aspects of our commercial infrastructure, including marketing, payer access, patient services, sales operations and distribution will begin preparation. These capabilities are further bolstered by a leadership team who is highly seasoned in the nephrology space and who can rapidly build the dedicated nephrology sales force to bring XPHOZAH to patients. Finally, I'm sure many of you have questions about the details of the launch as well as pricing, and we ask that you hold those until we're closer to launch. As we work with the FDA to develop the label, we will provide more visibility on the specifics of our launch plan. I can assure you that I have high confidence in our experienced team, many of who have proven launch experience and who already have well-established relationship and strong reputation within the nephrology community. In short, we will mobilize quickly and effectively to launch XPHOZAH upon approval. I will now turn the call over to Mike for some concluding remarks. Mike?

Thanks, Susan. Clearly, while not the original path we foresaw, we are now exactly where we always anticipated being, bringing XPHOZAH to patients. We will move quickly to resubmit the NDA, and we will ensure our commercial readiness. I want to express my sincere gratitude to the clinical trial participants and their family members, the clinician community, the patient advocates, the Ardelyx team and a countless others who believe strongly in the potential of XPHOZAH, and we have worked tirelessly to advance it through the regulatory process. With that, I will now open the call to questions. Operator?

[Operator Instructions] Our first comes from Mr. Chris Raymond from Piper Sandler.

Congrats guys. Very momentous move here. Just a couple of questions from me. So Mike, I guess I'm not sure you're going to be able to answer this question or not. But from the words that I heard from you in terms of the process, it sounds like this is not a scenario where you're going to need to generate new data or submit new data. Just maybe can you clarify that first? And then I've got another question.

Yes. We don't anticipate any new data, Chris. I think, we've shared some of the analyses that were done as part of the AdCom where we will be a part of what they would want us to submit. But that's data that they already have as part of the NDA, so nothing new.

Okay. Great. And then just getting at this market size and the type of patient that is an adequate responder, I know per serious data that's been out there forever, the majority of patients are not managed. But just to clarify, is -- are you characterizing those patients that are insufficiently managed, any patient that can't get to goal?

So I think it's going to be important to recognize that the majority of patients on binders, as we all know, never get to goal and/or have significant intolerability issues that forces physicians to try mixes of binders to try to offset the intolerable issues that they face. And that's the majority of that 400,000 that Susan referenced. This is sort of where we always anticipated was the best initial place for XPHOZAH. As you know the realities of the payer market is such that they're not going to have as the first line and are going to put patients through the paces, which is why prior ops are going to be needed. And with what we've done with IBSRELA, and the processes we've put in place, I think we are extraordinarily well poised to facilitate that process.

Our next question comes from Mr. Joseph Thome from Cowen & Company.

Congratulations on the news. Maybe the first one from me, I know a lot of times the difference between the Type 1 and the Type 2 resubmission has an inspection. Do you need an inspection with this resubmission? Or did you have one with the last review cycle? And then maybe second, just in terms of the sales force, I know we're going to keep a lot of our questions for -- closer to the approval. But maybe just in terms of size, what size of sales force do you think you're going to need to market this drug?

Sure. Let me ask Rob Blanks to address your first question on the difference between Type 1 and Type 2 and whether or not an inspection would be part of that.

Yes, I could answer that question. We -- the Type 1, as you know, is the Class 1 is a 2-month review, the other one is a 6-month review. I don't -- we don't suspect that inspection would be part of that as we have obviously -- we have made IBSRELA, which is the same active ingredient as XPHOZAH. So we wouldn't suspect that, that would hold anything up.

And Susan, if you could address the sales force?

Yes. So again, we're well positioned where we can leverage every aspect of our commercial infrastructure and activate that to bring XPHOZAH to patients and in terms of feet on the street to access the key prescribing nephrologists across the country, we anticipate that we can reach those nephrologists and address this opportunity with the sales force to approximately 30 people, and we'll continue to bolster that as the launch progresses.

Perfect. And maybe just a quick follow-up to the first question just because maybe it wasn't clear to me. But in terms of a potential label, because the AdCom did discuss this monotherapy education for patients that can't tolerate binders, I guess, do you think that's still a possibility? Or is the label do you think going to be limited to combination used in patients that can't meet their goal. Any color there would be helpful?

It's interesting that we're not going to speculate a whole lot on what the label is going to be, because you actually don't know until we go through that process. But intolerable is a problem for some patients even taking one. So I think there is going to be step through in the sorts of experiences that people are going to go through. And certainly from the dialysis patients, I know both in terms of the efficacy and tolerability, binders have been chronically an issue for the 60 years that they've been used.

Our next question line comes from Laura Chico from Wedbush Securities.

Congratulations on the update. I guess, I had 2 questions. Just kind of following up on the Class 1 versus Class 2 review timing. I guess what gives you confidence in obtaining a Class 1 versus Class 2 review, if you could provide any additional color there? And then I have a follow-up question.

Yes. And I think I would characterize it, it's not confidence one or the other. It's just the reality of the type of submission. Rob, could you address that?

Yes. I mean, I can't really speculate what they're going to say, but we -- obviously Class 1s are kind of limited to labeling discussions, which, of course, is part of what the FDA's or OND has directed the division to have with us. But obviously, if they -- if we have -- as we said, we would have a meeting with [ FDA ] at a request, as Mike said, they may request some of the analyses that we did as part of our AdCom presentation, that might obviously push it into a Class 2. We just don't know.

Got it. Okay. And then just one other follow-up in terms of the build-out for additional reps. Can you just remind us how you're thinking about the cadence of the build-out? And I guess kind of related to that, I guess, one other follow-up. There were some -- there was some language with respect to the SLR term loan about tenapanor approval and specific timing there. I just wanted to confirm what access, if any, remains to the remaining tranche available through the SLR term loan?

Yes. Let me address the cadence. Not until we understand from the agency, what the timeline looks like, will we be able to talk about the cadence of hiring. The infrastructure that is there in place and ready to also jump on XPHOZAH exist already for IBSRELA. So we will be thoughtful about how we expand the new ABDs once we have better clarity from the agency. And Justin, if you could address the Solar loan question.

Sure. So as Laura asked, our Solar loan has certain terms and contractual obligations that relate to the timing of when XPHOZAH would be approved. We're not sure, of course, yet as Rob Blanks articulated of when the official approval will come in. We will work with Solar as appropriate to perhaps modify and do an amendment if we feel that taking on additional debt is the right thing as part of our capital structure. As you know, we will always be thoughtful on how we finance the company through the various means of equity, non-equity and various other capital solutions. So at this point, it's -- we are still in compliance and still could take that draw if we wanted to, but we will know until we know the status of the submission and timing and approval, in which case then we'll work with Solar as appropriate to do the next steps or not depending on how we feel is the best way forward on financing the company.

[Operator Instructions] Our next question on line comes from Matt Kaplan from Ladenburg Thalmann.

Congrats on the granting of appeal. A couple of follow-up questions, I guess. What's the -- what do you view as the rate limiting step in terms of the resubmission of the NDA following your meeting with FDA?

It's what they tell us when we go into the meeting, is it going to be all of the analyses, which the review of those things would likely shift it into a 6-month or if it's just a traditional safety update, that could be a 2-month. So it's that kind of uncertainty that we have, depending upon what they want to say. The fact of the matter is, all of those analyses are ones that are done on data that we were part of the NDA so what role that plays in the way they think about the review to be determined, and that's why we need to have the meeting.

Okay. Great. And then following approval, how soon do you think you can launch the drug?

Well, it depends upon lots of things, right? We're going to get the sales force up and running, we're going to have all the tablets ready to go, right? We've got the API, we've got to start the tableting operations, so we have the optimal expiry, and all of that is happening. I think as all this begins to come together, as we go through the next couple of months, we'll be able to give you some more clarity on that.

Okay. Great. And then last question. You mentioned that roughly 80% of the patients are insufficiently managed on binders. What percent of that market or subset of that market, do you think you'll really be able to address, hopefully, if the label falls as you expect?

Well, I think by definition, all of those patients would be candidates for tenapanor. I think what you then deal with is the realities of the payer hurdles that all new drugs like what we have, have to go through. My perspective is they all deserve it, and then it's a different flight. Susan, anything to add?

No. I'll just say that, again, everything centers on to first-in-class novel mechanism of XPHOZAH. It's the first drug available now in the management of hyperphosphatemia that actually blocks the absorption of phosphorus as the primary pathway of absorption. So establishing the important role of this locking of phosphorus across the hyperphosphatemia treatment paradigm is an opportunity for us. And so we're confident that these patients that currently are incidentally managed on binders that they are good candidates for XPHOZAH and XPHOZAH can play a strong role in helping them achieve their target phosphorus level.

And we have no further questions at this time. I will now turn the call over to Mike Raab for closing remarks.

Thanks again for the questions and to everyone who's joined today's call. On behalf of the Ardelyx team, I want to reiterate our excitement about our future potential. Ardelyx is an established commercial enterprise that is building a portfolio of first-in-class mechanism products. Today is a momentous step forward for XPHOZAH and further proof of our ability to discover, develop and commercialize innovative treatment options that bring much needed benefits to patients. The approval and launch of XPHOZAH next year will mark the second commercial launch by Ardelyx, an incredible accomplishment by any measure. Once again, I want to thank the team for their tireless dedication to help patients. We look forward to sharing more in the weeks and the months ahead. With that, we can close the call. Thank you, operator.

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