Ardelyx Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
October 31, 2023

There are 11 speakers on the call.

Operator

Good day, and welcome to the Ardelix Third Quarter 2023 Earnings Conference Call. All participants will be in a listen only mode. After today's presentation, There will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over To Caitlin Lowy, Vice President of Corporate Communications and Investor Relations at Ardelex.

Operator

Please go ahead.

Speaker 1

Thank you. Good morning

Speaker 2

and welcome to our Q3 financial results call. During this call, we will refer to the press release issued earlier today, which is available on the Investors section of the company's website atardells.com. 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 the risk factors in our most recent quarterly report on Form 10 Q that was filed today It can be found on our website atardellis.com.

Speaker 2

While we elect to update these forward looking statements in the future, we specifically disclaim any obligation to do so even if our views change. Our President and CEO, Mike Robb, will begin today's call with opening remarks and an overview of the company's progress during the Q3 of 2023. Next, Susan Rodriguez, Chief Commercial Officer, will provide an update on the performance of Estrella and the launch of Xposa following its approval earlier this month. Justin Renz, Chief Financial and Operations Officer, will conclude today's prepared remarks with a review of the company's financial performance during the quarter ended September 30, 2023 before we open the call to questions. With that, let me pass the call over to Mike.

Speaker 3

Good morning, everyone, and thank you for joining us on the call. I'm very pleased to be here once again just a short few weeks after we celebrated the approval of EXPOSA. With this approval, we now have delivered on our mission to provide patients with medicines that matter for the 2nd time. It is something I am immensely proud of. Today, Susan, Justin and I will share details on the performance from the Q3 as well as important updates from the 1st couple of weeks following In the Q4 following the announcement of Expose's approval.

Speaker 3

Before I hand it over to them, let me share a few of my thoughts on the Q3 What we expect in the near future for Ardellus. First, Ibsrela momentum continues. Our quarter over quarter growth in Q3 Was driven by a clear need patients have for new medicine to address the challenging and sometimes intractable symptoms experienced by patients with IBS C. BIDSRILLA is establishing a unique role in what has traditionally been thought to be a challenging market to penetrate. We are demonstrating that when you have a novel mechanism product with a strong safety and efficacy profile that is benefiting patients and When you're thinking differently about marketing innovative products that you can disrupt markets.

Speaker 3

2nd, XPOSA is ready for success. As Susan discussed on our approval call, awareness, interest and intent to adopt EXPOSA are high among the nephrology community. The response to our approval has been nothing short of amazing. It is also humbling as we now have the responsibility to deliver for patients. We've received words of congratulations from across the kidney community with nephrologists expressing their excitement about having this novel therapy available to prescribe for their patients.

Speaker 3

As we've shared, there is significant pent up demand and we expect strong uptake at launch. Our sales team is already in the field And we expect to have exposa at our distributors shortly after the conclusion of ASN's Kidney Week. The new era for managing hyperphosphatemia among kidney patients is here. Finally, we are well resourced for the foreseeable future. We carefully and thoughtfully finance the company and have a strong cash position as a result, Sufficient to fund the commercialization of Exposa and support the critical ongoing investment in INGREZZA.

Speaker 3

We will also begin investments in R and D in the coming quarters as we work towards the next phase of Ardellix. I will now hand it to Susan, Who will share more on Exxoza's performance and additional details on the launch activities for EXPOSA. Susan?

Speaker 1

Thank you, Mike. It is great to be back today speaking about AZRELA and now XFOZA. We continue to disrupt The established IBS C market with Q3 revenue for AZRLLA at $22,300,000 reflecting a 22% increase versus Q2. This 1st in class drug is offering meaningful benefit to patients who have been in need of a novel approach. As I've noted on previous earnings calls, our growth is consistent and persistent.

Speaker 1

New prescriptions are growing. Retail prescriptions are growing. We continue to grow new writers and existing writers are expanding their use. These results reflect the extent to which Physicians continue to identify more and more of their patients as candidates for AZRELLA, that patients are gaining access to AZRELLA and that their treatment experience is favorable. Our team's efforts are supported by the strong clinical data package for INZRALLA, which we continue to expand.

Speaker 1

Just recently at the American College of Gastroenterology meeting in Vancouver, we had a significant commercial and medical presence, which included a well attended product theater as well as 2 posters and an oral presentation on data analyses About symptom response during treatment with Ensrella, our research was incredibly well received. Our poster titled, Tannapinar can improve abdominal symptoms independent of changes in bowel movement frequency in adult patients with IBS C, Authored by notable opinion leaders, Doctor. Derek Brenner and Doctor. Tony Lembo, as well as our Delek scientists, was recognized With the Presidential Poster Award by the ACG Abstract Selection Committee awarded to less than 5% of all posters, This distinction recognizes high quality, unique research. Our dedicated team is fully engaged with the physician community and carving out a meaningful role for Xrela among the IBS C patient population.

Speaker 1

Based on the uptake we are seeing, it is clear That the potential for AZERLA is high among this target group of patients who are in need of a novel option and that AZERLA is on pace to achieve a high single digit market share position across this 5,000,000 script market over time. With the price point we established within this market Enabled by the value of its innovation and the favorable uptake dynamics driven by the patient need, we are well positioned for success with INGREZZA. Turning to EXPOSA. During our call a few weeks ago, I characterized in detail the dynamics and our commercial approach. I will summarize those briefly before discussing our pricing and access strategy in more detail.

Speaker 1

The market dynamics for Xposa are favorable. Hyperphosphatemia is a well established therapeutic area with treatment goals centered on globally recognized 80% of the estimated 550,000 patients with CKD on dialysis In the U. S. Are treated with a prescription therapy in an effort to control their elevated levels of seraphosphorus. Of those being treated, it has been shown that 77% are unable to consistently maintain target levels of serum phosphorus over a 6 month period.

Speaker 1

The market is primed and ready for EXFOZA. Nearly 70% of surveyed nephrologists report a high or very high need for a new treatment option. And among nephrologists aware of new treatments for hyperphosphatemia, 3 quarters mentioned tapanor by name. Survey nephrologists rate the novel mechanism, efficacy, Tolerability and dosing attributes favorably and 59% reported that they intend to adopt EXFOZA within the 1st 6 months of product availability. Ardellix is well positioned to capitalize on this opportunity.

Speaker 1

Positioning for exposa will center on integrating a novel blocking mechanism therapy for their binder treated patients $2,960 per month of therapy, reflecting the value EXPOSA brings to patients in the context of the CKD market pricing landscape. We have built a dedicated nephrology sales force of 60 reps that cover the approximately 8,000 nephrology healthcare providers Who writes the majority of the hyperphosphatemia prescription? Our distribution network is also in place and will provide full coverage across the U. S. Aligned optimally to our access strategy.

Speaker 1

Our comprehensive patient services program, Ardellix Assist, Has gone live for XPOSA and is receiving calls. Product is on track to be in the channel following ASN's Kidney Week in early November. As I outlined in our approval call, there are 3 foundational components to our go to market approach centered on enabling urologists to integrate 1st in class phosphate absorption inhibitor exposa into the treatment regimen of their binder treated patients who have had an inadequate response or cannot tolerate any dose of finder therapy. 1st, Exposa is novel. It is a 1st in class phosphate absorption inhibitor.

Speaker 1

It is not a binder. This is a significant innovation for patients who up until now have only had one treatment option for managing hyperphosphatemia. 2nd, patients are in need of innovation. The vast majority of the 550,000 CKD patients on dialysis who are treated with a phosphate binder to lower their phosphorus levels are unable to consistently achieve or maintain target levels. And third, Arjellis' commitment to patient access and affordability.

Speaker 1

Patients prescribed to Xposa will have access to comprehensive prior authorization support and affordability programs. Ardelix Assist connects providers, payers and specialty pharmacies to help facilitate prior authorization and other administrative processes. For commercial patients, their co pays will be covered at the level of 100%. Patients unable to afford exposa Can apply for our patient assistance program that provides drug at no cost to patients who meet the program's broad eligibility criteria. I'd like to further characterize the access landscape and our access strategy as we received a number of questions following our approval call 2 weeks ago.

Speaker 1

EXFOZA, like Idrila, will be available to patients through a prior authorization process. We have been engaged with payers for several months To educate them on Exposa, its novel mechanism of action, clinical data and now the approved label. Over the coming months, payers will issue their coverage policy. We anticipate that the requirement will be that physicians attest that patients have not had an adequate response to their binder treatment or that they are not able to tolerate binder therapy. While the specifics around the requirements will vary by plan, it is important to note that the majority of patients treated with binders today by nephrologists Meet these criteria.

Speaker 1

What will be most important is that nephrologists prescribe EXFOZIP based on patient need and integrate the prior authorization work stream into their office practice so that patients prescribed XPOSA can access XPOSA. Nephrologists are well accustomed to the prior authorization processes as several products commonly used for patients with CKD on dialysis require them. Given the limited agents available today to treat hyperphosphatemia, the recognized unmet patient need and unopposed position of Exposa as the only non binder next line option for patients, we anticipate that Exposa will be acceptable via the prior authorization pathway Early in the launch. We do not intend to contract with payers and anticipate a steady and persistent uptake of EXPOSA by HCPs based on addressing the patients' unmet needs and effectively engaging in the prior authorization administrative process. The EXPOSA sales force has been in the field and will be joining the nephrology community this weekend at the ASN Kidney Week in Philadelphia.

Speaker 1

In parallel, the AZRELA sales team maintains their singular focus on disrupting the IBS C market, also with a 1st in class therapy, addressing important unmet patient needs. The Ardellic commercial team is executing at the highest level with teams of experienced, Dedicated and highly capable individuals who are delivering on our Delek's mission every day, addressing important unmet treatment needs through innovation. With that, I will hand it to Justin.

Speaker 4

Thank you, Susan. Ardellus has delivered on a number of key milestones since August. Continued growth of Impexrella across all key measures, The approval and imminent commercial launch of XPOSA, the expansion of our commercial organization to support XPOSA, The approval of tannapnor for hyperphosphatemia in Japan, the approval of INBREL in Hong Kong for IBS C, which we announced this morning And an amended loan agreement, which provides additional cash and flexibility to fund our future growth. We find ourselves with a very strong cash position. We are well resourced to support our ongoing operations, including the commercialization of both of our in market products.

Speaker 4

With that backdrop, I will discuss the specifics of our financial performance. In the Q3 of 2023, We had total revenues of $56,400,000 compared to $4,900,000 in total revenues during the Q3 of 2022. The increased request draws net product sales growth as well as milestone and collaboration payments from our international partners. Next, let me take you through the relative contributions of our revenue components during the quarter. First, as previously mentioned, We had U.

Speaker 4

S. Net product sales of Israel in the quarter ended September 30, 2023 of $22,300,000 A 22% increase from the $18,300,000 we reported in the Q2. As a reminder, in the Q3 of 2022, We reported Xarela net product sales of $4,900,000 2nd, we reported other Xarela net product supply revenue Of $2,100,000 related to our international partners. This is compared to $92,000 in product supply revenue in the Q3 of last year. 3rd, we recorded $30,000,000 in licensing revenue as a result of milestone and contract amendment payments from KYOQURIN Following the approval of tapanapanor for hyperphosphatemia in Japan in September.

Speaker 4

4th, we recorded a $2,000,000 milestone payment from Fosun Pharma Following the NDA submission for hyperphosphatemia in China, which we announced back in July. And finally, we recorded a small amount of royalty income from Knight Pharmaceuticals as we receive a percentage of their Imperella net product sales in Canada. Overall, our revenues were in line with our expectations Regarding U. S. Net product sales for Zrela as well as milestone payments related to our international collaboration partners.

Speaker 4

Looking ahead, we currently expect net Xarel sales revenue in the U. S. For the full year of 2023 To be between $76,000,000 $78,000,000 Please note that this does not include any anticipated sales from Exposa, Partner milestone payments or product supply revenues. In addition, the FDA approval of XPOSA triggered a $3,000,000 milestone payment from Fosun, Which will be recognized as revenue and is expected to be received in this current Q4. At the end of Q3, We reported year to date 2023 net gross sales revenue of approximately $52,000,000 Our raised and narrowed full year guidance range Of $76,000,000 to $78,000,000 represents our expectation of continued consistent growth.

Speaker 4

We are still early in our launch I'm unable to fully anticipate how seasonality may play into performance during the Q4, so we will continue to take a measured approach as we guide you Our expected sales performance. Research and development expenses were $8,600,000 for the Q3 of 2023, Which is an increase of $1,100,000 from the $7,500,000 in the same period last year. Selling, general and administrative expenses With $32,700,000 in the Q3 of 2023, an increase of $14,000,000 from the $18,700,000 we reported for the same period of 2022. The increase was due to the cost associated with the continued commercialization Growth of Israel as well as launch preparation activities for EXPOSA. As we mentioned during our Q2 call in August, We anticipated the cost associated with EXPOSA would be an incremental $20,000,000 per quarter, ramping up in the 3rd quarter And then being fully reflected in our SG and A expenses beginning in Q4 this year.

Speaker 4

We had net income of approximately $6,600,000 or $0.03 per fully diluted share in the Q3 of 2023 compared to a net loss of $22,900,000 or $0.14 per share in the same period last year. Our net income in the Q3 results in a $30,000,000 milestone And collaborate the amendment payments from KYWO KIRIN as well as increased sales from NIBDRA. From a cash perspective, we have never been in the stronger Let me take a step back and tell you where we are, how we got here and what it means. 1st, as you saw in the press release this morning, as of September 30, 2023, we had total cash, Cash equivalents and short term investments of $165,100,000 as compared to $123,900,000 at the end of 2022. This reflects $58,400,000 in gross proceeds that we raised during the quarter through sales of approximately 14,000,000 shares of common stock under our ATM program at an average selling price of $4.24 per share.

Speaker 4

We also received a $2,000,000 milestone of immunoflumposin Following the submission of an NDA for snafuor for hyperhidrosis hemia in China, which we announced back in July. In addition to our cash as of September 30, 2023, subsequent to quarter end, there are also 3 other contributing factors And I want to point out it significantly strengthens our cash position. First, we have received payment from KYOR Kirin $30,000,000 receivable associated with the approval in Japan. 2nd, also associated with that approval is a $5,000,000 milestone payment We have received from Healthcare Royalty Partners. And finally, we drew $22,500,000 from our loan agreement with SLR or Solar Capital.

Speaker 4

Considering these items as well as the ongoing business in October, as of yesterday, October 30, our cash and investments amounted to approximately $218,100,000 When combined with access to additional capital with our option, We have a loan agreement with Solar and our continued financial discipline as a company. We believe that we are very well resourced in the foreseeable future. We have taken a very thoughtful, disciplined and patient approach to how we fund the company. We are positioned to support continued investments in our in market product As well as gaining investments in our pipeline programs, we will continue to make thoughtful decisions that maximize shareholder value. And with that, I'll turn it back to Mike.

Speaker 3

Thanks, Justin. This is an exciting time at Ardelix. Within a couple of weeks, we will have EXPOSA at our distributors and ready for fulfillment to patients alongside Ambarella. We have focused on execution this year and yet we are not done. We have a lot of work ahead of us, continuing the momentum we've established with Idrela, Ensuring a successful launch of Exposa and looking ahead to next year where we will begin investing for further growth.

Speaker 3

We have shown that we can deliver on our promises. We continue to strengthen our company and our balance sheet. We are well resourced and excited about what is to

Speaker 4

I want to thank

Speaker 3

the members of the investment community who have been alongside us on this interesting journey. However, none of this would have been possible without the dedication, The passion and the resilience of Team Ardelix, thank you for what you do for patients every day. I will now open the call to questions. Operator?

Operator

We will now begin the question and answer session. The first question today comes from Louise Chen from Cantor. Please go ahead.

Speaker 5

Hi, congratulations on a strong quarter and thanks for taking my questions. I wanted to ask you how are you thinking about gross to net for Exvosa? And then also do you think there's a bolus of patients waiting for drug? Just kind of curious how you think about how fast the uptake might be Especially in the last quarter

Speaker 2

of the year or do

Speaker 5

you expect more of the uptake to come in the first half of twenty twenty four? And then last question I wanted to ask you was obviously you have a very strong cash Position, what do you think your cash runway takes you out to? Thank you.

Speaker 3

Yes. So let me ask Justin to address the first and last question first and then Susan, please, about update.

Speaker 4

Great. Thank you, Mike. Good morning, Louise. Regarding our gross to net for XFOSA, Our commercial strategy will be very similar to Azrela, which means that we don't expect significant rebating to payers other than Now the statutorily required rebates to certain government payers, which would obviously have negative effect on gross to net. But in general, We expect it to be very similar to what we saw with the XERAVA.

Speaker 4

There may be some seasonality in our gross to net in our Q1 being Perhaps less than other quarters due to the resetting of commercial co payment programs. But otherwise, we're very confident that it'll be Certainly in the early years comparable to Jerome. And then regarding our cash position, you may see in our 10 Q, which we filed earlier today, that we No longer have a going concern, which means our auditors are confident we have more than a year of cash. For us, we believe that it is more than that. We We have enough cash runway for quite a while.

Speaker 4

We can't specifically put on because we're waiting to see how successful we are at the close of launch, We're quite confident in our cash position. Susan?

Speaker 1

Yes, please. And regarding the uptake of Exoza, You're exactly right. There is a very large group of patients today who, despite treatment with binders, are unable to consistently maintain target levels and patients that can't tolerate binder therapy. So there's clearly a nice opportunity there and now these patients will have a new option With exposa, I think what's important here is thinking about the integration of novel mechanism exposa into the nephrologist Prescribing pattern, how exactly they're going to integrate use of exposa across their patient groups. So it's always going to take some time for The physician community to adapt their practices now that they have an expanded treatment armamentarium.

Speaker 1

So given that and given promotional presence with nephrologists, we believe that the uptake of EXPOSA is really going to be really quite steady and consistent As they identify patients early that they believe are most in need of exposa and then based on their experience proceed to expand their use to those additional patients That they're quite aware today, are not meeting the target levels, despite binder treatment. Thank you.

Operator

The next question comes from Dennis Ding with Jefferies. Please go ahead.

Speaker 6

Hi, good morning. Two questions from me. Number 1, maybe on the Congressional action to delay moving orals into the bundle. Can you comment if you have met with the CBO and what can you disclose From those discussions as it relates to XOLSA pricing and how the $3,000 a month price would impact their cost estimates for For moving orals into the bundle versus keeping them out. And then number 2, on the EXPARELA guidance, It seems based off of scripts, which continue to generally grow week over week.

Speaker 6

Your guidance the year seems a little bit conservative for Q4. So is there anything you could be expecting in the quarter that investors are missing? Thank you.

Speaker 3

Sure. Thanks for the questions, Dennis. So with any congressional action, again, maybe with the CBO, we don't meet with them. I've never Seeing that companies actually meet with the Congressional Budget Office, any bill going through Congress needs to get scored best to standard fare. So that's our expectation that's going to be happening here.

Speaker 3

Whether or not our price has an impact on that, again, that is The process that CBO goes through, and that's not something that we have transparency to. With ISRELA, I think in the guidance, as Justin said, I think as you've seen, we take a very measured approach in the way that we have certainly financed the company and the guidance that we give. We're very confident with this range and felt that Right. Raising it the way we did and narrowing it was giving you a perspective in terms of our confidence of where Exrela revenue and uptake is going.

Operator

The next question comes from Yigal with Citi. Please go ahead.

Speaker 7

Yes. Hi, Mike and team. Thank you very much for taking the question. On the pricing for EXPLOSA, could you just give a little more insight into the thought process around the $2,960,000 If we look at the binders, Obviously, there are price around $20 a year WACC, which is a year about a 75% to 80% premium. Obviously, you have a very significant value proposition with the unions' actions and we don't have anything like that in the market.

Speaker 7

But nonetheless, can you maybe spend a little more time Discussing the thinking around that type of opinion. Thank you.

Speaker 3

Sure. Thanks, Yigal. I think what you've just described as The significant difference in the opportunity and the benefit that EXPOSA would bring to patients, that's really the differentiator here is looking at what we're thinking is the best thing What's most appropriate for patients, especially in the context of other branded binders within the marketplace. So, We're very comfortable with where we've landed and think the price is exactly where it needs to be and it's appropriate for the patients and what we are going to be bringing for them.

Speaker 7

Okay. Thanks. And then maybe for Susan. Susan, if you could talk a little bit more about Umbrella. I'm not sure if you have this data, but can you tell us what the resale rate is and the number of scripts per writer so far, Is that data you have access to?

Speaker 1

Yes. Thanks, Yigal, for the question. Yes, we track that We have not specifically disclosed those growth rates. But what I can tell you is that The refill rates are growing at comparable or greater than the new Rx rate. So both Are showing very healthy growth and that has been persistent.

Speaker 1

So reflecting that physicians are continuing to write new scripts for patients and when those Scripts are written. They're getting refilled. So it's very encouraging looking at those rates. And in terms of the average script per writer, Again, it's not a specific metric we have disclosed, but we track that very closely. And what's really encouraging is that every single month, We see a new cohort of writers join the OZELO writing group.

Speaker 1

So we're persistently accumulating writers. And when you track existing writers monthly on a persistent level, they're increasing their prescription volume for Ambrela. So all of those fundamental demand Indicators continue to be very strong.

Speaker 7

Okay, thanks. And then one quick one for Justin on the cash and the finances. Obviously, you highlighted a very strong test position as of yesterday. Just curious, and you also mentioned that you did report positive net income, although I know that They've given us some one time items. But nonetheless, I'm just curious, Justin, if you could kind of give us a sense as to the likelihood that you might need to So use the XLR credit line again or if that's more of a backup plan and it's not really something you're expecting to be drawn again.

Speaker 4

Hi, Yigal. I'm sorry. I had trouble understanding the second part of your question. You asked about our cash burn there one time items?

Speaker 3

And then the rest of the questions whether we'd be accessing the credit that we have or financing the company have that.

Speaker 4

Yes. So we're very pleased with our 3rd quarter. We're clearly not in a point yet where we can share where breakeven is, but we take a very measured approach to our funding, as you've seen. I do think with our internal projections, we can be very flexible and patient. We have until March 15 next year to potentially draw The next tranche of debt, and so that's something that as a team will evaluate as we see how well Exposa launches and the continued growth of VIVZRELA.

Speaker 4

So It's something that we want to have the flexibility on. We don't have any intentions to do a significant equity raise this time. We're always looking at all of our different Ways to raise capital when appropriate.

Speaker 3

Yes, and Yigal, what I'd add to that is Solar has been a Spectacular and unique partner in this whole process for us. I mean, you think about when we first established a relationship with them, the company was in a very different position. And the terms around this loan are really favorable to us and what we're able to accomplish with it, which is why we drew down the 22.5. The additional 50 at our discretion is nice to have, and we may at some point in the future take that down before the timeframe that Justin just mentioned, but I think it's important that we have taken the approach that we have and have strong partners like Solar to grow the company to where we want it to be.

Operator

The next question comes from Ed Arce with H. C. Wainwright. Please go ahead.

Speaker 8

Hi, thanks for taking my questions and congrats on the approval and the quarter. First, I wanted to ask about It's Rella, given the guidance, the new guidance range, if you could Discuss sort of what you're continuing to see as drivers of additional uptake Both with new and existing writers. And then turning to EXPOSA, I'm wondering if With initial sales in the 4th quarter, are you expecting to report Quarterly metrics, say Q4 early next year and sort of disclosing those and tracking those beyond spritz. And then finally on pricing, I know this was already brought up, but I wanted to ask how you Came to that number as you think about balancing the ability to Capture the differentiated value proposition with the patient access And affordability that you mentioned is important for your launch. Thanks so much.

Speaker 3

Sure. Let me make a couple of comments on all of those. Ed, thank you for the question. And then I'll ask Susan to address all of them as well. So You know the Azrel uptake dynamic it's because the drug works, right?

Speaker 3

It is something that people are getting, you know, the samples and then their first prescription and the drug is doing Something that they've never experienced before with the products that they've previously been utilizing. So that's really what's driving us is the experience is positive And our Delta ASSIST program that facilitates access is extraordinarily important and The hallmark of what we do in the way that we help patients get access to the drugs that we develop. With XPOS and METRICS, We'd love to provide as much as we can, but we'll provide what we think is appropriate. Early in the launch, we want to make sure that As we did with Absdural, it's probably 4 to 5 quarters of these questions being asked and that we'll do the best to answer them before we're giving More solid metrics as we see it as things evolve. And with pricing, pricing is an art as well as a science.

Speaker 3

I think what we have done here given the expansiveness of the entirety of what we do for patients that this is a completely appropriate price For what this drug brings, because there are no other drugs to manage phosphorus, that our next line opportunities with a novel mechanism That may very well be the way that we can ultimately get a greater percentage of our patients to goal. And that's what we should all be focused on Is that we with this approval and the field force out there already, next week this week with ASN is going to be spectacular. And we're all going to learn a lot about this together. And we feel very confident that we have priced this appropriately and Are going to be reflecting that in uptake over the ensuing quarters that we were together talking about this. Susan, would you like to add anything?

Speaker 1

Yes. Thanks, Mike. I think in terms of, let me take the Agrela aspect of your question first and then touch on the expoza pricing. I think For INZRILLA, what we're finding is, I mean, there are many high writing physicians You are just beginning to prescribe INZRILLA. And as we get in their offices with the frequency and the sampling, we continue to bring on more and more new writers.

Speaker 1

So that's really there is a lot of runway there to continue to bring on new writers for Xarelto. And then as I mentioned before, on top of that, the existing writers Expanding their use across their patient population and what we're finding even for the 3rd dimension as a growth driver is as they gain the favorable experience with ISRLLA, They're expanding their view as they see patients daily in their office on patients who could benefit from EXRELLA. So we have very, very strong Growth dimensions there in view for XERLLA taking us into the future. I think in terms of EXFOZA pricing, as Mike mentioned, we Consider multiple dynamics, let's just talk a little bit about obviously, we've talked about the novelty of the drug, the unmet need our commitment to patient access, if you look at the CKD pricing landscape, there have been a few innovations launched Recently, which is really encouraging for CKD patients on dialysis, in high unmet need areas like Nephropathy, IgA nephropathy, lupus nephritis, those products priced in the range depending on which one depending on $4,000 The $10,000 a month, if you look at specifically hyperphosphatemia, I know Yigal had mentioned, the branded pricing Of the product, if you look at the number of capsules that they're on and it depends on which product they're on, the expensive branded binders is distributed across a pretty broad range, which ranges from $1400 a month to, as we estimate, around $2,400 a month.

Speaker 1

So In that context, you know, to consider the overall CKD pricing landscape, the hyperphosphatemia branded binder range of cost per month, The novel innovation that EXPOSA represents, we believe that it's an appropriate price point. You had mentioned the commitment to access. Mike has emphasized this, both for Ambarella and Exposa. We are quite confident with the program we have in place So we're going to support the nephrology offices with the prior authorization submission so patients can gain access to EXFOSA And that exposer will be affordable either because we can offset their co pay for commercial patients and for patients who can't afford the product, who don't have low co pay Program, they would be eligible for our patient assistance program. So, access and affordability really is our primary focus and that's what's going to be important to bring exposure to these patients.

Speaker 8

Great. Mike and Susan, thank you so much for those comments. Very helpful. Look forward to seeing the team later this week in Philly.

Speaker 3

Thanks, Ed. We'll see you then.

Operator

The next question comes from Joseph Thome with TD Cowen. Please go ahead.

Speaker 4

Hi there. Good morning and

Speaker 9

thank you for taking my questions. Maybe the 2 on Ibsrela uptake. I guess, are you seeing physicians, Obviously, the drug is launching well. Are you seeing physicians want to use the drug earlier in the treatment line of their patients? Or obviously, we talked about the target You know, post the domestic market, but are you seeing them want to use it earlier?

Speaker 9

And then second, we did see that Phase 3 trial in adolescent patients. I guess, what is the current uptake In adolescent patients between 12 and I guess 17, 18 years of age, what sort of the eventual goal of this study? Would it be Just to remove that line on the label that said safety and efficacy of the drug aren't available in pediatric patients since 2018 or is there something else that can be Done with it after the study readout. Thank you.

Speaker 3

Sure. Thanks for the question, Joe. And I'll ask Susan to speak to the Thanks, Rella. I'll take the first let me address the pediatric adolescent question. That was an interim look at some of the data that was presented.

Speaker 3

We are still indicated only for adults With IBS C, so that hasn't changed. So any insights that we have, I can't think of any that say that we're treating adolescents because that's not indicated in our label, nor is first line therapy, right? I mean, if you look at The way that we position this, it is a drug that's going to be used for patients that are no longer responding To the GCC agonists, specific feedback as to whether or not people are using it earlier, Susan, do you want to address that?

Speaker 1

Yes. Thank you. The actually, it's interesting for if you recall, we have a very focused approach calling on the highest writing physician For IBS C indicated prescription, for those physicians, the patients they see in their offices daily, have all been cycled You have cycled through GTC agonists. So very important to think about the context on where we're focused with ISRELA. So for those physicians, patients they see daily Typically have already been treated with these products.

Speaker 1

So it depends on how you define early. What we're finding is that because the patients meet already the prior authorization criteria, It's really, the physician's eagerness in identifying increasingly patients that they believe can benefit from a novel option. Remember that the overall label for, ISRALLA does support broad based use, but in our case focusing on these high writing physicians, it's really not an issue For the patients who walk into their office every day meet the prior auth criteria.

Speaker 4

Okay, perfect. Thank you very much.

Speaker 3

Thanks, Jeff.

Operator

The next question comes from Matt Kaplan with Ladenburg Thalmann. Please go ahead.

Speaker 10

Hey, good morning, guys, and congrats on the strong quarter. Just focusing on ISRELA a little bit. Maybe Susan, can you talk about how patients are using ISRELA in a real world setting now versus the use in Long term clinical studies.

Speaker 1

Yes, Matt. Actually, what we're finding in our clinical Data package really shows a rapid response to Xrela and a sustained response to Xrela, which is really a piece of our Overall product profile and clinical data profile that physicians respond very favorably to and what we're finding in the real world is that that has been their experience that Patients have responded to AZRELLA and when they respond to AZRELLA, they continue to have a sustained effect. I mean, obviously, you're not going it's not going to be That's the right drug for every single patient, but where the physician feedback really has been quite favorable on their treatment experience, consistent with Their expectation is based on the clinical data package and Spirit has been tracking the launch over time and persistently they're reporting either moderate or high satisfaction with treatment with ISRELA and reporting low discontinuation rates.

Speaker 10

All right. Thank you. And then, I guess, given the similarities between the IDFC market and hyperthrombophosphatemia Market in terms of going into these two markets with a novel mechanism of action combined with the unmet need. Can you talk a little bit about the learnings that you've had in the launch of ISRELA that you're going to apply to Exvoca?

Speaker 3

Sure. Susan, please.

Speaker 1

Yes. So, yes, you're spot on in terms of the parallels between the two markets. And a very important learning is the physician interest because of the limited options that they have had and the recognized unmet need, their interest in the novel mechanism profile, understanding the way the drug works uniquely and its clinical data package. So we're very much science based clinical based cell, patient based cell and also learn the criticality of emphasizing Our commitment to patient access and affordability. So physicians really they prescribe based on Patients needing a drug and it's important that we encourage them that they do not have to have a concern around the prior authorization process that we can support that.

Speaker 1

We can remind them that they have familiarity with that administrative process with other drugs they write and this one is no different. And in this case, The patients that they are identifying who are in need of our novel drugs, implicitly meet the prior authorization criteria. So all of that will be very critical in really supporting physician uptake, integrating novel mechanism exposa into their treatment patterns For these patients who have for so long have had no options outside of binders.

Speaker 3

And Matt, what I would add to that is The power of our Delix Assist and the comprehensiveness of that program, when physicians utilize it in the way that it's been designed, I think they find an extraordinarily seamless program where they get confidence that if they're going to write a script that their patient is going to get it, Irrespective of whether or not it's a copay pay down, it's an affordability issue, Medicaid, Medicare, our Dellix This is there to accomplish an awful lot. So it's really the that program and how physicians and ultimately the patients who are receiving Whether it's a driller or then exposa are finding that Ardelix Assist is really doing the job that it's been designed to do.

Speaker 10

Okay, great. Great. And then last question, can you provide a little bit more detail on the presence You're going to have at the upcoming ASN meeting later this week.

Speaker 3

Sure. Susan?

Speaker 1

Yes. So we will have A very strong presence for XPOSA at the upcoming ASN meeting, we will have a strong promotional booth Present, reflecting our whole launch campaign for EXPOSA. As we mentioned earlier in the narrative, we have Salesforce out and deployed calling on, nephrology healthcare providers as we speak, so we'll have a strong promotional presence at ASN. Reminder, at banners, I think anywhere you look across the ASN floor, you're going to see exposa and its novel blocking mechanism campaign. We also have a clinical scientific presence at ASN.

Speaker 1

We'll have a product theater where we have opinion leaders presenting on The novel product profile of Exposa and its clinical data package, so we're quite encouraged about, all of the events at ASN and hopefully look forward to seeing you there.

Speaker 10

Great. Thanks. Thanks, Sue.

Speaker 3

Thanks, Matt.

Operator

The next question comes from Laura Chico with Wedbush Securities. Please go ahead. This is Ingrid on for Laura Chico. How should we be thinking about gross to net dynamics for exposure pricing over time? And what your steady state rate expectations for gross to net discounts?

Operator

And then just our last question is, could you perhaps review why ISRELA as a competitor makes sense?

Speaker 3

Let me start with the last one first. It's a great question is why does Idriolla as a competitor makes sense. I think Susan is the best one to address that given what the experiences are that we're seeing in the field. And then I'll ask Justin to address gross net for exposure and discounts.

Speaker 7

Susan?

Speaker 1

Yes. So I think as Joel as a comparator, let's just take a step back and think it's Some of the parallels that Matt alluded to. So as a novel mechanism drug, a specialty drug, there are the gross to net component Take into account the distribution, the mandated government rebates and other considerations that Jocelyn can touch on. Overall, Between the two products, we're going to need to wait and see because the mix of patients, the payer mix of patients Also determine the extent to which the government mandated rebates become a part of your gross to net profile. But what is comparable between the 2, which is an important comparator, is that there will not be incremental rebates that we're providing payers for access to the drug.

Speaker 1

Access to the drug will be achieved by a prior authorization because for these patients in both cases, they have limited options and And therefore, there will not be the incremental payer rebate gross to net item, which we get a lot of questions on that because I think for product launches, Those are rebates that are negotiated over time, so they start to integrate themselves into your gross to net profile. That is one I know that, we can tell you today it's not going to be something that's going to show up on the profile for either product.

Speaker 3

And just to follow-up on the question, Were you asking about the financial comparator or the clinical comparison to other drugs in the market?

Operator

Financial comparator.

Speaker 3

Great. Thank you. Justin, if you want to address gross net for exposin and discounting?

Speaker 4

Sure. Thank you. Susan briefly touched on it. Just to elaborate, the most important thing for us is access and making sure the patients have access to it. And so Our commercial strategy will be very similar to what we did with IBSRLLA, which means, as Susan mentioned, we don't do significant rebating to payers, but we will have our same Generous commercial copay commercial buy down process where if you have commercial coverage, we will take care of your Copate 100%.

Speaker 4

And so as a result, we may expect to see the seasonality that we saw with AZERLLA where in the Q1 of the year When many patients' plans reset, there may be deductibles where we will help the patient meet that need. And then it may improve, if you will, over the course of the following subsequent quarters. So as a general premise with Pedro, as you may have seen, our Q1 was just about 33%. It's come down into the high 20s over the course of this year. I think it's fair to say, at least initially, we expect similar gross to net margins for EXFOZA.

Operator

Thank you. This concludes our question and answer session. I would like to turn the conference back over to President and CEO, Mike Raab, for any closing remarks.

Speaker 3

Thank you everyone for joining us this morning. Before I close the call, I want to recognize a member of the kidney community who we recently lost, Derek Forfang. Derek was an incredible person and patient advocate who meant so much to so many people in the kidney community and beyond. For Ardellix, Derek brought the patient voice to the Ardellix Scientific Advisory Board and was the driving force behind the creation of the Ardellix Patient Advisory Council. Gerrick was a warrior who despite his many health challenges always persevered, put others first and continued his mission To advocate for kidney patients with a smile.

Speaker 3

Derek's passing is a reminder to all of us that our job is not done. There are so many patients with CKD who need innovation and we need to continue investing in and developing innovations with urgency for this community of patients. With that, we can close the call. Thank you, operator.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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Key Takeaways

  • Ardellix reported Q3 revenues of $56.4 million versus $4.9 million a year ago, driven by a 22% sequential rise in U.S. net sales of IBSRELLA (to $22.3 million) plus milestone payments and international product supply revenue.
  • The FDA approved EXPOSEA (tapanor) as the first‐in‐class phosphate absorption inhibitor for hyperphosphatemia in dialysis patients, with a $2,960/month price and a 60‐rep nephrology sales force ready to launch post‐ASN Kidney Week.
  • IBSRELLA momentum remains strong, with persistent growth in new and refill prescriptions, expanding prescriber base and expectations to capture a high single‐digit share of the 5 million script IBS-C market over time.
  • Ardellix Assist—a comprehensive patient services program—will support both products with prior authorization facilitation, 100% copay coverage for commercially insured patients and a broad patient assistance program for affordability.
  • The company ended Q3 with $165.1 million in cash, equivalents and short-term investments (and ~$218.1 million including subsequent receipts and loan draws), positioning it to fund ongoing commercialization and R&D without near-term equity raises.
AI Generated. May Contain Errors.
Earnings Conference Call
Ardelyx Q3 2023
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