Ardelyx, Inc. Morgan Stanley 24th Annual Global Healthcare Conference

Great. Good morning, everyone. My name is Robert Klingenberger. I am with Morgan Stanley. Before we start with the Ardelyx team, which we are very excited to have here, just want to direct everyone to our research disclosures at morganstanley.com/researchdisclosures. If you have any questions, reach out to your Morgan Stanley representative. Very excited this morning to have Mike Raab, CEO, and Sue Hohenleitner, CFO from Ardelyx, joining us. Welcome. I think just to kind of kick things off, Mike, maybe starting with you. Obviously, the company has. There is a lot that has happened over the last couple of years, moving kind of commercial stage and launching two products. Maybe just to start us off, how would you characterize where the company stands today and kind of reflecting on some of the progress over the last couple of years?

Sure. Bob, thank you, and thanks, Morgan Stanley, for inviting us today. It has been certainly a journey for all of us getting to where we are. I guess the way I describe where we are in our journey is what we all aspire to do. We ultimately get into this business to develop drugs and ultimately help people who have needs that are not being met by the current medicines on the market. We have the good fortune of having two on the market, one for IBS-C, IBSRELA, and the other for hyperphosphatemia for patients on dialysis, XPHOZAH. We are on a path right now to generate this year close to half a billion dollars of revenue. As we have said in our last earnings, we are on a path to be profitable in 2027.

With that cash that we are going to generate is going to be the next evolution of a chapter of Ardelyx as we in-license and look at extending the life cycle for particularly IBSRELA when we are running our chronic idiopathic constipation trial. The reason we are doing this work is if you look at the intellectual property that we have built, we have a runway now to 2042. So the ability that we have to create additional value for both of these programs is evident in the investments that we are making. So, we are just at the start, frankly. If you look at 2042 being the timeframe before we have expiry of our intellectual property, there is a lot of time to build substantive value, and help the many, many patients, both with IBS-C and with hyperphosphatemia.

Yeah. You mentioned, right, kind of your guidance for the year and the strong ongoing kind of demand for both IBSRELA and XPHOZAH. Maybe just kind of talk us through some of the comments you made in your last earnings around the payer environment and.

Sure how you adjusted some of the recent guidance.

Yeah. I will ask Sue to comment on this as well. But one of the things when we launched is we said there is going to be an opportunity coming for negotiations and discounting to payers. We started without it because frankly, as we described, we could have given every single penny of profit away and not had a better position, which was non-formally non-preferred. We have now gotten noticed, and I think that was really the genesis of the re-guide that we did earlier this year was based upon the pressures that payers do. That is their job and the business that they are in. They were putting hurdles in front of patients in order to get a prior authorization approved.

Just based upon those dynamics, as we looked at it, we felt it was a responsible thing to do to back off from the guide that we do, reframe the business as it was going forward, as we start this process with our payers, and feel very good about the guides that we have given both for IBSRELA and XPHOZAH, and the opportunity ahead.

Sue? Yeah. I mean, the only thing I would add is the guidance for the rest of the year does not reflect that any of those payer pressures are going to be eased off.

We know that these talks take a little time, and we will look to do something in 2027 likely. But we have started the talks, and I think really, as Mike said, what we want to do is make sure that patients and physicians can prescribe and know that their patients will get the product.

Yeah. I think importantly, as part of that, you sort of maybe specifically on IBSRELA, the sort of greater than $1 billion peak guidance. Maybe just help walk us through the funnel to get down to that number and the different components giving you confidence in that longer-term outlook.

Yeah. I will start in terms of the financial piece of that. When we think about our guide for this year and the revision of $350 million to $370 million for IBSRELA, that represents at the mid about a 31% growth rate. When you think about the path to a billion dollars, initially in 2029, that would have assumed about a 38% CAGR. So we knew right now growing at 31%, to be able to grow at 38% just felt like that is a little much right now without a huge catalyst. Obviously, CIC is a great catalyst, but not something that is going to really measurably impact 2029, just given when we expect approval. So we decided let us decouple the timing with the billion. We still firmly believe in the billion. It just may be a little bit longer than that.

So I think also for the context is the hurdles are ultimately at the bottom of the funnel, and the demand at the top of the funnel is incredibly strong.

Right? I mean, what we hear from the field and prescribing physicians, we get zero pushback on the clinical value proposition on any of the things and the benefit it provides the patient, which is one of the reasons we have also put in place the beginning of the IBSRELA Pharmacy Network, the IPN as we refer to it. The reason we do that is if you look at where the vast majority of IBS-C prescriptions historically have gone through is through a retail pharmacy. I do not know if you have been in a retail pharmacy recently, but if you look at it, roughly 90% of their prescriptions are generics. They are not set up given the amount of time it takes for prior authorizations.

To move our prescriptions out of retail and into the specialty network allows for a higher touch. Our data says that there's at least one to two additional prescriptions that are filled, so refills, that go through the IPN versus retail. It's a strategic move that, frankly, had I to do it over again, we probably would've only launched with a specialty pharmacy network because of the high abandonment rate through the funnel of scripts that go through retail. There's, in the dynamics that are happening in our business, the need for any new drug that has a kind of value proposition in a space that has an incredibly successful set of competition like LINZESS. That is retail. You need to have a strategy where you begin to have that high touch.