Good morning and welcome to our Ardelyx Business Update conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's formal remarks, 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 Lowie, Vice President of Corporate Communications and Investor Relations at Ardelyx. Please go ahead. Thank you. Good morning and welcome to our call. During this call, we will refer to the press release issued earlier today, which is available on the investor section of the company's website at ardelyx.com. During this call, we'll 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 and our most recent quarterly report on Form 10-Q that was filed on May 2nd and 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. Please note that Ardelyx is currently in a quiet period related to topics not addressed during this morning's call, including second-quarter financial performance. We will be providing a full corporate update in early August when we announce our second quarter 2024 results and host a conference call. During this morning's call, our President and CEO, Mike Raab, will share formal remarks. He will be joined by Chief Financial and Operations Officer, Justin Renz, and Chief Medical Officer, Dr. Laura Williams, for the question-and-answer period. I will now pass the call over to Mike. Mike. Good morning, everyone, and thank you for joining us on this call. Since the founding of our Ardelyx, our mission has always been a healthier tomorrow for patients with unmet medical needs. Ensuring patients have access to our therapies is paramount to achieving that vision. Access to treatment, from developing first-in-class medicines in our labs to introducing innovative patient access and affordability programs, is a foundation of our business. As we all know, the Centers for Medicare & Medicaid Services, or CMS, intends to move all oral-only drugs into the Medicare ESRD Prospective Payment System, or bundle, on January 1st. With the release of the 2025 PPS proposed rule issued by CMS on June 27th, it is clear that CMS has not listened to the countless calls from patient advocates and has, instead, chosen not to act in the best interest of patients. Including oral-only drugs in the bundle is inherently anti-patient. Keep in mind that a majority of dialysis patients are among those who have historically experienced poor health outcomes due to the negative social determinants of health. While addressing health disparities has been a stated goal for CMS, this policy moves us in the opposite direction, resulting in severely restricted access to important medications. Additionally, this CMS policy will also have the same devastating impact on those patients who are not covered by Medicare. The best opportunity for all patients to continue to have access to XPHOZAH and all oral-only drugs is through the passage of the bipartisan legislation introduced in both the House and the Senate to extend the exclusion of oral-only medications from entering the bundle. We stand with the sponsors and supporters of these two critical pieces of legislation who, with us, are advocating for the needs of patients. As you saw this morning, we issued a press release reaffirming our foundational commitment to supporting patient access to our therapies. Consistent with that philosophy, we did not file for TDAPA for XPHOZAH. It is absolutely clear that within the bundle and beginning with TDAPA, the restrictions placed on XPHOZAH would effectively eliminate patient access to this novel therapy for all patients, and that is not acceptable. We determined that not applying for TDAPA enables us to continue exploring all options to support patient access. Before I discuss this decision in more detail, please allow me to provide some background on our situation. There are approximately 550,000 patients with chronic kidney disease on dialysis in the United States, and 80% of those patients require prescription therapies to lower elevated serum phosphorus. In multiple longitudinal studies, it has been demonstrated that elevated serum phosphorus is an independent predictor of morbidity and mortality in patients on dialysis. Despite the heroic efforts on the part of patients and their care teams, approximately 70% of patients on phosphate binders are unable to consistently maintain serum phosphorus levels within the target range. It is abundantly clear that patients need other options than phosphate binders to manage phosphorus. Based on its positive clinical benefit for patients, last October, our first-in-class phosphate absorption inhibitor was approved. And now, in the first eight months with XPHOZAH being utilized in clinical practice, we are hearing that patients who have previously had high levels of serum phosphorus have finally been able to achieve and maintain target levels. These results are why it's so imperative, why it's our obligation to do everything in our power to maintain access to this critical therapy. As we analyze our options, we recognize that participating in TDAPA and entering the bundle would severely restrict and effectively eliminate access to XPHOZAH for all patients. TDAPA, or the Transitional Drug Add-on Payment Adjustment, refers to a payment that is made by CMS during a specified period of time when a new drug is being added to the bundle. During the TDAPA period, CMS collects utilization data for a new drug that will, after the end of the TDAPA period, be reimbursed by CMS as part of the fixed or bundled payment received by dialysis organizations for each dialysis treatment, regardless of the specific patient service provided during that treatment. Last week, CMS issued its preliminary regulation to announce changes it plans to implement in 2025. It is unfortunate that CMS has consistently ignored the feedback and perspectives from the entire kidney community of patients, physicians, and advocacy groups who have strongly recommended that CMS change its policy and not move oral-only drugs into the bundle. It's important to note that in the proposed rule, CMS treats XPHOZAH differently from phosphate binders. CMS has determined that XPHOZAH is subject to the standard TDAPA for a new renal dialysis drug rather than the unique TDAPA made available to phosphate binders. Yesterday was the deadline for us to file an application to participate in the TDAPA period beginning January 1st. Now, let me review the critical factors we considered when making the determination that filing for TDAPA was not in the best interest of patients. First, XPHOZAH is an important innovation for patients with CKD on dialysis, and the first new mechanism approved to lower serum phosphorus in more than two decades. Phosphate binders are not sufficient for the majority of patients to achieve and maintain serum phosphorus at target levels. In the short time since its launch, XPHOZAH has already had a meaningful benefit for patients in actual clinical practice. Thus, maintaining access to XPHOZAH for all patients is our obligation. Second, ample evidence from recent novel therapies entering the bundle makes it clear that access to XPHOZAH is likely to be significantly restricted and effectively eliminated for all patients, regardless of insurance coverage, and this erosion of access begins during the TDAPA period. Further, the policy interferes with the essential and appropriate shared decision-making between healthcare professionals and their patients as it relates to individualized care. We have seen these dynamics in the past with other novel therapies, resulting in drugs that were providing meaningful clinical benefit being so restricted that the manufacturers ultimately chose to discontinue marketing efforts. We believe that within TDAPA, XPHOZAH would experience similar restrictions, ultimately resulting in patients not having equitable access to what is clinically possible to lower elevated serum phosphorus. Therefore, by not filing for TDAPA, we believe that we are acting in the best interest of XPHOZAH patients as well as our Ardelyx employees, shareholders, and supporters as it provides the most optionality to explore alternatives to protect access for all patients and help guard against the unintended consequences that would limit access to XPHOZAH for patients not covered by Medicare. We still have more analyses to conduct in the weeks and months ahead to determine the best strategy to support access for patients and protect our XPHOZAH business. Once we have made final decisions, we will communicate that information as comprehensively as possible, including the financial implications of that strategy. In the meantime, our team in the field remains committed to driving the continued use of XPHOZAH based on the nephrologist's determination of patient needs. Importantly, we call on Congress to protect dialysis patients and pass the bipartisan, bicameral legislation extending the oral-only exclusion from the bundle. This is the best option to preserve access for all patients. We are hopeful that the momentum that has been created by sponsors and supporters of this legislation will drive home the critical need for Congress to protect patients and pass this bill into law later this year. Where we are right now, I think about a rallying cry from the kidney community, which is that dialysis patients are worth saving. That is why we are here. Dialysis patients are worth fighting for, and we will continue to fight for them. I will now open the call to questions. Betsy. We will now begin the question-and-answer session. To ask a question, you may press star and one on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. First question comes from Laura Chico with Wedbush Securities. Please go ahead. Good morning, guys. Thank you very much for taking the question. Mike, I wonder if you could kind of elaborate a little bit further on some of the alternatives you're considering. You mentioned for retaining access to the Medicare population. And I guess related to that, you did mention the proposed rule. Are there any other remaining legal options that you might be able to take to challenge XPHOZAH's inclusion in this definition? I guess, as you've noted, the mechanism is distinct from traditional binders. So I guess I understand it is being identified as a dialysis service and meeting the oral-only criteria. But just wondering, are there any other kind of legal courses of action that you might be able to take? Thank you very much. Hi, Laura. Thank you for the question. Obviously, lots of moving parts here, and that's why in my comments I said that the analyses and work that we need to do over the next days and months is going to address a lot of those issues. At this point, I'm not going to speculate on which path we're going to take or paths, frankly. It's likely to be more than one. But what I'm committed to doing is providing all of you updates as we learn more and draw conclusions as to the path forward. The next question comes from Roanna Ruiz with Leerink Partners. Please go ahead. Hi, morning, everyone. I was curious if you could elaborate a bit more on how access will be eliminated or highly restricted for all patients on the—I think you talked about the standard TDAPA for XPHOZAH if it did go through. And also was wondering if you could just clarify, you're talking about both Medicare and non-Medicare patients possibly being impacted? Sure. To the latter part first, if you look at historical precedents, whether it's KORSUVA, Parsabiv, other drugs that have entered the same process, those are effectively not available for both Medicare and non-Medicare patients in the process and the system that exists now, which is what drove a big part of our consideration for this decision. That is the example for the first part of your question too, is this system, this process by which one goes to a TDAPA period ultimately causes that restriction. To me, it just made no sense given our need to help these patients and focus on their needs to file for TDAPA. It made absolutely no sense given what I saw and we saw what would occur. Got it. Thanks. And a second one from me. I was also curious, does this change your expectations for XPHOZAH's use going forward? I know you're not in a position to give guidance or anything like that, but qualitatively, how are you thinking about XPHOZAH's usage and possible ramp not being part of the TDAPA period? Yeah, I can't speak to the ramp, as I said in my comments that we will get back to everyone on it. But it is clear from the anecdotes that we're hearing, and frankly, are even becoming more than anecdotes, the number of patients that are on the therapy. This drug is working. It is a good drug. It is helping these patients, and that is what's driving this decision, Roanna. Okay. Got it. Thanks. The next question comes from Louise Chen with Cantor. Please go ahead. Your line is now open. You may ask your question. Hi there. Sorry, I was on mute. Thanks for taking my questions. I had a few for you. So one of the questions that we got from investors this morning is, how do you think about the sales opportunity for XPHOZAH in light of your decision? Is it a net positive or a net negative? I know that's not easy to quantify, but maybe if you could broadly explain what you're thinking there. Second question is, how do you think about potential legislative updates? Where you're at, what's the next steps, and when will we have some resolution or some clarity as to where those go? And then just wanted to confirm there's no impact to the sales for 2024 for XPHOZAH. I'm not sure if you can say anything given how close you are to earnings. Thank you. Yeah, let me start at the end first. We can't comment on that. As I said in my previous answer to the question, the uptake continues to be great. The enthusiasm and the impact it's having on patients is clear, and we expect that that continues going forward, which is why we made this decision. Net positive or net negative, this is about the patients and the services that we provide them. With this decision, it gives us the optionality to explore all options as to how we ensure access for these patients. The most important thing that can occur is that Congress pass the legislation. Thank you. The next question comes from Dennis Ding with Jefferies. Please go ahead. Hi, good morning. Thanks for taking our questions. Maybe two questions from us. If the orals do go into the bundle starting January 1st, 2025, I guess, what is your commercialization strategy going to be then, and how would you compete on price? And then question number two, more specifically on H.R. 5074 and S. 4510, what do you think is the next step here? And I guess, what is your basic expectation that this gets signed into law? I know there's some talks around end of the year, Omnibus, CR, this could even go into first half 2025, etc. But I'm just curious to hear what your internal base case expectation is. Thank you. Sure. Thanks, Dennis. To the first point, as I said in my comments, we're not going to address the specifics as to what the path looks like forward until we've finished our efforts in analyzing what that looks like. With regards to the bill, you've written an awful lot about this, Dennis, in terms of the ways that Washington works with these two bills. I wouldn't be sitting in this job if I could predict what's going to occur in D.C. and when it's going to occur. What I can say is the unwavering support from the entire community, the constituents that are impacted by chronic kidney disease and dialysis. There's no one that isn't supporting the efforts that we have here and that Congress has for it. It's up to Congress and the vagaries of the way Washington works for that ultimately to occur. We believe, as you noted a couple of different times over the ensuing months where that could occur. We have great hope with the support that exists that Congress will pass the bill. Thank you. The next question comes from Joseph Thome with TD Cowen. Please go ahead. Hi there. Good morning, and thank you for taking our questions. Maybe just the first one on the overall dispensing of the products, should they be included in the oral bundling? Is it correct that each of these dialysis centers would then have to be responsible for dispensing and kind of hiring additional staff needed to do this at the sites? And do you think they would be even ready for that beginning in 2025? And then second question is on TDAPA in general. I guess, should some of these bills go through pushing inclusion to 2027, can you then apply for TDAPA at the end of that period, or is this sort of in relation to the kind of initial timeline here? Thank you. Thanks for the question, Joe. What you just described, CMS and their proposed rule gives a pretty glancing blow as to the challenges that dialysis organizations have in putting in place the infrastructure. They say, "Simply go ahead and use mail-order pharmacy," or in those states where you can't do that, "Put in the infrastructure." It's a huge burden for dialysis organizations to do what they're expecting them to do, which is a problem. They've not really paid attention to the fact that that is ultimately going to be an issue in delivering these drugs for these patients. And, I'm sorry, could you repeat the second part of your question? Yeah. The second part would be, if the bill's going through to push to 2027, are they. And is excluded from using TDAPA again. Yeah. So we believe that there would be opportunities for us to subsequently file for TDAPA. This is our decision today, and this allows us to do the work that we're going to do without the train leaving the station. That's really, to me, the driving decision here is to preserve time for us to do the work now that we see the PPS coming out and working in D.C. and with all the sponsors of the bill to get it through. Perfect. Thank you very much. Very helpful. Thanks, Joe. The next question comes from Ed Arce with H.C. Wainwright. Please go ahead. Good morning. Thanks for taking our questions. Mike, I have a couple. First, just wondering if you can elaborate again on exactly what you see as the crux of the issue here. What is exactly being restricted by TDAPA in terms of the prospective ruling posted on their site on Thursday? Basically, the base rate goes up by less than 1%. Is this about the corresponding lack of an increase in the base rate to include those meds? That's question number one. And two, in that same posting at CMS's site, they specifically mentioned that the incorporation of these oral-only drugs would increase access. And they note that this has been previously seen having a significant positive impact on other drugs. I'm just wondering if you could comment on that, how they can see things so differently from you. Thanks. Well, a couple of things. Thanks for the question, Ed. The base rate increase referred to in that PPS has nothing to do with binders or XPHOZAH. That's just increased cost of living, inflation, etc. The TDAPA period the binders are going to go through is for collection of utilization data that they would then subsequently increase the base rate based on that. We are not included in that, which is what I said in my statement. We're treated similar to other new dialysis drugs that go into the bundle, for example, KORSUVA. The data demonstrate that what they said in their proposed rule just isn't true in the real world. You look at what happened with Parsabiv. You look at what happened with KORSUVA, and that is just patently untrue. During the TDAPA period, there was an increase in utilization of cinacalcet and Parsabiv. That then changed subsequent to inclusion into the bundle and the base rate that occurred for that. So, selective information, as they provided my opinion, and all evidence otherwise says that things going into the bundle for innovative and important medicines that help patients do not get the opportunity to help patients that they would outside of the bundle. Thanks. Appreciate it. Thanks, Ed. The next question comes from Yigal with Citi. Please go ahead. Hi, thanks. Mike, just to clarify, so with the decision today, my understanding is that you basically believe the probability of the Kidney Care Act passing is high. Otherwise, I assume you would not have taken the risk not to apply for TDAPA. Is that a correct statement or not? I think you can separate the two. Filing for TDAPA is certain that ultimately, as I said in my statements, would effectively eliminate access. So that is what we believe to be true based upon all the evidence that we see of other drugs that have gone through the process. I have a lot of hope that the work in Congress and the support that exists for that will get that bill passed. But again, I wouldn't be in this job if I could predict what happens in Washington. I believe that this decision provides optionality to explore all avenues for this drug to be available for patients. And then if the Kidney Care Act is not passed, then it sounds like you're saying that you would preserve the optionality to apply for TDAPA in the next cycle. Or is anything changed with giving up the application this year? Does that change your right to apply in future years, or is it preserved? I think we're able to apply going forward. Since we're not being treated in the same manner as binders, the base rate that is there for binders, they don't benefit from XPHOZAH in calculating that. So it's more Parsabiv-like in the way that that process would go forth. And part of what we're going to be evaluating is not only the scenarios that you just described, but are there other ways to preserve access for these patients? As far as the legislation itself, the latest I understand is that if assuming it passes, it would delay inclusion until 2027. Is that your latest understanding? That's what both bills in the House and the Senate say. Yes. Okay. All right. Thank you. The next question comes from Ryan Deschner with Raymond James. Please go ahead. Good morning, everybody. Based on your analysis, at what point would you assume access would be mostly or fully removed for non-Medicare patients? Would you assume this would occur at some point during or after the TDAPA process for XPHOZAH? And how much of an impact has the XPHOZAH launch thus far played a role in your decision to not apply for TDAPA? Thanks. Oh, well, let me answer the second part first. I think the benefit that we're seeing with patients is something we believed was going to be the case given the clinical package that we developed as part of our clinical program. But it's proving true that it's having remarkable benefit in patients to lower their serum phosphorus. So we believe that to be the case. We now see that to be true and certainly is a big part of what drives us every day in how we serve these patients. And staying out of TDAPA preserves the optionality for all patients to retain access, not just Medicare and not just non-Medicare. And as I said in my opening statements, we see erosion happening with other examples for both Medicare and non-Medicare patients. The moment it goes into the TDAPA period, particularly the way that we would be treated, and that drove our decision as well. The next question comes from Chris Raymond with Piper Sandler. Please go ahead. Hey. Thanks. Mike, I'm sorry. I think this question is maybe a little repetitive, but I'm just trying to understand here what's happening here. Since this call, I've been looking at the CMS proposed rule, and I know you cited that, but you also cited sort of the way that Parsabiv and KORSUVA were treated through the TDAPA period. But up until recently, I think you guys have been talking about this TDAPA as a cornerstone strategy. So I guess the question is, I know you've been asked about this rule and what's different, but what exactly in the language changes sort of the calculus? And wouldn't you have known about the way that Parsabiv and KORSUVA were treated before this decision, meaningfully before? And I'm sorry if this is repetitive again, but what's changed here? Is it the rule, or is it just your interpretation of this? Yeah. So if you follow what people have believed up until the draft guidance that was earlier this couple of months ago, everyone was of the mind that we would be part of a TDAPA period similar along with binders, which then it's been a unique process for binders where there's a base rate increase similar to what occurred with Parsabiv. That is not how we're being treated. As you read the documents, you can see that it's explicit that we will not be included in the TDAPA period. The binders and the calculation of the binders are going to go through. We will be treated as new renal dialysis drugs, which is how KORSUVA was treated. That is the conclusion that I have been consistent in saying when we see the proposed PPS that was to come out as it did at the end of June, that's going to drive a lot of decision-making. That's what I've consistently said, Chris, and that is what drove us to this decision. Okay. So I'm sorry. So what you're saying is in this new proposed rule, there is no add-on payment, or the add-on payment is not what you thought it would be. Is that correct? No, that's not correct. We will not participate in an add-on payment period that then subsequently increases the base rate as it will for binders. They are separating us from binders, so we're not participating in that. We are being treated separately, somewhat in a hybrid fashion, as a separate drug, but treated similarly to how KORSUVA was treated, which was a nominal base rate increase, as you saw, of about $0.40. Okay. And then maybe this is sort of a down-the-road question, but another sort of cornerstone, I guess, of CMS's bundling construct is there's a QIP element for other stuff that's in the bundled payment. Do you have any visibility or window into to your point, I think you'd mentioned early in the call, like 70% of patients can't get to goal. One would think XPHOZAH is the primary vehicle sort of to improve that number. Any visibility once or if XPHOZAH is in the bundle as to how the QIP and measurement of that number might come into play in terms of uptake and use or how CMS might interpret that? How CMS operates with these things is a complete puzzle. There is no note, no comment about a QIP for managing something they're putting into a bundled payment. It's nonsensical to me. So there's actually not an answer to your question because there is not a QIP that they've noted in this PPS. Okay. Okay. Thank you. The next question comes from Matt Kaplan with Ladenburg Thalmann. Please go ahead. Hey. Good morning, Mike. Just in terms of the Kidney Care Act, if it's passed, as you mentioned, it pushes the inclusion of orals out into 2027. Can you talk a little bit about the Groundhog Day aspect of this? It's been pushed out several times now for five years. This will be two years. And kind of being at the same place again two years from now in terms of inclusion in the bundle of the orals. And is there anything underway in Congress to kind of implement a situation where the orals are not included in the bundle in kind of perpetuity? Yeah. I think a couple of things is fundamentally, as I said in my opening comments, access to a drug like XPHOZAH should be allowed for a physician or patient to work through the individualized care that they each need. The variability of serum phosphorus is such that simply putting this into a protocol does not make sense, which is what ultimately happens for patients on dialysis. The fact that this has been pushed out three other times—this would be the fourth time—certainly gives you perspective that it would happen again. And we certainly will continue efforts, and I know the Hill would continue assuming passage of this act, looking for other ways to either permanently extend or continue to extend it. I hope, Matt, what I have demonstrated and the team has demonstrated is that our Ardelyx is pretty good at fighting these fights, and we get done what a lot of people may be skeptical about us accomplishing. So I think people should not underestimate this team and what it is that we can ultimately do. Getting two years is an important step. It is not the last step. And we will continue the efforts in the fight to make sure that patients retain access to XPHOZAH. That is our job. We've demonstrated again and again that we do that very well, and it's hard, but we do it well. I'm committed to you, everyone on this call, that as we learn more, we will be communicating to you fulsomely as to what the path forward looks like. Then I guess kind of follow up on that question in terms of the ability to change how XPHOZAH is being treated in the recent guidance in terms of the PPS proposed rule. Is there something you can do to amend that so it's treated more like the binders in that process? Yeah. I mean, it's a fair question. I'm not sure if we were treated like binders. I would make a different decision, right? Because that means that we still would be like other innovative drugs that ultimately aren't utilized because of the inconsequential amount of money that's ultimately distributed to the dialysis organizations to do everything that they would need to do. Some of these DOs are going to have to basically put pharmacies into their facilities and deliver thousands, if not tens of thousands of bills to patients. And that's going to be devastating for a lot of the DOs. So it's a problem, and I'm not sure I would want to be treated as such. Thanks. Thanks, Mike. Thanks, Matt. 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. Thank you, everyone, for your time this morning. We've covered a lot today. What we have highlighted is our focus on fulfilling our commitment to employees, patients, caregivers, and advocates while at the same time maximizing shareholder value. We will do everything in our power to protect patient access to treatment. With that, we can close the call. Thank you, Betsy. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.