I'm the Senior Analyst for the Spec Pharma sector for Barclays. Thank you for joining us at the Barclays Global Healthcare Conference. On day three, continuing the Spec Pharma track, we have with us the management team from Ardelyx, including Justin Renz, the CFO and Chief Operations Officer too, and Caitlin Lowie, the Vice President of Innovations. Justin and Caitlin, thank you for joining us today at the healthcare conference. Maybe to kickstart, I'd love to invite you to provide a brief overview on Ardelyx and more about the pipeline and the key value drivers for the company, and then we can dig into some of the questions. Great. Thank you. Good morning, everyone. And thank you, Balaji, for having us. It's a beautiful day here in Miami, the Barclays Conference. Also, today also happens to be World Kidney Day, so we're very excited to our kidney colleagues out there to offer a novel medicine for them. Ardelyx is a company that was founded just over 15 years ago in California. Our desire was to discover and develop novel medicines for either gastroenterology or kidney disease. Novel mechanism of action, small molecule. We are so proud and grateful that we have, in fact, done that twice. We've discovered, on our own, developed, got approved, and commercialized two medicines. IBSRELA is approved for irritable bowel syndrome with constipation. We got that approved in 2019, launched in 2022. We are very proud of our commercial success with that. We did $16 million in the first year, then $80 million, and then $158 million last year. We look forward to executing and building on the revenue of that product. We will get into that in detail. Our second product, XPHOZAH, is approved for hyperphosphatemia as an add-on treatment to binders or if you are unable to tolerate binders. Again, novel mechanism based on the NHE3 class. It works either, as I said, in combination with binders or standalone. Great efficacy profile. Both drugs have had excellent clinical results. We launched XPHOZAH in the fall of 2023, had an excellent first full year of sales last year with approximately $160 million in net product sales revenue, and look forward to talking more about that as part of our discussion. We have a very strong balance sheet. We have tried to be thoughtful stewards of our capital. We finished last year with approximately $250 million in cash. We are well-resourced to build a great company. We are looking to expand our pipeline. We have a number of items internally that we've discovered that we're looking to and evaluating, and we will be discussing those probably later this year should they move forward appropriately. We are very measured and methodical in what we do. We also are looking at external business development. There are opportunities that we are being very thoughtful and careful in evaluating, but it will take a very high bar because of the success we've had with our first two products. We are looking to build a great company. We are very grateful for the opportunity to talk to you today, Balaji. Again, Caitlin is here. I don't know if I've missed any of our key talking points to start. No, I think Justin outlined our key strategic priorities really well. Initially, we're going to be focused on executing and driving commercial excellence for IBSRELA and XPHOZAH, building out the pipeline and delivering a strong commercial and financial performance. Great. Thank you for that overview. Digging into the commercial side of things with IBSRELA, clearly the flagship product for the company. As I look at last year's performance, and as I said, launched in 2022, you had an exceptionally strong launch. The guidance for this year is $240 million-$250 million, with a long-term peak sales guidance of $1 billion. Help us understand what degree of element of conservatism is there in the FY 2025 guidance, considering that you have such a strong FY 2024. How are you baking the long-term growth drivers into this guidance? Sure. No, thank you for asking. The IBS-C space has really evolved over the last 15-20 years. It was once a primarily generic and over-the-counter marketplace, has evolved with the introduction first of Amitiza and then later on Linzess. The teams at Forest, now AbbVie, and Ironwood did a great job with Linzess in really building out the prescription marketplace for IBS-C. That was about 12-13 years ago. Another GCC agonist came along named Trulance about seven years ago or so. They have really built out this prescription marketplace. When we launched in 2022, there were approximately 5.2 million scripts written for IBS-C indicated drugs. We did around $16 million in sales. In 2023, the indicated market was about 5.7 million scripts. We did approximately $80 million in sales. Last year, there were about 6.3 million scripts written. We did approximately $158 million in sales. We have been growing with the market. The market clearly has unmet need. IBSRELA has an excellent clinical profile. It actually is in the two phase III trials. The results were very similar to Linzess in terms of efficacy. It is the payer dynamic that we cannot really compete with Linzess on price. We are essentially, by the way the marketplace has evolved, a second or third line treatment option, meaning if we want the patient to ask if they have been on Linzess or Trulance or even both, and many of these patients have cycled through both drugs, would you like to try something new? Is there something different that you would like to try? That is what we, and are your symptoms completely under control? Maybe you can do a little better. That is kind of our marketing message. We are trying to give that new option with that novel mechanism for our patients. We are looking to really penetrate that market. As I mentioned, there were approximately 6.3 million prescriptions written in 2024. We aspire to achieve at least a 10% market share. At our price point, with our considered gross-to-net and that share percentage of scripts, we believe we can get to over $1 billion. We are working methodically and building towards that as relatively expeditiously as possible. We increased our sales force, initially 34 at launch, 64 a year later, and we built it from 64 to 124 over the course of last year, having all reps in the field for sure for the fourth quarter. That's where we saw some incremental growth. We are trying to build towards that billion dollar target. We try to be very thoughtful and measured in our guidance. We believe that when we can achieve a number, we will share that with the external audience. We are comfortable with our $250 million-$250 million guidance. That is on our path to a billion. Kind of understand the dynamics around the market and market growth and the prescription growth, and you judiciously building your sales force expansion towards this target. What kind of time duration should we think about when you speak about a billion dollars or a 10% market share in this segment? What kind of field force setup would maybe be needed? Maybe at the time you reach peak sales, what kind of sales force would be needed? Yeah, as I mentioned, we expanded our sales force last year from 64 to 124 over from the timeframe we say March to September. Really, our initial launch, we were targeting around 9,000 gastroenterologists and high-writing non-gastroenterologists. With our increased sales force, we're now targeting approximately 14,000 writers. Those writers include an incremental approximately 5,000 APPs, so advanced practice providers, because we've found in our work in the first couple of years that there were others within the office dynamic that were writers. We are trying to drive breadth and depth of those groups. That's our target audience. We want each of those targets to ask their patients, would you like to try something new? Are all your symptoms? Again, same idea, really messaging that over and over again. The composition of matter patent is August of 2033. Our goal is to drive to that billion dollar target, of course, prior to that date in patent expiry. We're, of course, doing everything we can to accelerate that growth. We'll be thoughtful in how we add to the sales force in our team. One of the changes our recent new Chief Commercial Officer, Eric Foster, made is we've added some folks that are actually in the field. We call them field access managers. They're actually out deployed to try to help the pull through of the scripts. Again, in this marketplace, there are prior auth required. We really want to help the office make this as seamless as possible and get the drug to as many patients as possible. Yeah, I think the only thing I'd add is the reason why we believe that these investments, both in the commercial team, our omnichannel communications, is the market has really demonstrated that it responds very favorably to IBSRELA. It has a strong clinical and efficacy profile. Once physicians have experience with IBSRELA, they're willing to write more. We know that once we get in front of them, they're more likely to write due to the clinical profile. These investments, we feel very good about. We talk about the field can drive that clinical conviction at the top of the funnel. The more that we can use the lever with our ArdelyxA ssist program and our field access managers to pull them through at the bottom, it allows us to touch the patient at every step of their journey. Understood. You spoke about the unmet need. Is there a way you can quantify or comment on this unmet need and what section of the patient population this would constitute and how we could tap into them? Yeah, interesting question because there actually is a little bit of a difference in opinion between the physicians and the prescribers and the patient population. I think from our survey data, we've found that when asked the high-riding GIs and high-riding non-GIs and the physician population writ large, they believe that approximately 30% of their patient population is not well served or could possibly do better. When we ask the patient population essentially the same question, it's closer to 70% who believe their needs are not completely resolved. Yeah, I think that we have data that suggests up to 13 million patients may have IBS-C. There is a large patient population, and they're very active in their treatment. Especially those that are diagnosed, they're looking at their entire life holistically and how to manage the condition. That is where some of the activities we're taking this year to activate those patients in a more aggressive way, we believe, will be involved. As Justin said, 70% of them indicate they continue to have symptoms despite treatment. That is a large opportunity for us to do. Understood. Understood. Maybe on the commercial side of things, can you provide a breakdown around the Medicare versus non-Medicare patients for IBSRELA? Sure. So IBSRELA is approximately, at least historically for us, in the 50% neighborhood of commercial and then 50% non-commercial. That is a little bit more Medicare than Medicaid, and then there's some cash. It is different than exposure. When we talk about exposure, exposure has a different patient mix. Approximately 50% commercial, approximately 30% Medicare, and approximately 20% Medicaid, plus or minus, historically. Yeah. As an extension of that, could you also talk about your contracting and especially the gross-to-net strategy and how this is likely to evolve? Sure. We have not contracted yet with payers. We believe that as a novel mechanism and with the clinical profile that we have, we are comfortable in being second line from a payer perspective. Again, because we have a first line clinical profile, we are there for the patients whose needs have not been well met by frontline therapy. We do not believe that contracting would actually ever move us on the formulary of either Linzess or Trulance or something else. We are firmly in that second line when your symptoms are not well met, which Caitlin just alluded to. That is a place where we are currently playing. Obviously, this is always subject to change. We take an independent look every year. For now, we do not believe there is anything we can do contractually that will get us in a better position than we are right now. Because if we did, of course, that would negatively impact our gross-to-net calculation. So IBSRELA historically has had a what I call 30% plus or minus 5% gross-to-net range, less favorable in the first quarter, and then more favorable as time progresses. That is primarily a variable of the commercial copay buy-down that we do. To the extent that the patient's commercial plan allows, we will do everything we can to pay their copay at the point of sale. As you might imagine, most plans, so deductible plans and others, reset in January. Typically, our copay claim amounts are higher and more frequent in the first quarter, and they lessen over the course of the year. As an example, in 2024, in the first quarter, our gross-to-net was approximately 33.5%. In Q4 of last year, it was approximately 28.5%. Understood. That's 500 basis points spread. I want to spend a few minutes on XPHOZAH. Again, similarly there on that front, maybe a quick overview around the product itself. It's been one full year of launch for you. What has the feedback till now been, and what are you seeing on the ground? Sure. XPHOZAH was approved in October of 2023, and we launched in November. Now we're 15-16 months into its commercial availability. It is a great drug. These patients are end-stage renal disease patients on dialysis. Our drug is indicated as either an add-on therapy to binders or when you can't tolerate a binder. There are approximately 550,000 patients with end-stage renal disease on dialysis in our country. The mix is approximately 60% Medicare, 40% non-Medicare. We want to make our drug available to everyone because of its novel mechanism. Its clinical profile is excellent. We were, again, discovered, developed, and approved by our team and now launched. The response from the patient community, again, it's World Kidney Day today. We are happy that we are able to make this drug available for kidney patients. It's easier to take. It's one small pill twice a day, 30 mg strength. It has a really strong clinical profile. We have seen patients that were outside of the target ranges set by the kidney community, which the goal, generally speaking, is to have your milligrams per deciliter 5.5 or less. We have been able to get patients who have been outside of range for many years under control and within acceptable range. We've had even anecdotal feedback of patients who, once upon a time, were not transplant eligible to suddenly become transplant eligible because their levels were within range. Yeah, the therapy is really serving an unmet need among patients. It can work in combination with binders as well as a monotherapy. It is proven to be a very flexible therapy for physicians. While our sort of initial cohort of patients were those that maybe had the highest level of phosphate binders, we believe that physicians are beginning to expand their consideration set to really any patient who may be intolerant of binders or who adding XPHOZAH may allow them to reduce their binder regimen or add on top. The therapy has demonstrated we had an incredibly strong first year of sales at $161 million. We believe it just demonstrates the unmet need among the patients and the continued growth opportunity in the future. Got it. You have a long-term guidance of $750 million before peak. Remind us of when the IP expires and what is the trajectory to that $750 million in terms of duration? Yeah, great question. XPHOZAH has a composition of matter to August of 2033, but its method of use patent extends til April of 2034. As Caitlin alluded to, we did approximately $161 million in sales last year. That included Medicare patients as well. On January 1st of this year, the dialysis bundle took effect. Medicare patients are no longer revenue-generating prescriptions for us. We are having a little bit of a reset here in 2025. Looking at the total addressable population, again, there are approximately 550,000 end-stage renal disease patients on dialysis. 40% of them approximately are non-Medicare. Our total addressable market is approximately 220,000 patients. It is our belief over time that all of these patients at some point are going to need pharmaceutical intervention for their phosphate-lowering therapies. We believe we can get a meaningful share of those 220,000 patients. In our survey work prior to approval, in our first year of launch, and even now, we believe that we can achieve at least a 30% market share. At least the nephrology community believes that that's kind of on average what they think that they would prescribe to their patients. If we can make that type of penetration at our price point, we can get to that $750 million of net sales prior to patent expiry. Understood. Got you right with the 60% Medicare patients are no longer accessible because of the changes in reimbursement? They are no longer revenue-generating patients, but we believe that is the right thing to do to make our drug available to everyone. Our message has not changed from March 12th of last year to March 12th of this year, which is have the prescription writers, the nephrologist, or the nephrologist's office send the script to Ardelyx Assist. We will evaluate the patient's coverage. Should they be a commercial payer and that is a revenue-generating script, excellent. If they happen to be a low-income patient, and this was true last year as well, and they qualify, we will make sure the program is available through our patient assistance program to get them the drug as well. It is a mail order. To the extent they're a Medicare patient before, and now they're a Medicare patient still, of course, in 2025, we want them to still maintain their medicine. We want the nephrologist to be agnostic to the coverage of the patient. We want them to write the prescription for every patient that it's clinically relevant for them to benefit from. One of our tests that we've evaluated, and Eric Foster, our Chief Commercial Officer, has really carefully analyzed is, okay, if you were a commercial patient in 2024, and you're a commercial patient in 2025, are you still getting the drug? The answer is yes. Are you a new commercial patient in 2025, and are you getting the drug? The answer is yes. If you were a Medicare patient in 2024, are you getting the drug, and are you getting it still in 2025? The answer is yes. If you're a new Medicare patient in 2025, are you getting the drug? The answer is yes. We are very pleased that our strategy is working. We want this drug to be available to everyone. Again, in honor of World Kidney Day, it is the right thing to do morally to make sure that everyone who could benefit from a drug can get it. Wonderful. That's great. You're definitely addressing one part of the equation, which is to ensure that patients don't lose access to the drug. The other part of the equation is on the company itself and mitigating the revenue impact. How could you counter that, and what could you do to minimize revenue impact? Sure. We will, of course, have a setback in 2025 with this reduction from Q4 of 2024. Our goal, again, as I just mentioned, is to make it available to everyone and have the nephrologist keep writing. It is a very large addressable market. We're only a year and a half since approval. We need to just continue to have the nephrologist write the script. There's enough of a total addressable market that we believe over time we will make it the revenue guidance long-term setup. To help investors understand this, is there any way you could share metrics around this retention of patients on XPHOZAH in 2024, covered by Medicare in 2025? How can we kind of gauge this or understand this? Sure. I mean, it's a little too early to tell specifically in 2025. We're only about 11 weeks into the year. The overall dialysis space, particularly around phosphate-lowering therapies, has been a little tumultuous because of the change that affects all patients, not just related to Ardelyx. We want to keep the nephrologist at the center of the decision-making and encourage the dialysis organization to let them know that Ardelyx's drug, XPHOZAH, is available through our Ardelyx Assist program and to not worry about the other items. In general, the space is having some challenges in getting their medicine because this is a new government decision where Medicare no longer includes the oral- onlies outside as a Part D benefit. It has moved into a Part B benefit. That is a change for all of us that we have to navigate. It is too early to tell on a specific basis. Understood. Maybe shifting towards the pipeline side of things. Clearly, with two composition of matter patents expiring in 2033 for both drugs, with the patents expiring in 2033, I think you have to get started now to build the pipeline. Help us understand what's your capital allocation strategy. You called out a strong balance sheet. I see around $250 million in cash. How would R&D be prioritized and BD be prioritized over with this kind of balance sheet structure? Yeah, excellent question. We've always tried to be thoughtful stewards of our shareholder capital. I think we've done a very good job over the past few years in getting us to where we are. We need to maintain that discipline in 2025 and beyond. We aspire to build a great company. To your point, we need to augment the pipeline. We're going to look at internal innovations that we have that we, again, have focused on the launch and growth of IBSRELA and XPHOZAH for the last few years, and appropriately so. Now that we have that in command and in control and we're going to execute on those, the next step to do is to augment our offerings. We're going to have a very high bar to grow. It has to be, again, an area of unmet need, patient population that's underserved, and an area where we think we can make a difference. That will be probably renal adjacent or GI adjacent. We do have some assets internally that we have not developed yet for, again, capital reasons or priority reasons. Now we're going to look to see if we can bring those forward. We're going to look at lifecycle management to see if there's any opportunities there because tenapanor is an outstanding drug, efficacious and safe. We know the profile. We'll also look at external innovation. Again, we're going to have a very high bar. We're going to be thoughtful. Again, if it can be similar to what we've done before, we'll do it. We're not going to do a deal just to do a deal. Understood. And with tenapanor approved in multiple geographies and as you think of expanding or U.S., what are the timeframes that you're looking at and the investments needed for this and what's the strategy? We have three partners. We partnered with Kyowa Kirin in Japan for hyperphosphatemia. It actually got approved a month before us in September of 2023. They have been selling it for a year and a half now, doing very, very well. We provide them with the product supply. Tenapanor is actually challenging to make. We actually do provide them with the drug, and then they do the final packaging. We are happy for their success. It is unpartnered for IBS-C in Japan. That happens to be a large market for Linzess. That is a potential opportunity. We are proud that two weeks ago, our drug was approved in China with our partners, Fosun. Fosun will be moving that forward. We got a $5 million milestone, and we have royalties between 15%-20% on their sales for hyperphosphatemia. They also have the rights to IBS-C. They were focusing on hyperphosph first. We are partnered with Knight in Canada, and they are selling it for IBS-C that was approved several years ago, and we get a modest royalty from them. Europe is unpartnered, as is the rest of the world. Again, it would take the right deal and the right partner. We want to be thoughtful about it. Again, echoing my business development comments, we would never do a deal just to do a deal. We would like the right partner to move this forward at the appropriate time. It is not a high priority for us. Again, the most important thing for us is driving the execution of IBSRELA, XPHOZAH, and then following up with keeping a strong balance sheet. If we can find the right partner that would fortify our balance sheet to go to our other initiatives, that would be great. Again, now that we have a business development team, we actually have the resources to look at partnering considerations, but it has to be the right deal. Understood. With the time just running out, I think that's a great spot to leave this conversation at. Justin and Caitlin, thank you so much for your time. I look forward to updates on your progress. I wish you the best at the conference. Great to be part of it. Thanks for having us. Thank you. Thank you for having us.