Conference Transcript - ARDX 2026-06-03

Dennis Thain, Analyst — Jefferies

Good morning. Welcome to the Jeffries Healthcare Conference. My name is Dennis Thain, biotech research analyst here. I have the wonderful pleasure of having CFO Sue Hohenleitner here, as well as Chief Commercial Officer Eric Foster here with us from Ardelix. Welcome. Before we kind of get into the Q&A, maybe Sue, if you can give a little bit of background in terms of Ardelix and what you're trying to achieve and just give us the state of Ardelix right now.

Sue Hohenleitner, CFO

Absolutely. Yes, thank you very much. So for those of you that don't know Aradelics, we are a company focused on developing and commercializing innovative products for unmet patient needs. So we have two currently commercialized products. We've got Ibsrella for IBSC, and we have Exposa for patients on dialysis with hyperphosphatemia. If you think about those two products combined, it's going to be over $500 million in top-line revenue this year. So a lot of revenue to be had, and I know we'll have a lot of questions on that, Dennis. Speaking of 2026, I wanted to just provide very quickly what our four key strategic priorities are. The first one is to increase Ibsrella demand. And as I talked about the half a billion dollars, Ibsrella represents over $400 million of that. So we guided to $410 to $430. So we really need to see that growth and the continued increased demand there. It's also continuing the momentum that we have with Exposa. The third priority is about continuing to advance our portfolio, our pipeline of our current pipeline, which we'll talk about. We've got one product in preclinical. We also have one in phase three, and we've got some pediatric trials that we'll talk about. And then finally, it's to continue the strong financial performance. And what I mean by that is it's top-line growth. it's you know keeping our capital allocation plan going and we can talk about that in a little bit as well and it's also about maintaining a healthy cash position so with that I'll turn it back to Dennis to start the questions

Dennis Thain, Analyst — Jefferies

yeah we'd love to start on Ipsarela I mean that's one of the single biggest growth driver of the company doing 410 to 430 million of revenue this year so before we get into some of the financials and just the growth drivers there, like, I guess, you know, what is the use case for Ibsirella? Where does it fit in IBSC?

Eric Foster, Other

Yeah, thanks for the question, Dennis, and thanks for the opportunity to be here. So where does it fit in IBSC? So the IBSC market is a very large market. So in 2025, around 7,000 prescriptions in the market. You know, we focus on 14,000 HCP prescribers that represent about 50% of that total TRX market. And Ibsrilla is a unique product. It's NHE3 inhibitor in terms of its mechanism of action. And we know that Linzess and Trulance have been out for a while. And as GCC agonists, their positioning is really first line. And they've done a good job of that over the past 10 plus years in establishing themselves in the market. But we also know that patients need more. So around 77% of patients, according to our research, continues to demonstrate symptoms and or not satisfied on a GCC agonist. So those patients need something different, and that's where Ibsrella comes in. So Ibsrella offers a unique mechanism of action, proven clinical efficacy and safety profile. And so for those patients that are looking for something different, that's where Ibsrella can come in and really help them in terms of being able to treat their IBSC.

Dennis Thain, Analyst — Jefferies

and you guys have made tremendous progress there in the sense that I believe last year you guys did 275 this year going to be north of 400 so like what exactly is driving that growth what is

Eric Foster, Other

really resonating with physicians yeah so as you said in 2025 we did 73 percent year-over-year growth and then in first quarter of this year 58 percent year-over-year growth relative to q1 of 2025 so um we are continuing to see um our momentum be very strong as it relates to um ipserola when we think about the opportunity that we have in in front of us really um continuing to see the benefit of our sales force so we expanded and doubled the size of our sales force in late 2024 and really saw the fruits of that um that change in in size in 2025 as we saw quarter over quarter sequential growth as it relates to demand we're going to continue to see that in 2026 you know we've communicated guidance north of 50 percent year-over-year growth for this year so good return from our sales professionals we are optimizing our alignment adding some additional representatives around 20 or so that will start in the back half of this year in July as well as some additional field reimbursement managers which really help the physicians navigate the payer environment and pull those patients through. The third thing I would say is making sure that the scripts that are written get filled. So we have the Ipserella pharmacy network which is a limited group of specialty pharmacies that distribute Ipserella to patients and we know when those prescriptions go to the Ipserella pharmacy network there's a higher fulfillment rate as well as on average one more refill on an annual basis. And then lastly we know that these patients are very engaged. Like I said, it's a very large market. And so this year, we've got a concentrated effort to really engage patients, meet them where they are, drive them into the office, because we know when they are aware of Ibsrella, they go to the office, they ask for the product, and the physician will write for the product. So it's really those four levers that we're focused on in 2026. And we also know that that's going to continue to support our growth as we go

Dennis Thain, Analyst — Jefferies

out to the $1 billion in 2029. In terms of penetration into, you know, the post-Linzess sort of, you know, market, right, for IBSC, can you talk a little bit about, you know, how many doctors are prescribing Ibserola right now? How much more, I guess, you know, runway is there to penetrate? And maybe give a couple of examples in terms of, you know, for those high prescribing doctors where are they in penetration because that could be a leading indicator for some of those

Eric Foster, Other

later adopters yeah yeah so we haven't really gotten into the details in terms of numbers but i will say you know we focus on around 14 000 hcps that's broken down into high writing gis high writing pcps and then advanced practice providers so nurse practitioners and pas and they're a really important segment for us they essentially prescribe just like the high writing GIs do. And we know that when physician writes, on average, we're seeing their share around six or seven percent higher than that of physicians that have just got one or two. So being able to continue to drive depth with our prescribing target physicians is really important to our long-term growth. And then we still feel like we still have plenty of room in terms of adding new writers. So it's really breadth and depth of prescribing that we're focused on. I think, You know, we've only been out now since 2022, so still relatively early in the life cycle of the product and still feel like there's plenty of opportunity, again, in a very large market that's out there.

Dennis Thain, Analyst — Jefferies

In terms of driving additional death into the existing prescriber base, what's been some of the feedback from doctors who are only prescribing it to, like, 1%, 3%, 5% of their patients? You know, like, what's been some of the pushback? Is there any kind of feedback on efficacy, or is it just mainly waiting for these patients to come in for their, you know, visits every six months or every year? I'm just curious, you know, what's going to drive that depth of prescription?

Eric Foster, Other

I think it's really, just like you said, it's around patient identification and the physician engaging the patient and asking them if they're satisfied on their current therapy or they continue to experience pain with their constipation. From a patient standpoint, that's why we think it's so important to engage them more in 2026 to make sure that they're speaking up on their behalf. We talked earlier this year about our engagement with the LPGA and think that that's really a vital avenue for us to engage patients, to really empower them to go in and speak to their physician honestly about their condition. There's a lot of stigma associated with GI disorders. And so for us, it's really about empowering patients to speak up So the physician can recognize them that while they might be on Lens S or TrueLens, they're still not completely satisfied and they're looking for something different. And that's where that's where Ipsarela fits in.

Dennis Thain, Analyst — Jefferies

Can you talk a little bit about, you know, awareness of Ipsarela at the physician but also patient level? I'm just curious, you know, in terms of driving, empowering the patients, right? Like, like, are they aware and like what sort of efforts do you think you guys can take to drive that awareness?

Eric Foster, Other

Yeah, we do obviously see awareness with, you know, with Ipsarela, but there's still room for improvement there. And so the team, you know, when it comes to our marketing efforts, very engaged from a digital social standpoint. I think you'll continue to see us invest in there in the latter part of this year to really try to go broader. Because, again, it's about driving awareness, patients into the office and requesting for Ipsarela. So while we do see a good level of patient awareness because the population is so big, the patient base is so big, we still have room to go there. And you'll see us investing in that this year.

Sue Hohenleitner, CFO

I would just add to that, that is why we've had a little bit more investment this year when you kind of think year over year, our OPEX has gone up slightly by about 25%. A lot of that is these high ROI programs that we're doing and that Eric's been talking about, which I think is great.

Dennis Thain, Analyst — Jefferies

And I believe OPEX this year is 525 max or 520?

Sue Hohenleitner, CFO

Up to 520, yeah, which would be about a 25% increase year over year.

Dennis Thain, Analyst — Jefferies

So I guess what sort of investments, you know, are you guys planning to do? Yeah. DTC is like a big question. Curious where you'd stand on that. But, you know, I'm sure digital channels and things like that. So just kind of elaborate on that a little bit

Sue Hohenleitner, CFO

further. Yep. One of the things I'll say first too is, and we can talk about this later, but the R&D, the investment in the R&D programs that we've announced. And so that's obviously a piece of the SG&A that we've talked about that's up to 520. The rest of it is things like Eric talked about the patient activation. There's not a broad DTC. I don't think you'll see us on mainstream TV like you see Linzess. You know, it's great that they're on there because, again, it grows the market, and then, you know, we do get that as well, but, you know, certainly some, you know, digital DTC and some more direct-to-patient, I'd say. Yeah, I mean, social is a very powerful

Eric Foster, Other

medium for patients. We know that they're highly engaged. When you think about the demographic of our patient, you know, 30 to 55 years old, highly engaged in social media, and we get see good positive return there. From the TV side of things, as Sue mentioned, you're not going to see us doing any Super Bowl ads, but you can do much more targeted, cost-effective media when you think about streaming TV and the options that are out there. So could have potential some investments down the road this year and the later part of the year that could really reach patients in their TV but not be doing so on kind of the main broadcast type media.

Dennis Thain, Analyst — Jefferies

Okay. eric you mentioned uh the specialty pharmacy dynamic which i think is incredibly interesting right like when you look at ipsarela historically it's been around you know the specialty pharmacy channel has been around 15 15 percent of scripts i think right now it's like 30 to 33 something like that so you're essentially doubling the amount of scripts that's flowing through that channel so so elaborate a little bit more on just the rationale behind doing that um and you also mentioned one additional script what is the base of that script right is it three four five right um and yeah we'd love to hear more about that yeah so as we were looking at our business you

Eric Foster, Other

know prescriptions can really they were really going to one of two places they were going to the retail side or they were going to specialty pharmacy retail you know on average fills about 90 of their prescriptions that they fill are generic they're also administering vaccines and other uh you know seeing patients checking people out at the grocery store or at the at the at the pharmacy. So there's a lot going on. When you think about Ibsrella and where we're positioned second line and minimal discounts on the payer side of things, prior authorizations can be required. And so there are a couple of steps that need to take place in order for the product to be filled. And really the retail pharmacy is really not the place to do that. So we wanted to make sure that we set up the best environment for physicians and patients to be able to get the script filled. So we have the Absarola Pharmacy Network. It's a limited group of specialty pharmacies. And specialty pharmacies are important because they're very patient-centric, high-touch. And I think you see that in the additional refill. So your question leads to around five or six refills on average. And if they go through the specialty pharmacy, they get the additional refill. So the advantage of patients going through the Absarola Pharmacy network one you get a higher fulfillment rate so you don't see the abandonment like you do on the retail side of things and then you get the additional refill on average on an annual basis

Dennis Thain, Analyst — Jefferies

okay um how high can that go you know right now it's 30 percent can it go to 40 50 just as you think about medium to long-term trajectory for ipsarela right it seems like a very very uh

Eric Foster, Other

you know very attractive investment it is and you're exactly right it is an investment And we are making a concerted effort to try to make sure that those prescriptions go into the network So I mentioned our field reimbursement team They're out there messaging to physicians and making sure they've got the right path Set up so the scripts can get can get filled So we're purposely trying to make sure that those scripts go through the Israel of pharmacy network and ultimately at the end of the day The worst thing that can happen is a physician write a prescription for a product and the patient not get it So this is us putting a strong emphasis on that, and that's why it's one of those four key levers that we talk about that will help us in terms of our long-term growth trajectory.

Dennis Thain, Analyst — Jefferies

Have you commented on that abandonment rate historically where it's been outside of the specialty pharmacy channel and like where it is now?

Eric Foster, Other

We have not, but I will say, you know, we obviously have the information that we're able to look at, and the fulfillment rates look significantly better than they have in the past.

Dennis Thain, Analyst — Jefferies

Okay. So then, you know, in terms of the outlook, you guys did provide medium-term guidance, I think a billion dollars in 2029. You guys are, you know, around 410 or 430. Hopefully you guys, you know, beat and raised this year. That's why we're bi-rated. But, you know, the path from 26 to, you know, 400 plus million to a billion is still fairly steep. So I guess what drives that confidence to, you know, for you guys to put that number out there?

Sue Hohenleitner, CFO

Yeah, I mean, I would say, as Eric mentioned before, you know, we grew 73% of Zarela in 2025, you know, growing at our guide between 50 and 55%. So when you think about then getting to a billion dollars in 2029, that's about a 38% CAGR. So that kegger feels very doable given where we are, even knowing that there's now a higher base of overall prescriptions in that. And certainly all of the marketing programs and the selling programs that we're doing are all not only helping us get to the 410 to 430, but also to the billion dollars by 2029, in 2029.

Eric Foster, Other

Okay. Yeah, I would just add, I mean, we have a sizable market that's continuing to grow at double digits. We have a winning and sustainable position in that marketplace. and highly effective on execution. You know, with the addition of the area business managers, we're kind of optimizing that alignment to make sure we've got the right reach and frequency to those target HCPs. So we feel really good about the team, their ability to execute, the right strategy. And then as you look at it from a competitive standpoint, it's pretty wide open over the next five, six, seven years.

Dennis Thain, Analyst — Jefferies

Can you remind me how many reps you have selling Ipsarella right now? And then your $1 billion guidance, does that count or assume that you guys would meaningfully expand that further?

Eric Foster, Other

So right now we have 124, and as I mentioned, we'll be going up to 144. This week, I was just in Boston yesterday, actually, with the new 20 ABDs or representatives. They are very motivated and engaged and eager to get out there in the field, and so they'll be ready to go on July the 1st, as well as the new field reimbursement managers. So we'll go to 144 on the sales side, and that's really what we feel is kind of the optimal alignment against the 14,000 HCPs. So as you think about the guide in 2029 to a billion, it's really primarily IBSC related and our ability to execute and deliver and drive depth and breadth of prescribing against that 14,000. As we think about 2029 and beyond, we have a successful CIC trial that comes in that really drives greater value in terms of the Ipsarella overall and really opens up that CIC market that can create in another inflection post 2029 yeah okay

Dennis Thain, Analyst — Jefferies

so then on CIC you know it's a big face for you read out like talk a little bit about you know how big that market is and can be for for Ipsarella appreciating that competitive landscape might look a little bit different there you know I'm I'm assuming, given that the data is in 2017, it might not be a huge contributor to your $1 billion guidance in 2029, but how are you handicapping that phase three redale? How do you have confidence that it'll be positive in CIC?

Sue Hohenleitner, CFO

Yeah, I'll start talking first about the trial and then pass it to Eric for kind of the market size. So we have announced that first patients have been dosed, so we're continuing to enroll. All of our pre-specified sites that we wanted to be up and running are up and running, So really great accomplishment there. So we expect to have full enrollment by the end of this year. The trial will take about 26 weeks in total, and then we'll obviously file after that for approval. It's a 700-person placebo-controlled double-blind study, three arms plus a placebo, and certainly looking for the outcomes mid-next year or so. That's kind of on the actual study itself, and I'll pass it to you on the market opportunity.

Eric Foster, Other

Yeah, so from a market sizing standpoint, CIC is about two to three times that of IBSC, so much bigger market. But we know the vast majority of that is over-the-counter. But there is a strong prescription market as well in CIC. Matter of fact, when you look at the seven million prescriptions right now, it's IBSC and CIC because it includes Lenzess and Trulance, which has both of the indications. So I think there's a couple of ways that you can look at it. It's still a very sizable market, and we feel like with the addition of CIC and the conversations we've had with physicians and research that not only will we gain on the CIC side, but it's going to be able to drive greater confidence for the molecule as a whole and really raise what we think that we can do on the IBSC side as well. What sort of patients are you

Dennis Thain, Analyst — Jefferies

enrolling in the CIC trial? Like, are they generally, you know, treatment naive? Could you get, you know, patients who have failed lenses? I'm just curious, like, what that population looks

Eric Foster, Other

like yeah I mean you you could you certainly could I mean I don't think we have any exclusion criteria with regards to patients that have tried that but I think you know for us patient that has constipation with or without pain you know this is kind of the future constipation with or without pain or abdominal discomfort would really be that target market that we'd be focused on very simple message for our field team to be out there with physicians driving the overall value of ipsarilla and helping more patients at the end do

Dennis Thain, Analyst — Jefferies

Do you have any insight in terms of, you know, how much of Linzess's revenue comes from, you know, CIC versus IBSC? Maybe you can look at claims data, which, you know, we don't have access to. But I'm just curious, you know, as you think about Ipsarela, and I understand that you're saying that CIC is, like, two to three times bigger. But in terms of the actual flow through to Ipsarela revenue relative to IBSC specifically, I'm just trying to gauge the magnitude, you know, um like like how big that can be relative to ibsc yeah i mean it is somewhat tough to see they don't

Sue Hohenleitner, CFO

disclose it specifically what their their split out is but you know there's different dosage forms so you can kind of triangulate but again it it seems like that's prescribed across their dosage

Dennis Thain, Analyst — Jefferies

so it's a little a little bit tough there yeah yeah so not really um and lastly just remind me on ip and when you expect ipsurella to go off patent yep so we um did just get orange book

Sue Hohenleitner, CFO

listed the 299 patent so that's a formulation patent for tenapenor so that goes out to november of 2042 so we've got um you know that's a brand new patent that's not an extension and that complements and supplements the composition of matter and method of use which

Dennis Thain, Analyst — Jefferies

are 33 and 34. okay for exposa so talk a little bit about that that you know seems to be recovering a little bit um curious what you're hearing in terms of feedback from doctors and you know given that this entire space has been sort of disrupted with you know the loss of part d yeah well i'll

Sue Hohenleitner, CFO

start with with some of that and then pass it to you so yeah this year we've guided exposa full year to be 110 to 120 million dollars which would be around a six to 16 growth versus prior year when you even look at q1 our total growth if that is really the paid writers grew about 19 percent total prescriptions grew about 32 percent so we are seeing that continued growth albeit you know a little bit lighter and smaller than what we see with absurdo but certainly continues to grow even in this environment and i would say that would that's one of the reasons we did want to lean in and provide guidance this year to really give that stability um and certainty around what we think is going to happen so so far we've been pleased with what we've seen in terms of the financial performance and i'll pass it to you for positions yeah i mean i i really

Eric Foster, Other

lean on kind of the first quarter number around 19% growth over prior year. So that's really the paid prescriptions. And then when you think about total dispenses, which includes our patient assistance program as well as paid, that was around 32% year over year growth. So I understand in terms of guidance 110 to 120, but while we're in this Tadapa period, as you mentioned, the market is a bit disrupted. And we know that that ends at the end of 2026. And so, you know, for us, we'll be in a good position in 2027 and feel like, you know, we've got a product that can really address the unmet needs of those patients that are on dialysis and continue to have hyperphosphatemia.

Dennis Thain, Analyst — Jefferies

And how are you thinking about the landscape given that Unicisive might get approved, you know, fairly soon? And, you know, could that add another layer of disruption in terms of a new Tadappa period?

Eric Foster, Other

Yeah, I mean, our assumption is that the product would likely be approved at the end of this month and could go into their own Tadappa period. But just to remind everybody, our indication is to use Exposa in addition to that of a binder. So, again, you know, 70% of the patients we know continue to have elevated phosphorus levels or don't have kind of two consecutive measures where they're able to have their phosphorus under control despite being on treatment with a binder. So we know that patients are going to continue to need more and need Exposa. And so we're there, obviously, to address this unmet need and feel like we've got a good place in the market as well.

Dennis Thain, Analyst — Jefferies

You guys gave long-term guidance for Exposa, that's $750 million. I guess it seems like, you know, given that it might be $110 million or $120 million this year, it seems like a fairly steep ramp. So maybe talk about the confidence that you had when you gave that guidance, I believe it was last year, and your confidence around that today. I'm just curious how that has evolved.

Sue Hohenleitner, CFO

Yeah, I think what we continue to monitor is the paid prescription growth and seeing 19% even in Q1. We had, I'm trying to remember the number from 2025, it so quickly went away, total for paid prescriptions.

Eric Foster, Other

Oh, 32.

Sue Hohenleitner, CFO

Yeah, 32. No, total for all of 25. But anyway, what we do see is, you know, continued growth in that paid prescriptions. And so that really gives me, from a financial standpoint, confidence to continue to reiterate the 750, you know, before the loss of exclusivity.

Eric Foster, Other

Yeah, and I would say, you know, we continue to do research with physicians thinking about peak share and continue to see the same response coming back before the Tadapha period as well as after the Tadapha period. So really, again, sizable market, you know, 550,000 patients a year. unfortunately continue to be on dialysis and like I said 70% of those continue to need something else and not able to control their phosphorus so the market is there exposes great product proven safety and efficacy and know that it can really meet that unmet need and so for us it's just continued to go out and make sure that we're driving awareness driving clinical conviction with HCPs and patients can have access to it and we've seen that with our patient assistance program that we provide as well as their ability to get through commercial and Medicaid.

Sue Hohenleitner, CFO

And I think that's a really important point that, you know, regardless of coverage, we want to be sure that Exposa is there for every patient, you know, whether you're on Medicare or any other paying channel. So I think, you know, definitely makes us feel very good about what we're doing and what we're being in the market with Exposa for everyone.

Dennis Thain, Analyst — Jefferies

Is there a scenario where reimbursement can kind of be restored in the Part D setting?

Sue Hohenleitner, CFO

we're really waiting for for that obviously the um the decision to come back down so you know at this point we're assuming business as usual from that from a reimbursement so you know even when you think about the 750 that you know does not assume that we need parking coverage or medicare coverage and your paid prescription growth in in 2025 was 41 sorry it was somewhere stuck in my but it's there and that's you know again continues to give us confidence that this is a growing market you know regardless of which payer it is it's a growing market and the paid prescription

Dennis Thain, Analyst — Jefferies

volume continues to grow yep the pipeline maybe talk a little bit about that it's uh and it's not in the clinic yet uh but maybe talk a little bit about you know what what you know what is so interesting about this product what gives us so much promise um i know you guys haven't disclosed specific indication yet but curious how you're thinking through that process yeah so you're

Sue Hohenleitner, CFO

referring to 10 531 which is our preclinical compound that we're looking at now versus tenapin or it's it's highly soluble and potent and we're looking at it across a variety of different areas so we haven't yet decided or you know figured out where we're going the science will lead us but that's really how it's going to happen the science will lead us to you know whether it becomes a next-gen tenapin or something different or something

Dennis Thain, Analyst — Jefferies

kind of in an adjacency I'd say it's kind of okay lastly just financials so like you know we heard revenue guidance we heard some of the OPEX guidance but what about something like profitability how much of a priority is that for our Deluxe and you know should we expect it potentially in 2027 right as you know your products grow maybe 700 million or something like that right so like I guess what are some of the gating factors for you that would prevent you from issuing some sort of profitability guidance yeah I hate to say preventing

Sue Hohenleitner, CFO

us from doing it what I do want to see is some more certainty around our top line and so you know the range that we guided to you know as we feel better and when you think about the math there between Exposa and Absarilla if they hit the high end of that you know if you do the math that would actually assume that you would get profitable this year but what we don't want to do is guide to profitability maybe in a certain quarter and then have to kind of go back. We want it to be, look, when we say we're profitable, we're profitable from here out. And so, you know, for me, you know, being here and kind of observing how we're doing this, I think, you know, it is right around the corner. It's just not something just yet that I'm ready to say, look, we're here. But I think, you know, it is very much right around the corner, which is another reason why even in the first quarter we did put out a capital allocation strategy. So everybody knows as we become income positive and cash flow positive what is it that we're going to be doing with our capital so really quickly it's and it's what you heard already today it's Rella it's about investing in our pipeline the current pipeline that we have already on our website as well as any opportunistic deals that we could be looking at and then finally just ensuring the rest of the financial strength you know whether it's the refinance of the SLR loan that we did in April or other things to continue to to fortify our cash flow so overall i'd say jenis we're getting there stay with us yeah yeah

Dennis Thain, Analyst — Jefferies

like you don't want to guide to profitability and then only for q1 to be seen you know very seasonally quarter and q1 is always going to be that bumpy season it's more about sustainable profitability and you guys are making a lot of investments this year because you do see the long-term potential of it yeah yeah um anything that you think that you know i might have missed

Sue Hohenleitner, CFO

or any you know last last minute comments you hit it all i think we're excited about the year we're excited about 2026 our four priorities and in strategy and you'll see more of that in 2027

Dennis Thain, Analyst — Jefferies

and beyond sounds good perfect well thank you so much guys thank you