Hello, ladies and gentlemen. Thank you for standing by, and welcome to Ardelyx's Second Quarter 2016 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder today's call is being recorded. It is now my pleasure to turn the call over to Bill Slattery Jr., Account Manager at Burns McClellan Incorporated, who will make introductory comments.

Thank you, Howard. Good afternoon, and welcome to Ardelyx's second quarter 2016 earnings conference call. This afternoon, Ardelyx issued a press release providing the details of the company's financial results for the second quarter 2016 as well as a corporate and clinical update. The press release is available in the Investor Relations sector of the corporate Web site at ir.ardelyx.com. Today's call will be led by Mike Raab, Ardelyx's President and Chief Executive Officer. He will be joined by Mark Kaufmann, Chief Financial Officer, Dr. Paul Korner, Executive Vice President and Chief Medical Officer, and David Rosenbaum, Senior Vice President of Drug Development. As a reminder, during today's call Ardelyx will be making certain forward-looking statements. To the extent that statements discussed on this call are not descriptions of historical facts regarding Ardelyx, they are forward-looking statements reflecting the current beliefs and expectations of Management made pursuant to the Safe Harbor of the Private Securities Reform Act of 1995, including the potential for tenapanor in treating irritable bowel syndrome with constipation or IBS-C to potential for tenapanor in treating hyperphosphatemia in patients with end-stage renal disease or ESRD, the expected timing for the receipt of the results from ongoing tenapanor clinical trials, and the expected timing of the initiation of the second tenapanor Phase 3 hyperphosphatemia clinical trial to potential for RDX227675 in treating hyperkalemia in kidney and heart disease patients, the expected timing for the initiation of the RDX227675 Phase 3 clinical trial, and for the initiation of and the results from the onset-of-action clinical trial for RDX227675, the expected timing for the filing of an IND for RDX98940, and to potential of Ardelyx's drug discovery and design platforms. Such forward-looking statements involve substantial risks and uncertainties that could cause the development of tenapanor, RDX227675, or Ardelyx's future results, performance or achievements to differ significantly from those expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the uncertainties inherent in the research and the clinical development process, and the uncertainties in the manufacture of clinical trial material. Ardelyx undertakes no obligation to update or revise any forward-looking statements. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to Ardelyx's business in general, please refer to Ardelyx's quarterly report on Form 10-Q filed with the Securities and Exchange Commission on August 8, 2016, and its future current and periodic reports to be filed with the Securities and Exchange Commission. At this time, it is my pleasure to turn the call over to Ardelyx's President and Chief Executive Officer, Mike Raab.

Thank you, Bill. Good afternoon everyone, and thank you all for joining us. On today's call I will review our recent clinical and corporate accomplishments, and walk through Ardelyx's ongoing and planned clinical activities for the remainder of 2016 and 2017. Mark Kaufmann, our Chief Financial Officer will then provide financial highlights for the second quarter of 2016. Dr. Paul Korner, Executive Vice President and Chief Medical Officer, and Dr. David Rosenbaum, Senior Vice President of Drug Development are also joining us today, and will be available to address any questions you may have. The second quarter of 2016 was highlighted by a number of important and exciting developments for Ardelyx. In June, we announced the end of Phase 2 meeting with the FDA regarding tenapanor for the treatment of hyperphosphatemia in ESRD patients on dialysis, that our ongoing trial would be considered the first of our two Phase 3 trials for the indication. We were extremely pleased with the outcome as we believe that tenapanor can become an extremely important tool for physicians to better manage hyperphosphatemia in dialysis patients. Tenapanor is a first-in-class non-fiber [ph] therapeutic development for patients with hyperphosphatemia, and we believe it has the potential to be a clear paradigm shift for those patients. Enrollment continues as planned, and we currently expect to share the results from the trial during the first quarter of 2017, and expect to initiate a second Phase 3 trial in the first half of 2017. Also in June, we announced positive results from the once-a-day dosing arm of our RDX227675 PD studies in healthy adult volunteers. Results from the final arm of the study demonstrated that 7675 at roughly 14 grams once a day is able to bind potassium [indiscernible] levels at seven grams twice a day, and 4.6 grams…

Thank you, Mike. As Mike mentioned, with approximately $257 million in the bank pro forma as of June 30, we're well-positioned to support the company through a sea of our clinical milestones in 2017, and with sufficient cash at year-end 2017, to provide an adequate additional runway. Our goal in completing the private placement of common stock was to rid the company of any financial overhang for these important milestones in 2017, which I believe we have succeeded in doing. Incidentally, we have not changed our guidance of $25 million to $30 million cash burn over the next several quarters. Regarding the results from the second quarter of 2016, net loss was $28.6 million or $0.83 per basic and diluted share, compared to a net income of $9 million or $0.43 per basic and $0.42 per diluted share for the second quarter of 2015. Both licensing and collaborative development revenues decreased in the second quarter of 2016 to zero, from $17.7 million and $0.4 million for the second quarter of 2015 respectively, because both of these items were recorded as part of the AstraZeneca agreement which was terminated in June 2015. Research and development expenses for the second quarter of 2016 increased to $23.8 million from $6.2 million for the second quarter of 2015, as expected, primarily because of increased clinical development activities as well as clinical manufacturing and process development activities associated with tenapanor 227675 and 98940. General and administrative expense was $4.9 million for the second quarter of 2016, as compared to $2.9 million for the second quarter of 2015. The increase was primarily due to an increase in professional service fees, including fees for market research and pre-commercialization activities, systems implementation, and intellectual property management, and as well as an increase in personnel-related expenses and facility costs. Cash and cash equivalents were $146.7 million after June 30, 2016, compared with $107 million as of December 31, 2015, primarily as a result of the completion of an underwritten public offering of common stock in January 2016 that yielded approximately $80.8 million in net proceeds offset by $41.1 million in cash required for operating and other activities. As noted in July, 2016, the company also sold shares of its common stock in a PIPE for aggregate gross proceeds of approximately $110 million. I am pleased to report that the financial condition of the company has been strengthened in a way that allows us to focus on the execution of our clinical plan rather than the financing of them. I'll now turn the call back over to Mike.

Thank you, Mark. With that we would now like to take any questions that you may have. And as a reminder, Dr. Paul Korner, Executive Vice President and Chief Medical Officer, and Dr. David Rosenbaum, Senior Vice President of Drug Development have joined us to today's call, should you have any questions related to our clinical program. Howard, we've now ready to take questions.

[Operator Instructions] Our first question or comment comes from the line of Yigal Nochomovitz from Citigroup. Your line is open.

Yes, hi, thanks. Question on the onset-of-action study, can you just go into a little bit more detail on what you expect to see there in the way of time to affect, just in light of what we've already seen for Relypsa and ZS? Thanks.

David, you want to address that?

Sure. So the study is designed to look at the rate of onset-of-action over the first 48 hours. We're running the study, so we can give guidance to people on how fast the onset-of-action is. We don't know, but we don't expect there to be any surprises there that it will work, but we do not know yet the speed of which it will work.

Okay. And then can you just clarify the Phase 3 that you are referencing that would serve as one of the pivotal trials for hyperphosphatemia. Is that the same as the Phase 2b or are we talking about something else? It's a little unclear.

It's the same. It's the ongoing trial.

Okay. So that's basically been sort of upgraded to a Phase 3 trial formally from a Phase 2b?

We reference it in the press release. When we had the end of Phase 2 meeting with the FDA, what was previously the secondary endpoint randomized withdrawal portion of the trial at the end is now the primary endpoint. As well as the FDA made a strong recommendation to provide a diverse population of responders from that first eight-week portion of the trial. So it is the same trial, but different endpoints as we look at the opportunity [ph] with the FDA.

And did the FDA have any other specific feedback apart from the changing the primary?

I'll let Paul address that.

The FDA actually provided feedback that Mike just mentioned because they had a little interest in seeing the data in that way against placebo. They clearly expressed interest in this type of product being out there as another option for [indiscernible].

All right, thank you.

Thanks, Yigal.

Thank you. Our next question or comment comes from the line of David Nierengarten from Wedbush. Your line is open.

Hi, thanks for taking my question. Maybe a little bit more open-ended question, as we're getting towards next year where you're going to have several Phase 3 readouts. Where are you on planning for commercialization? And what should we look forward for the next year in terms of ramp in that regard? Thanks.

Hi, David. In terms of ramp, I think for expenses to be de minimis. We are already well underway in building a strategic plan around both market access, how we would look at promoting these products, where we would promote them to, what relationships we want to have certainly looking at European, Asian partners, all that is part of the plan that we are in the process of developing. I think one of the biggest issues that we're going to face over the next period of time is going to be market access. As we look at the change with kind of a peer [ph] organization, and the way [indiscernible] address the market. That was one of the key reasons to bring Paul onboard when we did, and you [indiscernible] build-out will begin happening towards the end of next year. Again, that'll be modest, but huge impact that that kind of group will be able to make. So next year I wouldn't anticipate too much of a significant build above from where we are now in terms of commercial presence.

Okay, great. Thanks.

Thank you. Our next question or comment comes from the line of Jason Gerberry from Leerink Partners. Your line is open.

Hi, this is [indiscernible] filling in for Jason. There's a couple of quick questions. First, I wondered if you could frame the composition of matter patent on 7675 within the context of your overall IP portfolio strategy for the drug. Can we expect additional IP for the product, for example? And the other one was just a quick question going back to some of the exploratory Phase 2 data that suggested that tenapanor could play a role in lowering FGF-23 levels. And I wondered if there was any additional updates on that finding? Thanks

Let me first address that last part, and Paul can address any plans that we have publication. There isn't anything updated on that. Clearly exciting data, to see that kind of decrease in FGF-23. But let's be realistic, if those patients on dialysis have got high levels of FGF-23, and looking at -- seeing that over a longer period of time is what we would expect to and hope to see as part of our trials. I don't know, Paul, anything to add in terms of plans on publication?

It's clearly going to be part of the -- what we published from the study that we have ongoing. And it's becoming increasingly more important biomarker of risk that we hope to learn more about more about and generate more data on to that specifically in the future trials as well.

So I think it's important to note that we have historically seen improvement in FGF-23 with very high doses of binders delivered, it's just not practical both for the patients to take that amount of binder as often as they need to and that's what I think people often miss as they think about tenapanor as this is two small pills a day with that kind of response and even the dose response that you saw and at very little doses you see dramatic FGF-23 lowering. So clearly this is a paradigm shift with a pharmacology what tenapanor is doing for phosphorus FGF-23 and we often forget that this also blocks the absorption of sodium is not a bad actor for both CKD and ESRD patients. So your question is a good one and one that I think does lead to some of the other benefits that we expect to see out of tenapanor. As it relates to intellectual property obviously we can't predict what the U.S. PTO is going to do. We were believing what we would get in terms of the patent and its composition of matter. We will always work to continue to expand our IP be it via composition matter formulation, method of use, manufacturing all those things are responsible things we continue to pursue in any of our product so nothing specific that I can address for that now but certainly once we get clarity from the U.S. PTOs anything else emerges that will be part of the release is that we would have in the future.

Okay, thank you.

Sure.

Thank you. Our question or comment comes from the line of Mara Goldstein from Cantor Fitzgerald. Your line is open.

Yes. Can you hear me?

Yes, hi, Mara.

Great, thanks so much. Hi, good afternoon. I have two questions both maybe strategic in nature and I am just wondering in the field of hyperkalemia what your thoughts are given the projected the merger between Relypsa and Galenica regarding growing it alone in that market versus looking for a partner. And then just secondarily now that you have this additional cash are there funds that are much more for commercial and where you think you'll be once you start to have data readouts from to the cash burning for commercial activities.

Good questions, Mara. So we look to what's happened even going back to GS Pharma and now with Relypsa as great indications of other companies seeing a huge value that exists in the management of chronic hyperkalemia. I guess my view and I've said it consistently is, the big markets of chronic markets onset on action is a critical part of what we're going to need in our package insert is going to be less I think of a bigger market issue since that tends to be a discussion that people have in hospital, acute use of managing hyperkalemia. Under the context of hospital cost putting a binder in to patients who are -- who maybe cognitively impaired due to the situation at variance imagine them injecting an expensive binding I think although it is happening with some of the scripts we seen written with [indiscernible] is likely to get a smaller part of the market. The long-term mildly hyperkalemic patients whose ACE inhibitors are suboptimally dosed and that's where we know we can improve outcomes. That's the target market. ACE knows how to build businesses and build markets if you look at PTIs and Crestor clearly a company that understands that well. I think with the Relypsa acquisition same thing it's accompanied to give client wanting to come in and build that presence in the U.S. is a very, very positive sign for the management f hyperkalemic. The fact that we now have intellectual property that covers us without extension through 2035 I think you are going through pace it we're at Phase 1 to the data at 14 grams having the potassium bindings the fact that potash had at 28 grams we clearly believe with the palatability what we've done with flavoring and the variety that ultimately you'll…

Okay, thank you.

Sure.

Thank you. Our next question or comment comes from the line of Mike King from JMP Securities. Your line is open.

Thanks for taken my question guys. And I've got a couple of quick follow-ups. Just wondering if you can -- just as far as the second Phase 3 tenapanor you might have mentioned this on the call although I made missed it. Any appreciable difference in terms of either patient numbers or geographic locations or is it expected to be a direct replication of the first Phase 3 trial. And also if you could just tell us sort of gaining factors of why that starting in the first half of 2017 versus any earlier time than that?

So let me address that last part first, and then they David if you want to talk about the design versus the current trial.

Yes.

If you look at timing remember this first trial was originally 2b, right, and big part of what we were doing was getting our manufacturing up and running after its transferred back to term -- just year ago we're not going back. So that was the gaining factor. And we also, we're seeing what we are doing out with this program being Phase 3 the first one, nothing has changed in the timeline for the second one. And David you want to address the design?

Yes, Mike, so the ongoing clinical trial is an eight week study followed by a four week placebo-controlled randomized withdrawal period. The next clinical trial will be a long term safety study, so people will receive drugs for one year that will be followed by the same placebo-controlled randomized withdrawal period. The clinical trial will probably be in the 300 patient size receiving drug and it will probably include some international sites.

Okay. So from that standpoint it should look fairly similar to the [indiscernible] trial?

Yes, exactly.

Okay great. And then just size you have been talking about market awareness for hyperkalemia, but I'm just wondering what you guys are doing as far as your market assessments for pulse dialysis and non-dialysis CKD patients for tenapanor in terms of sort of the real world utilization of phosphate binders where things are falling short where improvements can be made and just what segment of the markets tenapanor may exploit assuming successful clinical development and approval.

Sure. It's interesting, Mike, if you at our primary market research, if you look at by trends research and market research and that's anything that we've seen talked about one of the simplistic unmet medical need for patients on dialysis for hyperphosphatemia is so good. And there is just a mass amount of binder for treating out there. All these binders, and you know me well, I'm pleased with how is perform, but they they're all create equal in lot of way it released their phosphate management. So something it provides fewer pills, and let's be clear, you are in smaller pills if you do three big pills that makes no difference, because the food you need turns out that still as problematic if taking handful of those binders. So you need things small those like we have in fewer which we have; number one. Number two, physicians has been looking for an action. There's never been anything out there, but binders. People talk about [indiscernible] NaP2b inhibitor that began trial and fast moving start moving forward with that never been getting mechanism with action. So my confidence says that this would be a first-in-class eventually drug. It's going to be a drug that is going to what is FGF-23 opportunity what you see with hyperphosphatemia, the fact that we divert sodium mostly patients are constipated and have a benefit of moving —climb out of the gut more rapidly is a good thing given where these patients are. So I think we will have a significant percentage of the market is going to be interested in what we have for them and what we can provide in terms of benefits but of course presuming successful outcome as you say.

Okay. I guess I would ask you know ask you if that's - if that just first kind of things you are getting from at ad board kind of feedback or have you gone…

Yes, we…

Closer to the physician community?

So both ad board in terms of KOLs, but it's really important to go to the treating community to make sure there is data sitting on a top-line, it's consistent and also the nursing and dieticians. And if you go across all these examples that I gave you each of them are doing 100s of nephrologists and the associated caregivers. The number one issue is [indiscernible]. Number two, issue is something is going to be easier to take mechanism of action. So we need the criterion of many things that physicians and patients and caregivers are asking for. We are going to have to earn the right of course with our clinical data. So this isn't just at board this is [indiscernible].

Okay. Thanks, Mike. Thanks for taking the questions, guys.

Thank you. Our next question or comments comes from the line of Matt Kaplan from Ladenburg Thalmann. Your line is open.

Hi, guys. Thanks for taking my questions. Just going back to 7675, in terms of the Phase 3 study there, could you give us a sense in terms of the timing that it will take to complete that study and kind of paint us a picture in terms of potential timeline for filing the NDA and approval?

We are not giving specific guidance Matt on timing of all those things changing. So what I think is very, very soon with all these trials ongoing presuming successful outcomes of hyperphosphatemia and hyperkalemia all will be launching in 2019.

Okay. Great, that's helpful. And then in terms of tenapanor in hyperphosphatemia, do you expect to have any presence that ASN coming out later in November?

Yes, we'll be there. And I see we are going back to work even [indiscernible] things that we have done subsequently if there an extensive publication strategy that includes posters, wall presentations and things that we are going to touch whether it's ASN, EDTA, EDW [indiscernible]. So we will continue to have expanding presence in all these meeting.

Okay. So you expect to have publication there at that meting just a boost or something.

Yes, we have some.

Okay, great. And then in terms of I guess that question for Mark, thinking about your R&D spend kind of going into this year and then next obviously number of trials starting and the trials wrapping up, can you help us think about that which I guess for remainder of the year in 2017.

Sure. Well, I think we haven't been more granular on $25 million to $30 million per quarter as we said in the past it kind bounces around for the reason that you gave. G&A is relatively flat during the next several quarters. So it's all because of as you point out R&D, but again we haven't been any more granular in that.

Okay, fair enough. And then in terms of just one more follow-up on -- since the end of Phase 2 meeting for hyperphosphatemia the first now the ongoing Phase 2b is going -- that was your first Phase 3? The sides changing the end point for the study in terms of eight week and then I guess the four week as well. Are you changing the size of that Phase roll as well?

Paul, you can grab that.

In order to ensure that we have the 90% hour for the placebo portion of the study, and additional 50 patients were included, and in our previous guidance we had indicated that the readout should come in the first quarter of '17.

All right. Thanks for all the detail..

You are welcome.

Thank you. [Operator Instructions] Our next question or comment comes from the line of Tim Chiang from BTIG. Your line is open.

Hi, thanks. On the 7675 Phase 3 CKD trial you are going to start in the first quarter, I mean, how many patients do you guys plan on enrolling for that trial?

Yes. That will be somewhere between 250 and 300-ish.

So, it will be close to number of patients, I guess, what Relypsa enrolled in…

Yes.

ASA Phase 3 trial?

Yes.

I mean, is the design of the trial very similar to the design of their trial?

Yes, very similar.

Okay. And how confident are you guys that you only have to do one Phase 3 here? I know you guys had just know what the FDA and they sort of supported the single Phase 3 trial, but I just wanted to make sure that we only needed a one trial here, is that right?

Yes. Paul, you want to take that?

Sure. As part of the [indiscernible] we were seeing guidance from the FDA that a single Phase 3 would be adequate, and we are very consistent with the FAGO [ph] side being nothing else.

But this is an open-label extension trial, so you will be following them for that, 50 [technical difficulty] year, is that right?

Yes, so there will be a year long spacey portion of that trial. That's correct.

Yes, okay. And maybe just one last question, you've done the additional financing completed, I mean, are you guys pretty confident that you won't need to do another financing for -- to get yourself to submission for both tenapanor and the two pivotol programs you are running in 7675 and hyperkalemia, is that right?

Yes, I don't think we have guided that the money that we are raising would get us through submission. I think what we have said is with the money that we raised, the 110 in the PIPE, we get again in '17 with approximately 12 months of cash remaining [indiscernible] that time. With that dozen factor [indiscernible] we did licensing in Japan or other territories advances that, but certainly not going to have any less than 12 months of cash on hand is another driving force. And we looking towards building out commercial [indiscernible] success we've had in bolstering our balance sheet is quite a significant accomplishment.

Okay, great. Thanks.

Thank you. I am showing no additional questions at this time. I would like to turn the conference back over to management for any closing remarks.

Thank you, Howard. As mentioned in this press release issued this afternoon and reiterated on today's call, we remain committed to advancing our clinical and preclinical product candidates for registration and approval and to become a fully integrated commercial pharmaceutical company. For the remainder of 2016 and 2017, which will be characterized by number of important milestones for Ardelyx, and I'm confident in our ability to achieve our objectives. Thanks again for joining us today. We appreciate your continued interest in Ardelyx, and look forward to maintaining an open dialog with you over the coming months, and providing updates on our programs. Howard, you may now disconnect the call.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.