00:08 Good afternoon and welcome to Ardelyx's Fourth Quarter and Year-End 2021 Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session after the prepared remarks. As a reminder, today's call is being recorded. 00:26 I would now like to turn the call over to Justin Renz, Chief Financial Officer of Ardelyx. Sir, you may now begin.

00:33 Thank you. Good afternoon, everyone and welcome to our first financial results call, a practice we intend to implement going forward as we march towards becoming a commercial stage company. 00:45 During this call, we will refer to the press release issued earlier today, which is available in the Investors section of the company's website at ardelyx.com. On the call with me today are Mike Raab, President and CEO; and Susan Rodriguez, Chief Commercial Officer; Dr. Laura Williams, Chief Medical Officer; Dr. David Rosenbaum, Chief Development Officer; and Rob Blanks, Chief Regulatory Affairs and Quality Assurance Officer, who will join us for the question-and-answer period. 01:16 During this call, we will 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 our risk factors in our annual report on Form 10-K, which we filed today and also 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. 01:40 With that, let me pass the call over to Mike.

01:44 Thank you, Justin and good afternoon, everyone. It's exciting for me to kick-off, what will now be quarterly calls on the eve of launching our commercial product IBSRELA in the coming weeks. What is so important to understand about IBSRELA is that it represents a significant advance and innovation for treating irritable bowel syndrome with constipation in adults. With over 5 million prescriptions written annually, it remained a significant unmet need for many of those patients. Compared to current treatment choices, IBSRELA provides a unique mechanism of action offering physicians and patients with different options to address the debilitating impact of IBS-C. 02:23 Today’s dynamics around the IBS-C market and particularly with IBSRELA make it a very compelling opportunity for patients, the company and our shareholders. This is a significant inflection point for Ardelyx and we are excited to bring our innovative product to market as commercially focused organization. 02:41 I would like to review a few key points. Number one, we see a highly favorable dynamics as we prepare for launch. The IBS-C market has been cultivated and expanded over the past 10 years and is right for differentiated product with a unique mechanism of action. Two, the established prescription market includes over 1.6 million IBS-C patients treated with currently available therapies with at least 35% of whom are in adequately managed and in need of effective treatment alternatives. Three, this is a highly concentrated market with 9,000 physicians responsible for approximately 50% of over 5 million annual scripts for IBS-C. This is a dynamic that is ideal for our focus, targeted, specialized sales force, all of whom have been hired, trained and are preparing for launch. 03:37 And four, based on thoughtful, well considered assumptions of mid to high-single digit penetration in the IBS-C market, we expect…

07:40 Thanks, Mike. Our team is excited and ready to execute a successful launch of IBSRELA. The market need is clear, we can efficiently reach key prescribers and our research confirms that the novel mechanism and strong efficacy data of IBSRELA will fuel market receptivity. Over the past decade, the introduction of GCC agonist has transformed the management of IDFC with market building investment converting what was once an OTC market to an established prescription therapy market. 08:13 The market basket of IBS-C indicated products include Linzess, Trulance, Amitiza and Zelnorm with the market increasingly consolidated around two branded therapies that combined have 84% market share. Despite active use of these therapies, HCPs persistently report that over a third of patients under their care continue to have symptoms and are considered to be inadequately manage. This relatively uncluttered market with the stated need for expanded therapeutic options is an ideal opportunity for IBSRELA with its novel mechanism and compelling and differentiated clinical profile. 08:55 All key commercial elements needed to drive the successful launch in IBSRELA are in place. We are ramping up our product supply and have mobilized our highly experienced specialty sales force and commercial team to engage with our targeted high writers, introduce Ardelyx and inform them that IBSRELA is coming soon. Our go-to-market plan and strategy for IBSRELA is informed by comprehensive market research and analysis. Our commercialization focus is on physicians, who are high prescribers of the GCC agonist, targeting the patients that are currently under their care. 09:31 Our research showed that 56% of high prescribers consider IBS-C to be a difficult condition to treat and 83% reported a significant unmet need with more than one-third of patients currently being treated with prescription therapies continuing to suffer from symptom of IBS-C. The dissatisfaction centered…

15:39 Thank you, Susan. At the end of the fourth quarter 2021, we had total cash, cash equivalents and short-term investments of $116.7 million as compared to total cash, cash equivalents and investments of $188.6 million as of December 31, 2020. As announced last week, we paid off our existing debt with Solar Capital Limited and the Life Sciences Group at Bridge Bank in full, and we have now entered into a new term loan with SLR Capital Limited for $27.5 million with two years interest only and an option for an additional $22.5 million in term loan debt if XPHOZAH receives approval and certain other conditions. 16:26 We generated $10.1 million in revenue for the year ended 31, 2021, an increase of $2.5 million, or 33% compared to $7.6 million for the year ended December 31, 2020. The increase in our revenue was primarily attributable to a $5 million development milestone, which we earned upon the initiation of Phase 3 clinical studies in Japan by KKC to evaluate Tenapanor for hyperphosphatemia. 16:59 Research and development expenses were $91.1 million for the year ended December 31, 2021, an increase of $26.1 million or 40% compared to $65.1 million for the year ended December 31, 2020. The increase in our R&D expenses was primarily the result of Tenapanor manufacturing costs, as we prepared for the launch of IBSRELA and should we be successful in our appeal, the U.S. launch of XPHOZAH. In late 2021, we eliminated our research group and so in 2022, we expect our research and development expenses to be significantly lower than in 2021. R&D expenses for 2021 also included $2.7 million in severance payments and other employee related restructuring costs. 17:52 Selling, general and administrative expenses were $72.3 million for the year ended December 31, 2021, an…

20:21 Thanks, Justin. Despite some of these recent challenges, this is a monumental time for Ardelyx as we enter an important evolution to commercial stage company. We are enthusiastic to enter the marketplace and offer patients with IBS C a much needed novel mechanism therapy. This transition differentiates us in the biopharma industry. Now as a revenue-generating company with a clear line of sight to breakeven for IBSRELA and ultimately profitability for the product, which we believe will create significant shareholder value. 20:52 We will have a strong and capable commercial presence and we'll be poised from a position of strength where additional commercial products could be leveraged, including the support the potential launch of Tenapanor for hyperphosphatemia upon a successful outcome of the formal dispute resolution process. Given what many would characterize as a tumultuous 2021 for Ardelyx, our pipeline diversification and visionary strategies have positioned us well for near-term and future growth. We believe that our focus on the patients and developing medicines to help them live longer and better lives will be successful for the patients and ultimately, for our shareholders. We look forward to keeping you apprised of our progress. 21:33 And now with that, I will open the call to questions. Jesse?

21:41 Thank you, speakers. Participants, we will now begin the question-and-answer session. [Operator Instructions] Speakers, our first question is from the line of Chris Raymond of Piper Sandler. Your line is now open.

22:12 Hey, guys. Thanks for taking the question. I guess I need to ask couple of weeks ago, you guys had an 8-K where you highlighted the outcome here and appeal to the office and new drugs, but I guess I was pretty intrigued by the language around potentially having a path to resubmit without running new trials. I mean, I guess, I'm just kind of curious no mention of that pathway here in this call. So can you maybe give a little bit of color is that path still open? Where does that stand I guess first and foremost?

22:52 Yeah. Thanks for the question. No that path still exists, we've expect. What we’ve been consistent in is saying that we believe any sort of positive outcome is going to come through SEDAR and LNG. So rather than go through the process at OCHEN, it made sense to then kick it upstairs as we've talked in the past and go through with them the process to hopefully be able to over-turn the CRL. So, our assumption is that alternative is still there, it opened up the door, but I think strengthens the process we're going through now through R&D, which was the strategy that we had said at the beginning, that we would presume.

23:35 Okay. So just so I understand the sequence then. So you go through the process with the Office of New Drugs, you get your answer in April. And then depending on that answer or the decision pursue the path of resubmitting based on some subset of the data that you already have, is that right?

23:59 So I'll ask Rob Blanks to add a little bit more color, but the outcomes can be rejection. It can be overturning remaining (ph) to cardio renal. It could be additional information requests or it could be advisory committee, right? So those are kind of the generally the outcomes that could be there. And in hose could be additional analyses as we suggested in our filing. Obviously, we don't have any way of predicting what it's going to be setting where we are now. But the other nuances if it's a two-month versus a six-month submission as we don't have an active NDA. So we would have to submit resubmit in order to have discussions. Rob anything to add.

24:44 No, Mike. I think you have it covered pretty well. I mean with path still exist, we obviously, we feel that you only have one chance to go up to a higher level and we felt that that was the best way to go. And certainly, we did not think that the OCHEN with Dr. Joffe who is relatively new to that position would overturn them. So we still think we have a chance with the OND.

25:14 Okay. Thank you very much.

25:16 Thanks, Chris.

25:20 Next question is from taking Joseph Thome of Cowen. Your line is now open.

25:25 Hi, guys. This is Peyton on for Joe. So, kind of following up on that, how would you plan or rebalancing additional investment in the hyperphosphatemia program, with that potential inclusion in the dialysis bundle and if the ‘23 timeframe for inclusion is still likely to stand? And then I've got a follow-up as well.

25:45 Sure. I mean I think we're taking this in stepwise fashion. We believe wholeheartedly the patients deserve this drug first and foremost. And as we were speaking over the past that the opportunity that exists even in a bundled scenario, we think allows for a great opportunity commercially. We believe there continues to be an opportunity to extend the exclusion that work is ongoing. So lots of different obviously, balls in the air, but additional investments in, XPHOZAH would depend upon what that looked like. I think we have been consistent in saying doing what was implied in the CRL of doing an outcome study is not on the table. There is no other phosphorus-lowering therapy that has ever been required to do that and that is a big part of the basis of our FDRR. So we continue to be committed to seeing this through, anyone who knows me knows that I'm stubborn and want to find a path to get this product to the patients who still needed.

26:46 Thank you. That's really helpful. And then kind of the second question, kind of more on IBSRELA in Europe. What are kind of the plans? And have there been any discussions of partnership or do you plan on potentially launching XPHOZAH?

26:59 No, I think we'll wait and see how we do here begin the conversations with folks that have reached out and will reach out to other folks as well. I mean, we're a relatively small team doing a lot and want to focus on the U.S. launch before distracting ourselves and trying to do those.

27:17 All right. Thank you so much.

27:22 Sure. Thank you.

27:25 Next question is from Laura Chico of Wedbush Securities. Your line is now open.

27:32 Hi. So this is Sam on for Laura Chico. I'm wondering at this point for the IBSRELA launch. What are the key gating factors to launching in the second quarter? And then I'm just wondering if your view on market positioning in the few months that you've had to prepare has changed at all?

27:54 Yeah. So let me just give a couple of comments, and I'll pass it off to Susan. We would have launched IBSRELA sooner. Had we had the material, right, we were focused on the XPHOZAH launch making those tablets. So we had to shift our efforts to make it 50 milligram tablets. And that's really been the gating issue for us in preparation for launch. I will ask Susan to address your, the second part of your question, I would say that my conviction for what Susan has described, the opportunity to be has only increased over the months and no way decrease, given the dynamics of that marketplace. Susan?

28:35 Yes. Thanks, Mike. Yes. We -- as a commercial team, I mean, the commercial capabilities for Ardelyx have been ramping up over the last 18 months. And heart of building out a commercially-facing company we've attracted phenomenal talent, very experienced talent in the industry with bringing new products to market. And the first thing we did was very thoroughly evaluate our portfolio of assets and do the market research to understand the relative opportunity of each of those assets and how, which then directs our thinking around optimizing those assets which implicit in that is a go-to-market strategy positioning and messaging for IBSRELA. So we really, we're quite ready to be able to move forward the launch for IBSRELA given the timing on the FDA decisions or XPHOZAH. So we're moving that forward. As Mike mentioned, really what's critical was we could -- we did timely research in the first, the end of last year and early this year to confirm our go-to-market approach very thorough quantitative and qualitative research, thorough work with our opinion leaders, testing out all of our positioning and messaging. And so we really have everything ready to go and really quite confident in our go-to-market approach and readiness for this Q2 launch.

30:01 Okay. Thank you very much.

30:03 Next question is from Louise Chen of Cantor Fitzgerald. Your line is now open.

30:14 Hi, good afternoon, everyone. This is Cantor on for Louise from Cantor. Thank you for taking our questions. Our, first question is what are some takeaways you guys have gathered from Knight Pharma in the commercialization of IBSRELA in IBS-C in Canada that might be important in the States? How should we view the initial uptake of the drug? Any feedback from provider community would also be helpful? Our second question is on peak annual revenue. You have highlighted a potential peak to be at least $500 million. We’re wondering want to how long it would take to get to the peak? Thank you so much.

30:53 Susan, that's [indiscernible], in your court.

30:56 Great. Yeah. So first thing, Canada actually the COVID restrictions in Canada have really been quite significant. So while they have stacked the channel for IBSRELA they really have not fully launched commercially in Canada. So it is too early to say exactly, the early read in terms of the opinion leader response the provider a research in Canada, the need for an alternative mechanism of therapy for IBS-C other research findings are quite aligned with what we learned in the U.S. So that's all I can tell you at this time. And what's great is that we are very much aligned with the Canada commercial team for North America alignment on our go-to-market approach messaging, positioning, communication of the data and really leveraging the opinion leader community. So we'll continue to keep you posted on that as they are really just starting to ramp up their full commercial launch. 32:11 In terms of your next question on provider response, here in the U.S., it's really very interesting. We’ve conducted both quantitative and qualitative research. It's quite persistent that there is a very established pattern of how to manage these IBS-C patients under their care. So keep in mind, I think everybody is accustomed to thinking about this market is a market-building market to bring patients into the physician's office to use the prescription therapies that have been available and introduced over the last decade. But what we have to remember now as we look forward to the launch of IBSRELA what we're looking at is a very established market hooked market patients that are under physicians care, they see the physician regularly, they churn through a lot of therapies in managing these patients because the systems -- the symptoms persist. So that what we hear back from doctors is there is an unmet need particularly along the pain and bloating. There is a high level of interest in a novel mechanism therapy and a strong intent to adapt the therapy in a very meaningful subset of patients and what's notable is that we see this not only across the high writing GIs we see it across writing. Non-GIs, we also see it across the opinion leader community on a national and regional level. So, so everything all of the intelligence and insights are pointing towards. So this opportunity and the extent to which IBSRELA can address clinical unmet need. And with our sales team now deployed across the country, there is a high level of receptivity to meet with our team an eagerness for our physicians to learn about novel mechanism IBSRELA.

34:02 Got it. And just on the final piece, how long should we -- should it take to get to the peak for the drug?

34:09 Yes. Sorry, that was your last question. Yes. So we had projected that over five-year time frame.

34:21 Got it. Okay. Thank you so much. Thanks a lot.

34:30 [Operator Instructions] Speakers, next question is from the line of Matt Kaplan of Ladenburg Thalmann. Your line is now open.

34:50 Hi, good afternoon, guys, and thanks for taking questions.

35:01 Hey, Matt.

35:03 Hi. So just wanted to maybe continue with Susan a little bit. Initially, in our prepared remarks, you said the uptake of IBSRELA is going to be driven by unmet need and coverage. Can you talk a little bit about kind of how long coverage will take to get in place? And what you see kind of coverage levels exiting this year and kind of going into next and how we should think about that?

34:56 Yes. Thanks for the question, Matt. We will -- we're working as we speak now in parallel educating payers on the clinical profile of IBSRELA. We anticipate that IBSRELA ultimately would be carried as Tier 5, specialty tier product. That is, really that needs to be our expectation because you have to look at the established nature of the IBS-C market and it's actually quite unusual to have branded products hold such a strong Tier 2 and Tier 3 position, which is what LINZESS and Trulance have. We are not going head to head with that. Again, we are going to market-focused on addressing the clinical unmet need. There is no alternative to IBSRELA in the patients who have been managed and are continuing to show persistent symptoms, so that is the value proposition is we bring it forward to payers. 35:45 Our intention is to contract to secure access and to try to minimize the prior auth and step hurdles, but we do not intend to match the rebate levels of LINZESS and Trulance and we do not anticipate holding formulary positions that are comparable to theirs. The crux of the opportunity is addressing the unmet need the novel mechanism drug and the clinical package. So we will be working with payers throughout 2022 to secure access for IBSRELA. And I think as we go into 2023, we'll be able to give you a good read on how things are going with that access picture with in parallel, keeping in mind that is the introduction of any novel therapy when there is an unmet need. You can access -- prescriptions are filled if the writing physician is willing to go through the medical exception process, so obviously as part of demonstrating to payers. The demand for IBSRELA which is what will help us secure the access positions we seek we'll be working very closely with them to give them all the support to really pursue approval of the IBSRELA script via the exception process following lunch.

37:01 Okay. That's very helpful. Thank you. And then I guess one more for you Susan, in terms of what commercial metrics, do you plan to share with us on a quarterly basis beyond? I guess, obviously, reporting revenues but helping us to gauge your success in the launch?

37:19 Yeah. So you clearly reporting revenues is a primary metric that we will be sharing with you, I think we all need to be cognizant of the typical ramp-up of accuracy of data capture for IQVIA script. And that will be very much determined by the profile, the mix of maybe retail versus specialty and reporting capture. So over time as we get to a steady state for IQVIA capture. We will be reporting on our scripts and our share penetration.

37:54 Okay. And then just going back to the OND, how does the process work now with OND until they arrive at answer in April? Is there significant interaction between you and that part of the agency?

38:10 Rob?

38:13 Yes. We've obviously, we submitted the appeal and then we have, it's a potential to have a meeting with them by the end of, if they have 30 days to review. So by the end of that into that process of the potential that we have a meeting with them that meeting will likely not to be face to face, but we could have a meeting with them and we could also get information requests from them asking for more information. So there is plenty of opportunity for interaction with the OND.

38:47 That's helpful. Thanks. And just a quick question for Justin Renz. He mentioned in his prepared remarks, the elimination of the R&D group late last year and that would have a significant impact on R&D. Can you help quantify that for us?

39:06 I can't really give specifics out Matt, yet other than it will be substantially reduced, because as you know our clinical process we've wrapped up the preponderance of our work with the Phase 4 programs that David Rosenbaum and Laura led for us and we are doing a novel new research in 2022, so it's going to be substantially less than last year.

39:30 Okay. Thank you. Thanks. Thanks for that deal.

39:34 Thanks, Matt.

39:38 Thank you, participants. I'll now turn the call back over to Michael Raab for final remarks.

39:46 Thank you all for joining our call. This is indeed a transformational year for Ardelyx with our launch of IBSRELA for patients with IBS-C. We look forward to keeping you apprised of our progress in the coming months and Jessey, you may now end the call. Thank you.

40:02 Thank you, speakers. This concludes today's conference call. Thank you all for joining. You may now disconnect.