Ardelyx, Inc. (ARDX) Q4 2024 Earnings Report, Transcript and Summary

Welcome to the Ardelyx Fourth Quarter and Fiscal Year 2024 Earnings Call. [Operator Instructions] I would now like to turn the conference over to Caitlin Lowie, Vice President of Corporate Communications & Investor Relations. Caitlin, you may begin.

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. Our President and CEO Mike Raab will begin today's call with opening remarks and an overview of the company's progress during the fourth quarter of 2024. Next, Eric Foster, Chief Commercial Officer, will provide an update on the performance of IBSRELA and XPHOZAH. Justin Renz, Chief Financial & Operations Officer, will conclude today's prepared remarks with a review of the company's financial performance during the fourth quarter and full-year ended December 31, 2024 before we open the call to questions. With that, let me pass the call over to Mike.

Thank you, Caitlin, and good morning, everyone. I'm pleased to be here today to discuss our fourth quarter and full-year 2024 performance. In the past year, our team's dedication to outstanding commercial execution led to numerous significant achievements. IBSRELA’s growth continued throughout 2024 with acceleration in the fourth quarter as we began to see the positive impact of our expanded sales team. It is evident that patients are benefiting from IBSRELA, as this important medication provides rapid and lasting relief from the symptoms of IBS-C, which can significantly disrupt patients' lives. For XPHOZAH, our team successfully executed one of the best product launches in recent years. In the first year of sales, we demonstrated that XPHOZAH is a crucial medication for dialysis patients, enabling them to achieve and maintain target phosphorus levels. In the midst of this outstanding performance, we confidently tackle the challenging reimbursement environment. Our commitment to prioritizing patient needs has never wavered. We've taken strong, decisive actions, and we're dedicated to ensuring that patients continue to have access to XPHOZAH as they always have, regardless of the coverage changes made by CMS. Our commitment to protecting patient access guarantees that at a minimum we will continue to serve dialysis patients as we aim to grow the XPHOZAH business to at least $750 million before patent expiry. Building on the impressive performance of both IBSRELA and XPHOZAH, we successfully reinforced our cash reserves, finishing 2024 with a strong cash position, paving the way for future growth. These accomplishments established the foundation for our growth in 2025 and beyond, and we're poised to execute our strategic priorities with determination, firmly anchored in our commitment to commercial excellence. IBSRELA’s growth momentum is continuing as the commercial team builds clinical conviction among prescribers, which alongside our exceptional patient services team ensures the prescriptions are filled and reach patients. IBSRELA is an outstanding product and patients deserve access to this treatment and the benefit it provides. Despite the coverage changes, the CKD community is navigating, preliminary evidence clearly indicates that our XPHOZAH strategy is effective and that patients across all access paths are successfully receiving treatment. We're extremely proud of our team's performance and the strong initial indicators we're observing, which Eric will share with you momentarily. Our exceptional commercial execution has demonstrated our ability to establish a sustainable and resilient company. Our corporate development team is focused on building a robust pipeline and are actively identifying and evaluating a range of internal and external opportunities. Their efforts leverage our proven strength and development, regulatory affairs, and commercial excellence to drive our next phase of growth. Our focus on serving our patients and driving exceptional commercial and financial performance is at the core of who we are and what we do. We're extremely proud to have generated over $330 million in revenue last year and finished the year with a robust $250 million on our balance sheet. This strong financial position empowers us as we build our company for the future. Rest assured, we will be diligent stewards of our capital, strategically investing in areas where we have confidence in our ability to generate significant value for shareholders. We're building an exceptional company, one that stands out in the industry. Our future is incredibly promising, and we are poised for great success. I will now hand the call to Eric to share an update on our commercial performance. Eric?

Thank you, Mike. It's great to be with you all again. Across our portfolio, we had a great fourth quarter driven by strong demand from prescribers for these two first in class medicines that are demonstrating the clinical benefits they can offer patients. Every day we hear success stories of patients with IBS-C whose quality of life has improved, thanks to IBSRELA, or CKD patients who have struggled for years to achieve target phosphorus levels are now coming into range, thanks to XPHOZAH. We had a strong momentum throughout 2024 and will look to maintain that momentum in 2025 with strategic investments in areas where we believe we can drive further demand and share. Let me start with IBSRELA. We reported an incredibly strong quarter with more than 32% growth quarter-over-quarter from Q3. We completed our sales-force expansion at the end of Q3, and they were trained and in the field for all of Q4, driving that accelerated growth. Importantly, we saw growth from all our key indicators in the fourth quarter, including new and repeat writers and new and refill prescriptions. We particularly saw a notable increase in the growth of new writers. We are pleased to see that, because it aligns with the expanded targeting that we implemented with the growth of our sales team. Not only has the team focused on high riding gastroenterologists, but we've been able to expand the number of high riding non-GIs as well as a number of advanced practice providers, or APPs, which includes nurse practitioners or PAs who are heavily involved in IBS-C management for patients. We're excited about the exit trajectory coming into 2025, and as we look to maintain the momentum, we're focused on maximizing our pull-through across the patient journey. Starting with the top of the funnel, our sales team will continue to focus on driving clinical conviction and patient identification among our expanded HCP list. At the same time, we are thoughtfully increasing our investments in omnichannel communication to engage and drive action among prescribers and patients. Initially, our marketing efforts focused on the prescribers, and we saw early on that they were highly responsive to IBSRELA’s safety and efficacy profile and our marketing messages. We have also learned that IBS-C patients are incredibly engaged, seeking new information and connecting with patients alike, while also exploring options to manage their condition. We will be increasing our investment in direct to patient communication in 2025 to empower patients to learn more about their condition and the different options to treat their symptoms of IBS-C. At the same time that we are driving more patients at the top of the funnel, we will be increasing our focus on pulling those patients through to the bottom of the funnel so more patients can access IBSRELA. We've got an incredible patient services program with ArdelyxAssist, and it performed phenomenally in the fourth quarter. We believe that we can do more, and so in 2025 we'll be investing in our patient services programs and notably expanding our access manager team. This is a field-based team that is part of ArdelyxAssist that will focus on pulling through those appropriately identified patients. This team will work with physicians' offices to help understand the process for prior authorizations and make sure that barriers are addressed, so patients can have access to our medicines. We have always had pull-through rates that are in-line with our industry. However, we recognize that we can do more and we have the unique ability to address this opportunity because of the ArdelyxAssist program that helps connect healthcare providers, pharmacies, patients, and payers. I'm excited about the incredible potential that IBSRELA has to help many more patients with IBS-C and the continued growth we expect in 2025. Moving on to XPHOZAH, the performance that we delivered in 2024 demonstrates just how important this medicine is for patients. XPHOZAH’s differentiated mechanism of action and strong safety and efficacy profile were attractive to prescribing physicians since launch in late 2023. But the real world experience that physicians have with XPHOZAH demonstrates the significant impact that it can have. More patients are now able to achieve target phosphorus levels, thanks to the addition of XPHOZAH to their treatment regimen for hyperphosphatemia, an innovation that came nearly 50 years after the introduction of phosphate binders. We recognize that the question everyone is asking is what is going to happen to XPHOZAH in 2025. This is what we know today. First and most importantly, dialysis patients who are in need of XPHOZAH to lower their serum phosphorus levels have access to treatment. Today, XPHOZAH is available as it always has been, as a prescription written by healthcare provider. The only thing that has changed is that XPHOZAH is no longer covered by Medicare Part D. Second, our commercial approach is unchanged from last year. As with IBSRELA, our XPHOZAH team is focused on driving clinical conviction and patient identification and pulling prescriptions through to the patient. At the same time, they're helping the nephrology community and care teams to understand that their ability to prescribe XPHOZAH remains unchanged and that for the best experience, prescriptions should be sent to the ArdelyxAssist specialty pharmacy. Most importantly, we do not want physicians to change their prescribing habits based on patient coverage. Our message is to prescribe as you always have, based on the patient need, and we will adjudicate patient access and affordability on our end. That directive will ultimately support our long-term growth expectations. For us, ensuring patients have access to therapies is both a moral obligation and a strategic opportunity. We have seen the benefit that XPHOZAH offers, and we are fortunate that the business we've structured and the approach that we have taken allows us to ensure access to our medicines regardless of fare. With this approach, we are confident that we can deliver significant growth on our path to $750 million at peak. It is too early for us to share any meaningful commentary on the first quarter, but I can share a few thoughts. The first thing that I looked for when we entered January was if our processes were operating as planned, and there are four key patient paths that we have been monitoring. First, is an existing patient who is covered by Medicare still on therapy through our patient assistance program in 2025 if they qualify? Second, is an existing non-Medicare patient still receiving a revenue generating script. Third, is a new qualifying Medicare patient able to access XPHOZAH through our patient assistance program, and fourth is a new non-Medicare patient receiving a revenue generating script. The answer in all four of these scenarios is yes. So the systems and processes that we put in place in anticipation of this change are working as designed. At this point we're staying very close to all the stakeholders to quickly learn and address any concerns that may arise. We are connecting with prescribers through every avenue we can to reinforce our message that the access path for XPHOZAH is unchanged. Our early indicators are in line with our expectations, and we'll share more in the months ahead as we have additional data available. I have a tremendous amount of confidence in our team's ability to deliver on our priorities for this year. They are focused, empowered, and a high performing team. We are investing across the commercial organization to strengthen our position in the market, support patients along their journey, and accelerate our growth momentum in the years ahead. I will now turn it over to Justin. Justin?

Thank you, Eric. Earlier in January, we announced our product revenue and cash position. So I use this as an opportunity to review that material and highlight additional key financials from both the fourth quarter and full-year 2024, as well as offer some thoughts on 2025. We had total revenues of $116.1 million in the fourth quarter of 2024, driven by growth in product sales. On a full-year basis, we reported total revenues of $333.6 million in 2024 compared to $124.5 million in the prior year. Our performance was driven by strong year-over-year growth for IBSRELA and the exceptional launch of XPHOZAH. During the fourth quarter of 2024, we recorded IBSRELA net product sales revenue of $53.8 million nearly double the same period of 2023, and an increase of over 32% quarter-over-quarter from Q3. Our growth was driven by several factors, including strong patient demand, the completion of our field-based sales team expansion, and an improvement in our gross and net deduction, which was 28.5% for the fourth quarter. On an annual basis, we recorded $158.3 million of IBSRELA net product sales revenue in 2024 compared to $80.1 million in the prior year. We also recorded $57.2 million in net product sales revenue of XPHOZAH in the fourth quarter, the increase of 11% over Q3, driven by continued demand for the first in class medicine. Our gross and net deductions remain consistent at 20.3% for the fourth quarter. On an annual basis, we recorded $160.9 million of US net XPHOZAH’s sales in 2024 compared to $2.5 million during a partial fourth quarter of 2023 following launch. In addition to product revenue, we also had $4.2 million in product supply and licensing revenue in the fourth quarter and $11.7 million for the full-year 2024 compared to $3.8 million during the fourth quarter and $41.9 million for the full-year of 2023. As a reminder, we received non-recurring regulatory milestone payments from our collaboration partners in the fourth quarter of last year. We also recorded just over $900,000 in non-cash royalty revenue during the fourth quarter of 2024 and $2.7 million for the full-year 2024. Research and development expenses were $13.7 million for the fourth quarter of 2024 compared to $9.5 million for the same quarter of the prior year. In 2024 and 2023, R&D expenses were $52.3 million and $35.5 million respectively. The increase in R&D expenses reflects increased medical engagement with scientific communities and pediatric clinical trial activities. Selling general administrative expenses were $76.1 million for the fourth quarter of 2024 compared to $47.8 million that were reported for the same period in the prior year. On a full-year basis, total SG&A expenses were $258.7 million compared to $134.4 million in 2023. The increase was related to commercial activities from IBSRELA and XPHOZAH, including the aforementioned sales-force expansion, as well as growth of the overall corporate infrastructure to support our strategy. We had net income of approximately $4.6 million or $0.02 per share in the fourth quarter of 2024, compared to a net loss of $28.8 million or $0.12 per share in the same period of the prior year. The net income for the fourth quarter of 2024 included $10.8 million in combined non-cash expenses from share-based compensation and net non-cash expense related to the monetization of hyperphosphatemia sales royalties in Japan. Our net loss for the full-year 2024 was $39.1 million or $0.17 per share, which included $41.8 million for non-cash expenses from share-based compensation and net non-cash expense related to the monetization of hyperphosphatemia sales royalties in Japan. As of December 31, 2024, our total cash, cash equivalents, and short-term investments increased to $250.1 million as compared to $184.3 million at the end of 2023. This includes $49.7 million in net proceeds that we drew in October from our term loan agreement with SLR Capital, as well as operating cash flows generated during the second half of the year. Before I close, I want to share some of our financial expectations for 2025 and beyond. From a revenue perspective, we anticipate continued long-term growth for both IBSRELA and XPHOZAH. We continue to expect IBSRELA to achieve greater than $1 billion in net product sales annually prior to patent expiry. As we announced in January, we expect to deliver between $240 million and $250 million in net product sales revenue for IBSRELA in 2025, driven by our expanded sales force, as well as investments in patient pull through in our omnichannel communications efforts. We also expect our gross to net deduction to follow a similar trend that we have seen over the past two years, being 30% plus or minus 5%, and less favorable in the first quarter and more favorable by the fourth quarter. As we relate to XPHOZAH, as you have heard from Mike and Eric, we continue to have significant expectations for XPHOZAH, driven by the clear unmet need for CKD patients to have another option to lower their serum phosphorus to target levels. We expect that XPHOZAH will achieve $750 million in annual net sales revenue prior to patent expiry. As I think we have demonstrated in the past, we provide guidance that is thoughtful and reflects our expectations of the business. We also only give information when we feel that we are in a position to give an accurate view. As such, we will not be sharing 2025 XPHOZAH revenue guidance at this time. One thing I can share is that we expect XPHOZAH’s gross to net deduction in 2025 to be less favorable than we saw in 2024 due to the change in our payer mix. We will also be increasing our SG&A expenses by approximately $10 million per quarter in 2025 as compared to the fourth quarter of 2024’s run rate to grow both IBSRELA and XPHOZAH. Those investments include the additional market access team members and the omnichannel communications that Eric spoke to, as well as increased costs associated with our patient assistance program following the elimination of Medicare Part D coverage for XPHOZAH. You should note that our royalty obligation payable to AstraZeneca is expected to be fully satisfied in 2025, which should generate some gross margin favorability in the second half of this year. We are excited to be making these investments to grow our business, and we will do so based on our strong cash position of over $250 million. We feel very confident we're in a position to fund our expected operations from our current cash position. We are building a great company and expect to create significant shareholder value this year by delivering on our key strategic priorities. With that, I'll hand it back to Mike.

Thanks Justin. Since our founding in 2007, every year, no matter the challenges we've encountered, had made us better and more resolute in our mission. 2024 was an incredible year for Ardelyx, and the patients we serve are benefiting from our medicines. We protected patient access to XPHOZAH. We doubled down on our commitment to IBS-C patients with IBSRELA. We strengthened our financial foundation to ensure future growth and most importantly, we never deviated from our values. The path ahead is clear and filled with promise. We're fully committed to our priorities, driving IBSRELA’s growth, executing on XPHOZAH’s strategy, building a pipeline of impactful medicines, and achieving strong financial and commercial performance. I'm truly excited about our future and we'll keep you informed about our progress in the quarters ahead. I will now open the call to questions. Operator?

[Operator Instructions] And our first question comes from Yigal Nochomovitz at Citigroup. Q – Yigal Nochomovitz: Oh great, thank you very much. So my question relates to the IBSRELA guidance. So $240 million to $250 million if you do the math, I mean it seems quite conservative, about 5% quarter-on-quarter growth at the midpoint. I can understand the low end being conservative, but the high end, even if you were to assume modest decrease versus what you saw in 4Q 2024, the 32% seems like the upper end of the guidance could be quite a bit higher, so I'm just curious if you could comment on the thinking around the $240 million to $250 million. A – Mike Raab: Yeah, thanks for the question Yigal. Totally understand. I think as we've seen this business grow and the overall contraction that we see in the IBS-C market [indiscernible] in the first quarter, we want to see the impact of that. Historically, if you look at IBS-C scripts, they go down about 10%. We've not experienced that historically, and that's probably more due to volume compared to the growth that we have now. So we really want to navigate that first before we give you anything that's any different than $240 million to $250 million. Again, as Justin said in his comments and you know, I think you've experienced our guidance in the past, we'll give you numbers that we're confident that we're going to hit. Q – Yigal Nochomovitz: Okay, understood. And then on the $750 million with XPHOZAH, can you just clarify, is this based on using 2033 Hatch-Waxman 14 years from 2019 approval or is it based on an earlier date without Hatch-Waxman just based on the core IP? Can you just clarify what timeline you're referencing there please? A – Mike Raab: Yeah, it includes the extension of Hatch-Waxman. Q – Yigal Nochomovitz: Okay. Alright, and then last one on the BD front, should we have an expectation that we could see some sort of licensing of a new product this year or that's to be determined?

To be determined. We're going to bring in the team that we've built. We talked about [indiscernible] established and what you are looking at now. Certainly our objective is to continue to build the pipeline and for the right opportunity but if it's here this year, we certainly would announce that. Q – Yigal Nochomovitz: Alright, thanks so much. A – Mike Raab: Thanks Yigal.

And our next question comes from Dennis Ding of Jefferies.

Hi, good morning, thanks for taking our questions. We have one on XPHOZAH and another follow-up on IBSRELA. So for XPHOZAH, thanks for your comments and prepared remarks, it's very encouraging to hear. So we're seeing scripts potentially bottoming out, but curious what you're seeing real time in the field now that we're towards the end of February and if doctors are broadly prescribing XPHOZAH in the same way as they did in 2024. I guess the key question is from a volume perspective, do you think we are at the bottom and then I have a follow-up. A – Mike Raab: Sure, just a brief comment from me and I’ll ask Eric to comment is, the entire [indiscernible] management market has been challenged disrupted as binders move into the bundle. And how that operates within the DOs getting to the patients, all those things, so we're working within that context, right? So think about that and the message is Eric said in his comments that we're trying to enforce with physicians, the directive that keep doing what you've been doing historically and we will adjudicate on our end all the issues that [indiscernible] coverage for Medicare patients. Whether or not we're at the bottom, I think I certainly wouldn't be in a position to predict that. We feel really good about the performance, and I think if Eric can comment a little bit more on the sort of 4 areas that he's been thriving to ensure that confidence continues.

Yeah, thanks, Dennis. I agree with Mike. I think it is too early to say whether or not we've been at the bottom. What I can say is, our message has certainly been well received with regards to access continuing for XPHOZAH for these patients. And again, it was really important that we make sure that we were confident that the plan that we have and those 4 patient groups and pathways that they were being able to kind of flow through and receive access. Very early on we saw that those 4 patient paths, they were successful and that patients were able to have access, so we're continuing to see that as we saw from the beginning part of this quarter and which continue to be encouraged that we're continuing to see that flow through. As Mike said, there is a lot of activity right now with regards the binders being in the bundles and the DOs having to work through that. So we're certainly empathetic to the challenges that they're going through, and we just continue to remain focused on ourselves and making sure that physicians are confident that there continues to be access for XPHOZAH and those patients out there in need can have access to it. So we're encouraged by seeing that and we're just going to continue to push forward from there.

Okay, great and then my follow-up on IBSRELA, it's a 3-part, so I apologize for that, but you started 2 Phase-II trials in Parkinson's and CF-associated constipation. Can you talk about the rationale behind those 2 very specific populations and if they are part of your $1 billion peak sales guidance or if these are incremental opportunities and perhaps help us size those markets for us. Thank you. A – Mike Raab: Sure, those are investigator sponsored trials, which are certainly common in the industry. So those are not ones that we sponsor and I think if you look at it, constipation is many different ideologies, Parkinson's being one that's common, and we're excited to see what those results will look like. And no, that's not part of the billion. Q – Dennis Ding: Okay, perfect, thank you so much.

Our next question comes from Laura Chico of Wedbush Securities. Q – Laura Chico: Good morning. Thanks very much for taking the question. One on XPHOZAH and apologies if I missed this. Are there any quantitative metrics you could share just with respect to kind of the retention of patients now in 2025 and any possibility you can kind of frame context around the quantification of free drug in the quarter so far? A – Mike Raab: Yeah, I think the latter question it's too early for that Laura, as people are going through this process that we described in our prepared remarks. I think I'll ask Eric to talk about sort of the first 2 groups of patients that came in from 2024 into 2025 and seeing that they're still on therapy. That's probably the only thing that we can comment on at this stage.

Yeah, as Mike said we're not going to be able to get into specifics in terms of quantifying it, but I can confirm that we had patients that were on XPHOZAH in 2024 covered by Medicare Part D. And as they came into 2025 and obviously we re-verified their benefits, and they are able to qualify for our patient assistance program, they have been given access to XPHOZAH. So those patients that were receiving it through Medicare Part D in 2024 now have access to our patient assistance program if they qualify and are continuing to have access in 2025. And then those patients that were receiving it through their commercial or their non-Medicare benefit, again going through that re-verification process in the January time frame, if their coverage does continue, we've been able to confirm that they still continue to have access to XPHOZAH in 2025. Q – Laura Chico: Okay, and then maybe just one for Justin, and I think I missed this, with the SLR term loan draw, I think it was about $50 million where are the primary proceeds going to be applied? Is it more for infrastructure, SGA expansion, any other comments right there?

Sure, Laura as you know we've always been very prudent in our capital raising strategies, and so we had an opportunity with SLR Capital in October to add that $49.7 million to our balance sheet to give us over $250 million. So we are very well resourced. It's at a very competitive interest rate, and so we want to take advantage of that as well as extend the runway of our interest only period until July of 2028. So it's somewhat of a strategic move to give us plenty of opportunity to give Eric the ability to do what he needs to do to expand the team, to grow a business, and to give our company the opportunity to build a pipeline which we've touched on in the past, but we're going to be methodical on patient. But again with a strong balance sheet now with plenty of runway, we have that flexibility to build a great company. Q – Laura Chico: Thanks guys.

And our next question comes from Joseph Thome of TD Cowen.

Hi there, good morning and thank you for taking my questions. Maybe on the first one on XPHOZAH, I guess just how familiar are the treating physicians with the bundling dynamics? I guess when we do our KOL calls, some physicians are acutely aware of reimbursement dynamics and others seemingly aren't at all. They just kind of write the prescription that goes off. So how often are you finding that you're having to correct physician behaviors and kind of remind them just kind of keep doing things as normal, and then maybe second on the [indiscernible], what sort of assets are you looking for? You've had good progress with the prior authorization commercially with some of your assets. Would you look for a commercial agent or you want to expand [indiscernible]? A – Justin Renz: Thanks for the question Joe. Let me address the second one first, and I'll ask Eric to speak to. What you just articulate in terms of [indiscernible] that we see out there is exactly what you pointed to. But in terms of what we're looking at obviously staying within our therapeutic areas is, first strategic consideration that Mike and the team are looking at, and whether the specific types that we will be looking at I think it's premature to address that, we're looking at something that makes sense within our team with the skill sets that we have across the organization and the commercial team, but building a broad and robust pipeline is the objective. A – Eric Foster: Yeah, and then with regards to your first question, Joe, I think it's a good one. What we have learned is the vast majority of the physicians are aware of the bundle situation, but to your point, it's really the DOs that have absorbed, they really have absorbed this as we moved into 2025. And for us it really allows us to keep a very simple message to the physicians. We know that they did not discern between Medicare or non-Medicare or based on payer coverage. So for us, our message continues to be simple and straightforward as it was in 2024 that regardless of coverage that they can feel confident that they will have access to XPHOZAH and that's exactly what we're seeing in 2025.

Thank you.

[Operator Instructions] And our next question comes from Roanna Ruiz of Leerink Partners.

Hey, good morning everyone. So, quick one on XPHOZAH, given the new reimbursement dynamic, I was curious what factors could allow you to meet or even exceed the $750 million peak sales guide for this product and also wanted to know if you could elaborate a bit more on some of the strategies and resources you're using to make sure Medicare patients continue to stay on XPHOZAH therapy if they qualify. A – Mike Raab: Sure, I mean, to the last part first is that is up to the physician, right? And the strong messaging that Eric has been talking about keep doing what you're doing and clear clinical benefit that XPHOZAH therapy has demonstrated in helping patients reach their target levels which previously many have not been able to do, but with XPHOZAH they are. In terms of the first part of your question, I'll ask Eric to address that. A – Eric Foster: Yeah, -- as we think about the patient's journey, we're very proud of ArdelyxAssist team and the service that they're able to provide for physicians and for patients out there, and that's one of the reasons why we've decided to expand that to be more of a field facing team in 2025. So we think about the levers for us again, it's very simple messaging that we continue to have access regardless of payer coverage -- patients continue to have access regardless of payer coverage. We continue to make sure that we've got a solid marketing plan. We're out there with physicians. We're in the community, peer-to-peer programming, meeting them at conferences where we know that that they like to receive information and they like to engage with the teams. And then again the ArdelyxAssist to be able to work with the offices to help triage those patients as they work through their journey to be able to have access and we're confident that works and we're seeing a lot of traction there and access is going through in 2025. So that's what's really giving us the confidence that we'll be able to achieve that whether it's having access in the non-Medicare segments and then also patients being able to qualify for a patient assistance program, if they are Medicare patients.

Got it. And last one for me, I noticed you're getting solid traction with the recent IBSRELA field force expansion. Just thinking ahead, are there any triggers or milestones that might encourage you to do additional field force expansion either for IBSRELA or XPHOZAH? A – Mike Raab: We always considered all opportunities to do and deliver more and better to our patients. I think as Eric mentioned increasing the access team with the field-based access managers is a critical next step. Maybe you can talk a little bit more about that Eric with the pull through. A – Eric Foster: Yeah and also just to recognize that we just completed at the end of Q3 the expansion. So we're still fairly early on in that expansion. Q4 was the first full quarter having the team there, so we still feel like there's plenty of opportunity based on the sizing that we have to get to the 124 that's out in the field right now. So we have plenty of opportunity there. And then for us it's really about how do we pull through those patients and make sure that the teams are focused in terms of their core areas of responsibility and that it really felt like we could do more with regards to the field access manager team and so we're excited to be able to expand that team. It's taking place in Q1 and they will be out there in the field working with their ABD partners on the sales side starting in Q2. So, feeling very confident that we've got the right resources across the patient journey, whether it's through driving clinical conviction, patient identification with the HCPs or pulling through those patients with the officers and the payer teams.

Got it, thanks.

And our next question comes from Julian Harrison of BTIG.

Hi, good morning. Congrats on the really strong quarter and for taking my questions. On XPHOZAH, I'm wondering if you're able to share the approximate public versus private reimbursement split for the fourth quarter. Was it approximately 60-40 or was it notably different than that? And then also curious if private payer access is where you want it to be for 2025 or maybe there's some near term opportunities to grow the coverage on that side. A – Mike Raab: Thanks for the question. What I think is a confident number that we can say is a 60-40 split between Medicare and non-Medicare. The non-Medicare is more than commercial Medicare, it's Medicaid, commercial, Tricare, VA, and Native American Affairs. So those are the 5 pillars of non-Medicare. In terms of expanding access on the commercial side, remember Julian that we don't have rebates, we don't have discounts, and that's why we've embraced the prior [auth] [ph] process. So any specificity around expanding that it, it's certainly something that we would always consider, but don't see that as a strategy in the short term. Eric anything you could add to that? A – Eric Foster: I would just say to your point, following on from the prior authorization standpoint, the PA approval rate is very high, and I think you can see that with the uptake that we had in 2024 and certainly reflects the innovation and really the real value that it provides to patients.

Excellent, thank you.

And our next question comes from Ryan Deschner of Raymond James.

Good morning. Wanted to ask about what the level of promotion sensitivity for XPHOZAH looks like compared to what you were seeing at IBSRELA at this point in the launch, and then I have a follow-up. A – Mike Raab: Sure. Eric? A – Eric Foster: Right now I would say the team is very focused and we've not expanded the team. We feel like we've got the right number, still continue to focus on the same targets that we did in 2024, and continuing to get receptivity. As Mike mentioned, obviously a lot of activity in the market and so the team continues to be focused on working with nephrologists, obviously working with the dialysis organizations as well and right now from a promotional sensitivity standpoint, we feel like it's just as it was in 2024 and we still have the same confidence that we had coming into the year.

Got it. And then how are you thinking about expectations for gross to net further down the line at steady state for XPHOZAH now that you're 4 full quarters into the launch.

Thank you, Ryan. It's still relatively early, as you might imagine in the launch and with the payer dynamic change that we're seeing in 2025 and expect to see prospectively, it'd be too early to give precision. We try to give information when we have it. So as I said in my prepared remarks, we expect it to be less favorable in 2025 compared to 2024 because the Medicaid and commercial-related discounts, if you will, are higher than Medicare. But we'll give more color as things progress. It's just too early for us to give guidance.

Got it, thank you very much.

And our next question comes from Ed Arce of H.C. Wainwright.

Hello good morning everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you very much for taking our questions. So first question, also on XPHOZAH, just wonder if you can discuss the estimated bottom line impact of XPHOZAH now being filled by transitional pharmacy as well as the Ardelyx patient assistance program, perhaps as a rough percentage of net sales? And also will this be reflected in cost of goods sold starting in the first quarter? A – Mike Raab: Yes. So I just -- I believe I understand your question, transition pharmacy is ArdelyxAssist Pharmacy. We have a closed distribution network with XPHOZAH as compared to IBSRELA. So there's no change that is different with transition being the pharmacy with whom we work. So I wouldn't expect a change from that. I don't know, Justin, you can address that as well. But as Justin just said in the previous question, we do anticipate some change to gross to net due to the change in payer mix, which would be different that you will see going forward and we'll give you more clarity as things evolve. Justin, anything to add?

Just to reiterate what both Mike and Eric said earlier that our patient mix was approximately 60% Medicare, 40% non-Medicare in 2024. And so that is, again, with patients losing Medicare Part D benefit coverage in 2025, that will be a change that we are working through in 2025, but still believe there's a significant population that we will build from. And then on the -- I believe you may be referring to the cost of our patient assistance program. So as a reminder, costs related to our patient assistance program do not run through cost of goods sold, but rather are part of our SG&A expenditures. And again, they're somewhat modest and that's been included in the guidance that we gave, where we believe SG&A will increase approximately $10 million per quarter over the course of 2025 compared to Q4 of 2024.

Got it. And then perhaps one more question from us with IBSRELA. Based on your net sales guidance, $240 million in 2025 and you outlined a number of initiatives this year, what other programs strategy do you have in place in order for IBSRELA to reach towards the $1 billion net sales goal?

Sure. I'll ask Eric to comment a little bit more. But as he said in his prepared remarks, the omnichannel efforts that we have underway, patient communication that is going to expand, a number of other initiatives like are part of the omnichannel efforts.

Yes. I would -- as we come into 2025, one, we've got the continued expansion of the sales force. So we've got a full team in place there. The team -- the marketing team has done a great job. We've had the evolution of the campaign in Q4 of last year and now continuing to expand our patient initiatives and our patient marketing efforts. This is a devastating disease for these patients and we need to continue to amplify the impact of the disease and the patient voice. We know we've got an engaged patient population and we want to meet them where they are to make sure that they feel empowered and confident when they run or when they get into the office. And the marketing team is working very hard to really pull that through in 2025. And then from an access standpoint, we talked a bit about the field access managers. So again, as you think about that patient journey, really from coming into the physician's office, talking about their disease and the impact on their life, really raising their voice and being impactful with the physician to be able to get the right treatment for them, we feel that we've got the right insights and we've got the right strategy that we're going to be able to amplify that in 2025. And then again, with the field access manager team to really help those patients be able to pull through so that they can continue to have access to IBSRELA.

Thank you again for taking our questions. Looking forward to 2025 progress. A – Mike Raab: Thanks Yip.

And our next question comes from Chris Raymond of Piper Sandler.

Thank guys. Just on the commercial pay market for XPHOZAH, I know it's early, but as you guys have done scenario planning with such a large segment of the market getting free drug going forward, have you thought about when you might start to see private payers coming back to you for more discounts, if at all? Asked maybe another way, I know XPHOZAH already has a decent discount off of list price, but is there a point in time where maybe you'll feel comfortable that you won't see any more significant pricing pressure from the commercial market?

Hey Chris, thanks for the question. We actually don't discount to payers. That's the whole decision that we made to embrace the prior authorization process. And if and when they come to us that means that we have come to their radar and generating sufficient revenue that [indiscernible] those questions. When or even if that happens, I think it's hard to predict. I don't know, Eric, any thoughts?

Yes. I would say our primary objective is access to XPHOZAH. And in the current market, patients can have access. We're seeing that certainly on the commercial side and the other non-Medicare segments. Should that change and should we start to engage in communications, again, our primary goal is access to XPHOZAH and we will engage in those conversations. And if we need to shift and pivot, then we certainly have the flexibility to do so. But right now, we continue to see the access is maintained in those non-Medicare segments and we're going to continue to push forward.

Thank you.

This concludes our question and answer session. I would like to turn the conference back over to President & CEO, Mike Raab, for any closing remarks.

Thank you all for joining us this morning and a special shout out goes to Team Ardelyx, who I know is listening. Your hard work is invaluable in bringing our essential medicines to patients and we wouldn't be where we are without you. I also want to acknowledge our shareholders for their support on this journey. We're building a significant company, having successfully developed our medicines from initial concept through development and now into commercialization. This achievement is not just noteworthy, it's a testament to our capabilities and we're excited to seize the opportunity and to do it again. With that, we can conclude the call. Thank you, operator.

This concludes today's conference call. Thank you for attending.