Q1 2023 Ardelyx Inc. Earnings Call

Speaker 1: The to for but.

Speaker 2: Good day and welcome to the ARDELUX first quarter 2023 conference call. All participants will be in listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

Speaker 2: I would now like to turn the conference over to Kaitlin Latley, Vice President of Corporate Communications and Investor Relations. Please go ahead.

Speaker 3: Thank you. Good afternoon everyone and welcome to our first quarter financial results call. During this call we will refer to the press release issued earlier today which is available on the investor section of the company's website at our DALEX.com. During this call we will be making forward-looking statements that are subject to risks and uncertainties.

Speaker 3: Our actual results may differ materially from those described. We encourage you to review our risk factors in our most recent quarterly report on Form 10Q file today, which can be found on our website at ourdelt.com. While we may elect to update these four looking statements in the future, we specifically explain any obligation to do so.

Speaker 3: even if reviews change.

Speaker 3: Our President and CEO , Mike Robb, will begin today's call with Open remarks in an overview of the company's progress during the first quarter of 2023. Next, Susan Rodriguez, Chief Commercial Officer, will provide an update on the launch of a CERLO. Justin Renn's Chief Financial and Operations Officer will conclude today's formal remarks.

Speaker 3: with a review of the company's financial performance during the first quarter ended March 31, 2023 before we opened the call to questions. With that, let me pass the call over to Mike.

Speaker 2: Thank you, Caitlin, and good afternoon, everyone. I'm excited to be here today to highlight the momentum we've created at our deluxe as we report another quarter of consistent growth for a dr. and the progress we've made on our path to bring exposure to patients. In this afternoon's press release, we also announced a recent business development transaction.

Speaker 2: designed to bring our novel mechanism products to patients and strengthen our cash position.

Speaker 2: What you are seeing from our delegates is a focus on execution. We know our priorities and the team continues to deliver.

Speaker 2: Notably, Israel's sales came in at $11.4 million, an increase of 31% over the fourth quarter of last year. And all indicators continue to reinforce our confidence that we are on track for Israel to become an important product for patients with IBSC.

Speaker 2: In a moment, Susan will share details on our momentum and learnings as we are now just over a year in to launch.

Speaker 2: As we guided during our Q4 earnings call in March, we resubmitted the NDA for XFOSA on April 17th and await the goal review date from the FDA which we expect mid-month.

Speaker 2: We are now in full preparation mode for a launch in the second half of this year, pending approval of the NDA. Comprehensive nephrology research conducted in the first order reflects a high level of awareness, interest, and intent to adopt the fix-fosa. And we anticipate a strong response to the product launch.

Speaker 2: Our commercial team, LeBite Susan, is focused on executing a plan that will capitalize on the highly recognized unmet needs in the treatment of high-profile fatigues and a strong nephrology interest in adopting a novel mechanism therapy as we plan for long-term success of the X-Fosa.

Speaker 2: We will share information on our go-to market strategy as we get closer to launch.

Speaker 2: Finally, we continue to be thoughtful about how we fund the company. We are excited about the collaboration agreement with MetaSpherePutics to develop one of our earlier stage assets, our portfolio of PGR5 Agnes Compounds.

Speaker 2: We receive an upfront payment of $750,000 in April following the signing of the agreement and have potential to receive additional milestone payments in royalties in the future.

Speaker 2: As we look ahead to the rest of the year, we will continue to focus on execution.

Speaker 2: We are encouraged by our progress to date and the responses we hear from the market. Now, let me hand it over to Susan who will share more detail about the commercial performance of a Durala.

Speaker 4: See you soon.

Speaker 5: Thank you, Mike. The first quarter of 2023 marked one year since the launch of Abzrella. We launched in a market that many thought was impenetrable for new entrants with an innovative strategy few had seen. After 12 short months, our strategy is continuing to drive uptake and we are increasingly gaining share in the IBSC market.

Speaker 5: In the first quarter of this year, total net sales for Australia came in at $11.4 million, reflecting a 31% increase over the fourth quarter of 2022. The drivers feeling this growth are strong and persistent, which we believe point towards continued growth for Australia as we see new and

Speaker 5: are performing against these key components of the plan.

Speaker 5: First and foremost, our Dell X is a company that discovers, develops and commercializes first in class novel therapies to address important, unmet medical needs. Physicians are choosing a strella as a result of a recognized unmet need in IBSC. Patients are responding well to a strella and staying on treatment.

Speaker 5: The differentiated product profile with a novel mechanism of action and clinical data supporting Ibsralla safety and efficacy resonate with the GI community. We continue to generate clinical insights with additional analysis being presented at the annual Digestive Disease Week that will kick off.

Speaker 5: Saturday in Chicago, which we expect will continue to fuel this favorable view of the Agile products and clinical profile. Second, the omit medical need in IBSC is significant and persistent. Patient market research indicates that approximately 77% of patients with IBSC.

Speaker 5: view of the patients across their practice who they believe could benefit from the novel mechanism treatment approach provided by Australia.

Speaker 5: Third, we are executing with the absurlet by targeting a concentrated set of specialist healthcare providers that exists within what is now an established IVFD prescription market.

Speaker 5: These top-writing HCPs see patients with IVFC every single day and commonly see that their patients continue to suffer with symptoms despite treatment with GCC agonist therapies.

Speaker 5: These HCPs have a strong interest in learning about Australia and are continuously engaging with our Salesforce. They have established processes in place to pursue and secure the prior authorizations required for Australia are helping to ensure that patients gain access to Australia therapy.

Speaker 5: And lastly, our payer strategy is uniquely designed to address the access dynamics implicit to a novel branded entrance launching into a market where patients are commonly treated with established therapies yet persist with important on-met medical needs.

Speaker 5: Early in our launch, commercial and government payers evaluated if Drilla and established coverage policies that grant access on the basis that a patient has been treated with in most cases a GCC agonist. Since the patients prescribed Drilla are already considered by their HCP.

to be insufficiently treated despite GCCAgenist treatment, offices are motivated to administer the prior authorizations, which demonstrates that patients meet the coverage criteria. As a result, approval rates are favorable, and patients are gaining access to insurella.

This favorable access landscape experienced by treating HCPs is further reinforcing expanded use for those patients in their practice in need of a novel approach.

Due to the limited prescription options available to treat IVSC and the young that need despite use of these existing options, coverage policies include a path for use of the active sterla with prior authorization approval achievable.

Since our Access Strategy centers on proper patient selection and support of prior authorization procedures, we are achieving access by a HCP demand and not by unnecessary rebating to payers, resulting in a favorable dynamic for the gross to net profile of the Drilla.

Combined, these core elements of our strategy centered on targeting, positioning, and access are working together and Abserella is increasingly making an impact on the IVFC market at a price point aligned to its clinical value proposition.

All of the uptake indicators continue to give us confidence that Israel can achieve amid-to-high single-digit peak market share position, which at Israel's price point in this 5 million annual IBSC prescription market would make Israel a $500 million product at peak with the potential to exceed this level with additional market share gains.

As I look ahead to the launch of EXPHOZA, the markets dynamics in the hyperphosphatemia space are similar to the dynamics in IVSC. An established prescription market, a concentrated group of prescribers, existing treatment options limited to one class of therapy, and patients that despite treatment are in need of a novel mechanism treatment approach.

The unique clinical value proposition of EXPHOZA points to the same key strategic go-to-market elements in the areas of targeting, positioning, access, and pricing that our deluxe has successfully executed with the launch of Israel and preparations are well underway.

I look forward to sharing more of those details as well as updates on our continued progress with Israel in the months ahead.

Before I hand it to Justin, I would like to highlight that I am incredibly proud of the highly experienced, high performing team who is behind Ibsrella's disruptive commercial strategy and our success. Together we are realizing the vision of Ardellic. Justin? this is an educational program about people in partnership with Brain College

Justin, I would like to highlight that I am incredibly proud of the highly experienced, high performing team who is behind Israel's disruptive commercial strategy and our success. Together, we are realizing the vision of our delegates. Justin? Thank you, Susan.

I'm going to walk you through our product sales, collaboration revenue, and expenses before turning to our cast position and how we were thinking about 2023.

As both Mike and Susan mentioned, we had net product sales withdrawal in the first quarter of $11.4 million.

reflecting significant quarter over quarter growth, a 31% increase what was reported in the fourth quarter sales.

It was in the first quarter of last year that we recognized our initial sales of the draw of half million dollars and we had twenty seven million dollars in cumulative net product sales in our first four quarters since launch.

Research in Newfoundland expenses were $9.1 million for the quarter ended March 31, 2023, reflecting a slight increase over $8.9 million from the same quarter last year.

Selling General and administrative expenses were $26.8 million in the first quarter of 2023, an increase of $7.5 million compared to $19.3 million from the same period of 2022.

The increase was primarily due to the increased costs associated with the continued commercialization and growth of the Dredlo. For the quarter ended March 31, 2023, we had a net loss of approximately $26.8 million or $13 per fully diluted share compared to a net loss of $28.1 million.

or 21 cents per share in the first quarter of 2022. It is notable that our net loss for the first quarter included over $4 million of non-cash items, including share-based compensation expense of $2.9 million.

Interest expense related to the sale of future royalties of $1 million and an impairment of a lease right of use asset of approximately $429,000.

As of March 31st, 2023, we had total cash, cash equivalents and short-term investments of $130.4 million as compared to $123.9 million at ERN 2022.

I will take a minute to walk through our cash flows of the quarter.

As I said, we ended 2022 with approximately $124 million in cash.

We venerate $51.9 million during the quarter to sales for a common stock under our ATM program, $20 million of which we announced on our March 2nd conference call when we reported our fourth quarter results, and another $31.9 million from sales during the period from March 7 through March 27.

To note, in the first quarter, we spent approximately $20 million, including inventory bill preparing for the watch that exposed it and to support the Israel growth.

Our net loss of working capital adjustments accounted for the remaining $25 million in operating cash per

Regarding our spending requirements for the remainder of 2023, we will continue to invest in the launch of Xfosa in the near term as we approach the goal review date.

Besides the further investments in supply, we will be expanding our commercial footprint as well as adding additional promotional spend to support the launch activities.

In terms of financing the company, as Mike mentioned, we announced the licensing agreement with metastereputics under which metast has exclusive rights to develop and commercialize our TGR5 Agnes compounds all therapeutic areas.

This agreement brings opportunities to develop one of our next generation technologies. And as part of the agreement, we receive an upfront payment of $750,000 from medicine April . We have the potential for substantial clinical, regulatory, and commercial milestones, as well as future product world. We will continue to strengthen our cast position by looking at all options.

as you heard from Susan and Justin, our performance reflects a focus on executing in our plans. We know that we have more to do in the months ahead, and I'm confident that the team that our dollars has prepared and capable of delivering on the plans and admissions that we collectively share. I look forward to keeping you updated on our continued progress. With that, I will now open the call to questions. Operator?

Thank you. We will now begin the question and answer session. To ask a question, you may press star than one on your touchtone phone. If you're using a speaker phone, please pick up your handset before pressing the keys.

To withdraw your question, please press star then two.

At this time, we'll pose momentarily to assemble our roster.

Our first question comes from Yagel Nocho-Movitz from City Group. Please go ahead.

Hi, Mike Susan and Justin and team. Thank you. Just can you help us a little bit with the math for the first quarter? We were looking at the symphony data. I don't know how accurate that is. But in any case, we did some math on that using just over 12,000 scripts.

and then the WAC, which I know increased on February 1st, and we using the gross tenet from last year of 28 percent, we were getting a little bit of a higher number. So he just comment as to what the actual gross tenet was in the first quarter and any other dynamics that was driving the overall revenue picture. Thanks.

Sure, let me actually ask Susan to speak first to where we stand with IQV and symphony as those data begin to mature and then ask Justin to speak to Trostonet.

Yes, thank you Mike. Hello, Yagal. Yeah, as we transphose acute and acute and symphony scripts, what we're finding is that the growth trajectories are actually quite comparable. So, directionally, it's a good indicator on the momentum we're seeing with its driller uptake.

Sincerely based on their projection methodology consistently reports a slightly higher level of scripts. So I think that probably explains why maybe your math is slightly different than what we have announced as our quarterly performance for Q1 2023.

Can you just give the rough delta, what's the inflation with symphony? Do you have a rough number for that? How much is an inflated relative to what is more accurate?

Yeah, I really can't comment on that because I think in terms of we need a few more months of accumulating this audit data to really make a determination on which is the most accurate reflection. So you just need to see more months from you to be able to answer that question, you go.

Yeah, you've all I think is we've been so inconsistently is that we know that neither one of the two are going to be perfectly covering some of the direct accounts that we have with specialty pharmacies. And as these days, I think what we said is going to be 12 to 15 months there about before we believe it will be comfortable with projections there. And...

We will do our best to provide you what that delta looks like, but I think we're in a position right now that it's not going to be a perfect number so we want to get a little bit better.

And Justin, you want to address any questions? Yes, thank you, Mike. Thank you, your call for the question. So this is, as you know, the first time we had sales being part of a calendar year. So it's very important for us to make sure that we have access available to all of our patients who want to have.

Derella prescribed to them and so our gross net profile is affected by the commercial copay and other access Availabilities for our patients and so in the first quarter as you know when copay's reset whether they're private pair commercial pair or government pair there's more of a rebate possibility and that rebates the right word It copay buy down if you will we make available and so

We expect that to decline over the course of calendar 2023. So our growth in that, which is published in our external financials for Q1 was 33.7 will continue to decline over the course of the year. And we expect your point should go at a higher 20 range by the end of the year. You know, and you go if you look back over the last 10 years, the first quarter certainly said seasonality for the IBSC space and.

obviously early for us, but we didn't suffer that same seasonality and the results that we saw. So we feel good that we're on the right track, but we'll get more insight on those numbers and provide you that guidance when we're ready to.

Obviously, early for us, but we didn't suffer that same seasonality in the results that we saw. So we feel good that we're on the right track, but we'll get more insight on those numbers and provide you that guidance when we're ready to. Okay.

And then I know you probably can't answer this because you don't know the name, don't know yet But you have any better feeling yet as to whether for high-profile team here whether you're going to go down the two or the six-month Review clock or is it is it sort of the same? Yeah, I mean I think as we said consistently our base case is the six-month review

we will all know, you know, we expect by mid-month, and we'll certainly announce that, but I think we should all have the expectations that it would be a six-month review. It'd be nice to be surprised, but that's our base case.

Okay, thank you. Great. Sure. Our next question comes from Laura Chico from WEDBUSH. Please go ahead.

Hey, thanks guys for taking the question. I've got two for you. I guess first on its rela. Can you expand your comments a little bit on the prescribing press? And I guess what metrics should we be watching for to gauge how this might be changing in terms of repeat usage among prescribers?

The reason I ask is I think your market research is shown about 50% whole favorable perceptions of the drugs once they use it to try to understand how that's translating to repeat utilization. And then I have one follow up. Thanks.

Sure, Susan. Yeah, so I think if you look at, you know, and ultimately we'll be able to give you better direction when we give guidance on tracking new writers and then repeat writers. And we're seeing, you know, a very, a very consistent relationship of repeat writing.

over the last several months as we build momentum for Australia. And for now, I think really seeing as well the new and refill RX ratio is also extremely encouraging in terms of the growth we're seeing at both levels. So patients are persisting on therapy.

which is a further reflection of the favorable experience physicians are having and why we are seeing repeat writing.

Yeah, more, you know, just anecdotally, we're all getting out in the field now with the commercial organization and, you know, the anecdotal stories I hear from physicians and caregivers is that, you know, and then there it's been tried on the most difficult to treat patients, which is a normal tendency with a new drug with a new mechanism getting launched. And they're finding it to be what they, what we did.

anticipated it would be that they're getting a great response and that begins to then help them say, gee, how many other patients deserve the right to try new mechanism and that's beginning to take to gain traction.

Okay, that makes sense. I guess then one follow up on expoza. Can you just comment there to on intention to prescribe dynamics and how that's changed over time because this is another one where you've had market research data going back for some time. Now that we're getting closer here, just curious. I think the last metric I'd seen was around the mid fifties.

first quarter of 2023 and what we found is that all of those metrics are really quite comparable. So the market dynamics continue to indicate high level of unmet need, high level of awareness of exposure and that intend to adopt a number that you reference is really quite comparable in the research that we...

Maybe the first one, you know, I know when the process was, you know, sort of the killer granted, the O&D directed the division to work with you on a label. I guess have any of those communications happened pre the submission or is that part of the review process and kind of don't know that has happened yet? And when you think about a potential label.

what sort of the scenario that you're anticipating. And then I have one. Yeah, I mean, I think if you think about Peter Stein's letter, where he said, appeal granted, basically says that the drug should have been approved, we were, as you recall, well in the process of negotiating package insert back when we received the CRL.

So, and in Peter's letter, he talked about how this would maybe be appropriate and instruct the division work with us on labeling where you had binders that no longer were, they were inadequately controlled or tolerated.

which is likely to be from a reimbursement standpoint where we would end up anyway. But it strengthens the position, the arguments with insurers to get the prior hot loss through. It's radio silence from the FDA until we get the goal date. You know, so there have not been conversations with them. We would anticipate that those begin.

you know subsequently as we get closer to whatever it's a six month or two month review which which as i said we expect six.

Okay, perfect, that's helpful. And then just as we think about the cadence of a potential launch, should we think of it similarly as what IBSRELA has done over the past kind of four quarters here, or is there any reason why exposure would be, you know, the uptake would be faster or slower for any reason, kind of how should we think about that case?

we just spoke about the anticipation for exposure has not tempered than with us two-year delay. So we anticipated it's going to be well received and the commercial footprint that we'll put in place is going to be appropriate to make sure that we have feet in front of those 8,000 physicians to make those prescribing decisions.

for expose ahead not tempered than with us two year delay. So we anticipate it's going to be well received and the commercial footprint that we'll put in place is going to be appropriate to make sure that we have feet in front of those 8,000 physicians who are going to make those prescribing decisions. Great. Thank you.

The next question comes from Chris Raymond from Piper Sandler. Please go ahead. Hey, thanks. I got a couple. Maybe for Susan first. I know you guys have described a scenario of taking share despite the typical patients being on existing therapy, but...

I'm actually going to maybe give a little bit more color on the prototypical patient that's new to therapy and maybe how that's changed since launch and how you serve a spy to see that maybe over the next.

year or so. And I guess what I'm asking specifically is, you know, just when or if you would expect to start to see any sort of frontline use or at least demand or expectations from from docs. And then the second question I guess on adrenaline, I'm sorry, is I know you guys indicate you're seeing persistency of therapy but

So, is there any sense of average duration on therapy and how that might shake out over time? Yeah, so let me make a couple comments and then Susan, please. You know, I think the thing that's important to note, and you know, we talk about this with physicians all the time, are 1200 patients were naive to therapy, or maybe 50.

They're about to have had previous exposure to GCC Aguina. So it's a frontline therapy clinical study that we got approved for Isabella. So that's an important backstop to think about. The realities of reimbursement is that no matter what we do, the likelihood of pairs saying, hey, you got to fail something else.

is likely going to be there. It doesn't mean that there isn't interest out there for using patients, but it's a harder code.

doesn't mean that there isn't interest out there for using patients, but it's a harder product.

Yes, you know, it's really important to note Chris, following up on Mike's comments that the, and when you go out and talk to physicians based on the product profile as a draw on the clinical data, they see it as a draw that's quite broadly applicable to patients and are very, very pleased with how it's performing. However, the market structure is such that actual first line use before a GCC access.

of GCC agonist therapy. So what we're finding is that, you know, on a daily basis, these physicians are seeing their patients who have been tried on these, you know, there's limited options. It's either Lenseth or Trulance and are persisting in their symptoms. So what we're finding is that their expanded use is really centered on. Now that they have, there is another option. They're familiar with it. Their experience with it has been favorable. They're starting to actually bring this up.

What Susan just said is, you know, if you look at the numbers that she said that we anticipate and there certainly may be upside to it for peak revenue, that does contemplate frontline. That is just those patients who are not getting the relief and improvement on GCC agonists. So that's an important thing to keep in mind.

Yeah, okay, great. Thank you. And then maybe an X-Foza. And this might be maybe an unfair question or one you might not want to answer or really have a sense of. But, you know, like you've said pretty clearly that you guys were in labeling discussions a couple of years ago when FDA sort of reverse field on this. Are you guys anticipating and you're planning any major differences in labeling now versus what you thought you were in? Yeah.

would have ended up from a pair of perspective regardless. So, and that's somewhat reflected in, as we shared, the pure granted letter that we have from Dr. Stein. So I think that's what we would say that we would anticipate the label to be reflecting.

effective regardless. So and that's somewhat reflected in, as we shared, the pure granted letter that we have from Dr. Stein. So I think that's what we would say that we would anticipate the label to be reflecting. Great. Okay. Great. Great. Thank you. Thank you.

Thank you, Chris. Again, if you have a question, please press star, then one. Our next question comes from Matt Kaplan from Gladdenburg-Thelmond. Please go ahead. I get afternoon and grads on the umbrella results of the quarter. Just going back to XOASA, can you give a sentence in terms of the launch prep and where you are with that? Specifically, what the commercial footprint and how it will change from what you have currently for is related to adding in XOASA and what that commercial footprint.

What part of the model is that? Yeah, and we certainly will get into much more specificity on that matter as we get closer. But, excuse me, I want to provide some sort of general comments on that. That'd be great. Yeah, kind of. So we are mobilizing preparedness to launch exposure with our very strongly established marketing, patient services, distribution, access, payer engagement.

And as you can imagine, Matt, with what we're doing with Israel and in Susan was reflecting on there is much of that infrastructure that's wrecked with it for a successful launch exists. So we're not rebuilding that at all. We don't have to build that from scratch and it's the defeat on the feet. It's easy to excuse me. That's the major investment that we make is we're closer to the day. And that's really hasn't occurred yet this year. It's really kind of a second half of the year. Yeah, that's correct. Situations. Great. Thanks for taking a question.

Thanks, Matt. This concludes our question and answer session. I would like to turn the conference back over to our Alex President and CEO Mike Robb for closing remarks. Thanks again for the question, everyone, who joined today's call. I look forward to updating you when we receive the goal date review for X-Foza, and over the next few months sharing the details of how Susan and the team will leverage our commercial strategy. That is proving successful for Zerollah. To continue to drive growth of Zerollah and bring X-Foza to patients following approval. Once again, I want to thank Team Ardellix for your commitment and dedication to our patients and to the physicians and patient communities. We have continued to support our deluxe along our journey. We look forward to sharing more in the weeks and months ahead. With that, we can close the call. Thank you, operator. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.