Q2 2023 Ardelyx Inc Earnings Call
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Thank you good morning, and welcome to our second quarter financial results call. During this call. We will refer to the press release issued earlier today, which is available on the investors section of the company's website at our Dallas Dot Com.
During this call, we'll 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 most recent quarterly report on Form 10-Q that was filed today and can be found on our website and our galaxy Dot com.
We may elect to update these forward looking statements in the future specifically disclaim any obligation to do so even if our views change.
President and CEO , Mike Raab will begin today's call with opening remarks, and an overview of the company's progress during the second quarter of 2023.
Susan Rodriguez, Chief commercial officer, who will provide an update on the launch of its rollout.
Then chief financial and operations Officer, well conclude todays prepared remarks with a review of the company's financial performance.
Quarter ended June 32023, before we open the call to questions.
Now, let me pass the call over to Mike.
Good morning, everyone and thank you for joining us on the call I'm really pleased to be here today, and along with Susan and Justin to share with you. The progress we've made over the past quarter.
At the Midway point of 2023, we're excited about the critical milestones we've achieved the continued execution of our priorities and the important two quarters ahead of us.
Israel is making significant inroads in the Ibs C market as health care practitioners and patients recognize the benefits of its novel mechanism profile.
Our growth rate accelerated with net sales revenue in the second quarter of $18 $3 million, reflecting a 61% increase in net sales revenue over Q1.
This performance is the result of the incredible efforts of the team that is fully engaged in the field, calling on Hcp's and articulating the unique value proposition that as rolla offers patients who are in need of new treatment options.
At this stage of our commercialization of its rollout we're excited to provide revenue guidance for the very first time. We currently expect to draw on net sales revenue for 2020 three to be in the range of $72 million to $77 million.
Physician adoption patient need and positive treatment experiences as well as a favorable access are the fundamentals driving our exalt is where all the growth and.
And we believe the strength of these forces continues to predict expanded use of its rollout.
As we've said physicians are finding it's relatively an important treatment option for their patients with Ibs C.
Patients are experiencing positive results and refilling their prescriptions.
Access to withdraw it is favorable enabled by our best in class patient services program, our dogs assessed.
We are confident in the future performance of the drawn and we hope that this guidance will offer better insight into our expectations for this product in the market.
As it relates to expose that meaningful progress has been made since we spoke in may 1st as we announced in mid May the FDA had set the review will review date for exposure of October 17, and we expect to launch expose it in the fourth quarter of this year as quickly as possible following approval.
Awareness interest and intent to adopt exposure is high.
We will have comprehensive sales medical affairs patient services and payer access support in place at launch.
And as we get closer to launch we will share more details on our expectations for exposure and our launch plan to drive uptake and long term success.
Second as you may have seen a bipartisan bill was introduced last week in the house of Representatives, My Buddy Carter, Carol Miller, any Custer and Terri Sewell that will delay the implementation of the oral only policy under the Medicare Srd prospective payment system or PPS two January 1st of 2033.
<unk>.
The introduction of this bill is an important first step in extending the exclusion of the oral only yesterday drugs from the PPS currently oral only phosphorus lowering treatments, which exposure would be considered upon approval are scheduled to enter the P. P. S. Beginning in January of 2025, eliminating separate payment under Medicare part D.
For the approximately 60% to 65% of CK D patients on dialysis, who are covered by Medicare we.
We believe this important legislation is in the best interest of patients and we join your entire kidney community advocates patients nephrologist and dialysis providers that support the efforts to advance it.
Congress, taking action to extend this exclusion as it has done three previous occasions will ensure that <unk> patients on dialysis continue to have access to personalized care and innovation.
Pending approval of exposure by the end of this year within two years, our Delek will have launched two highly differentiated commercial products and markets for patients with significant unmet medical needs twice delivering on the vision of our Dallas a feed few biotechnology companies have ever accomplished.
Susan will now talk through the market dynamics and keep performing the performance metrics that are driving our success and accelerated sales growth where it is relevant.
Susan.
Thank you Mike.
10 months into the launch of Israel, we are establishing a strong early market position disrupting the ibs C market by addressing the need for a novel mechanism treatment option with a strong field force of more than 60 reps, having daily interaction with the top writing Ibs D. H C. P. We continue to focus.
Driving the breadth and depth of Israel, and writing across HCP for their patients who can benefit from a novel treatment approach.
On the channel digital tactics further amplify our commercial presence, enabling continuous engagement with existing riders as well as expanding awareness to cultivate new writers with new writers continuously being added and existing writers increasing their prescribing Israel is redefining the treatment.
<unk> landscape, our kitchen, South performance and revenue growth over Q1 reflects the growing uptake other tower and the opportunity. We believe the strength offers for a meaningful subset of patients that up until the launch of the Gela had limited treatment option.
Market is highly promotion sensitive our market presence is strong and the value proposition of Australia is resonating with HCP and patient.
The May 2023 launch dynamics tracking report published in Q2 by Sferics, an independent market research firm provides a view of the market responds to it thriller based on a monthly launched tracking survey across a sample of G. I.
The May 2023 findings reported based on the 76 G. I surveyed that 91% rated its rollout in advance of our existing therapy. Additionally of the subset of responded to reported using a thriller 98% reported satisfaction with treatment.
The May 2023 theory survey results also provide a view of the strength of our targeted commercial presence and high Ibs C. Writing HCP opposite with 74% of surveyed Gi reporting seeing in Israel, a rap of which the majority reported seeing a ramp within the last three months.
These results are in line with the persistent growth that we're seeing in both new and refill prescriptions and the feedback we receive daily from HCP.
People are interested in Israel.
Engaging actively with our sales team responding to our omni channel communication adopting a thriller and continuously expanding their use across their practice based on their favorable treatment experience.
Montana is strong and the potential is high we believe the opportunity for this strong to deliver Salisbury Delek a $500 million are more at peak is very real our commercial presence is strong and making an impact and novel mechanism and clinical profile resonate with physicians and patients are gaining act.
After the drug and seeing positive results. The neatest clear the opportunity is clear the product is performing and the team is executing at the highest level.
Commercial capabilities that are Alex our strong prison in mobilizing can be prepared to launch expose that if approved in the fourth quarter of this year.
Marketing distribution payer access and patient services commercial ramp has been ongoing with the buildout of the nephrology sales team now underway upon its approval expose that like it will be a novel mechanism therapy entering into an established therapeutic area with limited treatment option that is highly accessible via.
Our targeted focus on a concentrated number of H C. P. R strategy centers on treating nephrologist with our product positioning directly to patients with unmet medical need and a path to access to bring this first in class phosphate absorption inhibitor expose that to patients.
Forward to continuing to report on our Israel, our performance as well as sharing more detail on the <unk> launch in the near future with that I will hand, it to Justin.
Thank you Susan or second quarter of 2023.
Positive momentum on a number of financial metrics.
Sales growth improvement for our gross to net margin as compared to last quarter.
So a lot of thing of cash expenditure.
Our balance sheet.
We've taken several quarters.
I will walk through those metrics now and then discuss the guidance we provided today around that product in 2020.
In the second quarter of 2020, we had total revenue of $22 3 million compared to $2 5 million in the second quarter of 2022.
Increases in both our net product sales as well.
Alex supply licensing related revenue.
As previously mentioned, we had that product in Q2, 2023, $18 3 million.
Which is significant 61% quarter over quarter growth from the $11 4 million.
In the first quarter.
As a reminder, in the second quarter of 2022.
Borgwarner following launch we reported net product sales of one six.
We also recorded $4 million.
Licensing related revenue in the second quarter, this year compared to $1 million in the second quarter of 2022.
Research and development expenses were $8 3 million for the quarter ended June 32012, which.
With a decrease of $1 4 million for the $9 7 million the same quarter last year.
Expenses in the prior year reflects higher Tonight for manufacturing as.
As well as costs associated with our appeal.
In July 2021, complete response letter on the NDA.
We saw our gross to net margin improved in the second quarter.
As we expected health care plans reset a new calendar year most of that was somewhat higher in the first quarter and it had been in the third and fourth.
2022.
We were pleased to see that our gross debt included in the second quarter of 2020 to be approximately 28%.
We anticipate the gross to net margin to continue to be in the high point for the remainder of 2020.
Selling general and administrative expenses were $27 2 million for the second quarter of 2020.
Increased $8 3 million when compared to the $18 9 million.
Same period in 2022.
The increase was primarily due to the increased cost associated.
The commercialization.
So.
For the quarter ended June 32020.
We had a net loss of approximately $17 1 million or <unk> 80 per fully diluted share compared to a net loss of $26 9 million or 19 cents per share in the second quarter 2022.
The net loss for quarter ended June 32023, including $4 2 million in combined noncash expenses and share based compensation and noncash interest expense.
As of June 32020, we had total cash cash equivalents and short term investments.
<unk> hundred $27 6 million as compared to $123 9 million.
December 31 2022.
This reflects 11 $6 million, we raised during the quarter through sales of approximately 3 million shares of common stock.
Under our ATM program, we will continue to be patient and explore further opportunities to raise additional capital.
Yeah.
I'm now going to walk through some of the details of our financial expectations for the next 12 months.
First as you saw in our press release this morning, and as you've heard from US for the first time, we've shared full year net sales revenue guidance for example.
15 months following the launch we continue to see sales trends moving into steady positive collection patients are refilling their prescriptions previously running etp's on finding new patients and we have new hcp's running every day.
Our strategy to grow the depth and breadth of why this is working.
Also getting visibility patterns and dynamics of this once each day, enabling us to make more firm projections.
We currently expect net it's relative sales revenue for full year 2023 between $70 million to $77 million.
At the end of the second quarter, we reported year to date 2023, net sales revenue of $29 $7 million. This full year guidance range represents thoughtful consideration of continued growth.
With the volume of new prescriptions, we see favorable growth trajectory for LIFO prescription and strong demand and interest in this novel sleep.
We have confidence in it as well as potential and will continue with its relative to generate 500 million or more net sales revenue at peak.
In addition, I wanted to address a question we received related to symphony script cracking it.
As we start to understand the differences between our reported revenue.
Script data, we've identified that numbers reported by Symphony includes prescriptions from the pharmacy that fulfill prescriptions for our patient assistance program.
<unk> does not receive revenue for patient assistance program for spirit.
For this reason the symphony data does not directly tied to our reporting that.
In addition, Susan shared will begin investing in this quarter to prepare for the launch of exposure in the fourth quarter pending approval when.
Well, we want to support that if approved and as we ramp up.
The incremental expenditures to be approximately $20 million per quarter.
Hopefully quickly drive uptake and established our position first of all the hydropower, Jamie and treatment landscape.
Finally, as we've discussed in previous quarters, we will continue to strengthen our cash position by looking at all options available to them, including not equity solutions. As a reminder, we expect to recognize a $2 million milestone payment in the third quarter from apartment in China.
Following the acceptance of the NDA for Capa, Hypophosphatasia, which we announced earlier in July .
In addition, assuming approval to an abnormally high for fast opinion in Japan.
Another milestone payment later this year from our Japanese partner.
What about the continued growth of this rollout we are in excellent financial position as we prepare for the sport to watch we are confident in our ability to fund our operations, we will continue to be thoughtful decisions and maximize shareholder value.
With that I'll hand, it over to Mike.
Yeah. Thanks, Justin Q2 was another quarter, where our adult achieved important milestones delivered on our priorities and strengthened our business.
We are excited with its robust performance and are beginning to see upside for this product.
Pain behind Israelis focused dedicated and driven to help the patients that we serve.
We have set a standard for the type of success and innovative thinking that can be expected from your adults commercial organization.
Demand for exposure is high and we believe we have the potential for a strong launch after approval.
We continue to support our partners regulatory submissions, while engaging in discussions for further international expansion and looking at all the options available to us from a financing perspective.
Before closing I would like to take a moment as I always do.
Thank the incredible team our dollars your talent your passion and commitment are the driving force behind the performance that we've shared today.
I will now open the call to questions operator.
Thank you we will now begin the question and answer session.
Last question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
So the swing, one way or pause momentarily to assemble the roster.
Yeah.
And the first question comes from your call Nicol on what's with Citigroup.
Hi, Mike and Kim. Thank you very much could you just spend a little bit more time talking about the assumptions behind the newly introduced guidance range, obviously, it implies a quarterly growth over quarter over quarter growth.
Essentially lower than what you saw take you over <unk> for the.
Back half of the year. So if you could just delve into that a little bit more and then on the on the legislation with the with the bundling when you talk about the likelihood that that that legislation will will will come to fruition.
Keep keep the oral data bundle at 2033 Bronx.
Sure. Let me start with the last part first is I feel like starting to sing schoolhouse rock is to have a bill becomes a law.
And so I can't give you any specific.
Percentages on the probabilities. This is such an important first step you know what.
We're focused on is making sure that the team is ready to launch in the fourth quarter pending approval.
And we will take it step by step and I think this is such a strong message of what Congress has previously done three other times that it gives me some hope and optimism, but I can't give you specific numbers as it relates to the guidance you know as I said in adjusting to this is our first time, giving guidance, we're going to take a very measured approach I think as we look at.
How we performed since launch you know there's different percentages growth quarter to quarter. So we're not going to straight line things when we take these.
In a stepwise fashion as we have with us and I think this is a measured and appropriate first step for guidance, but just anything to add to that.
No Mike that's excellent again, we're really encouraged by Q2's quarter over quarter growth.
Hum.
Really two questions here with the amazing job and we'll keep you apprised of our progress.
Thanks, and then just one one quick question on the on the Symphony So the patient assistance program.
Can you say what percent of the the script volume coming out of smoke when he was driven by the P. A paper, which you don't book revenue.
Yeah, I mean, it's it's going to vary depending upon all the scripts right. So theres not a specific percentage that we can say is going to be true last quarter to the next one but it's just a it's a pap program that shows up in Symphony.
Okay. Thanks, Mike.
Sure.
Thank you and the next question comes from Dennis staying with Jefferies.
Hi, good morning, congratulations on the progress and thanks for taking my questions.
Two if I may.
Expose our you know what are your expectations into the October due for including how the label could eventually shake out and how that would impact your positioning in the market and then.
Number two.
Ever since the Resubmission and acceptance.
How has engagement with the F D a bin.
And what more needs to happen in the next two months into the particular thank you.
Sure. So I think as we shared when we.
So they'll get re filed the NDA and as well with Doctor Stein's letter and frankly, all the discussions that occurred at the AD Com. We believe the likelihood is that this is going to be an indication that says something along the lines. When binders are insufficient door and tolerable, which is the majority of patients is as everyone knows.
So I think that secures a very powerful second line spot where all the binder you know what.
Almost 80% of patients are above range in any six month period of time, and so we feel strong and feel good about if that's the indication ultimately ends up being.
There's not really been any substantive communication with the agency didn't anticipate any traditionally you begin your negotiations on your package insert.
Month, or so prior to your <unk> date, and if you recall in our last go around we negotiated the majority of the package insert them before what occurred to ultimately end up in the E. R. L. So.
Don't know how much re litigation is going to have to be required for the pi since that's already been done.
But.
That's what we would anticipate.
Thank you.
Thanks, Dan. Thank you and the next question comes from Laura Chico with Wedbush.
Hey, good morning, guys. Thanks for taking the question I just wanted to circle back on the guidance real quick here what.
What I I guess, maybe if you could explain like what gave this why was now a good time to start providing guidance was there anything that's changed kind of in the trajectory or anything there, but yeah rationale around why now is a good time for guidance.
Well, we said that we would do it in about 15 to 18 months from launch as we learn more about the data and got more comfortable and I think as Justin said in his opening remarks that we're gaining confidence in those numbers being representative.
Where we're going so that's really what generated that it's you know what 15 16 months post launch and it just seemed like the right time.
Just anything okay.
No I think that's right.
Laura.
Thanks, guys, Okay, and then if I could follow up on one just with respect to the legislation I don't think we've seen touched on that bill yet and I know you mentioned, we've already had Mccann kicked down the road three times previously I guess just on the off chance that Bill does not progress I'm. Just wondering if you could kind of walk through mechanistically.
What would actually happen if it were included in the bundle I guess I'm trying to work through that scenario.
<unk> impacts during the transition.
Yeah. Thanks, if theres any color there you could provide.
Sure and to see the text of the Bill you can go to a body Carter's website.
Congressman from Georgia.
And the Bill is there.
As it relates to the bundle.
It would end up being January one 'twenty five as it goes in and you ultimately earn a two year to doubt the period like other drugs that have gone into them or do you like since burn.
It makes it a vexing issue for the providers to actually accomplish what they need to when they're not gonna be getting these drugs during the provision of the balance of services.
That's very helpful. My last question I'll <unk> back in the queue in terms of a T. M utilization I think there was about 11 million generated.
This quarter could you just comment on kind of appetite for further use of the a T. M. Thanks very much.
Sure Justin.
Yeah. Thank you. So we sold approximately 3 million shares during the second quarter gross currency and $11.6 million.
Mmm discussed in our prepared remarks going to be very methodical in Asia capital raising ideas. So we're open minded to non equity solutions as well as we continue to explore options.
Business development.
Yes, and other non equity solutions so.
It's certainly a tool in our toolbox.
Gonna be patient and methodical as we've tried to be previous quarters.
Demonstrations in Washington as well.
Thanks, very much guys.
Thank you and the next question comes from Mac caps on <unk>.
Hi, good morning, guys and.
Congrats on me a traveller results for the corner a nice nice results just wanted to toss in a little more to your preparation for the Expos Avalanche.
And you know going into the October 17th pretty so can you give us a little bit more color in terms of.
How you're thinking about the build out of that that sells team and will.
Look like the <unk> or in terms of size and and give us a little bit more Colorado touchy prep form.
Sure Susan.
Yeah, Hi, Matt we are as you mentioned <unk> narrative react you know mobilized to prepare for it and watch it explode now we have the capability to ramp up on them I think distribution pair engaged in patient services. Your question on the sale for it we are fielding a dedicated nephrology.
<unk> and this market and the Israel as we have noted around me happy as the market has a very concentrated number of doctors with around 8000, Hcp's accounting for the majority of hyper 515 me a script so to really reach that target group. We are fielding a group of about 60.
Which we believe really will develop a very yeah establish a strong salesforce present for expos out with a dedicated nephrology salesforce across the country. So it really is a sales force comparable in size to our thriller Salesforce. However, it is dedicated to the nephrology <unk> and we are experiencing a really high level of interest.
Because we are interviewing you know to fill that spot as we speak with very seasoned salespeople with coming in with with abroad experience an established relationships. There were quite a few the attic about watching this dedicated team in and we will be prepared you know to be able to watch it as quickly as possible upon the approval of exposure in the fourth quarter.
And that's the thing I would add to that is if you recall before the C. R. L. We have an extensive disease awareness campaign in an organization that was <unk>.
Feet on the ground doing and what's been remarkable to see the continued awareness that has built even since then and the anticipation for it. So you were enthusiastic about what we're going to be watching them too.
Okay.
That's helpful. And then and then fall onto that is I guess why.
It should be exposed to launch look like the Israeli launch or why should look different given given what you just said Mike in terms of the level of awareness et cetera.
What what what should our expectations being.
<unk> yeah.
Yeah. So I think what we'll do is hold on that you know we will spend some more time more dedicated time with everyone. As we got closer to the to do for the day, telling you more about our expectations and and how that's gonna look you know I think we're still gathering perspectives on it we think it's going to be.
A positive response to launch, but uhm quantifying that at this stage, it's probably premature.
Okay.
And and last question in terms of the person to watch I think in your prepared remarks Justin.
<unk> you mentioned, an incremental increase in SG&A can you just go over that again and and how how what you think about that.
Yeah. Thank you ma'am, so where would you like to.
Did we anticipate additional incremental $20 million combined SG&A spend.
With well at some additional Pi <unk>, starting in this quarter and going on that will be the incremental costs of course.
Sorry.
Rather than that.
All set by <unk>.
Regarding excuse me may prevent the $20 million.
<unk>.
Okay.
Thanks again.
Thanks Man.
Alright, thank you so much.
As a reminder, please press star then one if you would like to ask a question.
And the next question I'm painting Bonsai critique Allen.
Hi, guys. Thanks for taking my questions I guess, a little more on the data that you mentioned, so I'm assuming that you have to apply for this is something that you guys would apply for this if it would be put into bundled however, unlikely that may be.
Yeah, I mean it too.
Whatever the process is to get those data collected we would certainly participate in that.
Alright, Gotcha, and then I guess it is kind of like a follow up.
How how we haven't kind of discussion been going for other areas like specifically Europe have you begin to move forward to <unk> and if you have any timelines that'd be great.
Yeah. So we've had ongoing discussions and all the Unpartnered territory's, whether it's I B S. C in Japan Europe , the rest of world. Those conversations continued some there's better trajectory than others no specific timeline that I can give you in terms of win anything like that would be uhm finalized.
Great and I guess, just like one final one for me see how you guys are you know pretty deep into it fell a lunch now and devoted probably gonna get approved and and then launched could you maybe talk about your longterm P. A D or an internal R&D strategy would you guys restart your earlier stage pipelines or would you be looking to license something.
Yeah, I mean, it's a great question, we set as we've said that it was a couple of programs that are sort of laying fallow at this 0.2 associate's metabolic acidosis, the hyperkalemia program to speak to that with sufficient capital obviously looking at those and restarting those would be.
The prudent thing to do I think what we're also demonstrating payton with what we've got into this dwelling on confidence will demonstrate with exposure is an extraordinarily powerful commercial organization that should be the partner of choice for new and upcoming drugs and I'd be S. N give me enough time, you drugs in dire.
Alexis Arena.
So we'll continue looking across multiple ways of strengthening our pipeline.
As we get to a place where we have a strong enough balance sheet to do that.
Great. Thank you very much appreciate all the color.
Okay.
Thank you and this concludes our question and answer session I'd like to we're trying to accomplish back over to President C. A micro Rob for any closing comments.
Thank you everyone for joining us this morning, I look forward to providing you with further updates in the weeks and months ahead, we have a number of milestones that I look forward to sharing including an approval of exposure in October and continued growth <unk> with that we can close the call. Thank you operator. Thank you. The conference has concluded. Thank you for attending today's presentation.
Nation, I mean I'll disconnect.
Mmm.