Ardelyx Inc (ARDX) 2018 Q2 法說會逐字稿

Good afternoon, and welcome to Ardelyx's Conference Call. (Operator Instructions). As a reminder, today's call is being recorded.

I would now like to turn the call over to Alicia Davis of Thrust Strategic Communications. You may begin.

Thank you, Sandra, and good afternoon, everyone. Earlier today, we issued a press release outlining Ardelyx's second quarter 2018 operating results. The press release and our corporate presentation are available in the Investors section of the company's website at ardelyx.com. On the call with me today is Mike Raab, President and CEO. Additional members of the team will join us for the Q&A session.

During this call, we will make forward-looking statements related to the company's current expectations and plans. These statements are subject to risks and uncertainties, and our actual results may differ materially due to various important risk factors, including those described in the Risk Factors section of our Form 10-Q filed with the SEC. These statements represent our views as of this call and should not be relied upon as representing our views as of any date in the future. We undertake no obligation to update any forward-looking statements.

With that, let me pass the call over to Mike.

Thanks, Alicia, and good afternoon, everyone. The first half of 2018 has been about execution and evolution for Ardelyx. As a company, we are focused on developing and bringing to market first-in-class medicines for renal diseases. This is an area of development that has seen little innovation by our industry despite the numbers of people affected, the significant cost of these disorders to our health care system and a clear need for new treatments. We owe these underserved patients and their physicians treatment options with unique mechanisms of action that are effective, tolerable and suitable for long-term use. This is precisely the role we see for tenapanor and why we are confident in its future. The strength of our expertise in the renal space, combined with our knowledge of the physician leaders, community center and payer landscape, makes me confident in our ability to build an effective, specialized U.S. commercial organization targeting nephrologists. Our plan is to bring tenapanor to market for hyperphosphatemia ourselves, along with potential new treatments for hyperkalemia and other renal disorders. For our GI programs, we are presenting strategic agreements that would bring them to market in all geographies worldwide.

We are well underway with our partnering efforts with several established agreements. We have an agreement with Fosun Pharma to bring tenapanor to patients in China for both IBS-C and cardiorenal diseases; an agreement with Kyowa Hakko Kirin to bring tenapanor for cardiorenal diseases, including hyperphosphatemia, to patients in Japan; and agreement with Knight Therapeutics to bring tenapanor to patients with IBS-C and cardiorenal diseases in Canada. Each of these play an important role in our future as we focus our near-term efforts on hyperphosphatemia and hyperkalemia. We see a significant opportunity to bring a better treatment option for hyperphosphatemia to end-stage renal disease patients on dialysis. ESRD, the last stage of chronic kidney disease, is a major problem in the United States, which currently requires dialysis or a quick kidney transplant in order for a patient to stay alive. Of the more than 400,000 people in United States with ESRD who are on dialysis, nearly all require phosphate management. And we know that hyperphosphatemia is an independent predictor of morbidity and mortality in this patient population. We believe tenapanor has the potential to change the care of patients with hyperphosphatemia with just 2 pills taken each day. That's 14 tiny pills a week as compared to the up to 64 large pills required by today's market leader. With a completely novel mechanism of action that limits the amount of dietary phosphate that can pass through the GI tract and into the blood, tenapanor has demonstrated the ability to reduce serum phosphorus with favorable safety in studies to date. This includes positive results from the first Phase III study of tenapanor in hyperphosphatemia, which we reported last year. Earlier this year, we began our second Phase III study for tenapanor for hyperphosphatemia, the 52-week PHREEDOM Trial. Patient recruitment into this study is ongoing, and we continue to expect data next year, followed by an NDA submission soon thereafter. If approved, tenapanor could be the first small molecule drug on the market for hyperphosphatemia for dialysis patients, bringing a new, innovative mechanism and convenient dosing, which we believe could lead to enhanced compliance and adherence over the conventional phosphate binders.

As noted earlier, our intention is to commercialize tenapanor for hyperphosphatemia in the U.S. on our own. There are only about 10,000 nephrologists in the United States, which are led by a concentrated group of key opinion leaders and less than 7,000 in-center dialysis facilities. Based on our experience, we believe we can reach these targets by building a highly efficient, specialized commercial organization. Using conservative estimates, we believe that tenapanor has a U.S. market opportunity of between $500 million to $700 million.

Our renal portfolio also includes our RDX013 program, which represents the potential for a small molecule treatment for elevated serum potassium or hyperkalemia. RDX013 works by a completely different mechanism, whereby it may have the potential to lower serum potassium whether or not potassium is present in the [GI]. Our preclinical data demonstrates that RDX013 had a significant potassium-lowering impact at 1/1,000th of a dose as compared to potassium binders. Like tenapanor for hyperphosphatemia, RDX013 has also been designed to lower pill burden, allowing for better compliance and long-term use.

We estimate that over 2 million people in the U.S. have hyperkalemia. And according to the 2017 study conducted by an independent market research group, about half of nephrologists and cardiologists surveyed note that even with today's available binder treatment, there remains a significant need for new treatments for hyperkalemia. With the successful development of an effective potassium secretagogue in a small, convenient pill format, we believe that our RDX013 approach may allow nephrologists and cardiologists an opportunity to treat hyperkalemia chronically without reducing the use of necessary concurrent medications. If successful, we would able to leverage the renal sales and marketing organization, we planned to build just for tenapanor for hyperphosphatemia, to efficiently bring RDX013 to market in the U.S. While this program is early, we believe that RDX013 is a significant opportunity and we look forward to advancing this program.

In addition to our renal pipeline and based on the success of our Phase III T3MPO program for tenapanor and IBS-C, we're working towards submitting our first NDA application early in the fourth quarter of this year. As stated before, we will not be commercializing our GI assets. Instead, we intend for those to be brought to market through strategic collaborations and licensing agreements with companies that have significant G.I. experience and a proven track record of commercializing medicines. Our agreements with Knights and Fosun Pharma are exemplary of the benefit we think that tenapanor can have for patients with IBS-C. Our plan is to continue pursuing such agreements to bring tenapanor to these patients globally.

In total, the 3 licensing deals have brought in $44.3 million in non-diluted capital with a potential for significant development in commercial milestones, as well as royalties payable to Ardelyx for each upon commercialization. That capital, combined with the recent $100 million we raised in the second quarter, give us an extended runway to mid-2020, getting us through our NDA for tenapanor for IBS-C and a potential approval next year as well as the data readout for tenapanor for hyperphosphatemia. I'm highly confident in the future of tenapanor and of Ardelyx as an organization. I look forward to sharing more detail on our progress in the months ahead as we execute on a number of critical milestones.

With that, we'll open the call to answer your questions. Sandra?

(Operator Instructions) Our first question comes from the line of Yigal Nochomovitz with Citi.

This is Samantha on for Yigal. I was wondering if, first, you could just provide a little bit more color on what specifically you're looking for in a partnership for IBS-C in the U.S.? And if you could, what discussions have you had so far with potential partners to date?

Sure. Thanks, Samantha. Let me start with the last part first. We have been in conversations throughout. We indicated quite a while ago that we would not be commercializing tenapanor for IBS-C and GI, and that we focus our efforts around cardiorenal diseases. And as you can imagine, I think as people saw T3MPO-1's data come out and the questions around CSBM, people began to demure and wait until T3MPO-2 came out. Obviously, the performance that we've seen with competitors that have recently launched, and ultimately the capital requirement that people believe is needed for commercialization of IBS-C, we've been thoughtful and careful as we've gone out now with the T3MPO-2 data, which is clearly best, from our perspective, in category results. The dynamic that then happens was clearly we needed to raise capital. We did get term sheets but none of which anyone would have wanted me to accept because, certainly, blood was smelled in the water as we needed to raise capital, so we did not accept any of those term sheets. We believe all those parties are still going to be at the table. And ultimately, the strongest position that we will have that will eliminate any uncertainty is our post-approval with an approved label. And that doesn't mean there aren't ongoing conversations that we have and will have. I mean, if there's something that makes sense for us to do, we certainly would take advantage of it. My interest here is to get a deal where, ultimately, we get to participate on the back end, both in royalties and milestones, as a way to offset equity financing that we may ultimately need to do in the future. So the kinds of companies that we are interested in are -- they range from folks that we've spoken to that are traditional companies that are in the GI space, and you know who they all are, all the companies that you would expect, we have spoken to, to companies that have gaps in their pipelines, and with something that is approved, is direct leverage to any commercial organization that they're going to have in the field. So I'm optimistic that we'll get something done. And it will be something that ultimately provides us the benefit that we would expect from that kind of relationship.

Great. And maybe you could also elaborate a little bit more. When you say one or more strategic partnerships in the U.S., what would it look like to have multiple deals in the same territory?

Yes. So that -- we wouldn't do multiple deals in the same territory with same indication. What we meant by that is what we will be doing is multiple deals across territories to get IBS-C out to all the patients. And as you can imagine, there may be parties that wants just United States or United States and Europe, and we're just going to have to -- so much of what we did with Fosun and Knight, look at the best parties in each of the territories and ultimately, make those decisions. So we wouldn't do 2 IBS-C deals in the U.S.

Great. And just one more. When do you anticipate enrollment for these second hyperphosphatemia studies to complete?

Yes, so what we guided to right now is that we will read the data out next year and file the NDA. We're still in the relatively flat part of the enrollment curve that everyone goes through. And I spoke to Yigal 2 weeks ago in New York about this, that we hit the headwinds of the HIF-1-alpha studies when we started enrollment in January of this year. Those are coming to an end. So we expect things to continue to be on the trajectory that we've expected. And once we get to the beginning of that hockey stick that everyone experiences, we'll begin to tighten guidance as to when we'd read it out.

(Operator Instructions) And I'm showing no further questions at this time. So I'd like to return the call to Mr. Mike Raab for any closing remarks.

Thanks, Sandra, and thank you all for joining us today. As you've heard, we are focused on the successful execution of a number of initiatives in the months ahead, as we work to bring important medicines to patients who need them. We thank you for your questions and look forward to keeping you updated as we make additional progress. Thank you, Sandra.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.