Executive Summary / Key Takeaways

• Ardelyx is demonstrating robust commercial execution, with IBSRELA showing accelerating demand and raised 2025 net sales guidance to $250 million-$260 million, reinforcing its path to over $1 billion in peak annual sales.
• XPHOZAH is exhibiting remarkable resilience and demand growth in a challenging reimbursement landscape, reaffirming its $750 million peak sales potential from the non-Medicare segment, driven by a differentiated mechanism and strong patient access programs.
• The company's core tenapanor technology provides a unique, first-in-class approach in both gastrointestinal and cardiorenal markets, offering tangible clinical benefits that address significant unmet patient needs.
• Ardelyx has strengthened its financial foundation through strategic debt financing and disciplined expense management, with a clear focus on achieving cash flow breakeven in the near term and expanding its pipeline for long-term growth.
• Key investment considerations include the ongoing uncertainty surrounding XPHOZAH's Medicare reimbursement, intense competition in both therapeutic areas, and the company's ability to effectively scale its commercial infrastructure and pipeline development.

Ardelyx's Foundational Innovation and Market Landscape

Ardelyx, Inc., established in 2007, has evolved into a commercial-stage biopharmaceutical company dedicated to discovering and developing innovative, first-in-class medicines. Its foundational strategy centers on a unique platform that identifies novel biological mechanisms, aiming to create potent therapies with minimized systemic side effects. This approach led to the discovery of tenapanor, a minimally absorbed oral small molecule that has become the cornerstone of Ardelyx's commercial portfolio.

Tenapanor's technological differentiation lies in its mechanism of action as a sodium hydrogen exchanger 3 (NHE3) inhibitor. This novel approach allows it to act locally in the gut, reducing phosphate absorption through the paracellular pathway for hyperphosphatemia, and modulating fluid secretion for IBS-C. For IBSRELA, this translates into rapid and lasting relief for patients with irritable bowel syndrome with constipation, offering a distinct non-secretagogue option. In the case of XPHOZAH, it provides a non-binder alternative that has clinically demonstrated its ability to reduce serum phosphorus, helping chronic kidney disease (CKD) patients on dialysis achieve target phosphorus levels previously unattainable with traditional binders. This targeted, non-systemic action provides a significant competitive moat, potentially offering superior efficacy and tolerability profiles compared to existing alternatives.

The biopharmaceutical industry is intensely competitive, with Ardelyx operating in two distinct therapeutic areas. In the IBS-C market, IBSRELA competes with established prescription products like Linzess (linaclotide), Amitiza (lubiprostone, including generics), and Trulance (plecanatide), alongside various over-the-counter remedies. Ardelyx strategically positions IBSRELA as a next-choice therapy after secretagogues, recognizing that only about 25% of patients are satisfied with current options, highlighting a substantial unmet need that its differentiated mechanism can address. For XPHOZAH, the competitive landscape includes a range of phosphate binders such as calcium acetate, lanthanum carbonate, sevelamer, sucroferric oxyhydroxide, and ferric citrate, many of which are available as generics. XPHOZAH's non-binder, NHE3 inhibitor mechanism offers a distinct advantage over these traditional binders, particularly for patients with an inadequate response or intolerance. Several new phosphate binders are also in various stages of clinical development, indicating an evolving competitive environment.

Ardelyx's competitive standing is that of a specialized innovator. While it may not possess the broad resources or diversified portfolios of larger pharmaceutical companies like AstraZeneca (AZN), or the integrated service models of dialysis providers like Fresenius Medical Care (FMS), its agility in R&D and focused commercial execution in niche areas provide a strong differentiator. The company's strategic partnerships for international commercialization further extend its reach without requiring extensive direct global infrastructure.

IBSRELA: Accelerating Momentum and Market Penetration

IBSRELA, launched in the U.S. in March 2022, continues to be a significant growth driver for Ardelyx. The second quarter of 2025 saw net product sales reach $65.0 million, an impressive 84% increase year-over-year and a 46% rise quarter-over-quarter. For the first half of 2025, IBSRELA generated $109.4 million in net product sales, up 72% from the same period in 2024. This robust performance is attributed to increased demand, growing prescriber awareness and experience, and the positive impact of an expanded sales force.

The company's commercial strategy for IBSRELA is clearly yielding results. The sales force expansion, completed by the end of Q3 2024, is now fully deployed and contributing to accelerated growth, evidenced by a notable increase in new writers and both new and refill prescriptions. Management highlights that refills constitute a growing proportion of prescriptions, indicating strong patient adherence and satisfaction. The gross-to-net (GTN) deduction for IBSRELA improved to approximately 32.2% in Q2 2025, down from 34.8% in Q1 2025, primarily due to decreased costs in the commercial co-pay program as patient deductibles are met over the year. The company anticipates the GTN to remain in the 30% plus or minus 5% range for 2025, with Q1 typically being less favorable due to plan resets.

Given this strong momentum, Ardelyx raised its full-year 2025 net sales guidance for IBSRELA to $250 million-$260 million. This revised outlook reflects confidence in continued demand, improved prescription pull-through, and modest GTN improvements. The company remains steadfast in its long-term projection of achieving over $1 billion in peak annual net sales for IBSRELA prior to patent expiry. Strategic initiatives, including increased investment in direct-to-patient communication and an expanded field access manager team, are designed to further enhance patient pull-through and broaden prescriber adoption by emphasizing IBSRELA's unique clinical profile.

XPHOZAH: Resilience Amidst Reimbursement Headwinds

XPHOZAH, launched in the U.S. in November 2023, has faced a significant reimbursement challenge with its inclusion in the End Stage Renal Disease Prospective Payment System (ESRD PPS) effective January 1, 2025. This change eliminated Medicare Part D coverage for Medicare beneficiaries, impacting XPHOZAH's revenue potential from this segment. Despite this, XPHOZAH demonstrated encouraging performance in Q2 2025, recording $25.0 million in net product sales. This represents a 7% increase quarter-over-quarter, or a 27% increase when adjusted for a one-time $3.8 million returns reserve release in Q1 2025.

Ardelyx's response to the Medicare Part D exclusion has been multi-pronged and strategic. The company deliberately chose not to apply for the Transitional Drug Add-on Payment Adjustment (TDAPA) to preserve shared decision-making between patients and providers, avoiding protocols that could limit this critical relationship. Instead, Ardelyx is actively pursuing legal action against CMS, with oral arguments scheduled for September 25, 2025, claiming the inclusion of oral-only therapies in the bundle exceeds statutory authority. Concurrently, it supports legislative efforts like the Kidney Patient Act, which has garnered bipartisan support. Commercially, the strategy encourages nephrologists to "prescribe as you always have, based on the patient need," with ArdelyxAssist handling access adjudication and providing free drug to qualifying Medicare patients. This approach has led to growth in non-Medicare payer segments (Medicaid and commercial), new writers, and both new and refill prescriptions.

The gross-to-net deduction for XPHOZAH was approximately 29% in Q2 2025, in line with the adjusted Q1 2025 figure of 32%. Management expects the GTN to be less favorable in 2025 compared to 2024, primarily due to the shift in payer mix towards Medicaid and commercial, which typically have higher discounts. While formal 2025 revenue guidance for XPHOZAH is not yet provided due to the fluid market, the company reaffirms its peak annual net sales expectation of $750 million prior to patent expiry. This target is based on penetrating the non-Medicare segment, which represents approximately 220,000 patients, with a need for substantively less than 100,000 patients to reach this goal.

Financial Health and Strategic Capital Deployment

Ardelyx's overall financial performance reflects its dual-engine growth strategy and disciplined expense management. Total revenue for Q2 2025 reached $97.7 million, marking a 33% year-over-year increase. For the first six months of 2025, total revenue was $171.8 million, up 44% from the prior year. This growth was driven by strong product sales from both IBSRELA and XPHOZAH, as well as contributions from collaboration and licensing agreements. Notably, the company reported a net loss of $19.1 million ($0.08 per share) in Q2 2025, a significant improvement from the $41.1 million net loss ($0.17 per share) in Q1 2025, demonstrating effective cost control amidst commercial expansion.

Operating expenses are carefully managed to support growth. Selling, general, and administrative (SG&A) expenses were $84.0 million in Q2 2025 and are projected to increase incrementally to approximately $90 million quarterly for the remainder of 2025. These investments fund commercial activities, sales force expansion, and crucial patient assistance programs. Research and development (R&D) expenses, at $15.7 million in Q2 2025, are expected to see modest growth as the company invests in life cycle management and pipeline development. A significant financial milestone achieved in Q2 2025 was the full satisfaction of the $75 million royalty obligation to AstraZeneca, which is anticipated to generate gross margin favorability in the second half of the year.

The company's liquidity remains robust, with $238.5 million in cash, cash equivalents, and short-term investments as of June 30, 2025. Ardelyx strategically strengthened its balance sheet by drawing an additional $50 million from its 2022 Loan Agreement with SLR Capital in Q2 2025, bringing the total outstanding debt to $200 million. This loan carries a favorable interest rate of 8.7% for the new tranche, resulting in a blended rate of approximately 9.67%, with interest-only payments extended until July 1, 2028. The company also retains an option to draw an additional $100 million in two $50 million tranches by December 2026, providing significant financial flexibility for future strategic initiatives, including pipeline expansion. Management believes achieving cash flow breakeven is "not that far off on the horizon," underscoring its commitment to sustainable financial performance.

Leadership and Future Pipeline

Ardelyx is actively building out its leadership team and pipeline to support its next phase of growth. Recent executive appointments, including a Chief Business Officer, Chief Patient Officer, Chief Medical Officer, Chief Technical Operations Officer, and Chief Human Resources Officer, reflect a deliberate strategy to deepen expertise across critical functions. While Chief Financial and Operations Officer Justin Renz is transitioning out by the end of 2025, a seamless leadership transition is planned. These leadership enhancements are crucial for realizing the full potential of current products and for strategically identifying and developing new assets.

The company is committed to building a robust pipeline, actively evaluating both internal and external opportunities within its core renal and GI therapeutic areas, as well as adjacent spaces. This includes supporting investigator-sponsored trials for IBSRELA in conditions like Parkinson's and CF-associated constipation, which, while not part of the current $1 billion peak sales projection, represent potential future growth avenues. This strategic focus on pipeline development, coupled with its strong financial position, positions Ardelyx to create long-term value beyond its current commercial successes.

Conclusion

Ardelyx stands at a pivotal juncture, demonstrating compelling growth driven by its dual commercial engines: IBSRELA and XPHOZAH. The company's differentiated tenapanor technology provides a strong competitive edge in addressing significant unmet needs in both IBS-C and hyperphosphatemia. IBSRELA's accelerating sales and increased guidance underscore effective commercial execution and a clear path to becoming a blockbuster drug. Simultaneously, XPHOZAH's resilience and demand growth, despite the challenging Medicare reimbursement landscape, highlight the critical value it brings to patients and the company's determined strategies to ensure access.

Ardelyx's proactive financial management, including strategic debt financing and disciplined expense control, provides a solid foundation for future investments in its commercial infrastructure and pipeline. While the uncertainty surrounding XPHOZAH's long-term reimbursement remains a key risk, the company's multi-pronged approach—encompassing legal, legislative, and commercial strategies—aims to mitigate this impact. The commitment to technological innovation, coupled with a strengthened leadership team, positions Ardelyx for sustained growth and long-term value creation for shareholders, making it a compelling story of innovation and perseverance in the biopharmaceutical sector.