Ardelyx, Inc. (ARDX) Earnings Call Transcript

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 Kimia Keshtbod, Manager of Corporate Communications. You may begin.

Thank you, and good afternoon, everyone. During this call, we will refer to the press release issued today, which is available in the Investors section of the company's website at ardelyx.com. On the call with me today are Mike Raab, President and CEO, with prepared remarks. Dr. David Rosenbaum, Chief Development Officer; Susan Rodriguez, Chief Commercial Officer; Justin Renz, Chief Financial Officer; and Rob Blanks, Chief Regulatory Affairs and Quality Assurance Officer, will join us for the question-and-answer period. During this call, we will 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 annual report on Form 10-K filed in March and our quarterly report on Form 10-Q filed in May, which can be found on our website at www.ardelyx.com. 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. With that, let me pass the call over to Mike.

Thank you, Kimia, and good afternoon, everyone. Thank you for joining our call today. As we just announced late yesterday, we received a complete response letter from the FDA for our NDA for tenapanor for the control of serum phosphorus in adult patients with CKD on dialysis. In the CRL, the FDA stated that the data we submitted for tenapanor provides substantial evidence that tenapanor is effective in reducing serum phosphorus in CKD patients on dialysis. Yet with ample evidence from numerous peer-reviewed publications and established international guidelines that substantiate the clinical meaningfulness of tenapanor's effect, the FDA has determined that the treatment effect demonstrated in our clinical work is small and of unclear clinical significance. We do not agree with their point of view. How we got here, sales comprehension, especially considering extensive and comprehensive clinical evaluation of tenapanor with 3 successful Phase III trials, all of which met primary and key secondary endpoints with statistical significance compared to placebo and long-term safety demonstrated versus an active safety control. All 3 Phase III trials were designed and agreed upon in collaboration with the FDA, not to mention that tenapanor was approved in September 2019 to treat irritable bowel syndrome and constipation in adults. It's hard for us to express how deeply sad and disappointed we are with this outcome. For dialysis patients, who have not had the benefit of any real innovation for the treatment of hyperphosphatemia since the advent of binders, they have truly been underserved, for the physician communities that have expressed the clear need for therapeutic alternatives to treat hyperphosphatemia, they deserve to be able to make treatment choices for their patients, and for all Ardelyx's employees, who have worked tirelessly since the company's founding in 2007 to bring innovation to these patients. Hyperphosphatemia is a severe condition associated with cardiovascular morbidity and mortality. The reality for CKD patients on dialysis is that despite treatment with phosphate binders that place a significant treatment burden on them and are the only class of therapy available, nearly 80% of them experienced uncontrolled phosphorus levels during any 6-month period of time. New, innovative, novel mechanism therapies that effectively lower phosphate levels are desperately needed. The clinical data supporting our NDA involved over 1,000 patients and included 2 Phase III monotherapy trials and a Phase III trial with tenapanor in combination with binder therapy. Our development program encompassed years of clinical investigation and valuation. As you would expect, all of our trial designs were discussed and shared with the FDA every step of the way. Results from a rigorous statistical analysis plan demonstrated clear, unambiguous and consistent safety and efficacy of tenapanor in reducing serum phosphorus. Furthermore, we continue to develop and share more supportive data from our ongoing Phase IV studies, normalized and optimized at international medical and scientific meetings. Before I share what we've learned from the CRL, I wanted to provide background on our interactions with the FDA over the course of over 10 years of development of tenapanor and through the NDA process. As many of you know, we have consistently characterized our relationship with the FDA as highly collaborative throughout the development process. Early on, they encouraged us to modify an ongoing Phase II trial to become our first pivotal study, which we enthusiastically did. During each step of development, we reviewed our trial designs and statistical analysis plans with the FDA, including powering the FREEDOM study to achieve at least a 1 milligram per deciliter decrease in serum phosphorus, which tenapanor readily achieved. These interactions, coupled with the CMS approval of tenapanor and IBS-C, led us to feel quite confident heading into the NDA process for the use of tenapanor in hyperphosphatemia. In September of last year, our NDA was accepted by the FDA, and we were given an initial PDUFA date of April 29 this year. In early April, very much as expected and on schedule, we began to receive noncontroversial comments from the agency on our proposed label addressing all aspects of the label with the exception of the clinical section. Given the nature of their proposed changes, we were able to quickly revise the draft label, including conforming to a broader, more inclusive patient age range, which was proposed by the agency that covered patients above 2 years of age. This progress, together with other relatively minor comments were encouraging signals in the process for us. Just before our initial PDUFA date, the FDA requested additional analyses from our Phase III clinical trials, which we properly provided. This additional information was considered a major amendment, which triggered a 3-month extension to PDUFA date to July 29. As we announced a couple of weeks ago, in a surprising and disappointing turn of events, we received a Deficiencies Preclude Discussion letter with a very simple message, noting that the FDA determined that a key issue was the size of the treatment effect of tenapanor and its clinical relevance. In the formal CRL, the FDA provided a bit more information. I'd like to drill down into the FDA's decision to not approve tenapanor and a particularly battling aspect of whether or not tenapanor's serum phosphorus lowering effect is clinically relevant for dialysis patients. Lowering serum phosphorus is not a new or controversial concept in the nephrology community. The objective of lowering serum phosphorus is a well-established and accepted treatment goal for patients on dialysis. These efforts are supported by numerous retrospective and prospective observational studies that have shown that lower serum phosphorus levels even by as little as 0.5 milligram per deciliter, which, by the way, tenapanor far exceeds, demonstrates an improvement in the relative risk of morbidity and mortality in these patients. It is clear to the treating community that serum phosphorus lowering is clinically meaningful. Treatment goals for lowering serum phosphorus have long been established, are evidence-based, and are guided by international peer-reviewed accepted clinical practice guidelines as published by KDIGO. These guidelines specifically call for physicians to lower elevated phosphate levels towards the normal range. The importance and definition of clinical relevance for lowering serum phosphorus should not be in question. Thus, you can appreciate why we believe the FDA's position on tenapanor seems quite subjective, inconsistent and unprecedented, particularly in light of the robust efficacy and safety demonstrated in our clinical program. Additionally, the FDA noted that for the application to be approved, Ardelyx needs to conduct an additional adequate and well-controlled trial, demonstrating a clinically relevant treatment effect on serum phosphorus or an effect on the clinical outcome thought to be caused by hyperphosphatemia in CKD patients on dialysis. To that end, we are requesting a Type A meeting with the FDA to discuss the agency's request for an additional trial and determine what data and endpoints would be required to satisfy the FDA. Above and beyond the efficacy that they've already acknowledged, has been demonstrated with tenapanor. There were no safety, clinical pharmacology, biopharmaceutics, CMC or nonclinical issues that were identified in the CRL. Until we have a Type A meeting, we are unable to provide guidance on the timing and resources required to meet the needs of the FDA and reset their application. In closing, despite the outcome, I want to recognize the dedication and support of the many clinical trial sites, everyone involved in the support and care of dialysis patients, but especially the over 1,000 dialysis patients who participated in our clinical trials. Without question, we believe their dedication and collaboration has demonstrated the very meaningful advance of tenapanor and its progress as an important new and innovative therapeutic option for the many patients with elevated and potentially dangerous serum phosphorus levels. We believe with a demonstrated efficacy and safety and dosing profile of tenapanor, as well as the FDA's own acknowledgment of substantial evidence of tenapanor's effectiveness, that physicians and patients deserve the choice to use this therapy. With that, I'll open the call to questions. Manny?

[Operator Instructions] And your first question comes from the line of Chris Raymond of Piper Sandler.

I got a couple of questions. I guess, first and foremost, Mike, you took pains to put in your press release and also highlight FDA's language around demonstrating a clinically relevant treatment effect on phosphorus or an effect on clinical outcomes. I guess maybe if I can ask the question maybe a little bit more bluntly, are we hearing that maybe Cardiorenal is maybe reconsidering whether or not phosphorus is an approval biomarker?

I think what we're hearing is Cardiorenal inherited phosphorus as a biomarker that has been used to approve other products. I think what I'm hearing is they're not seeing or believing in the clinical relevance of the effect, although they say it in their letter. And we've hit every single endpoint. I think they're asking us to prove something potentially that doesn't -- haven't had to prove, but not knowable until we had the Type A meeting.

Yes. And maybe a second question, and I'll get back in the queue after that. But just was an AdCom never discussed? You have quotes from some well-known KOLs in your press release, and obviously, the feedback from physicians has been pretty strong that this has been a highly desired agent for a long time. I guess maybe walk through the discussion around why the FDA decided to not take that sort of feedback into account? And then maybe a second part of that question is, is there a formal dispute resolution that's an option here and maybe asking for an AdCom?

Yes. I mean -- so first, there was no discussion about an AdCom, only emphasized our comfort and enthusiasm that we are on a path to approval. So no, there wasn't any sort of discussion around it. As it relates to whether or not they would listen to other physicians, not clear as to why they don't, and not clear as to why with clearly established international guidelines origin from KDOQI and now KDIGO, that they wouldn't pay attention to those as well. Again, those are things that hopefully that we get some perspective on with the Type A meeting. And of course, there are -- a pellet process that you can go through. But there's a sequence of events that you have to go through starting with the Type A meeting. Then ultimately with that, judgment needs to be passed as to whether or not an appeal is in the best interest of the product or any timeline that makes sense.

Our next question comes from the line of Louise Chen with Cantor.

So I had a few. In light of the FDA decision here, how should we think about OpEx for the rest of 2021? Is SG&A going to look more similar to what we saw in 2020? And what about R&D? How should we think about that? The first quarter, is that a good run rate? Or is that going to come down as well? And then where does this $171 million or so in cash get you to in terms of runway? I know that some of that's hard to tell because you still need to have that Type A meeting with the FDA. And then on the opportunity here for tenapanor, I mean, are you committed to this? Or is there a chance you'll fold up the tent on this want to move on to other things? You do have some other pipeline assets here. If the FDA does indeed require another trial here, I know you potentially have some options, but just curious on that front. And then last question is just on your pipeline projects, are you going to move forward with those? Or are those going to be on hold, pending the outcome of your Type A meeting?

Yes. So what I would say generally is we just got this letter and are digesting the implications and not knowing exactly what the path forward looks like. The last thing we would want to do is to cut up our noses, bite our face if there's a rapid solution post the Type A meeting. So all of that is part of what we're doing in terms of evaluating what the next steps look like and the future looks like. I tend not to be a quitter, Louise. I've been doing this since 2007 and before that, was involved with Renagel in my days at Genzyme, and this is an incredibly important patient population that just does not get the attention it deserves. So maybe I'm stubborn, but I think it's something that we've got to spend some real important time thinking about how we get this drug to the market for these patients who deserve it. I don't think we can give you specific guidance at this point in terms of where we're going to be going forward into the first quarter, I think we'll be providing that in the relative near term.

Your next question comes from the line of Joseph Thome with Cowen & Company.

Maybe the first one, just based on labeling discussions, was there ever any discussion to sort of limit tenapanor's use maybe only as an add-on therapy to binders instead of ever as a monotherapy? And do you think that could be sort of a viable strategy going forward or a discussion point? And then second, just in terms of the clinical outcomes that the agency might be looking for here, is it hospitalizations or kind of what are sort of the big things that you continue to maybe wanting to see here?

Yes. I mean, speculation on that is a dangerous thing, you can go down a rabbit hole. So I want to defer that question until we have the Type A and actually understand what it is that they're thinking. As it relates to combination therapy, it's interesting, I think we've shared with everyone is that when we designed the protocol for AMPLIFY, in fact, the question was asked and they answered in the affirmative that if we hit a p of less than 0.01, that a single trial, that AMPLIFY trial would be sufficient as a pivotal and to be an indication, which we did with 2 zeros before the -- after the decimal. So those discussions, we would have expected in April when we had been in labeling discussions, and it did not occur. So it's a puzzle to tell you the truth, how we've ended up in this place versus the kind of interactions and collaborations that we've historically had with them up until that point.

Great. And then maybe just one more. Can you just remind us on the timelines of a Type A meeting here? I think you submit and then they have like 30 days to respond. But do you know those hard deadlines that we know, we can kind of maybe expect another update here?

Yes. I mean, I'll answer part of it and then I'll ask Rob Blanks, our Chief Regulatory and Quality Officer to weigh in. Probably the most important thing is the briefing book, right, because that is going to be an important part of what establishes the discussion with the agency. And that can take some time. We do want it to be right. So let's say, 30 days or thereabouts for a briefing book preparation. And then after that, Rob, what are the specifics?

The specifics are -- you're correct, is -- they have to respond within 30 days, so -- for the request, and then after the meeting, they have -- we will get meeting minutes at about 30 days after that, too.