Prepared remarks
Welcome to Ardelyx's Second Quarter 2026 Earnings Call. (operator instructions) I would now like to turn the conference over to Lisa Caperelli, Senior Vice President of Investor Relations and Corporate Communications. Lisa, you may begin.
Thank you, Jen. Good afternoon, everyone, and welcome to our second quarter 2026 financial results and business update call. Earlier today, we issued our earnings release, which can be found on the investor section of our website at ardelyx.com. Slides that accompany today's call will also be found on our website. On today's call, I am joined by Mike Raab, President and CEO of Ardelyx; Eric Foster, Chief Commercial Officer; and Sue Hohenleitner, our Chief Financial Officer. Before we begin, I'd like to remind you that some of the statements made during the call today are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties that may cause our actual results to differ materially from those expressed or implied, including those described in our annual report on Form 10-K, our quarterly report on Form 10-Q, which was filed today, and from time to time in other documents filed with the SEC. These forward-looking statements speak only as of today's date, and 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. I will now pass the call over to Mike.
Thank you, Lisa. Good afternoon, everyone, and thank you for joining us today. This afternoon, we issued a press release announcing our Q2 financial results and a revision to our guidance. I'd like to share my perspectives on our release, drivers of those results, and how we're positioning the business for future growth before I turn the call over to Eric and Sue to cover the performance in detail. In Q2, IBSRELA and XPHOZAH generated a combined revenue of $118 million, up 31% year-over-year, the largest quarterly revenue in our company's history. This is a meaningful milestone and it is important to acknowledge. Growth in the second quarter was robust and yet performance fell short of our expectations. To be clear, IBSRELA demand is strong, physician confidence remains, and our view of the long-term opportunity has not wavered, including achieving $1 billion in revenue. As we anticipated with the establishment of the IBSRELA Pharmacy Network, our investment in the field reimbursement team, and with IBSRELA's continued success, payers have implemented significant hurdles that impacted new patient starts and access to IBSRELA. Eric will provide further details in his commentary. The fundamentals of the IBSRELA business remain strong, and by staying focused on execution, improving patient access, and partnering closely with providers, we are positioned to drive continued adoption and create meaningful value for both patients and shareholders. The team had an excellent quarter. Growth continues to be driven by patient need, physician adoption, and a differentiated clinical profile. As you know, on June 26, the D.C. Circuit Court of Appeals affirmed the district court's dismissal of our lawsuit against CMS. As a result, oral-only phosphate-lowering drugs remain in the bundle. With this decision, we have determined that we will no longer pursue further litigation on this matter. Now, while our strategy remains, we recognize the market dynamics ahead of us present challenges to navigate. As we have always done, we remain committed to ensuring patients in need have access to XPHOZAH. Now, taking a step back, we operate in a complex business with significant external pressures and with new ones that emerge almost daily. Even so, we are in an enviable position. We have two first-in-class commercial products, both differentiated, growing quarter-over-quarter and year-over-year. Our strengthening balance sheet is driven by top-line growth, disciplined expense management, and a thoughtful capital allocation strategy. We have built a solid foundation, are investing in our future by advancing tenapanor, our next-generation NHE3 inhibitor, and we are continuing business development activities to further expand our pipeline. We are building a robust patent estate for tenapanor, anchored by multiple Orange Book-listed patents, including our '299 patent. We are a well-funded, self-sustaining, high-growth company on the path to sustained profitability in 2027 and beyond. Our enthusiasm and belief in our business, our competitive position, our strategy, and the long-term value we are creating has not changed. Now, with that, I'll turn the call over to Eric.
Thank you, Mike. IBSRELA revenue grew 33% year-over-year, and as Mike noted, we experienced significant payer hurdles that had a direct impact on access to IBSRELA. While new patient starts have been slowed by these hurdles, we continue to see strong growth in refills and total prescriptions, reaching our highest demand quarter to date. We understand the ongoing market dynamics IBSRELA is facing and are confident that the following four actions will position IBSRELA for future growth by addressing increasing payer hurdles and accelerating IBSRELA demand. First, leveraging our dedicated field reimbursement team, which we doubled in size in the first half of this year, and which has been in the field as of July 1, to help navigate healthcare providers' cumbersome paperwork and burdensome steps. Second, reinforcing our continued efforts to drive more prescriptions through the IBSRELA Pharmacy Network, or IPN, to increase fulfillment rates and improve adherence. We deployed additional resources along with our field reimbursement managers and sales force to provide patient-focused, high-touch support that improves the patient experience. Our data shows that when a prescription goes through the IPN, it results in higher fulfillment rates, faster fills, and on average one additional refill per patient on an annual basis. Third, increasing the frequency of engagement with our target healthcare providers is one of the most important drivers of demand. In Q2, we implemented initiatives to expand our sales organization to 144 representatives to increase the frequency of engagement with our targeted high-writing providers. With this expanded sales force, along with our field reimbursement managers, we expect to see continued direct and measurable impact. While early, we are encouraged by the results. Fourth, we are expanding our patient awareness and engagement initiatives. Alongside our partnership with the LPGA and ongoing omnichannel and digital efforts, we are initiating new direct-to-consumer activities during the second half of the year. Our consumer-facing messaging is expected to increase brand awareness among our targeted patient population, leading to important conversations with healthcare providers, which our experience tells us leads to an IBSRELA prescription. The unmet need remains high for IBS-C patients and highlights the important role IBSRELA plays for patients seeking treatment options. Last year, nearly 7 million prescriptions were written for IBS-C-indicated drugs, reflecting both the large number of patients seeking relief despite existing therapies and the significant patient burden that still exists. While multiple treatment options are available, our internal research indicates that as many as 77% of patients on a secretagogue continue to experience persistent symptoms. The patient need is demonstrated by record highs in Q2 demand, total writers, total prescriptions per writer, and market share since launch, and further supports our conviction in IBSRELA reaching $1 billion in revenue. As we continue to work to execute on the four initiatives I just outlined, I am confident that these efforts will address the barriers identified, accelerate adoption, and enable more patients to receive the treatment they need. Moving on to XPHOZAH. We are impressed by the resilience of XPHOZAH as we saw strong momentum in Q2. With more than 550,000 adult patients with CKD on dialysis in the U.S., approximately 80% are treated with phosphate-lowering therapies in an effort to achieve and maintain target phosphorus levels. As the number of patients treated with XPHOZAH grows, our conviction in its value is reinforced. Our priority remains clear: ensuring XPHOZAH is available to patients who need it. In Q2, XPHOZAH generated 27% revenue growth year-over-year. We saw solid growth across key metrics with notable increases in total dispenses of 33% and in paid prescriptions of 25% compared to the same quarter in 2025. In addition, XPHOZAH reached its highest total writers and prescriptions per writer since Q1 2025. While we are encouraged by XPHOZAH performance, we continue to recognize and assess the challenges ahead of us. Our focus remains on enhancing the effectiveness of our commercial approach by refining sales force deployment and strengthening engagement with healthcare providers and dialysis organizations. These initiatives are designed to ensure we're reaching the physicians treating the patients most likely to benefit from XPHOZAH while continuing to build awareness across the nephrology community. I'm confident in the team's ability to drive demand for both medicines by overcoming the access challenges for IBSRELA and maintaining disciplined execution with XPHOZAH in the second half of this year. Patients need our differentiated products as indicated by the growing demand for both IBSRELA and XPHOZAH, and helping more patients with our medicine is our top priority. I will now turn it over to Sue.
Thank you, Eric. Our second quarter 2026 financial results reflect the ongoing transformation of Ardelyx into a financially strong organization that allows us to leverage our revenue base to fund both our current commercial operations and our advancing pipeline. This quarter, we maintained our focus of turning disciplined capital allocation into a clear strategic advantage. In the second quarter, our total product revenue was $118 million compared to $90 million in the same period last year, representing 31% growth and demonstrating the need for our differentiated products. IBSRELA is our primary growth engine. Our Q2 2026 revenues of $86.2 million increased 33% compared to Q2 of 2025. We are expecting sequential revenue growth in the second half of 2026, with the fourth quarter delivering the highest revenue of the year. XPHOZAH continues to demonstrate resilience. Revenues for XPHOZAH during the quarter were $31.9 million, an increase of 27% compared to the second quarter of 2025, driven by strong demand. Our financial strategy remains focused on driving towards sustainable profitability, which we are now projecting in 2027. We are a well-funded company investing in our growth accelerators, our commercial operations, and our pipeline, all of which require high-impact investments in R&D and SG&A. R&D expenses for the quarter were $26.1 million compared to $15.7 million for the same period in 2025. This increase primarily reflects development activities and patient enrollment costs for the ongoing ACCEL Phase III clinical trial in CIC. SG&A expenses were $101.4 million for the quarter compared to $84 million for the same period in 2025. This increase reflects deliberate investments to address the access barriers and drive future adoption of IBSRELA. Net loss for the quarter was $16.7 million, compared to a net loss of $19.1 million for the same period in 2025. The net loss for Q2 2026 includes $15.3 million for non-cash expenses from share-based compensation compared to $11.7 million for the same period in 2025. We ended the second quarter with $281.8 million in cash, cash equivalents, and short-term investments, and our liquidity remains robust. As previously announced, during the second quarter, we drew down $50 million from our existing arrangement with SLR for general corporate purposes and to enhance flexibility to support our ongoing strategic initiatives, all in line with our capital allocation strategy. Now turning to guidance. We issue guidance based on a high degree of confidence and our ability to deliver. And if things meaningfully change, we are committed to updating those projections. Starting with 2026, for IBSRELA, taking into consideration the current environment and our proactive initiatives to increase access and fulfillment, we have made the prudent decision to lower our full-year 2026 guidance for IBSRELA to a range of $350 million to $370 million. This revised guidance represents annual growth of more than 30% at the midpoint. This would suggest back-half sales would be roughly 60% of the full year, acknowledging increased sequential revenue growth in the upcoming quarters and in line with prior year's growth patterns. Now turning to XPHOZAH. We are reiterating our full-year 2026 revenue guidance to be between $110 million and $120 million. Now moving on to OPEX. With the decision to modify our guidance for IBSRELA revenue, we have proactively taken additional efforts to manage spending and are revising our 2026 OPEX guidance to be below $500 million. We are managing the business with discipline as evidenced by these actions. Moving on to our longer-term guidance. A few things first. Let me be clear. We are still on a path to achieve $1 billion in revenue for IBSRELA. However, with the 2026 revenue revision, we are evaluating the evolving market dynamics and the impact on the timing of this achievement. For XPHOZAH, we have been assessing market dynamics as well as future growth projections in a period of uncertainty. Therefore, it is prudent to revisit our internal assumptions and pull our $750 million revenue guidance. We believe these are the right decisions and at this time are the right actions to take to ensure that any forward view we provide reflects the current reality. As we are on the cusp of profitability and transition into a more steady and measurable cash flow positivity in the near future, our financial strategy is guided by our three capital allocation priorities, which remain unchanged: accelerating IBSRELA growth, actively progressing our pipeline, and maintaining financial strength. In closing, we are funding our own operations and pipeline from our revenue base, and we remain disciplined in our spending, aggressive in our commercial pursuits, and committed to delivering value for both patients and shareholders. With that, I will hand it back to Mike.
Thank you, Sue. The demand for our medicines is evident. We do understand the challenges that we are facing and we've taken decisive action to address them. We remain focused on executing on our 2026 priorities, including growing IBSRELA demand by improving patient access, maintaining XPHOZAH's momentum, building and expanding our pipeline, and delivering strong financial results. I have tremendous confidence in our team, our strategy, and our ability to execute. We are committed to our patients and creating long-term value for our shareholders and thank you for your continued support. With that, we'll open the call for questions.
Questions and answers
(operator instructions) And our first question today will come from Roanna Ruiz with Leerink Partners.
Ryan on for Roanna. Maybe can you just talk about the underlying demand metrics that you guys are tracking as you exit Q2 and through July and how that gives you confidence heading into your revised full-year guidance, and then maybe just quickly, can you also just talk about the pushes and pulls that are baked into this new guidance for IBSRELA?
Sure. And so it's all for IBSRELA and not XPHOZAH, correct?
Yes. Correct.
Yes. Hey, Ryan. Thanks for those questions. As we look at performance right now, we continue to see really strong refills and total prescriptions. We are excited about the highest demand quarter that we've had to date and will continue to focus on those metrics as well as prescriptions going into the IBSRELA Pharmacy Network. We know when that happens, we get higher fulfillment rates, faster fills, and on average one more refill on an annual basis per patient. Those are key metrics giving us confidence as we look into the back half of this year that we'll continue to have the controlled growth that we expect.
Yes, and the only thing I would add, Ryan, is that the pushes and pulls that we talked about have all been factored in. We've seen the current performance in the first half of the year, we know the friction that we've seen, and we have baked that into the guidance that we have for IBSRELA.
And we'll move next to Dennis Ding with Jefferies.
I had two on IBSRELA. First, it sounds like demand is fine, but access is getting more difficult. I think that's really the new piece of info for me. Can you give more color on what those hurdles are? Are these scripts still getting filled, but taking longer? Are they getting completely blocked or are there more step edits? What's going on there exactly? Second, you guys have called out many times the favorable impact from these specialty pharmacies. It's been around nine months since that got implemented and you guys have sounded confident the last few months. Is it possible to share a few quantitative metrics on things like how often scripts are being written as a sign of underlying demand and how many of them are actually getting filled over the last few quarters? I assume that portion or that percentage is getting better over time?
Yes, Dennis, thanks for the questions. I'll ask Eric to address most of that. One comment though is that it was important that we started the IPN back at the end of last year. As Eric has mentioned on every call, we do see better fulfillment rates and on average one additional prescription that goes through the IPN and the special network that we've established. We're incredibly fortunate that we started it then. As I said in my comments and Eric reiterated, the extent of the step edits that have been put in place was not something one would anticipate with this product. We're clearly getting attention given its growth and success. The demand is still there; it is just harder for patients to get through, and that's with the work Eric and the team are doing with the field reimbursement managers and the IPN.
Dennis, to give a little more color: two things we're seeing. First, more step edits. Second, more stringent prior authorizations. So what we're seeing is more slowing of new patient starts — not blocking in the absolute sense but a slowing due to those two factors. We feel confident around the four actions we've put in place that we'll be able to accelerate demand and improve pull-through in the back half of this year. As I said earlier, we were excited that Q2 was the highest demand quarter we've had to date, so we know these measures can work and we are encouraged by early signs.
We'll move next to Chris Raymond with Raymond James.
Hey, this is Daniel Chon for Chris Raymond. You guys have had pretty active business development efforts for a bit of time now. Can you talk about your view on the current environment for finding assets and opportunities in light of all the recent M&A activity going on in the industry and, as the business has evolved and the markets changed, has your thinking or strategy shifted at all over time?
Thank you for the question. We are looking at opportunities every day, and we see a substantial number of them. It certainly doesn't lack for opportunity. As we said on previous calls, you kiss a lot of frogs before you find the right things. The team is actively looking at many opportunities. We have prosecuted a number of them and have not closed others after due diligence; that's part of the process. I'm optimistic we'll be able to build the pipeline, especially given the cash generation we have now. It's an exciting next step for the company. With tenapanor and particularly the '299 patent, we have runway that I believe is not fully appreciated through 2042. The 531 program, if it bears fruit, is another leg on the stool that is critical.
Our next question will come from Matthew Caufield with H.C. Wainwright.
Just focusing on the discussed access challenges for IBSRELA, appreciate the color so far. Are these factors something that's gotten worse over the past couple quarters? In other words, what, if anything, has changed for the access challenges over the past 12 months, for example?
I'll ask Eric to comment on that. One thing to recall is how we approached market access: we decided we would not rebate, negotiate, or discount until there was a need to. What we're seeing now in step edits and hurdles that patients must go through merits discussions with the payer community. This is their business; they implement step edits and hurdles, and ultimately manufacturers often are asked to offset those things. We structured our field reimbursement managers and IPN to get patients through those hurdles, and that's why we have confidence in our approach.
When you have the success we've had over the past couple of years, payers pay attention. The speed and extent to which these more stringent prior authorizations and step edits were put in place had more impact than we anticipated. With that, we feel confident about the actions we started late last year and early this year. We're pleased we've added additional field reimbursement managers to work with physicians and patients to navigate those hurdles, and those measures are reflected in our updated guidance for the back half of the year.
And we'll move next to Laura Chico with Wedbush Securities.
Following up, Eric: if I'm doing the math right, the new guidance for IBSRELA implies about a 30% increase in the second half over the first half. Are you saying the deployment of these new people will help facilitate the appeals process and recover more scripts? Or is it more a matter of getting new starts through the queue or finding new patients? Second, Mike, on the IP you mentioned: can you confirm whether you've seen any ANDA challengers thus far? And as you're expanding the patent portfolio, are there other barriers to generic competition entry we should consider?
Thanks, Laura. On the IP question, we won't go into specifics about whether we've received challenges at this point, but for a product growing this aggressively, interest is expected. It's important to remember this is a non-absorbed drug, so the typical PK/PD route for generics is different. The FDA has product-specific guidance for what approvals require, which is a barrier. Our '299 patent is a critically important formulation patent. These are complex molecules; the formulation matters and is not straightforward. The IP we are building is intended to bolster exclusivity further. We have confidence in the '299 estate and other patents to strengthen our position through 2042 and potentially beyond.
Laura, on the field reimbursement managers, the focus is both new patients and patients previously identified who are working through the process. The field reimbursement managers can focus on approval rates and resubmission rates, which addresses hurdles for new patients and those already in the queue.
Our next question will come from Yigal with Citi.
Are you seeing this payer pushback dynamic broadly across the IBS-C category, with some competitive products as well? Is it restricted to certain plans like Aetna, Blue Cross, or CVS, or is it broad across payers? On XPHOZAH, could you elaborate a bit on why you decided to withdraw the $750 million target as opposed to revising it down to a figure you are more comfortable with?
Let me address that first. We're approaching the end of the TDAPA period at the end of this year, which is part of the context. There's a proposed PPS change currently in comment that would introduce a phosphorus quality measure, and that's the first time I've seen a phosphorus QIP proposed. We need to understand the implications of that QIP and how dialysis organizations will react in the post-TDAPA period. There are binders in development, some currently with agencies, and we want to see how things settle. We thought it prudent to step back from the $750 million guidance for XPHOZAH until we have more clarity on these transitions. We may return to that number, but it will be better informed after seeing how these changes play out in the coming months.
The only thing I would add is that when we provide guidance, we need a high degree of confidence in our ability to deliver. Pulling the $750 million guidance while we evaluate market dynamics and these regulatory and commercial transitions felt like the prudent course of action.
Regarding whether this is across the IBS-C category: our strategy is different from others and we are focused on our product. We've seen more stringent prior authorization criteria and enforcement of those criteria, as well as step edits. The trend is meaningful enough to influence the commercial landscape. For us, it was important to understand the real impact to the business and put actions in place, which led to our revised guidance and plan for the back half of the year.
Our next question will come from Julian Harrison with BTIG.
With the updated guidance, do you have any updated thoughts on the timeline to profitability? How should we be thinking about that? Second, on CIC, with about a year to top-line Phase 3 data, can you help frame expectations? What would be a win in your view, and does the CIC addressable rely on your current sales force or would you expand into a broader call point if data are supportive?
On the second part first: there is strong synergy with our existing sales force since physicians see both IBS-C and CIC patients. That makes sense operationally, and if there's a need to optimize the sales force, that's something we will consider. All sites are up and running, enrollment is going well, and we're on track to deliver the data in the timeframe you mentioned.
Regarding profitability, as I've said throughout the year, profitability is right around the corner. Given the revenue growth expected through the rest of this year and into 2027, we expect our cost structure to level out while top-line continues to grow, which is why I'm confident we will be income positive next year. Even this year, as sales grow, we are narrowing losses. Our Q1 loss was about $38 million; this quarter it was $16 million. It's less than it was this time last year, and you can see the path to profitability.
And our next question will come from Caroline Palomeque with Ladenburg.
When thinking about coupons or discounting for product, if you implement that, what kind of impact do you anticipate it will have on gross-to-net, or does the current guidance on gross-to-net still stand?
Our guidance on gross-to-net has been taken into account in our full-year guide. Throughout the year I've said low to mid-30s, and that still continues to be the case. We've considered all impacts. Our gross-to-net is affected by mix between government and commercial, IRA inflation rebates, co-pay and distribution discounts, and other items. All of that was taken into account.
This does conclude today's conference call. Thank you for joining. You may now disconnect.