ARDELYX, INC. (ARDX)·Q4 2024 Earnings Summary

Executive Summary

• Q4 revenue and EPS inflected positively: Total revenue $116.13M and diluted EPS $0.02, versus $98.24M and $(0.00) in Q3; operating income rose to $8.13M with a ~7.0% EBIT margin as product sales scaled .
• IBSRELA net sales accelerated to $53.84M, up ~32% q/q, while XPHOZAH delivered $57.16M, up ~11% q/q; FY24 net sales reached $158.3M and $160.9M, respectively, underscoring strong commercial execution .
• 2025 guide: IBSRELA U.S. net product sales $240–$250M; company will not give XPHOZAH 2025 revenue guidance and expects XPHOZAH gross-to-net to be less favorable in 2025 given payer mix shift post-Medicare Part D removal; SG&A to rise by ~+$10M/quarter vs Q4’24 run rate .
• Cash/investments of $250.1M at year-end (aided by $49.7M term loan draw) provide flexibility to fund growth; AstraZeneca royalty obligation expected to be fully satisfied in 2025, a 2H gross margin tailwind .
• Estimate comparison: S&P Global consensus for Q4 2024 was unavailable at time of analysis; we will update when accessible (SPGI daily limit reached).

What Went Well and What Went Wrong

• What Went Well

  • Commercial momentum: IBSRELA +32% q/q to $53.8M, driven by expanded sales force, rising new writers, and omnichannel initiatives; XPHOZAH +11% q/q to $57.2M with strong physician conviction and defined access path .
  • Profitability inflection: Q4 net income of $4.65M ($0.02 per share) versus a $(28.8)M loss in Q4’23, supported by higher product sales and improved operating leverage .
  • Strategic clarity and financial strength: Clear 2025 plan to invest in patient pull-through and access (e.g., Access Managers), with $250.1M cash/investments and extended interest-only period on term debt .
  • Management quote: “We are focused on our key priorities to grow IBSRELA, execute the XPHOZAH strategy… and continue to deliver a strong financial performance” .

• What Went Wrong

  • Reimbursement headwind for XPHOZAH: Court dismissed suit against CMS; oral-only PLTs entered the ESRD bundle effective Jan 1, 2025, eliminating Medicare Part D coverage and pressuring XPHOZAH gross-to-net in 2025 .
  • Visibility constrained: Company withheld 2025 XPHOZAH revenue guidance given payer-mix transition and early-stage dynamics; emphasized learning period and process monitoring .
  • Higher spend: 2025 SG&A guided up by ~$10M per quarter versus Q4’24 run rate to back access, omnichannel, and patient assistance—near-term drag on operating leverage .

Financial Results

Income statement highlights by quarter (USD Millions except per-share; oldest → newest):

Revenue composition (USD Millions):

KPIs and Operating Metrics:

Notes:

• Q4 y/y revenue growth: $116.13M vs $34.36M in Q4’23, driven by IBSRELA and first full-year ramp of XPHOZAH .
• SPGI consensus unavailable at time of analysis; estimate comparisons are N/A.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic focus: “We are focused on… grow IBSRELA, execute the XPHOZAH strategy, build a pipeline… and… deliver a strong financial performance” .
• IBSRELA growth engine: “We reported an incredibly strong quarter with more than 32% growth quarter-over-quarter… notable increase in new writers… expanding to non-GIs and APPs” .
• XPHOZAH access stance: “Prescribe as you always have… we will adjudicate patient access and affordability on our end” .
• 2025 spending and margin setup: “We will be increasing our SG&A expense by approximately $10 million per quarter in 2025… Our royalty obligation payable to AstraZeneca is expected to be fully satisfied in 2025, which should generate some gross margin favorability in the second half of this year” .

Q&A Highlights

• IBSRELA 2025 guidance conservatism: Management framed $240–$250M as prudent given typical Q1 IBS-C script contraction; willing to update after seeing Q1 dynamics .
• XPHOZAH peak sales horizon: $750M peak assumption includes Hatch-Waxman extension through 2033 .
• Reimbursement transition: Early in Q1’25, Ardelyx confirmed four patient pathways (existing/new; Medicare/non-Medicare) functioning as designed; expect 2025 XPHOZAH gross-to-net to be less favorable vs 2024 .
• Payer mix and pricing: 2024 XPHOZAH payer mix ~60% Medicare/40% non-Medicare; company does not rebate payers (embraces prior auth approach) .
• Capital and strategy: Term loan draw was strategic to strengthen cash and extend runway for commercial investments and pipeline building .

Estimates Context

• Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of analysis due to SPGI daily limit. We cannot present “vs. estimates” or beat/miss determinations for this quarter. We will update this section once SPGI data is accessible.

Key Takeaways for Investors

• IBSRELA is the primary 2025 growth driver with new guidance of $240–$250M; Q4 +32% q/q underscores momentum post salesforce expansion and patient pull-through focus .
• XPHOZAH access is maintained via ArdelyxAssist despite Part D removal; however, expect a less favorable gross-to-net and no 2025 revenue guide as payer mix shifts—monitor non-Medicare growth and patient assistance utilization .
• Operating leverage improved in Q4 with positive EPS; near-term SG&A step-up supports durable demand creation and access management, potentially delaying margin expansion until H2’25 as AstraZeneca royalty rolls off .
• Liquidity is strong ($250.1M cash/investments), providing flexibility to execute commercial plans and pursue BD to diversify beyond tenapanor franchises .
• Stock catalysts/risks: Updates on XPHOZAH reimbursement dynamics and non-Medicare uptake, IBSRELA script trends through seasonal Q1, gross-to-net cadence, and any BD disclosures are key narrative movers .

Appendix: Additional Context from Q4 Press Release and Filings

• FY24: Total revenue $333.62M; IBSRELA $158.29M; XPHOZAH $160.91M; year-end cash/investments $250.1M .
• FY24 OpEx: R&D $52.32M; SG&A $258.69M; FY24 net loss $(39.14)M ($0.17/sh) .
• Balance Sheet (12/31/24): Long-term debt $150.85M; deferred royalty obligation $25.53M; equity $173.29M .