Ardelyx Inc
NASDAQ:ARDX
Earnings Call Analysis
Q4-2023 Analysis
Ardelyx Inc
Ardelyx has experienced exciting growth, particularly in the consistent uptake of its products IBSRELA and XPHOZAH. The company's commercial strategy is paying dividends, leveraging market need, favorable market access, and key demand creation fundamentals. With first-in-class therapies, Ardelyx is primed to sustain its momentum and reach a greater number of patients who need new treatment options.
Ardelyx plans to initiate a real-world evidence study for XPHOZAH, providing further insights into the therapy's performance outside clinical settings. This data will complement existing clinical trial information, enhancing the understanding of treatment paradigms while supporting community physicians and patients managing end-stage kidney disease.
In the fourth quarter of 2023, Ardelyx reported revenues of $34.4 million and an annual total of $124.5 million, significantly higher than the previous year. This growth was mainly attributed to IBSRELA. The company expects IBSRELA's U.S. net product sales revenue for the full year 2024 to be between $140 million to $150 million. Furthermore, the company is set to incur incremental operating expenses averaging approximately $20 million more per quarter compared to Q4 of 2023, as it invests in growth. However, Ardelyx remains well-capitalized with a cash position of $184.3 million at the end of 2023, which will support the anticipated spend.
While Ardelyx will not provide detailed prescriber counts for XPHOZAH, the company stresses that revenue guidance will be a crucial metric for investors. Investor patience may be required, as similar to IBSRELA, around 12 months of sales data might be needed before reliable revenue guidance can be given for XPHOZAH.
The company has strategic plans to draw an additional $50 million tranche from its term loan agreement with SLR prior to March 2024, underscoring its ongoing commitment to advance its operations and deliver shareholder value in the challenging yet exciting year ahead.
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[Audio Gap] and welcome to the Ardelyx Fourth Quarter and Full Year 2023 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.I would now like to turn the conference over to Caitlin Lowie, Vice President of Corporate Communications and Investor Relations at Ardelyx. Please go ahead.
Thank you. Good afternoon, and welcome to our fourth quarter and full year 2023 financial results call. During this call, we will refer to the press release issued earlier today, which is available on the Investors section of the company's website at ardelyx.com.During the call, we'll 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 the risk factors in our most recent annual report on Form 10-K that was filed today, can be found on our website at 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.Our President and CEO, Mike Raab, will begin today's call with opening remarks and an overview of the company's progress during the fourth quarter of 2023 and full year of 2023. Next, Susan Rodriguez, Chief Commercial Officer, will provide an update on the performance of IBSRELA and XPHOZAH. Our Chief Medical Officer, Dr. Laura Williams, will then discuss and expose the real world evidence study announced today. Justin Renz, Chief Financial and Operations Officer, will conclude today's prepared remarks with a review of the company's financial performance during the fourth quarter and full year ended December 31, 2023, before we open the call to questions.With that, let me pass the call over to Mike.
Good afternoon, everyone, and thank you for joining us on the call. I feel like I've said this every quarter, but we are really excited to be here to discuss our progress and performance. The fourth quarter was significant, as was all of 2023 as we continue our evolution as an integrated biotech company, bringing 2 first-in-class products to patients.IBSRELA and XPHOZAH are demonstrating favorable market response, high healthcare practitioner interest, and continuously expanding adoption. In November of last year, we launched XPHOZAH, and the market response, both in terms of treatment uptake and direct feedback we received from the field, has validated what has always been clear to us that physicians and patients have been waiting for a novel mechanism option to help control serum phosphorus.As you will hear from Susan, all the indicators we track early in launch point to a strong uptake. Additionally, as we announced today, as part of our commitment to continually build our understanding of the clinical utility of our products, we're conducting a real-world evidence study designed to capture the impact that an XPHOZAH-based regimen can have on the treatment of hyperphosphatemia. Laura will review more details about the study during our call today.Turning to IBSRELA, in January, we shared our enthusiasm for commercial progress we are making and our expectations for IBSRELA are high. We shared that we believe IBSRELA has the potential to become $1 billion drug. Patients are there, they need relief, and many of them continue to experience symptoms despite treatment with incumbent therapies, clearly reinforcing the need for novel treatment options like IBSRELA.IBSRELA's mechanism of action, solid clinical data, and growing user base of positive experience is resonating, driving expanding consideration and adoption by more and more healthcare practitioners. Patients' positive experiences with IBSRELA, HCPs are beginning to change how they engage with and treat their IBS-C patients as they are expanding their use of the therapy.In addition, the path for access is established. These are the fundamentals of our commercial strategy, and they are working. As we noted in January, we will always look to expand the opportunity and to ensure our medicines get to those patients who need it. Thus, we are thoughtfully investing and expanding our commercial reach. We are also thinking about what the future of Ardelyx will look like, and we find ourselves in a unique and enviable position of options.Both XPHOZAH and IBSRELA approved in the U.S. and doing well. We are engaging potential international partners to bring these products to patients in other global markets. In addition, with our established and proven commercial organization, we are merging as a partner of choice for development stage assets in therapeutic areas, where patients continue to have unmet needs.And with our successful track record of discovery, development, and regulatory approvals, we also have the opportunity to develop earlier stage assets ourselves. These activities are ongoing, and we look forward to sharing more information when appropriate. In the meantime, our top priority is to focus on sustaining the commercial momentum of IBSRELA and XPHOZAH.I will now hand the call to Susan to share an update on our commercial performance. Susan?
Thank you, Mike. It is great to be here today to share a commercial update on both IBSRELA and XPHOZAH. Let me start with IBSRELA. IBSRELA has established a unique position within the IBS-C treatment paradigm, and it's changing the way the HCP community treats patients with IBS-C. HCPs that we have reached with our messaging are responding favorably to the differentiated mechanism of action and clinical data profile, adopting IBSRELA, and continuously expanding their use based on the patient responses they are seeing.Significant opportunity exists to continue to expand awareness, knowledge, and uptake across our target market. Research has demonstrated that when HCPs become aware of IBSRELA and its first-in-class mechanism, they begin prescribing. And the more they see, hear, and learn about IBSRELA, the more they prescribe and expand their thinking of patients who are candidates for IBSRELA.The fundamentals driving IBSRELA's growth momentum are strong. IBS-C is a condition of multifactorial pathophysiology, and patients need multiple mechanism therapies to improve treatment outcomes and provide additional relief. Prior to the launch of IBSRELA, there was a single class of drugs available for patients, with a large unmet need across patients whose symptoms persisted despite treatment with these therapies.IBS-C prescriptions are concentrated across an accessible group of HCPs who have demonstrated to be very responsive to both our field-based sales team as well as our omnichannel digital engagement program. A favorable access profile is established. Interest is high. Response to the IBSRELA profile is driving adoption. Favorable treatment experiences are driving expanded use, which, in turn, is driving a continuously expanding view of patients who are candidates for IBSRELA therapy.We continue to see consistent, persistent growth of IBSRELA across all key performance metrics. New prescriptions are growing. Refill prescriptions are growing. New writers are growing, and use across the existing writer base is persistently growing. These foundational elements will be leveraged and built upon as we increase our investment in IBSRELA in 2024. You can expect to see continued steady growth throughout the year.Turning to XPHOZAH, at just 3 months since launch in November, we are very pleased to see the market responding as we anticipated. The high level of awareness, interest, and intent to adopt has translated into strong initial product uptake.The $2.5 million in revenue we reported during the fourth quarter, but really from mid-November through the end of December, validate that there were patients and physicians who were waiting for first-in-class phosphate absorption inhibitor XPHOZAH as a much-needed option for patients who were not able to achieve target serum phosphorus levels with phosphate binders alone or who were intolerant of phosphate binders.We are continually hearing from physicians who say that patients who are on an XPHOZAH-based regimen are experiencing positive results. Additionally, patients are responding favorably to the single-tablet twice-daily dosing profile of XPHOZAH both when it's being added to their binder regimen or when the HCP chooses to discontinue their binder therapy and initiate treatment with XPHOZAH.In addition to a positive therapeutic response and patient experience reported by physicians, we are rapidly establishing a favorable access landscape for XPHOZAH. Payers are establishing coverage policies which provide access to XPHOZAH via a prior authorization for patients who are not adequately responding to binder therapy, or are intolerant of binder therapy.Nephrologists report to us that a large subset of their patients meet these criteria, and nephrologists are demonstrating a willingness to engage in the administrative [ PA ] process to secure access to therapy for these patients, as they believe they are in need of a novel mechanism approach. At this point, we are seeing patients access XPHOZAH across all commercial and government payers.In addition, we are seeing patients take advantage of the resources available through our patient services program, including our co-pay paydown program and patient assistance program for qualifying patients.Finally, we are also seeing strong market interest and responsiveness to our in-market messaging centered on the novel phosphate blocking mechanism and clinical profile of XPHOZAH. Our XPHOZAH dedicated sales force of 60, are finding nephrology offices across the country, welcoming and eager to learn more.Our digital and in-person educational sessions are highly attended, and our various omnichannel digital communications are seeing high levels of engagement. These are all positive launch indicators that we believe will result in continued, consistent, and persistent uptake. The foundational elements of the Ardelyx commercial approach are all working together. We are incredibly pleased with the performance thus far.What we see is consistent and persistent growth driven by the market need, favorable market access, and key demand creation fundamentals that are delivering on the mission of Ardelyx to bring a novel mechanism therapy to patients who, despite treatment with available therapies, are in great need of a new option. This is an exciting time for our team and for Ardelyx.The growth momentum we are seeing for both IBSRELA and XPHOZAH is exciting. The team is laser focused on sustaining this momentum with the strategic intent to reach all patients in need of our first-in-class therapies. I look forward to continuing to share updates with you in the future.With that, I will hand it to Laura.
Thank you, Susan. I'm really pleased to join you today. In addition to all the great work that Susan shared with you in support of IBSRELA and XPHOZAH, we also continue to expand our medical and clinical understanding of our products. Medical education for patients and HCPs, as well as data dissemination via abstract presentations and publications, continue to provide valuable insight and enhance the science around our products and more generally, within these therapeutic areas. Which brings me to one of the data gathering programs that I'm extremely excited about.Today we announced that we will be initiating a real-world evidence study of XPHOZAH. As we know in clinical development, gaining a real-world understanding of our therapies can vastly increase our knowledge of how these drugs are impacting patients outside of the more controlled clinical setting, complementing our overall understanding of the treatment paradigms for our patients.Real-world evidence studies can shine additional light on the safety, tolerability, and effectiveness of a therapy, and provide greater insights into epidemiology, disease burden, treatment patterns, treatment adherence, impact on quality of life, and, importantly, how a new drug like XPHOZAH integrates into a patient's [ lived ] experience. We anticipate that these types of data will provide Ardelyx with additional insights to help us support the patient and physician community as they integrate XPHOZAH into their treatment practices.It will also help us develop educational materials for patients to maximize their understanding of the drug, and potentially enhance their experience, while continuing to highlight the favorable benefit-risk profile of XPHOZAH. And it will also support ongoing discussions with payers. This will be a real-world long-term prospective observational cohort study designed to capture the impact of XPHOZAH-based regimens in patients with hyperphosphatemia on maintenance dialysis, who were either not controlled on, or intolerant of binder therapy.To that end, patients on the XPHOZAH-based regimen will include those who are using XPHOZAH in combination with phosphate binders, as well as those who are taking XPHOZAH as monotherapy. We will follow these patients over a period of up to 3 years to understand the persistence of treatment effectiveness, and achieving and maintaining serum phosphorus within the guideline recommended range.This extended analysis period will allow us to also examine changes in treatment patterns, discontinuation rates, across treatment regimens, and the impact of an XPHOZAH-based regimen on patient satisfaction. I am very excited about what XPHOZAH may be able to do for our patients.And capturing data in a real-world setting will not only supplement the insights we've gained in our clinical trials, but more importantly, will further expand our understanding, and enhance our ability to support the patients and the physician communities who are constantly striving to manage serum phosphorus in the setting of end-stage kidney disease. I look forward to sharing more detail and results from this trial in the future.I will now pass it to Justin.
Thank you, Laura. Earlier in January, we pre-announced our product revenue. So I'll use this as an opportunity to review that material and highlight additional key financials from the fourth quarter and full year 2023. What I believe you will hear from the information we have provided today is we find ourselves in a strong financial position.We are well-resourced, we have multiple revenue streams, and we are thoughtfully investing in continued growth. We have total revenues of $34.4 million in the fourth quarter of 2023, driven by growth in net product sales revenue. On a full-year basis, we reported total revenues of $124.5 million in 2023, compared to $52.2 million in 2022.Our significant year-over-year growth was driven primarily by the strong performance of IBSRELA. I will now take a moment to walk through the relevant contributions of our revenue components during the fourth quarter and full year.First, we had U.S. net product sales revenue of IBSRELA in the quarter ended December 31, 2023 of $28.1 million, a 26% quarter-over-quarter increase from the $22.3 million we reported in the third quarter.On an annual basis, we recorded $80.1 million of IBSRELA U.S. net product sales revenue in 2023, compared to $15.6 million in 2022, as a result of consistent and persistent growth in all key metrics. We also reported $2.5 million in U.S. net product sales revenue of XPHOZAH in the fourth quarter following the launch in November.Second, we reported $3 million in licensing revenue in the fourth quarter, bringing our full year licensing revenue total to $35.8 million, which is comparable to the $35 million in licensing revenue that we recognized in 2022.Finally, we reported product supply revenue of approximately $800,000 in the fourth quarter and $6.1 million for the full year of 2023, compared to $1.5 million during the full year of 2022.Research and development expenses were $9.5 million in the fourth quarter of 2023, compared to $9.1 million for the same quarter of 2022. In 2023 and 2022, R&D expenses were $35.5 million and $35.2 million, respectively.Selling, general, and administrative expenses were $47.7 million in the fourth quarter of 2023, an increase of $28 million from the $19.7 million we reported for the same period of 2022. The increase was due to the costs associated with the continued commercialization and growth of IBSRELA, as well as the launch activities for XPHOZAH. On a full year basis, total SG&A expenses were $134.4 million, compared to $76.6 million in 2022.We had a net loss of approximately $28.8 million, or $0.12 per share, in the fourth quarter of 2023, compared to net income of $10.7 million, or $0.06 per fully diluted share in the same period of 2022.The net loss for the fourth quarter of 2023 includes $5 million in combined non-cash expenses from share-based compensation and non-cash interest expense related to the sale of future royalties.Our net loss for the full year of 2023 was $66.1 million, or $0.30 per share, which included $17.9 million of non-cash expenses from share-based compensation, non-cash interest expense related to the sale of future royalties, and impairment of a right of lease use asset.In 2022, we reported a net loss of $67.2 million, or $0.42 per share, for the full year. As of December 31, 2023, we had total cash, cash equivalents, and short-term investments of $184.3 million, as compared to $123.9 million at the end of 2022. This includes $22.4 million in net proceeds that we drew in mid-October from our term loan agreement with SLR Capital, which we announced following the approval of XPHOZAH.In addition to our cash as of December 31, 2023, in January, we received a $3 million milestone payment from Fosun Pharma following the U.S. approved XPHOZAH. We also intend to draw the next $50 million tranche from our term loan agreement with SLR prior to the [ expiration ] of this option on March 15, 2024.Now, let me take a few minutes to give you some insights to what we currently expect for 2024. First, as it relates to IBSRELA. Our strong performance in 2023 was driven by consistent uptake from IBSRELA across each of our key measures, including new writers and repeat writers, as well as new and refilled prescriptions. IBSRELA's performance to-date, and as Susan shared earlier, the continued insight from our in-field experience has strengthened our confidence in the potential for this product.As a result, in January, we announced we currently expect IBSRELA's U.S. net product sales revenue for the full year 2024 to be between $140 million to $150 million. As a reminder, our guidance does not include any anticipated XPHOZAH, partner milestone payments, or product supply revenues.As we have continually done since the launch of IBSRELA, we have thoughtfully increased our investment as our internal expectations evolve. We began additional planned investments into our sales and marketing in January, including the expansion of our field presence from 64 to 124 [ dedicated ] to IBSRELA, as well as increasing our spending in marketing initiatives, including digital engagement, product sampling, and our patient support services.As a result, by the third quarter of 2024, we anticipate incurring incremental operating expenses averaging approximately $20 million more per quarter, when compared to our fourth quarter of 2023. We feel confident that our current cash position will support our expected spend, including these investments.We are excited about IBSRELA's performance, the early days of XPHOZAH, and the strength of our cash position. We will continue to be thoughtful with how we deploy capital while focusing on maximizing shareholder value.With that, I'll hand it back to Mike.
Thanks Justin. We accomplished a lot in 2023 and we're not yet done and we're not looking back. 2024 is going to be yet another important and exciting year for Ardelyx. We are looking ahead and our team is more aligned than ever on the company's path forward.I will now open the call to questions. [ Danielle ]?
[Operator Instructions] The first question comes from Dennis Ding from Jefferies.
Congratulations on Ardelyx's progress. So 2 questions from me. For XPHOZAH [indiscernible], can you remind us your guidance on that and the various pushes and pulls that could take place in Q1, given you guys have made some comments on things like co-pay assistance and then that patient assistance programs? And then question number two is also on XPHOZAH, but around HR 5074. I appreciate this is sort of out of your control, but can you elaborate on some of the different scenarios that could come out of this and that you are confident in your ability to manage the business in each of these scenarios?
Sure, Dennis. Let me address the second question first, and then I'll pass it off to Justin for some discussion on gross to net. You hit the nail on the head. We can't predict what's going to happen in Washington. We're very confident with the approach that we're taking in the business with XPHOZAH, and obviously continue to monitor and participate as much as is practicable in what's trying to be accomplished in DC.Obviously, the broader questions there in terms of continued resolution, the government functioning is what the priority is there in DC, and we will continue to update you and everyone else as -- when anything changes with the work that's being done there. Justin?
So for the fourth quarter, our gross to net deduction was in line with our expectations at approximately 21%. Generally speaking, at this stage, it's too early to tell what we can expect with any high level of specificity or detail. What we can say is, generally speaking, we expect that we may see a higher percentage of XPHOZAH patients on Medicare compared to ISBRELA.So due to the government segment rebate dynamics, we expect that the gross and net deduction may be slightly unfavorable for XPHOZAH compared to ISBRELA, but it's somewhat early and, of course, we don't -- haven't really experienced the seasonality yet, because, obviously the first time we launched and we started selling XPHOZAH in the first quarter of the calendar year.
The next question comes from Chris Raymond of Piper Sandler.
Congrats from us too on the progress. Maybe 2 questions, and they're both on XPHOZAH. So just on this 3-year observational study, at least in terms of the [ Spherix ] data that we get, and I know you guys get that too, intent to prescribe -- is really robust, awareness almost universal and there's just a ton of evidence that docs are, at least initially here very satisfied with the drug. And it seems like the pinch point really is access, as you might expect right now. So I guess the question is, maybe what commercial itch does this trial scratch with that kind of reception you've already had, or is there a regulatory commitment that this fulfills? And then I've got a follow-up.
Yes, and let me just quickly address that and then I'll pass on to Laura for any other comments. No regulatory commitment for this. This is as Laura said in her comments, our continued commitment to understanding the clinical utility and where and how a product like XPHOZAH can be used. And it's certainly curiosity, but it's also understanding that as this continues to grow, there's going to be questions and thoughts from payers and others that we want to be prepared to answer.And the only time to start is before you get those questions. So it's better to have these data than not. And it has as much to do with our belief in the clinical utility and capturing the data demonstrating that. Laura, anything to add?
Yes, Mike, I think the only other piece to add is, again, there's, as you said, no regulatory commitment. This really reflects our desire to better understand the impact that a drug like XPHOZAH could have on patients. We think that impact will be positive. And I think the other piece of it is, we also want to get a sense of patient satisfaction.You launch these drugs, you obviously have an objective to address unmet needs, and I think the ability to capture data on how patients are experiencing these drugs in their [ lived ] day-to-day sort of quality of life settings is really important.
And maybe a follow-up. Susan, in your comments, you mentioned out-of-the-gate working through prior-offs, expecting that out of the gate, but again, back to the [ Spherix ] data [ that ] -- it looks like about 20% or so of patients do not involve prior-offs. Can you give a little bit of color, I guess, on maybe the dynamic going forward? Is it the goal to reduce the number of patients requiring prior-offs, reduce the sort of lead time or the turnaround time for those, or both, or any sort of comment on the dynamic, and what your focus items are as you try to streamline the process for access?
Yes. We have been engaged with payers really months in advance of the approval -- post-approval now with the final label, and they're defining their coverage policies really exactly as we anticipated, very consistent with our labels, providing a path to access via a prior authorization, requiring the patient to have been treated on binders previously, inadequately responding, or intolerant of binders.So that is really our go-to-market strategy, because we at this time do not intend to engage in contracting with the payers. XPHOZAH is the only non-binder available. It is the first-in-class phosphate absorption inhibitor. It's the only option now for patients that have been treated on binders and have been found to be inadequate. So, we really are not going to be contracting.There is no path forward for a formulary position that is going to be first before treatment with binders. So the prior-off path is a direction that we're on. So what's critical for our commercial success is the comprehensive patient services support in the office to enable that prior-off process and getting the physicians and the office comfortable with that process.And what we're finding exactly is with IBSRELA, once they run through the process a few times and they get more and more comfortable with it and realize that when they go through that administrative process, the patient ends up having access to XPHOZAH because of -- all of our patient assistance programs, and ability to buy down their commercial co-pay.So both from an access and affordability standpoint, our patient services really enable the physician to successfully navigate that [ PA ] process. So for us, the success and the access path is really continuing to support that nephrology interest and wanting to go through the process.Because they believe the patients in need of XPHOZAH and supporting them through that process. What we're finding so far is that when they do so, we're getting those prior-offs approved and patients are gaining access to XPHOZAH.
The next question comes from Laura Chico from Wedbush.
One on XPHOZAH and then one on IBSRELA. For XPHOZAH, could you just talk a little bit more about, at what point you would move to secure step-up for XPHOZAH? And how should we think about the base case in terms of duration in which that would be active? I'm not sure if the [ calcium ] [indiscernible] experience would be a relevant proxy here?
Yes. So Laura, I think we're still trying to determine that as well. Obviously, if we go into depth, we've got to go through getting the proper codes and doing that. So I think as we get closer to that and get more clarity, we'll provide that commentary.
And then back to IBSRELA, I think Susan made the comment that you had kind of a changing view on who might be a good patient for this drug as you're getting more experience and exposure. Could you just expand on that a little bit further? And I guess, specifically I'm trying to understand, a little bit more about how you're thinking about utilization earlier in the disease process. Are you seeing signs of earlier utilization with IBSRELA?
Yes, actually it's really an expanding view. So what we're finding is that now that the HCPs who treat IBS-C have a novel mechanism option, they're increasingly identifying and aware of the patients that they had treated with [ GCC ] agonists, but they are having persistent symptoms and really could benefit from a novel approach.So they're -- it's really the patients they treat every day, particularly these high writing HCPs that we're focused on. Every patient that they see has likely been tried on a GCC agonist, or is on a GCC agonist. And what we're finding -- so those patients implicitly meet the prior authorization criteria. And what we're finding is that physicians are increasingly identifying them, engaging them in dialogue and saying, hey, there is a new therapy option available now that I really think you could benefit from.They're just -- they're expanding their view on patients now that actually could benefit from a novel approach since they've seen the good results for IBSRELA in the patients they initially tried it on.
The next question comes from Louise Chen from Cantor Fitzgerald.
So I wanted to ask you, including the drawdown that you expect in March, what do you estimate your cash runway to be? And then also on tenapanor, I saw that you have a potential regulatory action coming in China. So just curious how big that opportunity could potentially be for you? And then same question for Japan with the launch, how should we think about revenues in Japan in first quarter '24 and beyond?
Sure. Let me address a couple of those things, and then I'll pass it off to Justin. Recall that what we did with our relationship with KKC in Japan, is we monetized those royalties. Right? So you shouldn't expect anything more coming from our partnership in Japan. And it's up to KKC to speak to what kind of revenues they would expect out of their market.With our relationship in China, certainly there's some regulatory actions that can happen there. We've not really spoken a whole lot about what the opportunity is, and I think we'll hold off on that as well. In terms of the drawdown in March, we're probably not going to give you any specific numbers in terms of runway and what that provides, but if you can address that, Justin?
We are overall starting to move towards what we call steady-state spending. So this drawdown, of course, we're very mindful of how we bring in additional capital, and we try to be thoughtful and measured in how we approach our spending, our planning. And so, on top of the $184.3 million we had at the end of the year, and this really does put us in good shape. And we are obviously always trying to balance [ between ] our fund, our operations with other considerations.So for us, we're taking it thoughtfully and measure it, and we mentioned the increased activities we look to add to the commercial team this year. And once we get to the steady state, as I mentioned, we'll be able to give you more precise numbers. We're not really positioned to give you exact date now, other than that we're in really good shape in the near term.
The next question comes from Yigal Nochomovitz from Citi.
On the observational trial that you talked about, can you just talk a little bit more? Is there a fixed number of patients that can enroll, or is it more open-ended? Will the patients that go into that trial be getting free drug? Are they still considered commercial patients? And also, just, you obviously had approval back in October. Just curious as to why the study is starting now versus right after when the drug was approved?
Laura?
I mean, the first question in terms of the number of patients, it is more open. I mean, obviously, it's a real-world study where, again, we're looking at patients who are being prescribed the drug in a real-world clinical setting. And so, it's not free drug, it's basically patients who, again are either intolerant to phosphate binders or have not gotten to their treatment goal on binders alone.And so it's more of an open sort of enrollment piece, but again, the investigators that are looking to enroll patients will make that decision based on the normal decision making between patients and physicians.
And Yigal, to answer your question about commencement, it takes time to get these things going and figuring out which investigators we'll work with, so nothing about that time frame [indiscernible] relevant.
And then I was doing some math on the guidance. So $140 million to $150 million works out to 9% to 12% quarter-on-quarter growth. So just curious about how you arrived at that? And then, actually, if you carry that out into the future, and then you look at what happened with Linzess, Linzess, they launched in December 2012, they got to $1 billion in 2021, it took 9 years. If you take the low end of your guidance quarterly -- quarter-on-quarter, you will get to $1 billion in, I guess, somewhere around 2029, 2030. So just curious what you think about that [ time table ]?
Well, I think your math is very good. But what we've said is that, we see this as $1 billion opportunity. We haven't given the time frame within which we will accomplish that. I think -- I hope what you've learned about us, we're very measured in the way that we do this.And certainly if we see opportunity to give you more specificity around the time frame of hitting those numbers, we will. But we're very confident with what we've guided for this year between $140 million and $150 million, certainly gets us on the kind of trajectory that you just described.
The next question comes from Ryan Deschner of Raymond James.
My question is, from our recent discussions with nephrologists over the last few weeks, we're hearing a heavy interest actually in the perceived compliance benefit associated with XPHOZAH for patient subpopulations, actually both with and without adequately controlled serum phosphorus. So my questions are, how big of a market segment is represented by patients who are failing phosphate binders largely due to poor compliance? And how are you thinking about potentially addressing the market segment represented by patients with controlled serum phosphorus who have strong desire to reduce pill burden in the future?
Yes, I mean, I'll let Susan to address some of this, too, but that second population, that falls potentially within a definition of intolerance. If you think about how these patients have had to take these handfuls of pills every day, multiple meals, every meal and snack, that's a tolerance issue, not necessarily an efficacy issue. So, we think that the indication that we were ultimately able to get from the FDA allows a physician to attest to either one of those 2. Susan, anything to add?
Yes, I would just add that it's really important to note that consistently we see approximately 70% of patients despite treatment with binders, are unable to achieve or maintain the global guideline target levels within a 6-month period. And what we're finding now on the market in front of a nephrologist is that, they believe that the majority of their patients are unable to achieve or maintain target levels with binder therapy.So the population that aligned with our indication is really quite large. And that's why we're seeing the enthusiasm on the part of the nephrology community and now finally have another option for those patients. And with the novel mechanism of XPHOZAH as a first-in-class phosphate absorption inhibitor, there's broad application to be used for those patients that are inadequately managed despite binder therapy.On top of that, the intolerance consideration is another opportunity for use of XPHOZAH. So clearly, the compliance benefit is something that people speak to. I mean, 1 small pill twice a day, especially if it's being added to a therapy regimen, the patients are responding really favorably like, wow, I could take this, or if the physician decides to just continue the binders, now they're on 1 pill twice a day.Yes, that's really resonating with physicians and with patients. And it's really part of the momentum driving the use of XPHOZAH. And ultimately, the compliance is so intermingled with why patients have been unable to reach target levels. So, we're quite confident that there's a really strong opportunity within the labeled claim, and we're seeing that in the enthusiasm in the marketplace.
The next question comes from Joseph Thome from TD Cowen.
I have one on XPHOZAH, and then I'll have a follow-up on IBSRELA if possible. But maybe first on XPHOZAH, are you able to provide any sort of information on the number of prescribers that have maybe written since launch, or I guess if you can -- going forward, what sort of metrics do you anticipate providing to kind of gauge how launch is progressing? And then I'll have a follow-up.
Obviously, understandable question, given some of the data that you're accustomed to isn't available. But we're not going to be in a position to count physicians and do that. I think we -- as we begin, as we did with IBSRELA, getting the comfort of a number of quarters underneath our belt, ultimately the revenue guidance that we are going to give is going to be the most important thing for all of you to follow.And presumably there will be some resolution as to how you can access script data, whether it's through outlets like you have in the past or acquiring those data as well. And what's your question on IBSRELA?
And then on IBSRELA, I had a question on R-Ally study, the Phase III in pediatric patients with IBS-C. I guess, how important are data from this study? Kind of how is this progressing? And when you think about that expanded $1 billion market opportunity, does that include patients, or a meaningful number of patients at all under age 18, or would this be an expansion to that number? If you're able to kind of get that on the label?
Yes, I think very -- basically it'd be an expansion. But, Laura, if you want to address the question about the trial?
Yes. In terms of the pediatric study, again, we've got an ongoing study in patients who are aged 12 to 18, and that study is progressing nicely. And we have another study that is planned in pediatric patients age 6 to 11. So in terms of those studies, we see them progressing as planned. In terms of -- Mike, maybe you want to address the other part of the question in relationship to how that pertains to additional revenue?
Yes. There's obviously a population there that would benefit from a product like IBSRELA. I think quantifying that is not something that we've done, but it's potentially something that we would think is an expansion.
The next question comes from Ed Arce from H.C. Wainwright.
This is Thomas Yip asking a couple questions for us. So first on IBSRELA, can you provide some details on a plan that was previously announced to expand U.S. salesforce both in terms of scale and timing of the increase? Should we expect an incremental increase throughout the year, or is it contingent on certain criteria for expansion?
Yes, I think, as you heard in our opening comments, we're taking the IBSRELA dedicated team from 64 to 124. And as Justin said in his commentary, steady-state spend on that we expect would be in -- evidenced by the third quarter of this year.
And then perhaps one more question on XPHOZAH. When should we expect best time to provide revenue guidance? Should we expect something along the line of IBSRELA, in other words, about 12 months of sales before we see a guidance?
Yes, I mean, I think that's prudent. When we see some of the questions on this call, what the impact is of seasonality, the first quarter. All those things with IBSRELA was 4.5, 5 quarters underneath our belt before we came out with any guidance.
The next question comes from Matt Kaplan from Ladenburg Thalmann.
Just wanted to stick on IBSRELA for a minute. What are you seeing -- I guess IBSRELA, with respect to its use in terms of duration on therapy? And are patients using it in a cyclical fashion, kind of come on and come off the drug?
Susan, do you want to address that?
Sure, yes Matt. What we're -- the feedback that we're getting from the physicians treating patients with IBSRELA is really highly favorable in terms of the patient response to therapy and satisfaction with therapy. Overall, we're finding that, as you have noted, IBS-C patients overall, when they're feeling better, tend to want to maybe stop taking the drug knowing that if the symptoms come back, they would reinitiate therapy.So at this point we're finding that, that overall behavior is probably consistent regardless of the treatments that are prescribed. But the good news from the marketplace is that physicians are keeping them on the drug and really believe that the drug is working.
And then with respect to XPHOZAH, what are you seeing in terms of the current mixture of patients on XPHOZAH in terms of using it in combo setting versus a monotherapy? And I guess, how would you -- how do you think that evolves over time?
I'm not sure we have exact visibility into other prescriptions, right? So this is a -- we have a closed system with our adult assist program that helps the prior authorization process. Susan, do we have perspective on that?
Yes, actually, it's a great question, Matt. So I think that there isn't a quantitative answer, but what we could say is, based on our experience now in the offices that we're seeing physicians adding XPHOZAH to the current regimen and seeing a nice response in phosphorus reduction. We're seeing patients reducing the binder dose and adding XPHOZAH and also having a favorable experience.And we're seeing physicians just eliminate the binders and initiate use of XPHOZAH and seeing a response [ whereas ] they -- and then potentially adding back the binder if they need it. So I think early in the launch what we're finding is that because of the novel phosphate blocking mechanism and one small pill twice a day, it really gives the physician a lot of flexibility in terms of how to use the product.And then overall, they're telling us that the patients are responding favorably and satisfied, and they're seeing reductions in phosphorus levels. So it's all very encouraging. Over time, we'll do our own -- As we contract this in market research, it would have to be custom work. It's not really something available through the script data.We'll have a better understanding on how that cuts. But overall, it really just leads to a broad base use and seeing XPHOZAH as applicable to a broad range of patients, and that they can customize.
And Matt, I think that's why we're referring to this as an XPHOZAH based regimen, is it allows the flexibility for clinicians to do exactly what Susan just described.
This concludes our question-and-answer session. I would like to turn the conference back over to Ardelyx President and CEO, Mike Raab, for closing remarks.
Thank you, everyone, for joining us this evening, and especially to those many shareholders who've been on this wild ride with us, whether for the past few years, the past few months, or even the past few weeks. I hope that what you've seen and heard from us today is that we are thoughtful and measured in how we build our business, that we focus on executing on our priorities, and that we have the right team in place.And to that team, Team Ardelyx, I would like to extend a special and heartfelt thanks to all of you for what you do every day to further our efforts to deliver on our mission and, most importantly, to support patients.With that, we can close the call. Thank you, [ Danielle ].