Ardelyx (ARDX): Looking Ahead After Restructuring

Edward Kim  |

According to the International Foundation for Functional Gastrointestinal Disorders, between 25 and 45 million people in the US and 10% to 15% of world's population suffer from irritable bowel syndrome (IBS), which is characterized by abdominal pain or discomfort, and chronic or recurrent diarrhea, constipation or both. About two-thirds of those afflicted are female, and most are under 50 years old.

Despite how commonly IBS occurs, fewer than half of those afflicted seek medical care for symptoms, with a survey also showing that even when diagnosis of IBS is made, it typically does not occur until 6.6 years after symptoms begin. The exact causes of IBS have not been identified, though symptoms appear to result from a disturbance in the interaction among the gut, brain, and nervous system that alters the regulation of motor or sensory function of the bowels.

We've been following Ardelyx (Nasdaq: ARDX), which is working on treatments for gastrointestinal and cardiorenal diseases. The company has two oral compounds in Phase 3 clinical trials: tenapanor for constipation predominant IBS (IBS-C) and hyperphosphatemia (elevated blood levels of phosphorus), and RDX7675 for hyperkalemia (elevated blood levels of potassium). Hyperphosphatemia commonly afflicts people with chronic kidney disease and is linked to increased incidence of cardiovascular disease. Hyperkalemia can cause a variety of serious and life-threatening disorders including muscle fatigue, weakness, paralysis, arrhythmias and nausea.

Source: Ardelyx Investor Presentation, August 2017

Mixed Phase 3 Results Lead to Corporate Restructuring and Clinical Refocus

Ardelyx's Phase 3 results for tenapanor in IBS-C patients announced in May 2017, triggered a 39% fall in the stock on volume that exceeded the combined shares moved in the previous 28 trading days. While the primary endpoint of a 30% reduction in abdominal pain and an increase of at least one complete spontaneous bowel movement (CSBM) in the same week for at least 6 of the 12 weeks of the treatment period was achieved with statistical significance, tenapanor missed on the key secondary endpoint of the percentage of patients who showed the specified improvement in CSBMs only. Additionally, there was a very high incidence of diarrhea among the tenapanor patient group.

As can be seen in the table below, tenapanor resulted in a CSBM responder rate that was only marginally better than placebo. Additionally, according to EvaluatePharma, tenapanor's CSBM responder rate was worse than the rate shown by two competing products from Allergan/Ironwood Pharmaceuticals (NYSE: AGN; Nasdaq: IRWD) and Synergy Pharmaceuticals (Nasdaq: SGYP). (EvaluatePharma did note that any comparison of results across different trials of different products under different clinical regimens should be treated cautiously.) Further, 14.6% of patients on tenapanor experienced diarrhea vs just 1.7% on placebo; trial discontinuations due to diarrhea were 5.9% for tenapanor patients vs 0.6% for the placebo group.

Source: Table from Ardelyx Press Release, May 12, 2017. Annotations by Equities.com

In its Q2 corporate update delivered earlier this month, Ardelyx announced that a "comprehensive strategic review of its operations" had led to a "prioritization of resources to focus on the upcoming milestones for the late-stage programs, a delay in the development of a number of earlier-stage programs and a reduction in workforce of 28 percent, resulting in a remaining team of 76 employees." The company said these measures had extended its operating runway to the end of 2018.

Future of Tenapanor

CEO Mike Raab remains "highly confident in both the registration and commercial potential for tenapanor" and, to that end, enrollment has been completed in a second Phase 3 trial for the drug candidate as well as a long-term safety extension study, with results from both expected in Q4 of this year. The company expects to submit its first NDA for tenapanor in 2018.

Re tenapanor for the treatment of hyperphosphatemia, Ardelyx announced a successful 8-week long, Phase 3 trial in February 2017 in patients with end-stage renal disease on dialysis. The company has sought feedback on the study protocol from the FDA and expects to begin patient enrollment of a second Phase 3 trial by October 2017 to be comprised of a 26-week randomized treatment period followed by an up to 12-week, double-blind, placebo-controlled, randomized withdrawal period with an open-label extension.

Balance of Pipeline

Ardelyx's RDX7675 is a potassium-binding compound that is being tested in patients with hyperkalemia as a potential improvement to sodium polystyrene sulfonate, the standard of care for hyperkalemia for more than 50 years. Earlier this year the company announced the initiation of an onset-of-action study, as well as a single Phase 3 trial. As part of its organization focus on tenapanor, Ardelyx has adjusted the timing for the RDX7675 study results and currently expects to report data after the results from the second tenapanor trial for IBS-C in Q4 2017.


ARDX Stock

As mentioned above the stock was hit hard after the May tenapanor results and now sits at a market value of just $250 million. Given the depth of Ardelyx's pipeline, and the market sizes of the gastrointestinal and cardiorenal diseases the company is targeting, we like the risk-reward of the company at these levels and feel the stock is a value in the context of companies with multiple Phase 3 candidates. The IBS-C market, in particular, is large enough to accommodate multiple commercial drugs, and we believe that tenapanor has demonstrated enough to be given consideration by the FDA alongside the products from Allergan/Ironwood and Synergy.

According to Endpoints News, "None of these drugs stand out as a dominant drug on efficacy, and that may well lead to a near future scenario in which physicians send patients home with a sampling so they can decide which is best for them." Ronald Fogel, MD, of the Clinical Research Institute of Michigan and the investigator for Synergy's IBS-C drug, said to Endpoints News just prior to the release of Ardelyx's tenapanor results that "unless you run a head-to-head study, you’re not really going to find out which drug is actually better. A few points one way or the other could be explained by various factors." Dr. Fogel stated that he and other physicians in this field prefer to let patients take home a couple of drugs available for this condition to find out which one is right for them.

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