Biotech Stock On The Radar: Ardelyx Gears Up For FDA Decision Day

Shares of the thinly traded, micro-cap biotech Ardelyx Inc ARDX have risen over 200% year-to-date.

With a key binary event coming up, it's time for a look at what the future holds for the equity. 

The Company

Ardelyx is a biopharma company developing drugs for cardiorenal diseases. The Fremont, California-based company was launched in 2007 and does not have a commercial product on the market. 

The company's revenues so far have mostly come from licensing. Ardelynx employs about 86 people, with roughly 70% of them being in R&D.

The Pipeline

The company's lead drug tenapanor, an NHE3 inhibitor, is being evaluated for multiple indications.

1. Tenapanor is being evaluated in a second Phase 3 trial dubbed "PHREEDOM" for the treatment of hyperphosphatemia, or elevated blood phosphate levels, in patients with end-stage renal disease, or ESRD, who are on dialysis.

The pipeline asset is a novel, potent small-molecule dosed twice daily in milligram quantities.

As opposed to current treatment options, which are mostly phosphate binders requiring multigram quantities, tenapanor is expected to significantly reduce patient pill burden. The twice-daily dosing also facilitates improved patient adherence and compliance.

2. Tenapanor is also being evaluated in combination with phosphate binders in a Phase 3 trial dubbed "AMPLIFY."

If approved for the indication, the investigational drug could be the first and only phosphate-lowering therapy used as an adjunctive therapy in combination with binders.

In a clinical readout, the company said Tuesday the study met the primary endpoint and all key secondary endpoints, including showing a statistically significant reduction in serum phosphate levels in patients treated with tenapanor and phosphate binders compared to phosphate binders alone.

3. Tenapanor is in the clinics for irritable bowel syndrome with constipation, or IBS-C. The company submitted an NDA for the indication and has been granted a PDUFA goal date of Sept. 12.

Ardelyx is also developing RDX013 — a small molecule secretagogue — for the treatment of hyperkalemia.

Hyperkalemia is a condition in which the potassium level in the blood is abnormally high, and it is found to occur in patients with heart and kidney diseases, particularly those taking blood pressure medications belonging to the RAAS inhibitor class.

RDX013 is in the preclinical stage of development.

Source: Ardelyx

See also: Biotech Stock On The Radar: MyoKardia Bets On Precision Medicine For Heart Health

Market Potential

Ardelyx estimates the market opportunity for tenapanor in hyperphosphatemia to be $500 million to $700 million in the U.S.

The company has three collaboration agreements in place for marketing tenapanor overseas: 

With Kyowa Kirin Co Ltd KYKOF for cardiorenal diseases, including hyperphosphatemia, in Japan. The deal is for a $30-million upfront payment, up to $55 million in development milestone payments and up to $77.5 million in commercial milestone payments as well as royalties on annual sales.

With Fosun Pharma for IBS-C and hyperphosphatemia in China. The deal is for a $12-million upfront payment and up to an additional $113 million in additional milestone payments as well as tiered royalties on sales.

With Knight Therapeutics, Inc. in Canada. The deal is for CA$25 million ($18.89 million) paid upfront to Ardelyx as well as development and sales milestones and tiered royalties. 

Ardelyz sees a huge market opportunity for tenapanor in IBS-C, as there are limited prescription medicines available to treat this gastrointestinal disorder.

Out of the 11 million people in the U.S. who suffer from IBS-C, only one in four treated patients are very satisfied with the current FDA approved treatments.

Ardelyx also sees hyperkalemia as a promising opportunity.

Of the CKD and/or heart failure patients in the U.S., about 2.1 million are estimated to have occurrences of hyperkalemia.

The company believes its treatment option, if approved, is likely to score over existing drugs due to its ability to lower serum potassium irrespective of whether potassium is present in the diet.

It also would have lower pill burden, facilitating better compliance, longer-term use and potentially better efficacy than potassium binders.

Competition

Two drugs are already approved for hyperkalemia: Veltassa, approved in October 2015, and Lokelma, approved by the FDA in 2018.

Veltassa belongs to Swiss biopharma company Galenica, which acquired the asset via its 2016 acquisition of Relypsa, while Lokelma was developed by ZS Pharma, which has since been acquired by AstraZeneca plc AZN.

Many over-the-counter medications and three prescription products are intended for IBS-C: 

• Linzess by Allergan plc AGN & Ironwood Pharmaceuticals, Inc. IRWD. 
• Amitiza by Mallinckrodt PLC (NYSE: MNK through its Sucampo acquisition. 
• Trulance by Synergy Pharmaceuticals. 

Linzess, which was approved in 2012 for IBS-C and for the expanded indication of chronic idiopathic constipation, or CIC in 2017, fetched revenues of $761.1 million in fiscal year 2018, or 8.6% year-over-year growth.

Amitiza, which was originally approved for CIC in 2006, and later for IBS-C and opioid-induced constipation, or OIC, generated revenues of $343.8 million in 2018, down 16.6%.

Synergy's Trulance has been approved for both CIC and IBS-C as a once-daily treatment option.

Key Upcoming Catalysts

• PDUFA action date for tenapanor in IBS-C: Sept. 12, 2019
• Top-line results from the PHREEDOM trial due in the fourth quarter of 2019
• NDA submission for tenapanor both as a monotherapy and as an adjuvant therapy for treating hyperphosphatemia in patients with ESRD: anticipated in 2020 

Financials

Ardelyx has yet to turn in revenue from any commercialized product and has been incurring losses since its inception in October 2007.

As of Dec. 31, 2018, the company had an accumulated deficit of $365.5 million.

In the past three quarters, Ardelyx reported wider-than-expected losses.

As of June 30, 2019, Ardelyx had cash, cash equivalents and short-term investments of $123.94 million, lower than $168.09 million at the end of the December quarter of 2018.

Stock Take

Ardelyx offered its shares to the public in June 2014 at $14 each. In the past 52 weeks, the shares have traded in a range of $1.60 to $5.95.

Since hitting a low of $2.10 on Aug. 15, the stock has been mostly higher.

After a bearish crossover that occurred in late June, the shorter-term 50-day simple moving average, or SMA, and longer-term 200-day SMA are seen converging.

Source: Yahoo Finance

Thanks to the recent gains, the 14-day RSI, a momentum indicator, is approaching overbought levels.

The average analyst recommendation for the stock is a Strong Buy, according to the Yahoo database, and the average price target is $10.75, suggesting over 200% upside from current levels.

Ardelyx stock has strong support around the $2.5 and $5 levels. On the upside, the $7.80 level could serve as an overhead resistance.

Related Link: Attention Biotech Investors: Mark Your Calendar For These September PDUFA Dates