Ardelyx, Inc.

Good day, everyone, and welcome to the Ardellix third quarter 2025 earnings conference call. All participants are in a listen-only mode. Now I'd like to turn the call over to Caitlin Lowy, Vice President of Corporate Communications and Investor Relations. Caitlin, please go ahead.

Thank you. Good afternoon and welcome to our third quarter 2025 financial results call. During this call, we will refer to the press release issued earlier today, which is available on the investor section of the company's website at ardell.com. During this call, we will be making forward-looking statements that are subject to risks and uncertainties. Our actual results may differ significantly from those described. We encourage you to review the risk factors in our most recent quarterly report on Form 10-Q that will be filed today and can be found on our website at ardellis.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 Robb, will begin today's call with opening remarks and an overview of the company's progress during the third quarter of 2025. Next, Chief Commercial Officer Eric Foster will provide an update on the performance of Estrella and Exposa. Justin Renz, Chief Financial and Operations Officer, will conclude today's prepared remarks with a review of the company's financial performance during the third quarter ended September 30, 2025, before we open the call to questions. With that, let me pass the call over to Mike.

Thanks, Caitlin. It's great to be here with all of you today to share our third quarter of 2025 results, another standout quarter for both Xrella and Xposa. This performance demonstrates the power of our commercial model, the momentum behind our products, the exceptional execution by our team, and the real-world impact that our differentiated therapies are having for both patients with IDSE and for those with CKD on dialysis. We generated $105.5 million in product revenue during the third quarter, representing 15% year-over-year growth, a signal of strong demand across our portfolio. In January, I outlined four key priorities for our Delux this year. One, to accelerate the Zarrello's momentum. Two, to execute on our exposure strategy. Three, to build a pipeline. And four, to continue delivering strong financial performance. Ten months later, it is clear that the team at Ardelux is delivering on these key priorities, and as a result, we're building real, sustainable momentum. I'd like to provide a bit more detail on each of these areas. Izrella continues to outperform and is the foundation of our portfolio and the main engine for Ardelux's future growth. Izrella set yet another record, generating $78.2 million during the third quarter, a 92% increase over last year. Demand growth is broad-based and demonstrates how vital this therapy is for patients. The Izrella team is doing an exceptional job expanding reach and deepening prescriber engagement and conviction. Every driver that has fueled our success remains strong, a passionate patient community, an engaged prescriber base, and a novel commercial strategy. We expect this momentum to continue through Q4 and beyond, and as a result, we are raising our guidance, and we expect to generate between $270 and $275 million in Xrella revenue this year. Xfosa also had an incredibly strong quarter, generating $27.4 million in revenue, a 9% increase compared to Q2. The Exposa team is navigating this dynamic market with determination and agility as we execute on our strategy, ensuring patient access, strengthening clinical conviction among nephroliths, and driving prescription pull-through. Exposa is a valuable component of our growth, and we expect its contribution to our business will only grow over time. Today's announcement of RDX105531, which we will refer to as 531, is the next generation NHE3 inhibitor and marks an important milestone for Ardelix as we reinvigorate our pipeline. We at Ardelix pioneered NHE3 inhibition, and with Tenapenor, we have the only approved modulator of this pathway on the market. With 531, we may be able to unlock even greater benefit for patients. Early preclinical data demonstrates that 531 is a highly potent, highly soluble molecule that could open development opportunities across a broad range of therapeutic areas. Preclinical manufacturing activities are underway in advance of a phase one study. This investment in 531 reflects thoughtful stewardship of an important internal asset and is our first new development program in more than three years. We are committed to building a broad, sustainable pipeline, capitalizing first on an internal asset, while in parallel, we explore external opportunities. As we build this pipeline, we are taking a disciplined and forward-thinking approach, identifying opportunities where our delics can win. We are going to leverage our expertise, assets, and scientific, clinical, and commercial leadership to unlock value. 531 is a reflection of that approach, and I look forward to sharing more information on our plans for this molecule as we advance through the development program. Finally, I want to highlight our financial strength. With the meaningful revenues we expect to generate in 2026 and beyond, we're extremely well-positioned to thoughtfully invest our capital in current commercial endeavors and to grow our pipeline. We are delivering on our four key priorities. We are driving meaningful impact with patients, and we are creating lasting value for shareholders. Before I hand the call over to Eric, I'd like to formally welcome Sue Holm-Leitner to Artelix as our Chief Financial Officer. She's a remarkable leader who brings deep financial and strategic expertise to Artelix, and she's already making her mark, challenging our thinking, strengthening our plans, and energizing our path forward. She's joining a highly experienced leadership team with the technical expertise, vision, and enthusiasm to lead and write the next chapter for Ardelix. With that, I'm pleased to turn the call over to Eric, who will share his perspectives on our commercial performance. Eric.

Thanks, Mike, and it's great to be with you all once again. The commercial organization continues to operate at an exceptionally high level. Our commercial strategy is strong and continues to be the foundation of our success. We are focused on addressing areas of high unmet need, delivering first-in-class medicines, leveraging a targeted sales and marketing approach to both patients and prescribers, and investing in high-impact patient services programs to improve access. I'm excited to share with you today how this focus drove our performance during the third quarter, starting with Ibsrella. The strong demand for Ibsrella continued during Q3, leading to our highest demand quarter since launch. Additionally, we delivered record highs in the following areas. Revenue was $78.2 million, posting 92% growth year-over-year. We continued to see the strength of our field sales force and the impact of our marketing initiatives, which drove us to new highs in new riders and total riders, reflecting growth in both depth and breadth of riding. This increase in riders also led to growth in new, refill, and total prescriptions. And once again, the increase in focused activity from our field access manager team resulted in improved pull-through rates. These results clearly indicate that our strategies are working and our strong momentum continues. We remain focused on the patient, the prescriber, and improving prescription pull-through so more patients can benefit from Epsrella. First, the patient. IBSC patients are incredibly engaged and consistently seek information and new options to address their unmet IBSC symptoms. In fact, more than 75% of surveyed patients report that they continue to experience the symptoms of IBSC despite treatment on a secretagogue. In contrast, patients report highly satisfied with Ipsirella. In a poster we presented earlier this week at the American College of Gastroenterology's annual scientific meeting, 88% of surveyed Ipsrella patients reported treatment satisfaction. Further internal market research also suggests that when patients learn about Ipsrella, they are motivated to ask for the therapy by name, and when they do, physicians are highly likely to prescribe it. Our focus on the patient will continue, and in some areas, we will increase our investment in targeted patient marketing efforts to support our future growth expectations. Next is the prescribing healthcare provider. The investments we have made in our field-based team and physician marketing efforts continue to demonstrate that HCPs are highly responsive to Uptrella's safety, efficacy, and tolerability profile and its differentiated mechanism of action. Once again, we saw increased targeted activity from our sales team, who drove expanded adoption and utilization. We maintain our focus on driving depth and breadth of prescribing among high-riding HCPs who are frequently seeing patients with IBSC. Our messages are resonating, and the team will continue to drive clinical conviction and ultimately to identify and prescribe Ipsrella for those in need. Finally, prescription pull-through. The investments we are making in this area are delivering improvements across the patient journey. Our field access manager team increased their call activity during Q3, translating into increased rates of prior authorization approvals and resubmission approvals. We continue to look for ways to improve the patient experience, lessen the burden on HCPs, and help ensure that every patient who is prescribed Ipsrella gets on treatment. We are focused on addressing critical aspects of the patient and physician journey and maintaining and building momentum as we enter the fourth quarter. As I mentioned earlier, my team and I just attended the ACG Annual Conference, and we heard directly from many HCPs about the impact of IBSC and the important role that Epsrella is playing for their patients. We are committed to the patient community, and we continue to bring important science to HCPs with three posters presented at the conference. I'm incredibly proud of all this team has accomplished, and I look forward to a strong close to 2025 on our path to more than $1 billion peak revenue. Now turning to Exposa. The team continues to execute and drive demand. In Q3, the team delivered $27.4 million in revenue, a solid 9% revenue growth compared to Q2. This demand-driven growth demonstrates a clear need among patients for Exposa. Our strategy is anchored in access to Exposa for all patients who receive a prescription, regardless of payer. We are pleased that this strategy is working, and we remain confident in our long-term growth expectations. The team remains focused on driving clinical conviction among nephrologists to prescribe Xposa for appropriate patients, encouraging prescriptions to be sent to Ardelix Assist to ensure patients get on treatment, and providing important resources to support prescription pull-through. Our steady and consistent progress is evident in the growth we see across a number of key demand indicators. Total riders grew quarter over quarter. We grew new and rebuilt prescriptions, which resulted in growth in total dispenses compared to Q2, including increased volume for both paid and patient assistance prescriptions. In short, more patients have access to Exposa today than ever before. We also saw continued improvement in prescription pull-through following our investment in the field access manager team. And importantly, we saw a second consecutive quarter of growth in the non-Medicare payer segments. These are all very encouraging indicators, demonstrating that the momentum we experienced in the second quarter continues through the third quarter as a result of our strong commercial execution. We focus on expanding breadth and depth of exposed writing among healthcare providers and continue to place the nephrologist at the center of decision making. We also connect with other stakeholders in the community, including the dialysis providers, renal dieticians, and advocacy organizations that are important to patient care. We have a broad-based team focused across the patient journey and continue to engage with all stakeholders about the importance of EXPOSA. I will be joining the team on Tuesday at the American Society of Nephrology's Kidney Week to engage directly with HCPs and learn from them about the value that EXPOSA provides. We also have three posters being presented that will further support our efforts and will highlight the importance of Xfosa for patients with elevated phosphorus. Consistent progress will fuel a strong finish to 2025 for Xfosa and create a solid foundation for further growth next year and beyond. I am proud of this team and their efforts in this dynamic market. We remain confident in our long-term peak guidance of $750 million. Looking at the fourth quarter and into next year across our portfolio of products, we will continue to execute our strategies at a high level and create new opportunities for growth. We have the right team and the right focus. We're making a difference for patients and driving impact across the business, and we remain steadfast in our commitment to bring these important medicines to the many patients in need. I will now turn it over to Justin. Justin? Thanks, Eric.

Our Dell has delivered an impressive quarter with continued meaningful growth for both products and another record-setting quarter for Ibsrella. We thoughtfully invested to improve our commercial opportunities, restart our pipeline, and strengthen our balance sheet through significant top-line growth, starting with revenue. For the period ended September 30th, 2025, we reported total revenue of $110.3 million, an increase of 12% compared to the 98.2 million we reported in Q3 of last year. The growth was primarily driven by an incredibly strong performance by Absrella, recording revenue of $78.2 million, an increase of 92% over the same period last year. The team's focus on driving increased demand for Ibsrella and improving prescription pull-through continues to drive this momentum. The performance was also the result of expected improvement in our gross to net deduction, finishing the third quarter at approximately 31%, a slight improvement over Q2. We expect Ibsrella growth to continue, and as such, we are raising our guidance and currently expect to finish the year between $270 and $275 million in revenue. Exposa delivered another solid quarter of growth, generating $27.4 million in revenue during the third quarter of 2025, an increase of 9% compared to the second quarter of this year. Our gross to net deduction of approximately 29% was consistent with the second quarter. Finally, you will note that we recorded $4.8 million in non-cash royalty and commercial milestone revenue during the quarter, a significant increase compared to previous quarters and last year. We are pleased to share that our partner in Japan, Kiowa Care and Corp, achieved year-to-date sales levels that triggered a $3.4 million payment, which we passed along to healthcare royalty partners later this quarter. Now turning to expenses. Third quarter expenditures were up compared to the same period of 2024, reflecting our investment and growth, and spending levels were consistent with Q2 of this year. R&D expenses were $18.1 million for the third quarter of 2025, compared to $15.3 million for the same quarter of the prior year. SG&A expenses were in line with our expectation at $83.6 million compared to $65 million we reported in the third quarter of last year and reflects our continued investments in commercial activities to drive growth. Our net loss was approximately $1 million or less than a penny per share in the third quarter compared to a net loss of approximately $800,000 in the same period of last year. In addition, our third quarter 2025 results included $4.8 million in non-cash revenue, $12.7 million in non-cash stock compensation expense, and $2.2 million in non-cash interest expense. We are pleased to report positive quarter-over-quarter cash flow as a result of significant growth on the top line. We finished the quarter with a very strong balance sheet, including $242.7 million of cash, cash equivalents and short term investments. As I prepare to step away from the CFO role at Ardelux, I would like to thank all the investors and analysts who I've had the pleasure to interact with over these past five plus years. I would also like to thank all of the Ardelux team members who I've had the privilege to work with. And to all, I'm delighted to welcome Sue to the team. We've had the opportunity to work together in transitioning the various tasks over these past couple of weeks, and you will find her to be a strong and capable financial leader. I look forward to following Ardelux in the future as I begin my next journey. And with that, I'll hand it back to Mike.

Thank you, Justin, not just for the thoughtful commentary that you provided as you finish out your final quarter with us, but for your leadership, your partnership, and support of everyone at Ardelix. Ardelix's third quarter performance was a continuation of consistently delivering on our priorities. Ibsrella's strength is the foundation of our growth, and the opportunities ahead for this business are significant. is an important contributor to our business. 531 is our reentry to product development, and our strong cash position demonstrates our focus on being prudent stewards of our resources while investing in growth. I look forward to sharing more updates on our progress in the quarters ahead. Elvis, you can now open the call to questions.

If you'd like to ask a question, please press star one on your phone now, and you'll be placed into the queue in the order received. We'll pause briefly to form a queue. Again, it's star one for a question. Our first question comes from Chris Raymond of Raymond James.

Please go ahead. Hey, thanks for taking the question. And best of luck to you, Justin. It was great working with you and hope to in the future. Just some questions. Maybe, first of all, on Absrella. So, you know, just looking at the, I guess it's the Spherix data that kind of sticks out to me the most. So you guys have now sort of mid-teens share, I think, overall in the IBSC market, but first-line share looks like it's also in the single digits. You know, Mike, maybe, you know, obviously you've got a long way to go to compete with Linzess for front-line share, but Maybe just talk about how frontline use maybe is factoring into your long-range sort of plans and what you guys are doing to try to sort of make that more of a lever that you can pull. And then maybe the next question on the 10-5-3-1... I guess you guys didn't talk about indications maybe for a reason, but just looking at the literature and potential targets for a potent soluble molecule here, there's some pretty big indications, hypertension, heart failure, maybe some diabetes indications. Are you looking at something as more broad or more of a targeted indication? Thanks.

Well, let me answer the second part first. We've got to take some baby steps before we go to the sprint and marathon. We understand how to develop NHE3 inhibitors exceedingly well. The characteristics of the molecules are extremely unique, and the fact that we've got one that's as soluble and potent as this does open up the opportunity to consider things like what you just described. It is premature for us to consider what indications until we go through these initial steps. And as I said in my comments, the ability that we now have to invest in what we have created in NHG3 Innovations is an incredible strength. And, you know, all headed off questions that I'm sure are going to come is that this is well within our ability to spend and get it to the phases of development as we take advantage of the engine that Israel is. To your questions about Israel, and I'll ask Eric to comment as well. You know, I think as we spoke in the past, Chris, The indication in our clinical work was first line, right? So there is nothing in our label, nothing in our clinical work that says it cannot be first line. And the growth that you see in that is completely organic. When we started this effort to commercialize Absrella, we made the intentional decision to position it in a way that is second and third line because no matter what we did with PVMs and formularies, we would never be first line because we wouldn't generate the kind of revenue to supplant what they're getting from current first line therapies. So we are seeing that organic growth because it is a good drug and experience with physicians who are writing the scripts are being successful in driving those through. There are millions of patients on GCC Agnes right now, 80% or more of which are dissatisfied with their therapy. The market could grow no more, and we would still be able to meet our objectives and the projections that we've had. I think it's a really important way to think about the business is we, because of the way that we've approached this, our target and our commitment to a billion dollars or more is based upon second-line therapy. We establish patients that are there and the call points that Eric and the team are pursuing. Anything to add to that, Eric?

Thanks, Chris, for the question. Yeah, the only thing that I would add to that, Mike, is, you know, we're coming off a third quarter where we've got all-time highs and new riders and total riders. So clearly, we are doing a great job of expanding breadth and depth and utilization of Ipsrella. And with that comes confidence in the product when they see the results and the impact that it can have with patients. As you mentioned, we know that more than 75% of the physicians or patients that are out there are continuing to experience symptoms. So they need something different. And so we remain committed to our strategy. We're pleased to see that it does get some utilization first line, as you noted, that we're indicated from a first line basis. But we remain committed and very confident with what we saw in Q3 and the momentum that we're generating coming into Q4.

Thank you. Next, we have Yagal from Citi.

Hi, this is Juwon Kim on for your call. Congrats on the quarter and thanks for taking our question. Maybe just two quick ones for us. I know you had commented on solubility and potency, but just wondering if you could provide a little bit more color on what 531 is hoping to solve that was suboptimal versus tenacumil.

So versus tenafinor is one way to look at it. When you have highly soluble, gut-restricted drugs, you may have better penetration into the target of NHG3. So solubility matters to have a molecule do what it needs to do where you're trying to target it. Potency will bring you lower doses or better efficacy, and that's exactly the preclinical work that we're embarking upon is to understand how best to leverage those qualities of this molecule. And as I said in the previous question, it's premature for us to speak as to whether or not is to answer questions that Tenapenor can't or if there are other indications that make more sense to pursue.

Gosh, maybe just one more, if I may. It seems like Israel is really continuing to take off, due in part to the investment into the sales force. And so just wondering, as you're seeing that there's still a big opportunity there, is there any consideration for perhaps increasing the sales force even further beyond what you had already done to reach that peak 750 as early as possible?

I mean, just a general comment, I'll ask Eric to comment on the specifics. Every day we think about where else we can invest in this growth and this opportunity because what we see here in terms of the benefits providing patients, the organic growth that the previous question had in terms of moving into first line, this is a very good drug that's helping a lot of people and there are a lot of people that aren't being helped by it yet because of the breadth, depth, and reach. There are many ways to communicate with those HCPs and those patients and that broad-based approach is what we will always consider. So we will always look at new and better ways to penetrate, but certainly investing, those considerations of investing in whether it's the FAMS or Salesforce is something that Eric always considers.

Yeah, thanks for that question. As Mike said, we're constantly, you know, looking at the data to see where we can, you know, we can continue to drive growth and value. You know, as we're looking at the sales force, just recall, we're now about three to four full quarters in with the expanded sales force. And what they've done is really raised the bar. So right now, I've got great confidence in this team. We're well on our path to achieve one billion peak year sales. And as we go into Q4, I feel really confident about where the team is, you know, We'll continue to look at the size of the field team, but we remain confident there. And also just want to take the opportunity to remind you, it's not just the field team. We've got great marketing initiatives out there. We've got a wonderful field access manager team that's focused on pull-through. It's really a team effort out there that's driving the growth of Hitrella.

Fantastic. And congrats on the quarter again, guys. Appreciate it.

Thank you. Next, we have Rowena Reese from Blearing Partners.

Hey, everyone. Good afternoon. So, a couple from me. One for thinking about Isrella. What pushes and pulls could impact your ability to reach the high versus low end of your new guidance? And it did sound like you're making great strides with new and repeat prescribers as well. Could you give us a little bit more color, like what's resonating there?

yeah i mean i i think the the guidance reflects our con our confidence in what we are doing with all the questions you've heard previously um so i think that increased guidance in the range that we've provided is to show you our confidence in what we're going to deliver this year um i think eric can go into some more of the specifics around it um but that should speak for itself i think rana you've known us over the years that we've taken a pretty conservative approach in the way that we provide these numbers And what we do is give you numbers that we are confident that we're going to meet. And that's been consistently the way we've approached it over the years.

Yeah, like I said earlier, we're very confident in the strategy we have. If you think a little bit about what I mentioned earlier, we know that there are billions of patients out there that have been on or are on secretagogues. And again, more than 75% of those patients continue to experience symptoms of IBSC. And what they need is something different. We know that this is a multifactorial disease, and so they need something that potentially offers a different mechanism. with a proven safety and efficacy profile. I mentioned the poster at the American College of Gastroenterology that was just presented, showing that more than 85% of the patients out there were satisfied with Ipsrella. So we have a great opportunity out there to address a high unmet need in this patient population, and we continue to be confident with this strategy.

Got it. Thanks. And one question on 531. It did sound like it's just the beginning of building the pipeline. I was curious if there are any other targets or molecules that you're interested in or would consider? And is external BD also an option?

Well, yeah, I mean, to the second part first is, as you know, just under two years ago, we brought in Mike Kelleher to lead our corporate development efforts. And he and his team are always looking and speaking to opportunities that are out there. And we will pull the trigger on things when the right thing is there for us. As I said in my opening comments, we're now at a place where we could look at these assets that we had sitting on the shelf because they're really good. Are there other ones? There may be, but our focus at this point for our internal pipeline, generated pipeline, is 531.

Makes sense. Thanks.

Thanks, Rana. Our next question comes from Dennis Ding of Jefferies.

Hey guys, congrats on the quarter. Two questions for me. One on Epsirella. You guys are running trials in peds less than 18 years old. Can you help frame the size of that market versus the adults and if that is already accounted for in your 1 billion peak sales guidance? And also maybe comment on the timing of clinical trials to go into CIC. And then number two on Xposa, congrats on the progress there. But, you know, there's still quite a large gap between where Xposa is now and the $750 million you guys are guiding. What are things that are within your control to really accelerate that? Thank you.

Sure, and thanks for the question, Jonas. So from the top, you know, if you look at where we are with Obsrella and Xposa, Sorry, the pediatric trials were a commitment that you have to make to the agency. I think if you look at the total prescriptions that are out there for IBSC, it includes those. So the market that we're all penetrating is relatively small, but any IBSC drug, those are included in the prescriptions there. We've not specified whether or not we are counting on that to get to the billion, because we're just looking at the total market as the market that we're penetrating. For CIC, we've not spoken of doing anything there. It's obviously, as I spoke in your last meeting in London, that is obviously one that we would consider. As we have the ability to pay for it, those are the sorts of things we will look at. As it relates to EXFOSA, I think as we've talked about this, It's important to note that when we ended last year, we lost 60% of the revenue that was being generated by Xfosa in an incredibly tumultuous market for these patients that are depending upon effective phosphorus management to survive in many cases. So that turmoil is real. It's significant. And we just put numbers on the board that are as good, if not better, even having lost that 60% of the revenue for the entire portfolio. So the strength of this team and what we've done, I think, is what you see in the results that we're speaking of today. We have great confidence in our ability to get to $750 million. I will leave it at that because we've spoken about the specifics numerous times. It's a third of the TAM that we now have of 220,000 patients is what is required to $750 million. If the need is as extensive and significant as we believe it is and demonstrated both by the paying and the patient assistance program patients, the turmoil that's about the period is turmoil. Once you get past that, likely that's going to change.

Okay, thank you.

Laura Chica from Wedwich Securities has our next question.

Hi, good afternoon. This is Thomas for Laura Chico. Thank you so much for taking our questions today. This one from us, you discussed growth to net for 3Q earlier for exposure. Any thoughts on growth to net dynamics heading into 2026 and how might this compare to 2025 levels?

our thank you thomas so our gross net was approximately 29 29 for q3 um and we do think that will be somewhat consistent going to q4 we're not in a position yet to discuss specifics around 2026 look for us to update that in early 2026. okay i missed it thank you again for the questions next we have matthew caulfield from hc wainwright

Great. Hi.

Thank you, guys. When we think about Exposa and getting those prescriptions filled, should these essentially be primarily filled through our delux assist and the patient's pharmacy at this stage, or are there scenarios where the drug could come through the dialysis center experience despite being external to the bundle, for example? Just trying to kind of best understand the patient journey there to access and growth. Thanks.

Yeah, sure. That's an important question, I think, to really understand how we can make sure that these patients have access. So as we said earlier, we remain committed to access for these patients regardless of who the payer is. On the non-Medicare side, it's covered through their prescription benefit. Our Deluxe Assist can adjudicate it, and they can also work with specialty pharmacies to deliver to the patient. On the Medicare side, our DelixAssist can fulfill that through our patient assistance program. Because we did not file for Tdapa, the dialysis organizations are not buying and billing it. Important to note, though, what we've seen is actually increased access when we think about patients, whether they're Medicare or non-Medicare. So more patients today have access to Exposa than they ever have before. So I think it's important to note that we've got a path to access for these patients, and we're continuing to be able to address the unmet need for them.

got it understood thank you that's helpful thanks for the question our next question comes from joseph toby of td cowan

Hi there. Good evening. Congrats on the progress, and let me add my best of luck to Justin. Thank you for taking our questions. Maybe the first one, on the new program, I guess, anything that you can share on the profile of this drug, whether it's extended release, or is there a way to, I guess, improve tolerability? Obviously, the NHA3 mechanism does result in some diarrhea, I guess. Is that able to be modulated, given that it's kind of inhibited?

Joe, great question. Those are obviously the things that you begin to explore in the preclinical work that you're doing. We have obviously years and years of experience and knowledge around the translation of what you see in animal models all the way through to human experience. Obviously, that's one thing that we would look at. The benefit that we together have learned about what NHG3 inhibition does, it's blocking sodium. Fundamentally, that's what it does. Then it's tightening the junctions. Gosh, and that's where it works in phosphorus. That was not predictable. And geez, it also has a benefit in pain, which one would never assume that that was the case until you start the IBSC work. Those three different things that this molecule, NH3 inhibition, does, does open a vista for lots of things to consider, contemplate exactly around the lines of what you've questioned. But time will tell. It is early, early in the process, but we were excited to announce its development.

yeah and a little bit related to that um i guess maybe can you talk a little bit about why why now is the the right time i guess did you see anything pre-clinically um that you can share that kind of triggered the announcement or anything in the field i guess um or is it just kind of continued progress and now is the now i guess any any thing well i mean i kind of talked about it in a couple previous questions is you know you look at the balance sheet that we have you know we've not raised any money for years um and it's it's on the

basis of what we're driving with Israel and Exposa, that the balance sheet is as strong as it is. We had a very short dip after the start of the Tdapha period, and we're back with a balance that is what was prior to the start of the Tdapha period. That's an incredible accomplishment. That then said to me and the team, we can begin to afford to explore other things that we might be able to do to build this company. And 531 was an obvious choice because it was something we knew pretty well, and we began to pursue that. So I think, as you heard in my comments, I think this demonstrates that we've been extremely good and thoughtful stewards of the capital that we have. And I think this is an example of how we plan on deploying.

Perfect. Thank you very much.

Thanks, Joe. Our next question comes from Julian Harrison of BTIG.

Hi. Thank you for taking my questions. It's great to see another beaten race for Ipsbrella. You're at more than 70% year-over-year growth at the lower end of the new range for 2025. So I guess looking to next year and beyond, I'm curious to what extent you think this cadence of growth can persist. And then looking towards the intellectual property state, are you at a point now where you can talk more about how you're exploring extending exclusivity potentially beyond composition of matter? Are there any pending patent applications that you would highlight as potentially being Orange Book eligible?

Yeah, great questions. It is exactly what we are doing and should be doing to protect the franchise that we're building. Yes, of course, those things are all the things that we will contemplate and talk about when we can. I think what's important about your question is the growth that you see as you described for Izrella, the potential is spectacular, right? If you look at the number of scripts that we have compared to the market that's out there and the growth that is being driven by the need that's out there for the patients by Linzess and others, that is to our benefit over time. So our belief is that Reaching that billion dollars is something that's well within our control, or we wouldn't have said that we expected to be there. I think as we gain and continue to gain more perspectives and guidance, we can provide more guidance on when and how that is achieved. We're excited about the future for Israel and what we're doing now, certainly with IBSC and hyperphosphatemia with Xfosa. So this mechanism, these drugs are making a huge difference, and it's the work that Eric and his team are doing to show that conviction in physicians and getting those prescriptions pulled through.

Excellent. Thank you, and congrats on the quarter.

Thank you. Next, we have Aidan Heusenop of Lattenburg-Tallman.

Hi. Good afternoon. Thanks for taking questions, and congrats with a great commercial quarter. So regarding business development activities, I'm just curious on the kind of assets you're looking for. Is it more like a GI space or is it more like an early stage, phase one preclinical or would you prefer something like phase three, plug and play or complementary to your commercial portfolio?

So the answer is yes to all of that at the right time. We're going to take some baby steps as we can begin to afford to do more. The natural thing is to look at the therapeutic areas and the close adjacencies of the therapeutic areas that we're currently in. like any biotech company, we're going to be opportunistic as something demonstrates itself. Me too is not very interesting. Even me better, not very interesting. I think this very special and unique way that we approach commercialization is a really important driver of the considerations that we have for things to bring in. So that's the lens from which we look at things. And I think in the coming year, for sure, you're going to be hearing much more of that as we get our legs under us and look at opportunities that we are confident that we will bring in.

Thank you, Mike. And one more question, general question for me. So you're making almost 400 million in NOS sales. You give about 75 billion long-term guidance, and yet you're trading on 1.2 billion market cap. So what do you think the market is underestimating, the long-term guidance itself or the future after 2033? Just curious on your thoughts on this.

I'll be completely transparent, and we've talked about this before. I think there's an over-index on Xposa, not giving this engine that we have at Zrella the attention that it's due. What you see in terms of the growth and the benefit that it provides us in profit and operating cash for us to reinvest in the business, whether it is to expand our capacity and capabilities on the commercial side. We will be thoughtful and measured in that. But also, as we look at other things to bring in, it is something that we are looking forward to as we are on the cusp of generating that kind of free cash to build this company even further. So, I think we don't get that credit. I think if you look at many of the buying the sell side, they are expecting at LOE, we may or may not make a billion. So there's no consistency even in the way that people look at this product or products and whether or not they're giving them their due and the modeling that they do. And that's our job, right? To also work with each of you to work on that. But I think it's a I hope by now we're beginning to get out of the penalty box of we're a show-me story. I think we've shown everyone again and again and again a meet and beat, and that this is a substantive, big, and important market, certainly for Ibsrella. And as I said in my opening remarks, expose as a contributor to that portfolio, and we'll only continue to provide better contribution over time.

All right. Thanks, Mike.

Next, we have Prakhar Agrawal of Cantor Fitzgerald.

Hi, this is Daz. I'm for Prakhar. Could you comment on any potential tailwinds or headwinds in 2026 that we should be aware of for Absarola and Xozo? Thank you.

I can't think of any. You know, I think we're looking forward to getting out of the... auspices of what the bundle is doing for these patients and being able to help them to the degree that we believe we can and should. The turmoil is significant, so I think that's not a headwind. I think that's a tailwind that ultimately is going to help us as we emerge from 26 with this remarkable product. I think they're only tailwinds for both of them. Not only because I'm an optimist, but I think everything that we're sharing with you today says that we've got the wind in our sails that are going to help us, propel us to, at a minimum, the guidance that we've given for peak for both.

And that concludes our question and answer session. With that, I'll turn the program back over to our host for any closing comments.

Thank you everyone for joining the call today. We enter the fourth quarter with confidence in our strategy and enthusiasm for the future. We have the medicines, the focus on execution, and the team in place to deliver on our vision of a healthier tomorrow for patients. I'd like to recognize our employees, the people behind every number that we shared today. Their hard work, ingenuity, and resilience continue to drive our success. Together, Team Ardelix is determined to make a difference. I'd like to end by thanking our shareholders for your continued trust and support. We remain focused on driving sustainable growth and creating long-term value for you. With that, we can close the call. Thank you.