Ardelyx (ARDX -1.29%), a biopharmaceutical company focusing on innovative treatments for unmet medical needs, released its third-quarter earnings on Oct. 31. The company reported substantial revenue growth driven by its two approved products, Ibsrela and Xphozah. Total revenue reached $98.2 million topping analysts' consensus estimate of $86.64 million. Although the company recorded a slight net loss of $800,000, translating to about $0.003 per share, that was better than the loss of $0.049 per share that analysts had forecast. The company sustained its growth despite rising commercialization expenses and impending regulatory challenges.
| Metric | Q3 2024 Results | Q3 2024 Analysts Estimate | Q3 2023 Results | % Change (YOY) |
|---|---|---|---|---|
| Total revenue | $98.2 millon | $86.64 millon | $56.4 millon | 74.1% |
| Ibsrela sales | $40.6 millon | N/A | $22.3 millon | 82.5% |
| Xphozah sales | $51.5 millon | N/A | $0 | N/A |
| Net income | ($800,000) | ($0.049 per share) | $6.6 millon | N/A |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview
Ardelyx specializes in developing treatments for conditions relating to impaired electrolyte regulation, including irritable bowel syndrome and chronic kidney disease. Its two approved products, Ibsrela and Xphozah, drive its revenue, supported by strategic collaborations internationally. These products face regulatory and government-driven headwinds, particularly relating to Medicare's reimbursement policies and coverage of them.
Ardelyx aims to leverage partnerships and collaborations globally to diversify its revenue streams while managing costs to maintain its financial health.
Quarterly Highlights
In Q3 2024, Ibsrela's sales grew to $40.6 million, rising 15% quarter over quarter due to increased prescription volumes and awareness. They also nearly doubled year over year, underscoring robust demand and an effective market strategy.
Xphozah, which earned FDA approval in October 2023, generated $51.5 million in net sales in Q3, a 39% increase from the previous quarter. This highlights the drug's role in catering to unmet needs among dialysis patients. However, looming changes in how Medicare will handle reimbursement for the drug will create challenges.
While sales were strong, operating expenses were elevated. Selling, general, and administrative (SG&A) costs rose significantly to $65 million from $32.7 million in the prior-year period, largely due to the company's increased commercialization efforts.
Ending the quarter with $190 million in cash and investments on its books, Ardelyx remains in a stable financial position.
Financial Outlook and Future Considerations
Management anticipates full-year 2024 sales for Ibsrela will land between $145 million and $150 million. The company is focused on navigating the headwinds related to Medicare's plan to end Part D reimbursement for Xphozah, and is taking legal action in response.
In future quarters, investors should monitor how international partnerships impact the company's revenues, as well as developments on the Medicare and regulatory fronts. Increased expenses must be balanced against revenue gains to sustain profitability and continued market growth.
