On Wednesday, Jefferies sustained their Buy rating and $11.00 price target for Ardelyx, Inc. (NASDAQ: NASDAQ:ARDX), expressing confidence in the company's ability to navigate the challenges surrounding its kidney disease drug Xphozah. Management remains optimistic about the growth in patient demand for Xphozah, despite potential changes in reimbursement.
The firm noted that while the litigation with the Centers for Medicare & Medicaid Services (CMS) is not fully resolved, management plans to challenge or appeal the recent dismissal motion. Ardelyx could present a motion to reconsider, highlighting flaws in the judge's decision, which could potentially lead to a preliminary injunction (PI) or summary judgment. Alternatively, an appeal to the Circuit could result in a stay before January 1, 2025, to prevent irreparable harm, leaving open the possibility of a PI by year-end.
Progress in the legislative arena was also highlighted, as House and Senate bills related to Xphozah have been gaining bipartisan support. Management anticipates that a minibus or omnibus bill package could pass by year-end, which could be more likely with a potential Republican majority in Congress. The original bill proposed a delay in bundling until 2033, but was shortened to a two-year delay, suggesting that future bills might also seek to postpone bundling.
Ardelyx is also preparing for the possibility of Xphozah entering the Medicare bundle in 2025. The company's representatives are actively communicating with doctors to ensure continued access to the drug. Medicare prescriptions will be processed through Ardelyx's patient assistance program, ArdelyxAssist, and filled at an external specialty pharmacy.
The program has been expanded to handle an anticipated increase in prescriptions starting January 1, 2025. Additionally, continuity of care programs will automatically enroll Medicare patients, offering two months of free medication.
The firm acknowledges the near-term uncertainties but remains confident in the stock's potential for recovery as the market enters 2025. Management's proactive strategies and legislative support are key factors contributing to this outlook, despite the cautious stance of investors.
In other recent news, Ardelyx, Inc. has seen some significant developments. The company reported a notable increase in total revenue to $98.2 million in Q3 2024, up from $56.4 million in Q3 2023, largely due to strong sales of its key products, IBSRELA and XPHOZAH. Additionally, Ardelyx has managed to narrow its net losses to approximately $800,000 while maintaining a strong cash position of $190.4 million.
However, the company faces challenges with Medicare coverage for XPHOZAH, leading H.C. Wainwright to downgrade Ardelyx shares from a Buy rating to Neutral, citing expected sales decline for XPHOZAH starting in Q1 2025. This follows a court decision dismissing a lawsuit filed by Ardelyx, potentially impacting Medicare patients who represent a significant portion of the market for XPHOZAH.
In response to these developments, Ardelyx has been actively advocating for the Kidney Patient Act and has completed the expansion of the IBSRELA sales team, expecting full effects in early 2025. Recently, the company also announced the appointment of Joseph Reilly as the new Principal Accounting Officer, ensuring a smooth transition of responsibilities.
InvestingPro Insights
Ardelyx, Inc. (NASDAQ: ARDX) is showing promising signs of growth and financial stability, according to recent data from InvestingPro. The company's revenue growth is particularly noteworthy, with a 87.57% increase in the last twelve months as of Q3 2024, and a 74.21% quarterly growth in Q3 2024. This aligns with the article's discussion of increasing patient demand for Xphozah.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year, with 6 analysts revising their earnings upwards for the upcoming period. This positive outlook supports Jefferies' Buy rating and $11.00 price target mentioned in the article.
Despite these positive indicators, it's important to note that Ardelyx is not currently profitable, with an operating income margin of -25.44% in the last twelve months. However, the company's liquid assets exceed short-term obligations, suggesting a stable financial position as it navigates the challenges surrounding Xphozah's reimbursement.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for Ardelyx, providing deeper insights into the company's financial health and market position.
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