On Friday, H.C. Wainwright adjusted its outlook on Ardelyx, Inc (NASDAQ:ARDX) shares, reducing the biopharmaceutical company's price target to $10 from the previous $13. The firm maintained a Buy rating on the stock.
The revision follows a recent announcement by the Centers for Medicare & Medicaid Services (CMS) regarding the Transitional Drug Add-on Payment Adjustment (TDAPA) for Ardelyx's kidney disease drug, XPHOZAH.
The CMS rule, proposed on June 27, 2024, established that XPHOZAH would receive the standard TDAPA for new renal dialysis drugs rather than the more favorable TDAPA designated for phosphate binders. Consequently, Ardelyx has opted out of the TDAPA program for the estimated 55%-60% of dialysis patients covered by Medicare or other government programs.
Ardelyx's management is now evaluating its next steps to ensure patient access to XPHOZAH. They are considering various options and believe they can potentially affect the passage of the Kidney Cares Act by the end of the year.
This act, if passed, would delay the bundling of oral phosphate binders until at least 2027. There is a possibility that access to XPHOZAH could be significantly restricted for most patients, but the management's decision to not participate in TDAPA suggests confidence in navigating these challenges.
Despite the heightened commercial risk until Ardelyx reveals its strategy and its financial impact, H.C. Wainwright sees no implications from Ardelyx's decision for other companies.
The firm specifically noted that there should be no negative read-through for Akebia Therapeutics' (NASDAQ:AKBA) products Auryxia and Vafseo, or for Unicycive Therapeutics' (NASDAQ:UNCY) phosphate binder, oxylanthanum carbonate, in terms of CMS reimbursement or planned TDAPA entry.
In other recent news, biopharmaceutical company Ardelyx, Inc. reported a significant increase in its product-related revenue for the first quarter of 2024, reaching $45.6 million, driven by its products IBSRELA and XPHOZAH.
Despite the commercial uncertainty surrounding Ardelyx's hyperphosphatemia treatment, XPHOZAH, Citi maintained a Buy rating on Ardelyx's stock, reducing the price target to $10 from $14.
Similarly, Ladenburg Thalmann held a Buy rating while reducing the price target to $12.50 from the previous $14.50, following a reassessment of XPHOZAH's market performance.
In a strategic move, Ardelyx decided not to include XPHOZAH in the Medicare Prospective Payment System (PPS), aiming to ensure patient access to the drug. Additionally, Ardelyx is supporting bipartisan legislation to extend the exclusion of oral-only medications from the Medicare ESRD PPS.
These recent developments reflect a recalibration of expectations for Ardelyx in light of new information regarding its commercial strategy. Despite these changes, both Citi and Ladenburg Thalmann maintain confidence in the company's long-term prospects.
InvestingPro Insights
Following the recent adjustments in Ardelyx, Inc's (NASDAQ:ARDX) projections by H.C. Wainwright, real-time data from InvestingPro provides a deeper understanding of the company's financial health and market performance. Ardelyx's market capitalization stands at approximately $1.24 billion, reflecting investor valuation of the company. Despite not being profitable over the last twelve months, analysts have revised their earnings upwards for the upcoming period, indicating potential confidence in the company's future performance.
The stock has experienced significant volatility, with a one-week total price return of -28.21%, which aligns with the firm's recent stock hit. However, it's worth noting that over the last year, Ardelyx has seen a high return of 56.47%. The company's revenue growth has been impressive, with a 152.32% increase over the last twelve months as of Q1 2024, and a staggering quarterly revenue growth of 304.81% in Q1 2024. This robust growth may be a positive sign for investors looking at the company's ability to scale.
InvestingPro Tips suggest that while Ardelyx operates with a moderate level of debt and its liquid assets exceed short-term obligations, the company is trading at a high Price / Book multiple of 8.25. Additionally, Ardelyx does not pay a dividend to shareholders, which might be a consideration for income-focused investors. For those interested in further analysis, more InvestingPro Tips can be found at https://www.investing.com/pro/ARDX, and users can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. With 10 additional tips available on InvestingPro, investors have ample resources to inform their decisions regarding Ardelyx's stock.
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