ARDELYX, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the condensed financial statements and notes thereto included elsewhere in this report and with the audited financial statements and related notes thereto included as part of our 2025 Form 10-K. This discussion and analysis and other parts of this report contain forward-looking statements that involve risk and uncertainties, such as statements of our plans, objectives, expectations and intentions. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this report titled “Risk Factors.” These forward-looking statements speak only as of the date hereof. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason. Unless the context requires otherwise, the terms “Ardelyx,” “Company,” “we,” “us” and “our” refer to Ardelyx, Inc. EXECUTIVE SUMMARY We are a commercial-stage biopharmaceutical company focused on the development and commercialization of innovative medicines that meet significant unmet medical needs. We currently market two therapies from the active ingredient tenapanor, an NHE3 inhibitor that was discovered and developed by Ardelyx. NHE3 is an antiporter expressed on the apical surface of the small and large intestines. Tenapanor is a minimally absorbed, small molecule therapy. We are committed to our mission of developing and commercializing innovative medicines that address unmet patient needs. Our principal strategy is to continue our commercial momentum with our current products while advancing and expanding a portfolio of important medicines for patients with unmet medical needs. Our priorities include (i) driving significant IBSRELA growth, (ii) maintaining XPHOZAH commercial momentum, (iii) further advancing our pipeline and portfolio and (iv) maintaining a solid financial foundation to support our future growth. Tenapanor, branded as IBSRELA ® , is approved in the U.S. for the treatment of adults with IBS-C. We believe that IBSRELA can bring meaningful benefit to the approximately 13 million Americans who suffer from the symptoms of IBS-C, 17 Table of Contents many of whom continue to experience symptoms despite intervention with other therapies. We are seeking to further expand the IBSRELA eligible patient population to include patients with CIC, and have initiated a Phase 3 clinical trial (ACCEL) evaluating tenapanor in adult CIC patients. In January 2026, the Company dosed the first patient in ACCEL and has initiated all pre-identified sites. The Company expects to complete enrollment by the end of 2026 with topline data read out in the second half of 2027. IBSRELA is also being evaluated in multiple pediatric clinical trials which could potentially provide six months of additional patent life for tenapanor. Tenapanor, branded as XPHOZAH ® , is approved in the U.S. to reduce serum phosphorus in adults with chronic kidney disease on dialysis as add-on therapy in patients who have an inadequate response to phosphate binders or who are intolerant of any dose of phosphate binder therapy. We believe XPHOZAH can bring meaningful relief to adult chronic kidney disease patients on dialysis, the vast majority of whom have elevated levels of serum phosphorus and are unable to achieve target serum phosphorus levels with phosphate binders alone. Continually elevated levels of serum phosphorus can result in severe cardiovascular health complications. We are also developing a next-generation NHE3 inhibitor, RDX10531, which has demonstrated in preclinical models to have improved solubility and potency compared to tenapanor. RDX10531 is currently being tested in IND-enabling studies. If successful, RDX10531 has potential for broad applications across multiple therapeutic areas. Effective as of April 28, 2026, we entered into the Sixth Amendment with SLR as collateral agent and the lenders party thereto, resulting in a collectively reduced interest rate under all term loans, including the term loans we have the future option to draw from, and an extended maturity date for the outstanding term loans. For additional information, refer to Note 15. Subsequent Events . Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for definitions of terms used throughout the document. RESULTS OF OPERATIONS The results of operations for the three months ended March 31, 2026 are not necessarily indicative of results to be expected for the entire year ending December 31, 2026, or for any other interim period or future year. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2025 Form 10-K to enhance the understanding of our financial metrics below. Revenues Below is a summary of our total revenues: Three Months Ended March 31, Change 2026 vs. 2025 ($ in thousands) 2026 2025 $ % Product sales, net $ 93,373 $ 67,814 $ 25,559 38 % Non-cash royalty revenue related to the sale of future royalties 695 1,026 (331) (32) % Product supply revenue 354 254 100 39 % Licensing revenue 51 5,020 (4,969) (99) % Total revenues $ 94,473 $ 74,114 $ 20,359 27 % Below is a summary of our product sales, net by product: Three Months Ended March 31, Change 2026 vs. 2025 ($ in thousands) 2026 2025 $ % Product sales, net IBSRELA $ 70,074 $ 44,403 $ 25,671 58 % XPHOZAH 23,299 23,411 (112) — % Total product sales, net $ 93,373 $ 67,814 $ 25,559 38 % Product sales, net: The increase in IBSRELA product sales, net in the three months ended March 31, 2026 primarily reflected higher demand, driven by continued increase in awareness and prescriber experience, and to a lesser extent, higher net price. 18 Table of Contents XPHOZAH product sales, net in the three months ended March 31, 2026 remained consistent with the prior year and reflected continued growth in other non-Medicare sales channels. XPHOZAH product sales, net in the prior year included a $3.8 million favorable adjustment driven by a change in previously estimated product returns. Product supply revenue: Product supply revenue is primarily impacted by the timing of product supply shipments to our collaboration partners under our product supply agreements in support of the development and commercialization of our products ex-U.S. by our collaboration partners. The product supply revenue was primarily attributable to Fosun Pharma and Knight in the three months ended March 31, 2026 and 2025, respectively. Licensing revenue: Licensing revenue is primarily impacted by the timing of regulatory and commercialization milestone achievements as well as sales-based royalties received from our collaboration partners. The licensing revenue in the three months ended March 31, 2026 was attributable to sales-based royalties received from Fosun Pharma and Knight. The licensing revenue in the three months ended March 31, 2025 was primarily attributable to a $5.0 million milestone earned under the terms of the Fosun Agreement, following the NDA approval by China’s Center for Drug Evaluation of the NMPA for tenapanor in the control of serum phosphorus in adult patients with CKD on hemodialysis. Non-cash royalty revenue: The decrease in non-cash royalty revenue in the three months ended March 31, 2026 reflected lower royalties received from Kyowa Kirin for sales of PHOZEVEL in Japan. GTN Adjustments Reconciliation of gross product sales to product sales, net is as follows: Three Months Ended March 31, Change 2026 vs. 2025 ($ in thousands) 2026 2025 $ % Gross product sales $ 146,618 $ 96,732 $ 49,886 52 % GTN adjustments (53,245) (28,918) (24,327) 84 % Product sales, net $ 93,373 $ 67,814 $ 25,559 38 % GTN adjustment percentage 36.3 % 29.9 % The increase in GTN adjustment percentage in the three months ended March 31, 2026 primarily reflected the prior year favorable impact of a change in previously estimated XPHOZAH product returns, an unfavorable channel mix and Medicare and Medicaid Inflation Rebate charges. The activities and ending reserve balances for each significant category of GTN adjustments on product sales, net, which constitute variable consideration, were as follows: (in thousands) Discounts and Chargebacks Rebates, Wholesaler and GPO Fees Copay Assistance and Returns Total Balance as of December 31, 2025 $ 1,693 $ 34,456 $ 9,274 $ 45,423 Provisions (1) 8,205 29,969 15,071 53,245 Credits/payments (7,753) (25,012) (12,475) (45,240) Balance as of March 31, 2026 $ 2,145 $ 39,413 $ 11,870 $ 53,428 (1) Adjustments to prior period provisions recorded in the current period were not material. 19 Table of Contents Costs and Expenses Below is a summary of our costs and operating expenses, interest expense, non-cash interest expense related to the sale of future royalties and other income, net: Three Months Ended March 31, Change 2026 vs. 2025 ($ in thousands) 2026 2025 $ % Cost of sales $ 4,811 $ 12,303 $ (7,492) (61) % Research and development 20,188 14,938 5,250 35 % Selling, general and administrative 102,267 83,222 19,045 23 % Total costs and operating expenses $ 127,266 $ 110,463 $ 16,803 15 % Interest expense $ (5,599) $ (4,191) $ (1,408) 34 % Non-cash interest expense related to the sale of future royalties $ (1,317) $ (2,071) $ 754 (36) % Other income, net $ 2,112 $ 2,326 $ (214) (9) % Cost of Sales Three Months Ended March 31, Change 2026 vs. 2025 ($ in thousands) 2026 2025 $ % Cost of product sales $ 2,875 $ 2,340 $ 535 23 % Other cost of revenue 1,936 9,963 (8,027) (81) % Cost of sales $ 4,811 $ 12,303 $ (7,492) (61) % The increase in cost of product sales in the three months ended March 31, 2026 reflected higher product sales. A portion of the costs of IBSRELA and XPHOZAH units recognized as revenue during the three months ended March 31, 2026 was expensed as research and development expense in periods prior to the commencement of capitalization of inventory costs for each respective product. The cost associated with inventory sold but previously expensed as research and development was $0.3 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively. The value of inventory on hand as of March 31, 2026 and December 31, 2025 that was previously expensed as research and development was approximately $7.1 million and $10.9 million, respectively. The decrease in other cost of revenue in the three months ended March 31, 2026 primarily reflected the full recognition of the maximum $75.0 million royalty obligation under the AstraZeneca Termination Agreement as of the end of the 2025 second quarter, partially offset by higher costs related to capacity expansion at our CMOs. Other cost of revenue related to the AstraZeneca Termination Agreement was $8.8 million for the three months ended March 31, 2025. Research and Development Below is a summary of our research and development expenses: Three Months Ended March 31, Change 2026 vs. 2025 ($ in thousands) 2026 2025 $ % External R&D and other expenses $ 9,328 $ 4,202 $ 5,126 122 % Employee-related expenses 9,870 9,455 415 4 % Facilities, equipment, depreciation and other expenses 990 1,281 (291) (23) % Total research and development expenses $ 20,188 $ 14,938 $ 5,250 35 % The external R&D and other expenses consist primarily of expenses associated with life cycle management initiatives for tenapanor, including our CIC program. The increase in external R&D and other expenses in the three months ended March 31, 2026 reflected increased clinical trial activities, including the initiation of the Phase 3 clinical trial evaluating tenapanor in adult CIC patients. 20 Table of Contents Selling, General and Administrative The increase in selling, general and administrative expenses in the three months ended March 31, 2026 primarily reflected increased commercialization and administrative costs to support net sales growth of IBSRELA, consisting of external spending for disease awareness initiatives, patient affordability, access support and related patient awareness, as well as increased commercial infrastructure costs. The increase was also attributable to increased headcount, including an incremental stock-based compensation expense of $3.1 million. Interest Expense The increase in interest expense in the three months ended March 31, 2026 primarily reflected a higher outstanding loan balance resulting from the Term E Loan draw in June 2025. Non-Cash Interest Expense Related to the Sale of Future Royalties The decrease in non-cash interest expense related to the sale of future royalties in the three months ended March 31, 2026 primarily reflected the imputed interest accrued on the decreasing carrying value of the deferred royalty obligation and royalties received from Kyowa Kirin for sales of PHOZEVEL in Japan which were remitted to HCR. Other Income, Net The decrease in other income, net in the three months ended March 31, 2026 reflected lower income on our investments resulting from lower interest rates throughout the period, partially offset by higher investment balances. LIQUIDITY AND CAPITAL RESOURCES Below is a summary of our cash, cash equivalents and short-term investments: ($ in thousands) March 31, 2026 December 31, 2025 Change $ Change % Cash and cash equivalents $ 31,209 $ 67,999 $ (36,790) (54) % Short-term investments 206,865 196,690 10,175 5 % Total liquid funds $ 238,074 $ 264,689 $ (26,615) (10) % We regularly assess our cash position and our working capital needs to execute our strategy. We have historically funded our operations primarily from product sales, sales of our common stock, funds from our loan agreements with SLR, funds from our collaboration partnerships, as well as the sale of future royalties and commercialization milestones to HCR. We expect that we will increasingly rely on cash generated from our commercial operations to fund our operating plan while maintaining financial flexibility to source cash from future equity sales and debt financing. Sources of Liquidity In November 2025, we filed an automatic shelf registration statement on Form S-3ASR, which became effective upon filing, containing (i) a base prospectus, which covers the offering, issuance and sale from time to time in one or more offerings of our common stock, preferred stock, debt securities, warrants and/or units; and (ii) a prospectus supplement for the offering, issuance and sale of up to a maximum aggregate offering price of $100.0 million of our common stock that may be issued and sold from time to time under the 2025 Open Market Sales Agreement, deemed to be “at-the-market offerings.” Pursuant to the 2025 Open Market Sales Agreement, Jefferies, as sales agent, may receive a commission of up to three percent of the gross sales price for shares of our common stock sold under the 2025 Open Market Sales Agreement. As of March 31, 2026, there have been no sales of our common stock under the 2025 Open Market Sales Agreement. We have a loan and security agreement (the 2022 Loan Agreement) with SLR. The 2022 Loan Agreement provides a total of $300.0 million, of which $200.0 million has been drawn and is outstanding as of March 31, 2026. The additional available borrowings of $100.0 million consist of the Term F and Term G Loans, each in the amount of $50.0 million. The Term F and Term G Loans may be drawn at the Company’s election by June 30, 2026 and December 20, 2026, respectively. See Note 9. Borrowing of our 2025 Form 10-K and Note 8. Borrowing of this Quarterly Report on Form 10-Q for further information on our long-term debt. 21 Table of Contents Effective as of April 28, 2026, we entered into the Sixth Amendment with SLR as collateral agent and the lenders party thereto, resulting in a collectively reduced interest rate under all term loans, including the term loans we have the future option to draw from, and an extended maturity date for the outstanding term loans. For additional information, refer to Note 15. Subsequent Events . Cash Flow Activities The following table summarizes our cash flows: Three Months Ended March 31, Change 2026 vs. 2025 ($ in thousands) 2026 2025 $ % Net cash used in operating activities $ (32,237) $ (38,457) $ 6,220 (16) % Net cash (used in) provided by investing activities (9,995) 2,851 (12,846) (451) % Net cash provided by financing activities 5,442 1,482 3,960 267 % Net decrease in cash and cash equivalents $ (36,790) $ (34,124) $ (2,666) 8 % Cash Flows from Operating Activities Cash flows from operating activities represent the cash receipts and payments related to all of our activities other than investing and financing activities. Net operating cash flow is derived by adjusting our net loss for non-cash operating items and changes in operating assets and liabilities resulting from timing differences between the cash receipts and payments and when the transactions are recognized in our result of operations. As a result, changes in net operating cash flow reflect, among other things, the timing of (i) cash collections from our Customers and (ii) payments made in the normal course of business such as payments to suppliers, including our CMOs, CROs and government agencies. Net cash used in operating activities decreased in the three months ended March 31, 2026 primarily due to the timing of our payments and inventory purchases, partially offset by the timing of cash collections from our Customers. Cash Flows from Investing Activities Cash flows from investing activities include cash used for capital expenditures and purchases of short-term investments as well as net proceeds from asset dispositions and maturities of short-term investments. Net cash used in investing activities increased in the three months ended March 31, 2026 primarily reflected higher short-term investment purchases. Cash Flows from Financing Activities Cash flows from financing activities include net proceeds associated with our 2022 Loan Agreement, sales of our common stock with respect to the “at-the-market offering” programs and issuances of our common stock under our equity incentive plans. Net cash provided by financing activities increased in the three months ended March 31, 2026 due to higher proceeds from the issuance of common stock under our equity incentive plans. Funding Requirements Based on our current operating model, we believe our available cash, cash equivalents and short-term investments as of March 31, 2026 will be sufficient to fund our planned operations for at least a period of one year from the issuance of these financial statements. We have based this estimate on assumptions that may prove to be wrong and we could utilize our available capital resources sooner than we currently expect. In particular, our operating plan may change and we may require significant additional capital to fund our operations. There are no assurances that our efforts to meet our operating cash flow requirements will be successful. If our current cash, cash equivalents and short-term investments as well as our plans to meet our operating cash flow requirements are not sufficient to fund necessary expenditures and meet our obligations following the issuance of these financial statements, our liquidity, financial condition and business prospects will be materially affected. Our future funding requirements will depend on many factors as described in Part II, Item 1A, “Risk Factors,” of this Quarterly Report on Form 10-Q. 22 Table of Contents Contract Obligations and Commitments As of March 31, 2026, our total future payment obligation related to the outstanding balance of the term loans, excluding interest payments, was $209.9 million, which is due on July 1, 2028. As discussed in Note 15. Subsequent Events, effective as of April 28, 2026, we entered into the Sixth Amendment with SLR as collateral agent and the lenders party thereto. See Note 9. Borrowing of our 2025 Form 10-K and Note 8. Borrowing of this Quarterly Report on Form 10-Q for further information on our long-term debt. We have entered into various operating leases for our offices. As of March 31, 2026, our total undiscounted obligation for operating leases was $5.2 million, with maturities ranging up through July 2029. See Note 9. Leases for further information on our operating leases. We enter into a variety of contracts in the normal course of business. These contracts generally allow us to terminate on notice, reschedule or adjust our requirements based on our business needs prior to the delivery of goods or performance of services.