What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-04-30 · 100 added, 69 removed, 125 unchanged (57% of the section changed)

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Tenapanor is a minimally absorbed, small molecule therapy.

In addition, we are building a pipeline which is currently focused on expanding the commercial footprint of tenapanor.

We are committed to our mission of developing and commercializing innovative medicines that address unmet patient needs.

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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,

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.

We believe that IBSRELA can bring meaningful benefit to the approximately 13 million Americans who suffer from the symptoms of IBS-C, 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 adults with CIC.

In January 2026, we dosed the first patient in ACCEL and have initiated all pre-identified sites.

We expect to complete enrollment by the end of 2026 and to announce topline data in the second half of 2027.

IBSRELA is also being evaluated in multiple pediatric clinical trials which could expand its use and 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.

to reduce serum phosphorus in adults with CKD 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 CKD 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.

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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 .

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Effective April 28, 2026, we entered into the Sixth Amendment to our Loan Agreement with SLR as collateral agent and the lenders party thereto, resulting in better overall terms.

On June 26, 2026, the U.S.

Court of Appeals for the District of Columbia Circuit affirmed the District Court’s dismissal of our lawsuit against CMS related to CMS reimbursement classification of XPHOZAH.

We are not pursuing further litigation on this matter.

On June 29, 2026, we received $50.0 million of funding as a result of our draw down of the Term F Loan.

We elected to draw down the Term F Loan for general corporate purposes and to enhance flexibility to support our ongoing strategic initiatives, in line with our capital allocation strategy.

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.

The results of operations for the three and six months ended June 30, 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.

Below is a summary of our total revenues:

Three Months Ended March 31, Change 2026 vs.

Three Months Ended

June 30, Change

2025 Six Months Ended

June 30, Change

($ in thousands)

1 unchanged sentence

Product sales, net $ 118,129 $ 90,077 $ 28,052 31 % $ 211,502 $ 157,891 $ 53,611 34 %

Non-cash royalty revenue related to the sale of future royalties 695 1,026 (331) (32) %

Product supply revenue 1,976 6,185 (4,209) (68) % 2,330 6,439 (4,109) (64) %

Licensing revenue 96 20 76 380 % 147 5,040 (4,893) (97) %

Non-cash royalty revenue related to the sale of future royalties 676 1,380 (704) (51) % 1,371 2,406 (1,035) (43) %

Total revenues $ 120,877 $ 97,662 $ 23,215 24 % $ 215,350 $ 171,776 $ 43,574 25 %

Below is a summary of our product sales, net by product:

Three Months Ended March 31, Change 2026 vs.

Three Months Ended

June 30, Change

2025 Six Months Ended

June 30, Change

($ in thousands)

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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.

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.

The increase in IBSRELA product sales, net in the three and six months ended June 30, 2026 primarily reflected higher demand, driven by continued increase in awareness and prescriber experience, and to a lesser extent, higher net price.

The increase in XPHOZAH product sales, net in the three and six months ended June 30, 2026 primarily reflected higher demand and net price.

XPHOZAH product sales, net in the six months ended June 30, 2025 included a $3.8 million favorable adjustment driven by a change in previously estimated product returns.

Product supply revenue:

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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.

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The product supply revenue was primarily attributable to Fosun Pharma in the three and six months ended June 30, 2026.

In the three and six months ended June 30, 2025, the product supply revenue was primarily attributable to Kyowa Kirin.

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.

The licensing revenue was primarily attributable to sales-based royalties received from Fosun Pharma in the three and six months ended June 30, 2026.

The licensing revenue in the six months ended June 30, 2025 included a $5.0 million milestone earned in the 2025 first quarter 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.

The decrease in non-cash royalty revenue in the three and six months ended June 30, 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.

Three Months Ended

June 30, Change

2025 Six Months Ended

June 30, Change

($ in thousands) 2026 2025 $ % 2026 2025 $ %

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GTN adjustment percentage 34.0 % 31.3 % 35.0 % 30.7 %

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 increase in GTN adjustment percentage in the three and six months ended June 30, 2026 primarily reflected an unfavorable channel mix as well as Medicare and Medicaid Inflation Rebate charges.

The increase in GTN adjustment percentage in the six months ended June 30, 2026 reflected a $3.8 million favorable adjustment recognized in the 2025 first quarter, which was driven by a change in previously estimated XPHOZAH product returns.

The activities and ending reserve balances for each significant category of GTN adjustments on product sales, net, which constitute variable consideration, were as follows:

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Credits/payments (16,957) (58,732) (24,495) (100,184)

Balance as of March 31, 2026 $ 2,145 $ 39,413 $ 11,870 $ 53,428

Balance as of June 30, 2026 $ 2,719 $ 46,490 $ 10,162 $ 59,371

(1) Adjustments to prior period provisions recorded in the current period were not material.

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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.

Three Months Ended

June 30, Change

2025 Six Months Ended

June 30, Change

($ in thousands)

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Cost of Sales

Three Months Ended March 31, Change 2026 vs.

Three Months Ended

June 30, Change

2025 Six Months Ended

June 30, Change

($ in thousands) 2026 2025 $ % 2026 2025 $ %

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Cost of sales $ 5,759 $ 12,403 $ (6,644) (54) % $ 10,570 $ 24,706 $ (14,136) (57) %

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.

The increase in cost of product sales in the three and six months ended June 30, 2026 reflected higher product sales.

A portion of the costs of IBSRELA and XPHOZAH units recognized as revenue during the three and six months ended June 30, 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 $0.6 million for the three and six months ended June 30, 2026, and $1.0 million and $1.7 million for the three and six months ended June 30, 2025, respectively.

The value of inventory on hand as of June 30, 2026 and December 31, 2025 that was previously expensed as research and development was approximately $8.0 million and $10.9 million, respectively.

The decrease in other cost of revenue in the three and six months ended June 30, 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 and lower costs associated with product supply revenue.

Other cost of revenue related to the AstraZeneca Termination Agreement was $3.8 million and $12.7 million for the three and six months ended June 30, 2025, respectively.

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Research and Development

Below is a summary of our research and development expenses:

Three Months Ended March 31, Change 2026 vs.

Three Months Ended

June 30, Change

2025 Six Months Ended

June 30, Change

($ in thousands) 2026 2025 $ % 2026 2025 $ %

External R&D and other expenses

$ 9,328 $ 4,202 $ 5,126 122 %

External R&D expenses $ 13,942 $ 6,607 $ 7,335 111 % $ 23,270 $ 10,809 $ 12,461 115 %

Employee-related expenses 10,808 7,997 2,811 35 % 20,678 17,452 3,226 18 %

Facilities, equipment, depreciation and other expenses

990 1,281 (291) (23) %

Facility-related and other expenses 1,353 1,062 291 27 % 2,343 2,343 — 0 %

Total research and development expenses $ 26,103 $ 15,666 $ 10,437 67 % $ 46,291 $ 30,604 $ 15,687 51 %

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.

External R&D expenses consist substantially of costs associated with our life cycle management initiatives for tenapanor, with more than half of these costs attributable to our CIC program for the three and six months ended June 30, 2026, respectively.

External R&D expenses also include costs associated with early-stage, preclinical programs as well as unallocated program-specific costs, which were individually immaterial for the periods presented.

We begin to track program-specific costs for early-stage, preclinical programs once they become material, which generally occurs following IND and when clinical-stage work has commenced.

We do not track employee and facility-related expenses by program, as we typically use our employee and infrastructure resources across multiple R&D programs.

The increase in external R&D expenses in the three and six months ended June 30, 2026 reflected increased clinical trial activities, including Phase 3 clinical trials evaluating tenapanor in adults with CIC, as well as engagement with medical and scientific communities in the areas of gastroenterology and nephrology related to our marketed products.

The increase in employee-related expenses in the three and six months ended June 30, 2026 was primarily driven by increased headcount in connection with pipeline expansion activities as well as engagement with medical and scientific communities in the areas of gastroenterology and nephrology related to our marketed products.

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.

The increase in selling, general and administrative expenses in the three and six months ended June 30, 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 incremental stock-based compensation expenses of $3.1 million and $6.2 million in the three and six months ended June 30, 2026, respectively.

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.

The increase in interest expense in the three and six months ended June 30, 2026 primarily reflected a higher outstanding loan balance resulting from the Term E Loan draw at the end of June 2025, partially offset by the reduced interest rate under the term loans resulting from the Sixth Amendment to our Loan Agreement effective at the end of April 2026.

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.

The decrease in non-cash interest expense related to the sale of future royalties in the three and six months ended June 30, 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.

Other income, net remained materially unchanged in the three and six months ended June 30, 2026 and primarily consisted of interest income earned on our cash, cash equivalents and short-term investments.

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LIQUIDITY AND CAPITAL RESOURCES

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($ in thousands)

March 31, 2026 December 31, 2025 Change $ Change %

June 30, 2026 December 31, 2025 Change $ Change %

Cash and cash equivalents $ 97,191 $ 67,999 $ 29,192 43 %

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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.

Our capital allocation strategy includes (i) accelerating IBSRELA growth, (ii) investing in our current pipeline and (iii) maintaining financial strength.

Sources of Liquidity

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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.

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.

For additional information, refer to Note 15.

Subsequent Events .

As of June 30, 2026, there have been no sales of our common stock under the 2025 Open Market Sales Agreement.

We have a loan and security agreement with SLR (the Loan Agreement).

The Loan Agreement provides a total of $300.0 million, of which $250.0 million has been drawn and is outstanding as of June 30, 2026.

The additional borrowing of $50.0 million pursuant to the Term G Loan is available at our election to draw through December 20, 2026.

Borrowing for further information on our long-term debt.

Cash Flow Activities

The following table summarizes our cash flows:

Three Months Ended March 31, Change 2026 vs.

Six Months Ended June 30, Change 2026 vs.

($ in thousands)

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Net cash used in operating activities $ (38,636) $ (63,799) $ 25,163 (39) %

Net cash (used in) provided by investing activities (9,995) 2,851 (12,846) (451) %

Net cash provided by investing activities 12,666 37,774 (25,108) (66) %

Net cash provided by financing activities 55,162 51,138 4,024 8 %

Net decrease in cash and cash equivalents $ (36,790) $ (34,124) $ (2,666) 8 %

Net increase in cash and cash equivalents $ 29,192 $ 25,113 $ 4,079 16 %

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Cash Flows from Operating Activities

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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.

Net cash used in operating activities decreased in the six months ended June 30, 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.

Net cash provided by investing activities decreased in the six months ended June 30, 2026, primarily reflecting higher short-term investment purchases.

Cash Flows from Financing Activities

Cash flows from financing activities include net proceeds associated with our 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.

Net cash provided by financing activities included the receipts of the Term F Loan and the Term E Loan in the six months ended June 30, 2026 and 2025, respectively.

Net cash provided by financing activities increased in the six months ended June 30, 2026, primarily due to higher proceeds received 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.

Based on our current operating model, we believe our available cash, cash equivalents and short-term investments as of June 30, 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.

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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.

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.

As of June 30, 2026, our total future payment obligation related to the outstanding term loans, excluding interest payments, was $260.8 million, which is due on July 1, 2030.

Borrowing 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.

As of June 30, 2026, our total undiscounted obligation for operating leases was $4.7 million, with maturities ranging up through July 2029.

Leases for further information on our operating leases.

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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.

Critical Accounting Policies and Estimates

Our preparation of financial statements in accordance with U.S.

GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures.

We have discussed those policies and estimates that we believe are critical and require the use of significant judgment in their application in our 2025 Form 10-K.

We have made no material changes to our critical accounting policies or the methodologies or assumptions that we apply under them during the six months ended June 30, 2026.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis