ARDELYX, INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS ARDELYX, INC. CONDENSED BALANCE SHEETS (in thousands, except share and per share amounts) (Unaudited) March 31, 2025 December 31, 2024 Assets Current assets Cash and cash equivalents $ 30,808 $ 64,932 Short-term investments 183,144 185,168 Accounts receivable 46,467 57,705 Inventory 23,776 21,173 Prepaid commercial manufacturing 13,848 16,378 Prepaid expenses and other current assets 14,649 11,096 Total current assets 312,692 356,452 Property and equipment, net 1,665 1,495 Inventory, non-current 82,099 70,011 Prepaid commercial manufacturing, non-current 3,246 — Right-of-use assets 3,670 2,380 Other assets 6,822 5,416 Total assets $ 410,194 $ 435,754 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 13,722 $ 16,000 Accrued compensation and benefits 7,168 14,940 Current portion of operating lease liability 1,302 1,562 Deferred revenue 10,913 10,686 Accrued expenses and other current liabilities 42,735 34,642 Total current liabilities 75,840 77,830 Operating lease liability, net of current portion 2,505 1,023 Long-term debt 151,301 150,853 Deferred revenue, non-current 8,350 7,232 Deferred royalty obligation related to the sale of future royalties 26,522 25,527 Total liabilities 264,518 262,465 Commitments and contingencies (Note 14) Stockholders’ equity Common stock, $ 0.0001 par value; 500,000,000 shares authorized; 239,201,256 and 238,015,825 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively 24 24 Additional paid-in capital 1,072,118 1,058,548 Accumulated deficit ( 926,484 ) ( 885,340 ) Accumulated other comprehensive income 18 57 Total stockholders’ equity 145,676 173,289 Total liabilities and stockholders’ equity $ 410,194 $ 435,754 The accompanying notes are an integral part of these condensed financial statements. 2 Table of Content s ARDELYX, INC. CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (in thousands, except share and per share amounts) Three Months Ended March 31, 2025 2024 Revenues Product sales, net $ 67,814 $ 43,512 Product supply revenue 254 2,126 Licensing revenue 5,020 17 Non-cash royalty revenue related to the sale of future royalties 1,026 368 Total revenues 74,114 46,023 Cost of goods sold Cost of product sales 2,340 1,013 Other cost of revenue 9,963 6,115 Total cost of goods sold 12,303 7,128 Operating expenses Research and development 14,938 10,579 Selling, general and administrative 83,222 52,994 Total operating expenses 98,160 63,573 Loss from operations ( 36,349 ) ( 24,678 ) Interest expense ( 4,191 ) ( 2,356 ) Non-cash interest expense related to the sale of future royalties ( 2,071 ) ( 1,702 ) Other income, net 2,326 2,339 Loss before provision for income taxes ( 40,285 ) ( 26,397 ) Provision for income taxes 859 121 Net loss $ ( 41,144 ) $ ( 26,518 ) Net loss per share of common stock - basic and diluted $ ( 0.17 ) $ ( 0.11 ) Shares used in computing net loss per share - basic and diluted 238,624,145 233,065,960 Comprehensive loss Net loss $ ( 41,144 ) $ ( 26,518 ) Unrealized losses on available-for-sale securities ( 39 ) ( 244 ) Comprehensive loss $ ( 41,183 ) $ ( 26,762 ) The accompanying notes are an integral part of these condensed financial statements. 3 Table of Content s ARDELYX, INC. CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) (in thousands, except shares) Three Months Ended March 31, 2025 Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income Total Stockholders’ Equity Shares Amount Balance as of December 31, 2024 238,015,825 $ 24 $ 1,058,548 $ ( 885,340 ) $ 57 $ 173,289 Issuance of common stock under employee stock purchase plan 222,734 — 1,015 — — 1,015 Issuance of common stock upon exercise of options 389,963 — 467 — — 467 Issuance of common stock upon vesting of restricted stock units 572,734 — — — — — Stock-based compensation — — 12,088 — — 12,088 Unrealized losses on available-for-sale securities — — — — ( 39 ) ( 39 ) Net loss — — — ( 41,144 ) — ( 41,144 ) Balance as of March 31, 2025 239,201,256 $ 24 $ 1,072,118 $ ( 926,484 ) $ 18 $ 145,676 Three Months Ended March 31, 2024 Common Stock Additional Paid-In Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity Shares Amount Balance as of December 31, 2023 232,453,190 $ 23 $ 1,012,773 $ ( 846,204 ) $ 224 $ 166,816 Issuance of common stock under employee stock purchase plan 253,312 — 1,038 — — 1,038 Issuance of common stock upon exercise of options 701,578 — 2,183 — — 2,183 Issuance of common stock upon vesting of restricted stock units 551,664 — — — — — Stock-based compensation — — 7,616 — — 7,616 Unrealized losses on available-for-sale securities — — — — ( 244 ) ( 244 ) Net loss — — — ( 26,518 ) — ( 26,518 ) Balance as of March 31, 2024 233,959,744 $ 23 $ 1,023,610 $ ( 872,722 ) $ ( 20 ) $ 150,891 The accompanying notes are an integral part of these condensed financial statements. 4 Table of Content s ARDELYX, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three Months Ended March 31, 2025 2024 Operating activities Net loss $ ( 41,144 ) $ ( 26,518 ) Adjustments to reconcile net loss to net cash used in operating activities Depreciation and amortization expense 602 435 Non-cash lease expense 923 948 Stock-based compensation 12,088 7,616 Non-cash interest expense 2,136 1,753 Non-cash royalty revenue related to the sale of future royalties ( 1,026 ) ( 368 ) Other, net ( 1,191 ) ( 1,265 ) Changes in operating assets and liabilities Accounts receivable 11,238 ( 6,131 ) Inventory ( 14,692 ) ( 29,371 ) Prepaid commercial manufacturing ( 716 ) 13,406 Prepaid expenses and other assets ( 5,022 ) ( 5,450 ) Accounts payable ( 2,278 ) 6,139 Accrued compensation and benefits ( 7,772 ) ( 5,870 ) Operating lease liabilities ( 991 ) ( 1,068 ) Accrued and other liabilities 8,043 7,159 Deferred revenue 1,345 2,863 Net cash used in operating activities ( 38,457 ) ( 35,722 ) Investing activities Proceeds from maturities and redemptions of investments 34,726 31,602 Purchases of investments ( 31,550 ) ( 34,024 ) Purchases of property and equipment ( 325 ) ( 150 ) Net cash provided by (used in) investing activities 2,851 ( 2,572 ) Financing activities Proceeds from 2022 Loan Agreement, net of issuance costs — 49,750 Proceeds from issuance of common stock under equity incentive and stock purchase plans 1,482 3,221 Net cash provided by financing activities 1,482 52,971 Net (decrease) increase in cash and cash equivalents ( 34,124 ) 14,677 Cash and cash equivalents at beginning of period 64,932 21,470 Cash and cash equivalents at end of period 30,808 36,147 Supplementary disclosure of cash flow information Cash paid for interest $ 2,454 $ 2,095 Cash paid for income taxes $ 2 $ 1 Supplementary disclosure of non-cash activities Right-of-use assets obtained in exchange for lease obligations $ 2,213 $ — The accompanying notes are an integral part of these condensed financial statements. 5 Table of Content s ARDELYX, INC . NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) NOTE 1. NATURE OF OPERATIONS We are a biopharmaceutical company founded with a mission to discover, develop and commercialize innovative, first-in-class medicines that meet significant unmet medical needs. We developed a unique and innovative platform that enabled the discovery of new biological mechanisms and pathways to develop potent and efficacious therapies that minimize the side effects and drug-drug interactions frequently encountered with traditional, systemically absorbed medicines. The first molecule we discovered and developed was tenapanor, a minimally absorbed, first-in-class, oral, small molecule therapy. Tenapanor, branded as IBSRELA ® , is approved in the U.S. for the treatment of adults with IBS-C. Tenapanor, branded as XPHOZAH ® , is approved in the U.S. 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 operate in one business segment, which is the development and commercialization of biopharmaceutical products. Refer to Note 12. Segment Reporting for further discussion on our segment reporting. Basis of Presentation These condensed financial statements have been prepared in accordance with U.S. GAAP and pursuant to the requirements of the SEC for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted. These condensed financial statements have been prepared on the same basis as our most recent annual financial statements and, in the opinion of management, reflect all normal and recurring adjustments necessary to present fairly our financial position, results of operations, changes in stockholders’ equity and cash flows for the interim periods presented. Certain prior year amounts have been reclassified to conform to the current year presentation. The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto included in our 2024 Form 10-K. The results for the 2025 first quarter are not necessarily indicative of results to be expected for the entire year ending December 31, 2025, or for any other interim period or future year. 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. Use of Estimates The preparation of financial statements requires management to make estimates, judgments and assumptions. The most significant assumptions are estimates used in our revenue gross-to-net accruals and other assumptions. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could materially differ from those estimates. Recent Accounting Pronouncements Recent Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures . The amendments in this Update provide more transparency about income tax information through improvements to income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. For public business entities, the amendments in this Update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted on a prospective basis for annual financial statements that have not yet been issued or made available for issuance. The Company is in the process of evaluating the impact of this new guidance on its disclosures. In November 2024, the FASB issued ASU No. 2024-03, Income Statement (Topic 220) - Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses , which requires public companies to disclose, in interim and reporting periods, additional information about certain expenses in the financial statements. ASU No. 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is in the process of evaluating the impact of this new guidance on its disclosures. 6 Table of Content s NOTE 2. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS The following table summarizes our cash, cash equivalents and short-term investments: March 31, 2025 December 31, 2024 Gross Unrealized Gross Unrealized (in thousands) Amortized Cost Gains Losses Fair Value Amortized Cost Gains Losses Fair Value Cash and cash equivalents Cash $ 8,318 $ — $ — $ 8,318 $ 16,282 $ — $ — $ 16,282 Money market funds 22,490 — — 22,490 48,650 — — 48,650 Total cash and cash equivalents 30,808 — — 30,808 64,932 — — 64,932 Short-term investments U.S. treasury securities $ 72,431 $ 43 $ ( 3 ) $ 72,471 $ 79,720 $ 58 $ ( 5 ) $ 79,773 U.S. government-sponsored agency bonds 41,852 4 ( 26 ) 41,830 45,960 29 ( 27 ) 45,962 Commercial paper 33,026 2 ( 3 ) 33,025 37,061 19 ( 15 ) 37,065 Corporate bonds 28,077 7 ( 2 ) 28,082 17,415 4 ( 6 ) 17,413 Asset-backed securities 5,752 — ( 3 ) 5,749 2,983 2 — 2,985 Yankee bonds 1,988 — ( 1 ) 1,987 1,972 — ( 2 ) 1,970 Total short-term investments 183,126 56 ( 38 ) 183,144 185,111 112 ( 55 ) 185,168 Total cash, cash equivalents and investments $ 213,934 $ 56 $ ( 38 ) $ 213,952 $ 250,043 $ 112 $ ( 55 ) $ 250,100 Realized gains or losses have not been significant and are included in other income, net, in the condensed statements of operations and comprehensive loss. Unrealized losses as of March 31, 2025 and December 31, 2024 were not material. We determined that none of our available-for-sale securities were other-than-temporarily impaired as of March 31, 2025 and December 31, 2024, and no investment was in a continuous unrealized loss position for more than one year. Therefore, we believe that it is more likely than not that the investments will be held until maturity or a forecasted recovery of fair value. Based on our procedures under the expected credit loss model, including an assessment of unrealized losses in our portfolio, we concluded that any unrealized losses on our marketable securities were not attributable to credit and, therefore, we have not recorded an allowance for credit losses for these securities as of March 31, 2025 and December 31, 2024. See “Cash and Cash Equivalents” and “Short-Term Investments” captions of Note 2. Summary of Significant Accounting Policies of our 2024 Form 10-K for more information on our accounting policies for cash, cash equivalents and short-term investments. NOTE 3. FAIR VALUE MEASUREMENTS Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows: Level 1 – Valuations are based on quoted prices in active markets for identical assets or liabilities and readily accessible by us at the reporting date. Level 2 – Valuations based on inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Valuations based on unobservable inputs for which there is little or no market data, which require us to develop our own assumptions. 7 Table of Content s The following table sets forth the fair value of our financial assets that are measured or disclosed on a recurring basis by level within the fair value hierarchy: March 31, 2025 December 31, 2024 (in thousands) Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Assets Money market funds $ 22,490 $ 22,490 $ — $ — $ 48,650 $ 48,650 $ — $ — U.S. treasury securities 72,471 — 72,471 — 79,773 — 79,773 — U.S. government-sponsored agency bonds 41,830 — 41,830 — 45,962 — 45,962 — Commercial paper 33,025 — 33,025 — 37,065 — 37,065 — Corporate bonds 28,082 — 28,082 — 17,413 — 17,413 — Asset-backed securities 5,749 — 5,749 — 2,985 — 2,985 — Yankee bonds 1,987 — 1,987 — 1,970 — 1,970 — Total $ 205,634 $ 22,490 $ 183,144 $ — $ 233,818 $ 48,650 $ 185,168 $ — Fair Value of Debt The principal outstanding under our term loans is subject to a variable interest rate and therefore, we believe the carrying amount of the term loan approximates fair value as of March 31, 2025 and December 31, 2024. See Note 8. Borrowing for a description of the Level 2 inputs used to estimate the fair value of the liability. The carrying value of the deferred royalty obligation related to the sale of future royalties approximates its fair value as of March 31, 2025 and December 31, 2024 and is based on our current estimates of future royalties and commercialization milestones expected to be paid to us by Kyowa Kirin over the life of the agreement. See Note 7. Deferred Royalty Obligation Related to the Sale of Future Royalties for a description of the Level 3 inputs used to estimate the fair value of the liability. NOTE 4. INVENTORY Inventory consisted of the following: (in thousands) March 31, 2025 December 31, 2024 Raw materials $ 40,612 $ 30,792 Work in process 60,988 58,685 Finished goods 4,275 1,707 Total $ 105,875 $ 91,184 Reported as Inventory $ 23,776 $ 21,173 Inventory, non-current 82,099 70,011 Total $ 105,875 $ 91,184 Prepaid commercial manufacturing with third-party CMOs not included in inventory was $ 17.1 million and $ 16.4 million as of March 31, 2025 and December 31, 2024, respectively. There was $ 3.2 million of prepayments expected to be converted into inventory after 12 months as of March 31, 2025, as compared to zero as of December 31, 2024. 8 Table of Content s NOTE 5. REVENUE Disaggregation of total revenues by nature is as follows: Three Months Ended March 31, (in thousands) 2025 2024 Product sales, net $ 67,814 $ 43,512 Licensing revenue 5,020 17 Non-cash royalty revenue related to the sale of future royalties 1,026 368 Product supply revenue 254 2,126 Total revenues $ 74,114 $ 46,023 Product Sales, Net Total product sales, net was as follows: Three Months Ended March 31, (in thousands) 2025 2024 Product sales, net IBSRELA $ 44,403 $ 28,361 XPHOZAH 23,411 15,151 Total product sales, net $ 67,814 $ 43,512 Product sales, net approximated 91.5 % and 94.5 % of total revenues in the 2025 and 2024 first quarters, respectively. Concentrations Gross product sales from Customers accounting for more than 10% of total revenues were as follows: Three Months Ended March 31, 2025 2024 Customers (1) BioRidge Pharma, LLC 63.8 % 64.6 % Cardinal Health 22.2 % 19.2 % Cencora (formerly AmerisourceBergen Drug Corporation) 18.2 % 21.6 % McKesson Corporation 16.9 % 16.0 % (1) The total of the above percentages exceeds 100% as the numerators used in the calculations represent gross product sales for each Customer, as opposed to product sales, net as presented in our condensed statements of operations and comprehensive loss. GTN Adjustments 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, 2024 $ 1,643 $ 14,475 $ 11,170 $ 27,288 Provisions (1) 4,143 18,835 5,940 28,918 Credits/payments ( 4,681 ) ( 18,405 ) ( 8,334 ) ( 31,420 ) Balance as of March 31, 2025 $ 1,105 $ 14,905 $ 8,776 $ 24,786 (1) Provisions included approximately $ 3.8 million of favorable adjustment resulting from changes in prior periods’ estimated product returns for XPHOZAH. 9 Table of Content s NOTE 6. COLLABORATION AND LICENSING AGREEMENTS We out-license to external partners for the development of tenapanor and commercialization of tenapanor outside of the U.S. We recognize revenue from our agreements with Kyowa Kirin, Fosun Pharma and Knight as licensing revenue, product supply revenue or non-cash royalty revenue related to the sale of future royalties. See Note 7. Collaboration and Licensing Agreements and “Licensing Revenue Recognition” caption of Note 2. Summary of Significant Accounting Policies of our 2024 Form 10-K for more information on the nature, purpose, significant rights and obligations of the parties, as well as our accounting policies for such revenue streams. The following table summarizes total revenues by collaboration partner: Three Months Ended March 31, (in thousands) 2025 2024 Licensing revenue Fosun Pharma $ 5,000 $ — Knight 20 17 Total licensing revenue $ 5,020 $ 17 Product supply revenue Kyowa Kirin — 2,126 Knight 254 — Total supply revenue $ 254 $ 2,126 Non-cash royalty revenue related to the sale of future royalties Kyowa Kirin $ 1,026 $ 368 The following table presents changes in our current and non-current deferred revenue balances, which are all attributable to Kyowa Kirin: 2025 2024 (in thousands) Current Non-Current Current Non-Current Deferred revenue balance as of January 1, $ 10,686 $ 7,232 $ 7,182 $ 8,644 Prepaid product supply 227 1,118 732 3,459 Product supply delivered — — ( 1,328 ) — Deferred revenue balance as of March 31, $ 10,913 $ 8,350 $ 6,586 $ 12,103 Significant developments and updates related to our collaboration and licensing agreements in the 2025 and 2024 first quarters are discussed below. Kyowa Kirin In February 2024, Kyowa Kirin announced the launch of tenapanor, marketed as PHOZEVEL ® , for patients with CKD with hyperphosphatemia in Japan. In the 2024 first quarter, we began to recognize non-cash royalty revenue related to the sale of future royalties, which was remitted to HCR in accordance with the HCR Agreement. Fosun Pharma In February 2025, we announced the approval of an NDA for tenapanor for the control of hyperphosphatemia in adult patients with CKD undergoing hemodialysis by China’s Center for Drug Evaluation of the NMPA. This approval triggered a $ 5.0 million milestone to us under the terms of the Fosun Agreement, which was recorded as licensing revenue on our condensed statement of operations and comprehensive loss when earned during the 2025 first quarter and was received in April 2025. AstraZeneca In connection with the AstraZeneca Termination Agreement, we recognized royalty expense as other cost of revenue in our condensed statements of operations and comprehensive loss of $ 8.8 million and $ 4.7 million in the 2025 and 2024 first quarters, respectively. As of March 31, 2025, we have recognized $ 71.2 million of the total $ 75.0 million outstanding royalty obligation. 10 Table of Content s NOTE 7. DEFERRED ROYALTY OBLIGATION RELATED TO THE SALE OF FUTURE ROYALTIES We and HCR have an agreement in which HCR agreed to pay up to $ 20.0 million in exchange for royalty payments and commercial milestone payments that we may receive under our Kyowa Kirin Agreement. See Note 8. Deferred Royalty Obligation Related to the Sale of Future Royalties of our 2024 Form 10-K for further discussion on the nature, purpose, significant rights and obligations of the parties, as well as our accounting policies regarding the HCR Agreement. A summary of financial information related to the HCR Agreement is as follows: Three Months Ended March 31, ($ in thousands) 2025 2024 Non-cash interest expense related to the sale of future royalties $ ( 2,071 ) $ ( 1,702 ) Effective interest rate 32.5 % 33.7 % (in thousands) 2025 2024 Deferred royalty obligation balance as of January 1, $ 25,527 $ 20,179 Non-cash interest expense related to sale of future royalties 2,071 1,702 Royalty distributed to HCR ( 1,076 ) — Deferred royalty obligation balance as of March 31, $ 26,522 $ 21,881 NOTE 8. BORROWING The following table presents our long-term borrowing under the 2022 Loan Agreement: (in thousands) March 31, 2025 December 31, 2024 Interest rate Principal Term A Loan $ 27,500 $ 27,500 7.95 % + 0.022 % + SOFR (subject to a floor of 1.0 %) Term B Loan 22,500 22,500 7.95 % + 0.022 % + SOFR (subject to a floor of 1.0 %) Term C Loan 50,000 50,000 4.25 % + 0.022 % + SOFR (subject to a floor of 4.7 %) Term D Loan 50,000 50,000 4.00 % + 0.022 % + SOFR (subject to a floor of 4.7 %) Total principal 150,000 150,000 Adjustments to principal value Unamortized discount and debt issuance costs ( 1,070 ) ( 1,136 ) Accreted value of final fee 2,371 1,989 Total long-term debt 151,301 150,853 Less: Current portion of long-term debt — — Long-term debt, net of current portion $ 151,301 $ 150,853 The total unaccreted final fee was $ 5.1 million and $ 5.4 million as of March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025, our total future payment obligation related to the outstanding balance of the term loans, excluding interest payments, was $ 151.3 million, which is due on July 1, 2028. There have been no changes to the principal, maturity, interest rates, interest payment terms and debt covenants since December 31, 2024. See Note 9. Borrowing of our 2024 Form 10-K for additional information regarding our 2022 Loan Agreement. 11 Table of Content s NOTE 9. LEASES The following table provides additional details of our facility leases presented in our condensed balance sheets: ($ in thousands) Facilities March 31, 2025 December 31, 2024 Right-of-use assets $ 3,670 $ 2,380 Current portion of lease liabilities 1,302 1,562 Operating lease liability, net of current portion 2,505 1,023 Total lease liabilities $ 3,807 $ 2,585 Weighted-average remaining term (in years) 2.8 1.8 Weighted-average discount rate 6.0 % 6.5 % The lease costs, which are included in operating expenses in our condensed statements of operations and comprehensive loss, were as follows: Three Months Ended March 31, (in thousands) 2025 2024 Operating lease expense $ 977 $ 1,046 Cash paid for operating leases $ 1,047 $ 1,166 The following table summarizes our undiscounted cash payment obligations for our operating lease liabilities as of March 31, 2025: (in thousands) Operating Leases Remainder of 2025 $ 1,145 2026 1,480 2027 1,043 2028 469 2029 21 Thereafter — Total undiscounted operating lease payments 4,158 Imputed interest expenses ( 351 ) Total operating lease liabilities 3,807 Less: Current portion of operating lease liability ( 1,302 ) Operating lease liability, net of current portion $ 2,505 NOTE 10. STOCKHOLDERS’ EQUITY In January 2023, we filed a registration statement on Form S-3, which became effective in January 2023, containing (i) a base prospectus for the offering, issuance and sale by us of up to a maximum aggregate offering price of $ 250.0 million of our common stock, preferred stock, debt securities, warrants and/or units, from time to time in one or more offerings; and (ii) a prospectus supplement for the offering, issuance and sale by us of up to a maximum aggregate offering price of $ 150.0 million of our common stock that may be issued and sold, from time to time, under a sales agreement with Jefferies, deemed to be “at-the-market offerings” (2023 Open Market Sales Agreement). Pursuant to the 2023 Open Market Sales Agreement, Jefferies, as sales agent, may receive a commission of up to 3.0 % of the gross sales price for shares of common stock sold under the 2023 Open Market Sales Agreement. In the 2025 first quarter, we completed no sales pursuant to the 2023 Open Market Sales Agreement. As of March 31, 2025, we have completed sales pursuant to the 2023 Open Market Sales Agreement, resulting in the issuance of 16.8 million shares of our common stock and receipt of gross proceeds of $ 70.0 million at a weighted average sales price of approximately $ 4.17 . 12 Table of Content s NOTE 11. EQUITY INCENTIVE PLANS Stock-based Compensation Expense Stock-based compensation expense recognized for stock options, RSUs and our ESPP is recorded as operating expenses in our condensed statements of operations and comprehensive loss, as follows: Three Months Ended March 31, (in thousands) 2025 2024 Selling, general and administrative $ 8,484 $ 5,646 Research and development 3,604 1,970 Total $ 12,088 $ 7,616 A summary of our total unrecognized stock-based compensation expense, net of estimated forfeitures, as of March 31, 2025 is as follows: Unrecognized Compensation Expense (in thousands) Average Remaining Vesting Period (in years) Stock option grants $ 64,626 2.88 RSU grants $ 79,520 3.30 ESPP $ 304 0.42 Stock Options A summary of our stock option activity and related information for the 2025 first quarter is as follows: Number of Shares (in thousands) Weighted-Average Exercise Price per Share Balance as of December 31, 2024 28,085 $ 5.63 Options granted 4,113 $ 5.21 Options exercised ( 390 ) $ 1.20 Options forfeited or canceled ( 821 ) $ 7.91 Balance as of March 31, 2025 30,987 $ 5.57 Exercisable as of March 31, 2025 15,715 $ 5.45 Restricted Stock Units A summary of our RSUs activity and related information for the 2025 first quarter is as follows: Number of RSUs (in thousands) Weighted-Average Grant Date Fair Value Per Share Non-vested restricted stock units as of December 31, 2024 8,013 $ 6.59 Granted 7,093 $ 5.21 Vested ( 573 ) $ 6.04 Forfeited ( 425 ) $ 5.79 Non-vested restricted stock units as of March 31, 2025 14,108 $ 5.94 Employee Stock Purchase Plan During the 2025 first quarter, we issued approximately 0.2 million shares of our common stock under the ESPP. The shares were purchased by employees at an average purchase price of $ 4.56 per share, resulting in proceeds to us of approximately $ 1.0 million. 13 Table of Content s Issuance of Common Stock for Services During the 2025 first quarter, we issued no shares of our common stock to members of the board of directors who elected to receive stock in lieu of their cash fees under our Non-Employee Director Compensation Program. NOTE 12. SEGMENT REPORTING We operate in a single reportable segment. The CODM primarily uses aggregated net loss as reported on the condensed statements of operations and comprehensive loss to measure segment loss, supplemented by certain additional significant expense details reflected in the table below. There have been no changes in the determination of segmentation or the measurements used to determine reported segment loss discussed in our 2024 Form 10-K. See Note 17. Segment Reporting of our 2024 Form 10-K for more discussion on our segment reporting. Detailed information regarding our single operating segment’s significant revenues, expenses and operating loss is as follows: Three Months Ended March 31, (in thousands) 2025 2024 Revenues Product sales, net $ 67,814 $ 43,512 Other revenues (1) 6,300 2,511 Total revenues 74,114 46,023 Less: Cost of product sales 2,340 1,013 Other cost of revenue 9,963 6,115 Total cost of goods sold 12,303 7,128 Research and development (2) 10,542 7,790 Selling expenses (2) 56,800 34,852 General and administrative expenses (2) 13,904 8,969 Stock-based compensation 12,088 7,616 Other segment expenses (3) 4,826 4,346 Total operating expenses 98,160 63,573 Consolidated loss from operations ( 36,349 ) ( 24,678 ) Other reconciliation items (4) ( 4,795 ) ( 1,840 ) Consolidated net loss $ ( 41,144 ) $ ( 26,518 ) (1) “Other revenues” includes revenues from our collaboration partnerships, including licensing revenue, product supply revenue and non-cash royalty revenue related to the sale of future royalties. (2) Research and development, selling and general administrative expenses herein do not include certain allocated items, such as stock-based compensation expenses. (3) “Other segment expenses” primarily consists of allocated facilities, information technology and employee costs of approximately $ 4.7 million and $ 3.7 million for the 2025 and 2024 first quarters, respectively. (4) “Other reconciliation items” includes interest expense, non-cash interest expense related to the sale of future royalties, provision for income taxes and other income, net. NOTE 13. NET LOSS PER SHARE Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period and excludes any dilutive effect of stock-based awards. Diluted net loss per common share is computed giving effect to all potential dilutive common shares, including common stock issuable upon exercise of stock options, unvested restricted stock units and ESPP shares issuable pursuant to the current purchase period. As we had net losses for the 2025 and 2024 first quarters, all potential common shares were determined to be anti-dilutive during those periods. 14 Table of Content s The following table sets forth the computation of net loss per common share: (in thousands, except per share amounts) Three Months Ended March 31, Numerator 2025 2024 Net loss $ ( 41,144 ) $ ( 26,518 ) Denominator Weighted average common shares outstanding - basic and diluted 238,624 233,066 Net loss per share of common stock - basic and diluted $ ( 0.17 ) $ ( 0.11 ) The total numbers of securities that could potentially dilute net income per share in the future that were not considered in the diluted net loss per share calculations because the effect would have been anti-dilutive were as follows: Three Months Ended March 31, (in thousands) 2025 2024 Options to purchase common stock 29,129 26,681 Restricted stock units 10,370 7,024 ESPP shares issuable 213 227 Total 39,712 33,932 NOTE 14. COMMITMENTS AND CONTINGENCIES On July 30 and August 12, 2021, two putative securities class action lawsuits were commenced in the U.S. District Court for the Northern District of California naming as defendants Ardelyx and two current officers captioned Strezsak v. Ardelyx, Inc., et al., Case No. 4:21-cv-05868-HSG, and Siegel v. Ardelyx, Inc., et al., Case No. 5:21-cv-06228-HSG (together, the Securities Class Actions). The complaints allege that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act), as amended, and Rule 10b-5 thereunder, by making false and misleading statements and omissions of material fact related to tenapanor. The plaintiffs seek damages and interest, and an award of costs, including attorneys’ fees. On July 19, 2022, the court consolidated the two putative class actions and appointed a lead plaintiff and lead counsel. The lead plaintiff filed a second amended complaint under which the plaintiffs seek to represent all persons who purchased or otherwise acquired Ardelyx securities between March 6, 2020 and July 19, 2021. Defendants filed a motion to dismiss the amended complaint on June 2, 2023. On March 22, 2024, the court granted defendants’ motion to dismiss. The court provided plaintiffs a third opportunity to amend and plaintiffs filed a third amended complaint on April 19, 2024. Defendants filed a motion to dismiss the third amended complaint on June 3, 2024. The case was dismissed with prejudice on September 12, 2024. On October 9, 2024, plaintiff appealed the District Court’s dismissal of the case to the Ninth Circuit. While we believe the plaintiffs’ claims are without merit, we reached a settlement in the case on February 21, 2025 for an immaterial amount and the case was voluntarily dismissed on March 5, 2025. On December 7, 2021 and March 29, 2022, two verified shareholders derivative lawsuits were filed in the U.S. District Court for the Northern District of California purportedly on behalf of Ardelyx against certain of Ardelyx’s executive officers and members of our board of directors, captioned Go v. Raab, et al., Case No. 4:21-cv-09455-HSG, and Morris v. Raab, et al., Case No. 4:22-cv-01988-JSC. The complaints allege that the defendants' violations of Section 14(a) of the Securities Exchange Act of 1934, as amended, breaches of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets for personally making and/or causing Ardelyx to make materially false and misleading statements regarding the Company’s business, operations and prospects. The complaint seeks contribution under Sections 10(b) and 21D of the Securities Exchange Act of 1934 from two executive officers. On January 19, and April 27, 2022, the court granted the parties’ stipulation to stay the Go and Morris actions, respectively, until resolution of the anticipated motion(s) to dismiss in the Securities Class Actions. On October 25, 2022, the parties filed a stipulation to consolidate and stay the Go and Morris actions, and on October 27, 2022, the court consolidated the Go and Morris action and stayed the consolidated action pending resolution of the anticipated motion(s) to dismiss in the Securities Class Action. The Securities Class Action was voluntarily dismissed on March 5, 2025. We believe the plaintiffs’ claims are without merit. 15 Table of Content s On July 17, 2024, in partnership with the AAKP and the NMQF, we filed a lawsuit in the U.S. District Court for the District of Columbia against CMS, claiming that CMS has violated its statutory and regulatory authority under MIPPA, which established the ESRD PPS bundled payment system for dialysis services in 2008. Specifically, the lawsuit claims that moving XPHOZAH, along with all oral-only drugs, into the ESRD PPS is inconsistent with MIPPA’s statutory provision, and contradicts CMS’s own regulations. XPHOZAH and other oral-only drugs, are not administered by dialysis providers and cannot be taken during the delivery of maintenance dialysis. On November 8, 2024, the U.S. District Court for the District of Columbia granted defendants’ Motion to Dismiss and denied plaintiffs Motion for Preliminary Injunction, or in the Alternative, for Expedited Summary Judgment. Following the District Court’s denial of plaintiffs’ Motion to Alter or Amend the Judgment, or in the Alternative, for an Injunction Pending Appeal, plaintiffs filed an Emergency Motion for an Administrative Stay and Injunction Pending Appeal, which was denied by the United States Court of Appeals for the District of Columbia Circuit. Appellants filed an initial brief in the appeal on February 4, 2025; Appellees filed an initial brief on March 6, 2025; and Appellants filed a reply brief March 27, 2025. Both Appellees and Appellants filed a final brief on April 10, 2025. On August 16, 2024, a complaint was filed against us in the U.S. District Court of Massachusetts, captioned Yarborough v. Ardelyx, Inc., et al., No. 24-cv-12119 (D. Mass.). The complaint names the Company, Mike Raab, and Justin Renz as defendants and alleges violations of Sections 10(b) and 20(a) the Exchange Act and Rule 10b-5 promulgated thereunder, related to the our announcement on July 2, 2024 that it had chosen not to file an application for Transitional Drug Add-on Payment Adjustment for XPHOZAH (the “Yarborough Action”). The plaintiffs seek damages and interest, and an award of costs, including attorneys’ fees. The Court appointed Tate Wood as lead plaintiff on October 30, 2024. Lead Plaintiff filed an amended complaint on January 13, 2025, in which he added Susan Rodriguez, Laura Williams and Elizabeth Grammer as additional defendants and removed Justin Renz as a defendant. Lead Plaintiff purports to bring claims on behalf of all those who acquired Ardelyx common stock between February 22, 2024 and July 1, 2024. Defendants filed a motion to dismiss the amended complaint on March 14, 2025. We believe the plaintiff’s claims are without merit. On September 6 and 13, 2024, certain Ardelyx shareholders filed two verified derivative complaints purportedly on behalf of the Company in the United States District Court for the District of Massachusetts alleging violations of Sections 10(b) and/or 14(a) of the Exchange Act, breaches of fiduciary duty, unjust enrichment, waste, and aiding and abetting breaches of fiduciary duty against certain members of our board of directors and management based on substantially the same factual allegations in the Yarborough Action. The complaints seek unspecified damages and corporate governance reforms, as well as costs and attorneys’ fees. On September 25, 2024, the Court consolidated the two derivative actions into the case In re Ardelyx, Inc. Stockholder Derivative Litigation, Case No. 1:24-cv-12302-LTS (D. Mass.). On November 7, 2024, the Court stayed the consolidated derivative action pending resolution of any and all motion(s) to dismiss in the Yarborough Action. We believe the plaintiffs’ claims are without merit. From time to time, we may be involved in legal proceedings arising in the ordinary course of business. As of March 31, 2025, there is no litigation pending that would reasonably be expected to have a material adverse effect on our results of operations and financial condition.