Volatile or not, Ardelyx is getting attention

New in ‘22

Ardelyx, Inc., a biopharmaceutical company that engages in the research, development and commercialization of medicine for the treatment of cardiorenal diseases, was founded by Dominique Charmot, Peter G. Schultz, and Jean M. Frechet in 2007.  Headquartered in Fremont, California, its product portfolio includes tenapanor, an experimental medication that works exclusively in the gut and is in late-stage clinical development. 

Tenapanor has completed a Phase 3 clinical trial for the treatment of patients with irritable bowel syndrome with constipation, as well as a Phase 3 clinical trial for the treatment of hyperphosphatemia in end-stage renal disease patients on dialysis. Ardelyx also develops RDX013, a small molecule potassium secretagogue program that is in Phase 2 clinical trial for the treatment of patients with hyperkalemia; and RDX020, a small molecule program for the treatment of metabolic acidosis.

According to Zacks.com, investors in Ardelyx, Inc. need to pay close attention to the stock based on moves in the options market lately, because the January 21, 2022, $1.00 Call “had some of the highest implied volatility of all equity options today.”

Implied volatility, according to Zacks, “shows how much movement the market is expecting in the future.” When there are options with high levels of implied volatility, it suggests that investors in the underlying stocks expect a big move in one direction or the other. It might also signal that there is an upcoming event “that may cause a big rally or a huge sell-off.” Implied volatility, Zacks said, “is only one piece of the puzzle when putting together an options trading strategy.”

Options traders seem to be pricing in a big move for Ardelyx shares. Ardelyx is a Zacks Rank #3 (Hold) in the Medical – Drugs industry that ranks in the top 45 percent of the Zacks Industry Rank. During the last two months of 2020, two analysts increased their earnings estimates for the last quarter, while none dropped their estimates. The net effect has narrowed the Zacks Consensus Estimate for the current quarter from a loss of 28 cents per share to a loss of 25 cents.

The analysts’ perception of volatility could mean that a trade is developing. Options traders might be looking for options with high levels of implied volatility to sell premium. 

Isaac Mitchell of Marketing Sentinel revealed that the company’s share price was $1.10, and it changed around -$0.03 or -2.65 percent from the last close, as of January 3, which brings the market valuation of the company to $117.73M. Ardelyx currently trades at a discount to its 52-week high of $9.23, offering almost -739.09 percent off that amount. He added, “The share price’s 52-week low was $0.82, which indicates that the current value has risen by an impressive 25.45 percent since then. We note from Ardelyx Inc.’s average daily trading volume that its 10-day average is 8.46 million shares, with the 3-month average coming to 17.59 million.”

Mitchell said that Ardelyx Inc. stock received a consensus recommendation rating of an Overweight, based on a mean score of 2.00. He explained, “If we narrow it down even further, the data shows that 0 out of 6 analysts rate the stock as a Sell; another 0 rate it as Overweight. Among the rest, 3 recommended ARDX as a Hold, whereas 3 deemed it a Buy, and 0 rated it as Underweight. Ardelyx Inc. is expected to report earnings per share of -$0.34 for the current quarter.”

Meanwhile, Ardelyx announced plans to launch IBSRELA, the company's approved treatment for irritable bowel syndrome with constipation (IBS-C) in adults, in the second quarter of 2022. According to Mike Raab, president and chief executive officer of Ardelyx, "Over the last five years, the IBS-C market has grown to be sizeable and concentrated, with 9,000 high-writing physicians accounting for approximately 50 percent of the almost five million prescriptions written annually for drugs indicated for the treatment of IBS-C. This market is ripe for the entry of a novel therapeutic option like IBSRELA, as existing therapies do not adequately address all patient treatment needs.”

Raab added, “Our market research has clearly shown that treating physicians recognize the need for new therapeutic alternatives to address the unmet medical needs of patients currently managed for IBS-C. That same research demonstrates high interest in, and intent to prescribe, IBSRELA for a subset of patients. By capturing even a modest share, in the mid to high single-digit of this large market, IBSRELA has the potential to generate at least $500 million in peak annual net revenue. We will use the next few months to build commercial inventory and prepare the market for a second-quarter 2022 launch. We believe we have a clear line of sight to breakeven and ultimate profitability for the product, which we expect will create significant shareholder value."

William Chey, M.D., Nostrant Professor of Medicine at the University of Michigan School of Medicine, added, "It is now widely recognized that while people with IBS-C present with similar symptoms. It is a disorder of heterogeneous pathogenesis. Therefore, while there has been much improvement in our treatment of patients with IBS-C over the last two decades with the introduction and broad adoption of GC-C agonists, it should be no surprise that many patients continue to suffer. There is a need for innovation. The launch of IBSRELA, as a first-in-class NHE3 inhibitor, is exciting, as it offers a unique mechanism of action with compelling clinical data, providing physicians with an important new tool to advance the care of patients with IBS-C."

"IBSRELA, with its first-in-class mechanism and strong clinical data package, is an important new addition to the IBS-C treatment armamentarium," said Laura A. Williams, M.D., M.P.H., chief medical officer of Ardelyx. "The approval of IBSRELA was based on two successful Phase 3 trials involving over 1,200 patients with IBS-C. Both trials met their primary and most secondary endpoints. Additionally, in both trials, improvements from baseline in average weekly bowel movements and abdominal pain were observed by Week 1, with improvement sustained through the end of treatment. IBSRELA can play a meaningful role in the treatment of patients suffering from IBS-C."

Raab concluded, "As we work to bring IBSRELA to patients, we remain intent on pursuing approval of tenapanor for hyperphosphatemia through the formal dispute resolution process with the FDA, and as a commercial facing organization, if approved, we will be well-positioned to bring this novel therapy to patients."