Ardelyx's (ARDX) Shares Plunge as Tenapanor's Deficiencies Identified by FDA 'Take Approval Off the Table'

On July 19th, 2021, Ardelyx, Inc (NASDAQ: ARDX) disclosed a letter from the US Food and Drug Administration (FDA) relating to its New Drug application for Tenapanor – the company’s drug candidate for the control of serum phosphorus in adult patients with chronic kidney disease (CKD).

The agency notified the company of “identified deficiencies that preclude discussion of labeling and post-marketing requirements/commitments at this time”, as well as denied a follow-up meeting request by ARDX.

The FDA move took the market by surprise, sending the company’s shares nearly 75% lower overnight.

Commenting on the news, Piper Sandler Analyst Christopher J Raymond finds the announcement “mind-boggling” given the “three P3 studies that met efficacy endpoints with high degrees of statistical significance and relatively clean safety, an approval in hand for a different indication, and a clear unmet clinical need.”

Considering the FDA’s findings and the rapid shift in tone, the analyst now views the “July approval – or any approval for that matter – in hyperphosphatemia off the table” and expects the company will receive a Complete Response Letter (CRL) on the PDUFA date of July 29th.

Piper Sandler downgrades the shares to “Neutral” from “Overweight” and moves the price target down to $4 from $14.

The surprised, yet pessimistic sentiment is mimicked by Laura Chico of Wedbush who quotes: “The move is unexpected particularly in light of earlier labeling discussions between ARDX and FDA prior to receipt of the PDUFA extension in April 2021,” The Wedbush analyst is now equally “hard pressed to see anything emerge other than a Complete Response Letter for tenapanor at this point.”

She anticipates “shares will remain under pressure absent a more defined path forward”, as Wedbush downgrades ARDX to “Neutral” from “Outperform” and lowers the price target to $3 from $14.

While agreeing that the PDUFA approval seems highly unlikely, Louise Chen at Cantor Fitzgerald maintains a more optimistic tone as she continues “to have confidence in ARDX's management team and think that patience will be rewarded with this company and its pipeline.”

She also notes that at current price levels ~$2, shares are trading close to the Cash-per-share value of $1.77.

Cantor Fitzgerald maintains an “Overweight” rating and $14 price target.

Written by Vlad Schepkov | [email protected]

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