Q & A Highlights

Q: Can you provide more color on the payer hurdles impacting Ibsrela? Are prescriptions being filled but taking longer, or are they being completely blocked? And can you share quantitative metrics on how often scripts are written versus filled? A: Eric Foster (Chief Commercial Officer) explained that the company is seeing more step edits and more stringent prior authorizations, which are slowing new patient starts rather than completely blocking them. Mike Raab (President and CEO) added that the extent of step edits was not anticipated given the product's growth and success, but demand remains strong. The company is leveraging its field reimbursement team (doubled in size) and the Ibsrela Pharmacy Network (IPN) to navigate these hurdles, with data showing that prescriptions going through the IPN result in higher fulfillment rates, faster fills, and one additional refill per patient annually.

Q: What are the pushes and pulls baked into the revised full-year guidance for Ibsrela, and what underlying demand metrics give you confidence heading into the second half? A: Eric Foster (Chief Commercial Officer) highlighted record-high demand in Q2, including total prescriptions and prescriptions per prescriber, as key confidence drivers. Sue Hohenleitner (Chief Financial Officer) confirmed that all current performance and friction points have been factored into the revised guidance of $350 million to $370 million for Ibsrela, which still represents over 30% annual growth at the midpoint. The company expects sequential revenue growth in the second half, with Q4 delivering the highest revenue of the year.

Q: Why did you decide to withdraw the $750 million revenue guidance for Xphozah rather than revising it down to a more comfortable level? A: Mike Raab (President and CEO) explained that the decision was driven by the end of the TDAPA period at the end of 2026 and the need to understand the implications of a new phosphorus quality incentive program (QIP) from CMS, as well as how dialysis organizations will react post-TDAPA. Sue Hohenleitner (CFO) added that guidance requires a high degree of confidence in delivery, making it prudent to pull the guidance while assessing these evolving market dynamics. The company may revisit the guidance in the future once these transitions settle.

Q: Are the payer pushback dynamics for Ibsrela being seen broadly across the IBS-C category, and is it restricted to certain plans or widespread? A: Eric Foster (Chief Commercial Officer) noted that while the company's strategy differs from competitors, they are seeing more stringent prior authorization criteria and step edits across a meaningful number of payers that can influence the commercial landscape. The company conducted a deep analysis to understand the real impact on the business and developed actions to address it, leading to the revised guidance and a plan for the back half of the year.

Q: With the updated guidance, what are your updated thoughts on the timeline to profitability? And on the CIC program, what would constitute a win in the Phase 3 data readout? A: Sue Hohenleitner (CFO) reaffirmed that profitability is expected in 2027, noting that revenue growth will outpace OpEx growth as the cost structure levels out. She highlighted the narrowing net loss from $38 million in Q1 to $16.7 million in Q2 as evidence of the path to profitability. Mike Raab (CEO) noted that the CIC program has great synergy with the existing sales force since physicians treat both IBS-C and CIC patients, and enrollment is on track for data readout in the expected timeframe.

Q: Have there been any ANDA challengers to your patent estate for tenapanor, and what other barriers to generic competition exist? A: Mike Raab (President and CEO) declined to comment on specific challenges but acknowledged that a product growing this aggressively will attract interest. He emphasized that tenapanor is a non-absorbed drug, making it different from traditional PK/PD generic approvals, and noted the FDA has product-specific guidance. The company's '299 patent, a formulation patent, is critically important, and the complex molecule design plus ongoing IP building strengthens their position through 2042 and potentially beyond.

Q: If you implement coupons or discounting for Ibsrela, what impact would that have on gross-to-net (GTN), and does the current GTN guidance still stand? A: Sue Hohenleitner (CFO) confirmed that the full-year GTN guidance of low-to-mid 30s still stands and has been factored into the revised revenue guidance. She noted that GTN is impacted by mix between government and commercial business, IRA inflation rebates, co-pay assistance, and distribution discounts, all of which have been taken into account in the updated projections.

Q: Can you discuss the current environment for business development and finding assets, and has your strategy shifted given recent M&A activity in the industry? A: Mike Raab (President and CEO) stated that the team is actively looking at opportunities daily and prosecuting a substantial number of deals, though many don't pass diligence. He expressed optimism about building the pipeline, especially with the cash generation capabilities of the business. He highlighted the runway provided by the tenapanor '299 patent through 2042 and the potential of the 531 program as additional legs on the stool for pipeline expansion.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .