Good afternoon and welcome to Ardelyx's Third Quarter 2016 Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session after the prepared remarks. As a reminder, today's call is being recorded. I would now like to turn the call over to Monique Allaire at Thrust Investor Relation. You may begin.

Thank you, Hether. Good afternoon, and thank you for joining us on the Ardelyx's third quarter 2016 conference call. Earlier today, we issued a press release outlining Ardelyx's recent progress and financial results which is available in the Investor Relations of the company’s web site at ardelyx.com. On the call with me is Mike Raab, President and Chief Executive Officer, who will make some brief remarks and then we will open up the line for Q&A. Dr. Reg Seeto, Chief Operating Officer; Mark Kaufmann, Chief Financial Officer; and David Rosenbaum, Senior Vice President of Drug Development will join us for the Q&A session. During today's call, we will be making forward-looking statements related to the company’s future expectations, plans and prospects. These statements are subject to risks and uncertainties. Our actual results may differ materially as a result of various important factors including those described in the risk factors section of our Form 10-Q filed today. These statements represent our views as of today and should not be relied upon as representing our views as of any date in the future. We undertake no obligation to publicly update any forward-looking statements. With that, let me pass the call over to Mike.

Thank you, Monique, and good afternoon everyone. Throughout 2016, Ardelyx has made tremendous progress across all areas of the company which has set the stage for an important year in 2017. We have three ongoing Phase 3 studies with tenapanor, a Phase 3 study with RDX227675, on track to begin before the end of this year and a robust pipeline of earlier stage programs that are advancing to preclinical research and discovery. Due to its unique mechanism of action, clinical activity, generally well tolerated profile and oral administration, we are developing tenapanor for the treatment of hyperphosphatemia in patients with end-stage renal disease or ESRD who are on dialysis and for the treatment of patients with irritable bowel syndrome with constipation or IBS-C. Enrollment has now been completed in the first of two Phase 3 trials for tenapanor for the treatment of hyperphosphatemia in patients with ESRD on dialysis. We are on track to report results from this trial during the first quarter of 2017 and expect to initiate the second Phase 3 trial in the first half of next year. Lowering hyperphosphatemia in ESRD patients on dialysis remains a challenge for physician using today’s treatment option with reduced pill burden and just twice daily dosing, we believe that tenapanor has the potential to improve dosing adherence and compliance, and to better control hyperphosphatemia in these patients. In parallel with our hyperphosphatemia program, we are advancing two Phase 3 studies, T3MPO-1 and T3MPO-2 for tenapanor for the treatment of patients with IBS-C. Enrollment is well underway in both of these Phase 3 studies which are designed to support the registration of tenapanor for the syndication. We believe that tenapanor has the potential to improve patient satisfaction and tolerability in a population that currently has limited treatment options. We expect to…

Thank you. [Operator Instructions] Our first question comes from Yigal Nochomovitz from Citi Group. Your line is open.

Hi guys, thanks for taking the questions. I’m wondering if you could talk a bit more about the mechanism of action for tenapanor? I think you’ve obviously characterized this well in terms of sodium blocking. I’m just wondering if there is anything more you can say about how you understand the drug to be working with respect to blocking phosphate. Thanks.

Yes. Thanks, Yigal. So we have not released information yet on what we’ve done to elucidate that mechanism. We will be publishing on it. It’s clearly going to be a critically important part of how we differentiate ourselves versus binders. It’s an intriguing mechanism. I think it’s going to allow us to have some important conversations with nephrologists and creators for patients with hyperphosphatemia but we haven’t specifically described what that mechanism is and we will do so in upcoming meetings certainly in papers. But we also want to preserve the opportunity to intellectual property around which we could take advantage before releasing that information.

Okay, thanks. And also we saw an interesting study recently in literature suggesting that there is no drug interaction between tenapanor and sevelamer, and we thought that was interesting as potentially launching [indiscernible] to think combo studies down the road and wondering if you guys saw that study and if you had any thoughts on it? Thanks.

We published this along with AZ, so we are very familiar with it and we were very pleased to see that result at all. I think what we recognize or has to be recognized is combination therapy is standard there in a management of hyperphosphatemia for dialysis patients. How we ultimately move forward in combo therapy whether it’s fixed dose combos looking at it just to help physicians out, those are things that we are evaluating. Obviously our intellectual property covers fix those combinations as we thought that would be an important thing to cover in IP. Those are the sorts of study that we will continue to do as we help physicians treat patients with hyperphosphatemia.

Okay. Thank you very much.

Thanks, Yigal.

Thank you. And our next question comes from Matt Kaplan with Ladenburg Thalmann. Your line is open.

Hello, can you hear me?

Yes. Hi, Matt.

Hi guys, congrats on the progress so far. Just to follow-up on the prior question with respect to tenapanor, do you expect to have any presence or data at the upcoming ASN meeting later on this month?

Yes, there is some information there but not substantive yet. This is all coming live, so we will have a presence there but not a whole lot of information, certainly not in the mechanism.

Okay, fair enough. And then just digging into tenapanor and the Phase 3 T3MPO program, talk about how tenapanor differentiates from the current products available? I guess in development as well in IBS-C?

So let me speak first a little bit on how I see differentiation and then I have David address how we are in terms of development, whether there is any difference in what’s been done out there is what your question is?

Yes.

So in terms of differentiation, I think as I’ve said Matt before, really what I think our goal, our job now is in the pharmaceutical industry to develop or differentiated from an efficacy standpoint. That is a must going forward as well as a safety perspective. I think with tenapanor, if you look at our Phase 2b results, we clearly have a differentiated efficacy profile. And if we recapitulate in our Phase 3 that is clearly different than what you see out there today and presumably the same for synergy since those are basically the same mechanism of action. And as it relates to safety, again if we recapitulate in our Phase 3 what we saw in our Phase 2b, we’ll have a better safety profile as it relates to the market leader out there. In terms of differentiation of the way that we are developing the drug, let me have David address the clinical development program.

Yes, Matt. So our Phase 3 clinical trials from both an inclusion, exclusion criteria as well as the 12-week primary endpoint is exactly the same as what invested for their Phase 3 clinical programs. We also have a long term safety study which is also the same as what is expected in the space. So from a drug to development standpoint, we have not broken new ground where we perpetuating what they did, but as Mike said, based on our Phase 2b studies, we hope to see better efficacy and less tolerability issues.

Okay, great. That’s helpful. And then just shifting gears a little bit to your earlier stage pipeline, you mentioned that you’re on track to file an IND for your TGR5 agonist later on this year. Can you give us a sense in terms of the opportunity and the indication that that program could play a role in?

Yes, let me touch on it a little bit and then David can talk about Phase 1 design. If you look across all the different ways that both GLP-1 and GLP-2 which are the regulated by TGR5, there is a significant number of opportunities out there. And really what we are looking for in this Phase 1 trial is to see what the pharmacokinetic affects are, that TGR5 agonism. From there we will be able to look at what indications we want to go forward and we’ve seen great outcomes in our preclinical work in NASH and a number of other preclinical efforts but we’re going to make those decisions once we see those Phase 1 results. David, anything to add to that?

Yes, our goal in Phase 1 Matt is to establish the pharmacokinetics of RDX98940 as well as any TD response looking at GLP-1 and GLP-2 to total. And of course we will be doing standard safety that you would do.

And when should we expect to see some initial data from that? Is that first half of 2017 or latter half?

Yes, I don’t believe we’ve announced when we would have those data in hand but it’s a Phase 1 study so I think you’re not far off as you look at the timing of when those data would be available.

Okay, very good. Thanks for taking the question guys.

Thanks, Matt.

Thank you. And our next question comes from Mara Goldstein with Cantor Fitzgerald. Your line is open.

Yes. Thanks very much. With respect to RDX227675 and the onset of action study, how should we think about the study outcome against the perspective of typically looking at statistically significant endpoint and what is it that you’ll be communicating at the completion of that trial or that portion of the trial?

So let me address a little bit on this and then have David for additional. This is a trial that was asked of us by the FDA. We originally we’re going to have it as part of the Phase 3 program of its study to accelerate because there continues to be some interesting questions around onset of action as it relates to the way GS-9 and Relypsa compete. It’s our perspective and I think I’ve shared this before that was little bit of [indiscernible] fast onset of action when you’re going to be in the emergency department, you’re going to be using things like calcium gluconate, insulin which are cheap in order to drive capacity into cellular, and thereby decreasing hyperkalemia which is potentially a deadly situation. So on set of action I think is just something that’s going to be important for clinicians to understand as they begin to titrate in levels of potassium in serum. As it relates to statistical significance, I’ll let David address that but I think this is going to standard of care for any of us that are going to be in hyperkalemia marketplace in all aspects of how we treat our patients because you also don’t want to drive potassium too low in those mildly hyperkalemia patients which is the majority of them. They are taking drug like entresto and as a physician carefully monitoring the serum potassium decrease which you’re trying to target to optimize. David?

Yes, sure. So what we are looking at here is 10, 20 and 30 grams once a day arms and placebo, and what end point here is the slope of the decrease is serum K, and you are looking at the first 48 hours and you’re looking at the change of the slope between your drug treatment and placebo.

Okay. And so I guess I certainly understand that this is a work that FDA asked you to do. But is there a benchmark in which you consider it from a onset of action or success as it relates to whether or not you can use it accurately or just consistently the chronic used product. I mean is there some element of benchmark within that?

I think it’s one of things that we will know when we see it. There are some other quotes I can use about the Supreme Court but I won’t.

And I think more likely they’re not. This is going to be chronic used drug. The setting is a very small patient population.

Okay. And since you approach the political arena, I’ll just go there for a minute. Within renal proximity to data in the tenapanor program and I’m just wondering about within the prospective of being in proximity to healthcare reform yet again, how the precommercialization activities with respect to tenapanor maybe changing.

First, I’m happy to introduce Reg Seeto on this call. We’re thrilled to have him on board. I think the comment I would make first before he makes any comments is, we were in a complicated world when we launched back in my days. And there were turmoil that we had to work through, and in the end if you have the drug that helps for your patients most of whom are reimbursed through CMS you end up finding a path to getting them what they need. As we talked in the past, the bundle is not a concern of mine given the way that this has been pushed off over and over again, and the fact that this active ingredient would be both in IBS-C and in hyperphosphatemia diminishes that probability that much more. So I’m confident with successful data but we’ll find a path to commercialization. Reg?

Thanks, Mike. I think the scenario will continue to explore. So I think it’s one that still a bit uncertain but we clarify as time progresses. Thank you.

Okay. Thanks.

Thanks, Mara.

Thank you. [Operator Instructions] Our next question comes from the line of Mike King with JMP Securities. Your line is open.

Good afternoon guys. Thanks for taking the questions. Just a couple of quick ones. Just wondering if you guys are able to talk about unblended data from either T3MPO study regarding either dose titration and/or rates of diarrhea and whether those early incidents of diarrhea and the amount of dose titration is within your expectation?

David, why do not? Yes.

We can’t speak about that except one or two, make sure that you understand that those clinical trials are fixed dose 50mg BID, there is no dose titration in those two. But we don’t know it’s a double blind placebo controlled. So it’s really not something that real easy for us to be able to see.

And trust me, Mike. I ask David that every single day and he gives me the same answer.

I’m sure there is nothing if not consistent, and that’s a good thing. Second question I just wanted to ask spinning gears a little bit, you could talk about the TGR5 program especially as regards to the use in Liberty series. I know you guys had a bit of stealthy abstract that was accepted to the lever meetings and wonder if you could just share with everybody the biology underlying that, and whether and when do you have any plans to explore that in the clinical setting. Thanks.

That’s a – except for program in TGR5, that was the FXR program, Mike.

TGR, right.

Yes. We have two programs that may very well have benefit within lever disease, TGR5 the one that I mentioned in my statements but the tract which you refer was an FXR agonist. And it’s very interesting. If you look at the mechanism, the systemic ones look very, very interesting but have some liabilities. So if we deploy our minimally systemic, non-systemic or the chemistry that we undertake, maybe there is going to be a benefit there without mechanism. It’s still super early for FXR. We will continue the path that we’ve been on in the past as we look to preclinical models and look at development candidates, and those molecules that allows us to move forward. But it’s early days for FXR, TGR5 I think is going to be exciting over in 2017 for us to see what that PK/PD looks like and then ultimately how we may deploy that.

Great. Thank you.

Thank you. And our next question comes from Jason Gerberry with Leerink Partners. Your line is open.

Hi guys, thanks for taking my question. Mike, just going to curious as you guys get closer to tenapanor phase 3 data, how you guys are approaching business development just in terms of potentially lining up appropriate marketer for the product once you data in hand? Or do you just kind of wait until the data to enhance to start that process? And if you’re already kind of working on that process, what are the buyer look like for someone who wants to be in NGI, is it a biotech who is probably playing an IBD, is it a spec pharma company, is it a large pharma, Japanese pharma. Just curious if there is broad demand still for GI and more functional GI disorder. Thanks.

Sure. Let me make some preliminary comments and I’ll pass it over to Redge. What we have said consistently across our program is we have the luxury, waiting until Phase 3 data before we would contemplate out licensing whether it’s Asian rights, Canada rights, frankly Chinese rights and even U.S. rights if we choose to go down the path to primary care of licensing. One comment I would say at the outset is I think we are probably the best marketers of any of these programs because we know them as well as we do, and that’s clearly one of the path that we are considering. And it’s something in the change in healthcare environment that one can contemplate doing given the way concentrated debt files and script writers are. So all of that is under valuation and we wouldn’t have brought on someone like Redge if we didn’t look to see the opportunity of doing it on our own as a real option.

I mean clear it’s an area of interest from a lot of different ideas. And I think [indiscernible].

Okay, thanks.

You’re welcome.

Thank you. And our last question comes from the line of David Nierengarten from Wedbush Securities. Your line is open. If your phone is on mute, please unmute.

I’m sorry. I hope you can hear me now.

Yes.

So on RDX227675, I was just wondering given – looking at the 505 B2 pathway, how are you thinking about or if anything has changed with your thoughts about drug interaction studies and using data there? How that you would use data there as a reference molecule? Thanks.

So I’ll let David address it. But it has not done any drug interaction to study.

Exactly. So those part of the question there.

So that’s exactly right. So we start to start to undertake an extensive drug interacts program where we are looking at In Vivo results on many common drugs. In Vivo results were moving forward with any needed clinical TDIs [ph]. One thing that we want to make sure is filing our NDA. We understand clearly what drugs if any have to be dosed separately so that we have an accurate label with no black bucks warning.

Got it. And then maybe one other question on chronic dosing. Is it – I guess just for a little bit of background, is it known that tell us what causes the intestinal necrosis or with multiple dosing of – or do you think is there any other questions or feedback from the FDA on doing any additional work or things that would optimize your label versus [indiscernible]?

So David, let me make a couple of comments first and then if you can take from the regulatory question. First, if you look at all the courts – chronic approach to translate is that they are patient reports and are scattered in the very, very small percentage of total patients treated. And whether it is the shape of the particle or the significant amount of serve all, there is all sort of different ways and implications that have been including postoperative data when people were given this drug when they had no mortality. So I think there is lots of different indications as to why you saw some chronic necrosis but David I don’t believe we’ve gotten any specific guidance from the agency one way or another that would tell us that we couldn’t move forward with the plan that we have currently in place.

We’ve already presented plan to the FDA and there are no special things that we have to do. We just add one thing to what Mike said. It’s important to note that I think he may have implied it. Most of the cases seen were in cohort patient who would clearly therefore either hyperkalemia or other reasons. It really have ever been reported in the out patient population.

And David, I think the other and the other important thing to note is, where that any risk? That is one of the reasons we chose not to use Orbital. If we look at the way we differentiate ourselves as compared to the other products that are out there, we’ve eliminated sodium which was a bad act during the contact. Sodium existence to GS-9 and its truly fun intended counter intuitive teaser to counterion when you are trying to treat patients with hyperkalemia. We also eliminated serbital if there was any potential risk about being use of serbital. So what we try to develop as friendly – patient friendly as possible approach to managing hyperkalemia both in terms of the presentation of the polymer as well as the pace in flavoring that we done to make it as favorable and experience as possible.

Okay. Thanks, Mike.

Thanks, David.

Thank you. And our next question comes from the line of Tim Chiang with BTIG. Your line is open.

Hi thanks. Just one real quick question. I know number of the drugs that are in the IBS-C market, they are all dose only daily. I think that you guys are tenapanor BID, do you think twice a day dosing, do you think that is an issue for tenapanor? Do you think twice a day dosing isn’t going to be a big deal compared to like Ardelyx which is once a day dose?

Tim, it’s a great question and it’s obviously one that we considered. This is an extremely motivated patient population given the challenges that they face and having ideas. And when we did market research, this was not a hindrance whatsoever. That said, if you look at our Phase 2 I think we are taking you through this earlier on [indiscernible] we saw great results up in the 30% range but that was only a 4 week study in the overall responder rate. So we will likely going forward as we look at the strategies for the way that we commercialize this product, we will look at QD dosing, we will look at higher dosing and we will look at chronic idiopathic constipation. Remember, we were a private company modestly financed public company and needed to make choices as we did our clinical development. As we look to the 50mg BID data from the Phase 2b that clearly was the strongest result that we had, hence we went forward to design we have in the Phase 3. That has not stopped us from doing additional clinical development which is on the docket.

Okay, great. Thanks, Mike.

Thanks, Tim.

Thank you. And I’m showing no further questions at this time. I would like to turn the call back over to Mike Raab, CEO, for closing remarks.

Thank you everyone for joining today’s call. 2016 has been a very productive year and we look forward to a big year in 2017. Hether, you may now disconnect the call.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you all may disconnect. Everyone have a wonderful day.