Good day and welcome to the Ardelyx Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Caitlin Lowie vice President of Corporate Communications and Investor Relations at Ardelyx. Please go ahead.

Thank you. Good morning and welcome to our third quarter financial results call. During this call, we will refer to the press release issued earlier today which is available on the Investors section of the company's website at ardelyx.com. During the call, we'll be making forward-looking statements that are subject to risks and uncertainties. Our actual results may differ materially from those described. We encourage you to review the risk factors in our most recent quarterly report on Form 10-Q that was filed today and can be found on our website at ardelyx.com. Only elect to update these forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our views change. Our President and CEO, Mike Raab, will begin today's call with opening remarks and an overview of the company's progress during the third quarter of 2023. Next, Susan Rodriguez, Chief Commercial Officer, will provide an update on the performance of IBSRELA and the launch of XPHOZAH following its approval earlier this month. Justin Renz, Chief Financial and Operations Officer, will conclude today's prepared remarks with a review of the company's financial performance during the quarter ended September 30, 2023, before we open the call to questions. With that, let me pass the call over to Mike.

Good morning, everyone and thank you for joining us on the call. I'm very pleased to be here once again, just a short few weeks after we celebrated the approval of XPHOZAH. With this approval, we now have delivered on our mission to provide patients with medicines that matter for the second time. It is something I am immensely proud of. Today, Susan, Justin and I will share details on the performance from the third quarter, as well as important updates from the first couple of weeks following -- in the fourth quarter following the announcement of XPHOZAH's approval. Before I hand it over to them, let me share a few of my thoughts on the third quarter and what we expect in the near future for Ardelyx. First, IBSRELA momentum continues. Our quarter-over-quarter growth in Q3 was driven by a clear need patients have for new medicine to address the challenging and sometimes intractable symptoms experienced by patients with IBS-C. IBSRELA is establishing a unique role in what has traditionally been thought to be a challenging market to penetrate. We are demonstrating that when you have a novel mechanism product, with a strong safety and efficacy profile that is benefiting patients and when you're thinking differently about marketing innovative products that you can disrupt markets. Second, XPHOZAH is ready for success. As Susan discussed on our approval call, awareness, interest and intent to adopt exposed are high among the nephrology community. The response to our approval has been nothing short of amazing. It is also humbling as we now have the responsibility to deliver for patients. We've received words of congratulations from across the kidney community with nephrologists expressing their excitement about having this novel therapy available to prescribe for their patients. As we've shared, there is significant pent-up demand and we expect strong uptake at launch. Our sales team is already in the field and we expect to have exposed at our distributors shortly after the conclusion of ASN's Kidney Week [ph]; the new era for managing hyperphosphatemia on kidney patients is here. Finally, we are well resourced for the foreseeable future. We carefully and thoughtfully financed the company and have a strong cash position as a result, sufficient to fund the commercialization of XPHOZAH and support the critical ongoing investment in IBSRELA. We will also begin investments in R&D in the coming quarters as we work towards the next phase of Ardelyx. I will now hand it to Susan, who will share more on IBSRELA's performance and additional details on the launch activities for XPHOZAH. Susan?

Thank you, Mike. It is great to be back today, speaking about IBSRELA and now XPHOZAH. We continue to disrupt the established IBS-C market, with Q3 revenue for IBSRELA at $22.3 million, reflecting a 22% increase versus Q2. This first-in-class drug can offer meaningful benefit to patients who have been in need of a novel approach. As I've noted on previous earnings calls, our growth is consistent and persistent. New prescriptions are growing, retail prescriptions are growing. We continue to grow new writers and existing writers are expanding their use. These results reflect the extent to which physicians continue to identify more and more of their patients as candidates for IBSRELA, that patients are getting access to IBSRELA and that their treatment experience is favorable. Our team's efforts are supported by the strong clinical data package for IBSRELA which we continue to expand. Just recently, at the American College of Gastroenterology Meeting in Vancouver, we have a significant commercial and medical presence which included a well-attended product theater, as well as 2 posters and an oral presentation on data analysis about symptom response during treatment with IBSRELA. Our research was incredibly well received. Our poster titled, Tenapanor can improve Abdominal Symptoms Independent of Changes in Bowel Movement Frequency in Adult Patients with IBS-C, authored by notable opinion leaders, Dr. Darren Brenner and Dr. Tony Lembo, as well as Ardelyx scientists, was recognized with the Presidential Poster Award by the ACG Abstract Selection Committee. Awarded to less than 5% of all posters, this distinction recognizes high-quality, unique research. Our dedicated team is fully engaged with the physician community and carving out a meaningful role for IBSRELA among the IBS-C patient population. Based on the uptake we are seeing, it is clear that the potential for IBSRELA is high among this target…

Thank you, Susan. Ardelyx has delivered on a number of key milestones since August. Continued growth of IBSRELA across all key measures. The approval and the imminent commercial launch of XPHOZAH. The expansion of our commercial organization to support XPHOZAH. The approval of tenapanor for hyperphosphatemia in Japan. The approval of IBSRELA in Hong Kong for IBS-C which we announced this morning. And an amended loan agreement which provides additional cash and flexibility to fund our future growth. We find ourselves with a very strong cash position and we are well resourced to support our ongoing operations including the commercialization of both of our in-market products. With that backdrop, I will discuss the specifics of our financial performance. In the third quarter of 2023, we had total revenues of $56.4 million, compared to $4.9 million in total revenues during the third quarter of 2022. The increase reflects IBSRELA's net product sales growth, as well as milestone and collaboration payments from our international partners. Next, let me take you through the relative contributions of our revenue components during the quarter. First, as previously mentioned, we had U.S. net product sales of IBSRELA in the quarter ended September 30, 2023, of $22.3 million, a 22% increase from the $18.3 million we reported in the second quarter. As a reminder, in the third quarter of 2022, we reported IBSRELA net product sales of $4.9 million. Second, we reported other IBSRELA net product supply revenue of $2.1 million related to our international partners. This is compared to 92,000 new product supply revenue in the third quarter of last year. Third, we recorded $30 million in licensing revenue as a result of milestone and contract amendment payments in [indiscernible], following the approval of tenapanor for hyperphosphatemia in Japan in September. Fourth, we recorded a $2…

Thanks, Justin. This is an exciting time at Ardelyx. Within a couple of weeks, we will have XPHOZAH at our distributors and ready for fulfillment to patients alongside IBSRELA. We have focused on execution this year and yet we are not done. We have a lot of work ahead of us, continuing the momentum we've established with IBSRELA, ensuring a successful launch of XPHOZAH and looking ahead to next year, where we will begin investing for further growth. We have shown that we can deliver on our promises. We continue to strengthen our company and our balance sheet. We are well resourced and excited about what is to come. I want to thank the members of the investment community who have been alongside us on this interesting journey. However, none of this would have been possible without the dedication, the passion and the resilience of team Ardelyx. Thank you for what you do for patients every day. I will now open the call to questions. Operator?

We will now begin the question and answer session. [Operator Instructions] The first question today comes from Louise Chen from Cantor.

Congratulations on a strong quarter. I wanted to ask you, how are you thinking about gross to net for XPHOZAH? And then also, do you think there's a bolus of patients waiting for drug, just kind of curious how you think about how fast the uptake might be, especially in the last quarter of the year? Or do you expect more of the uptake to come in the first half of 2024. And then, last question I wanted to ask you was, obviously, you have a very strong cash position. What do you think your cash runway takes you out to?

Yes. So let me ask Justin to address the first and last question first. And then Susan, please, about the uptake.

Great. Louise, regarding our gross to net for XPHOZAH, our commercial strategy will be very similar to IBSRELA which means that we don't expect significant remitting to payers other than the statutorily required rebates to certain government payers which would obviously have a negative effect on our gross to net. But in general, we expect it to be very similar to what we saw with IBSRELA. There may be some seasonality in our gross to net, our first quarter being, perhaps, less than the other quarters due to the resetting of commercial copayment programs. But otherwise, we're very confident that it will be in -- certainly in the early years comparable to IBSRELA. And then regarding our cash position, you may see in our 10-Q which we filed early today that we no longer have a going concern which means our auditors are confident we have more than a year of cash. For us, we believe that it is more than that. We have enough cash runway for quite a while. We can't specifically put on because we're waiting to see how successful we are being close to launch but we're quite confident in our cash position. Susan?

Yes, Louise, regarding the uptake of XPHOZAH, you're exactly right. There is a very large group of patients today who, despite treatment with binders, are unable to consistently maintain target levels and patients that can't tolerate binder therapy. So there's clearly a nice opportunity there. And now, these patients will have a new option with XPHOZAH. I think what's important here is thinking about the integration of novel mechanism XPHOZAH into the nephrologist prescribing pattern. How exactly they're going to integrate use of XPHOZAH across their patient group. So it's always going to take some time for the physician community to adapt their practices, now that they have an expanded treatment armamentarium. So given that and given our promotional presence with nephrologists, we believe that uptick of XPHOZAH is really going to be really quite steady and consistent as they identify patients early that they believe are most in need of XPHOZAH and then based on their experience, proceed to expand their use to those additional patients that they're quite aware today are not meeting the target levels despite binder treatment.

The next question comes from Dennis [ph] with Jefferies.

A few questions from me. Number one, maybe on the congressional action to delay moving orals into the bundle. Can you comment if you haven't met with the CBO and what can you disclose from those discussions as it relates to XPHOZAH pricing? And how the $3,000 a month price would impact their cost estimates for moving orals into the bundle versus keeping them out? And then number two, on the IBSRELA guidance. Seems based of off of scripts which continue to generally grow week over week, your guidance for the year seems a little bit conservative for Q4. So is there anything you could be expecting in the quarter that investors are missing?

Sure, Dennis. So with any congressional action and meeting with the CBO, we don't meet with them. I've never seen that companies actually meet with the Congressional Budget Office. Any build going through Congress needs to get scored best of standard fare. So that's our expectation that's going to be happening here. Whether or not our price has an impact on that, again, that is the process that CBO goes through and that's not something that we have transparency to. With IBSRELA, I think is in the guidance, as Justin said and I think as you've seen, we take a very measured approach in the way that we have certainly financed the company and the guidance that we give. We're very confident with this range and felt that raising it the way we did and narrowing it was giving you a perspective in terms of our confidence of where IBSRELA revenue and uptake is going.

The next question comes from Yigal with Citi.

On the pricing for XPHOZAH, can you just give a little more insight into the thought process around the $2,960. If you look at the binders, obviously, they're priced around 200 a year back. You're about 75%, 75% to 80% premium. Obviously, you have a very significant value proposition with the unique actions and we don't have anything likely in the market. But nonetheless, maybe spend a little more time discussing the thinking around that type of [indiscernible].

Sure, Yigal. I think, what you just described as the significant difference in the opportunity and the benefit that XPHOZAH will bring to patients, that's really the differentiator here. It's looking at what we're thinking is the best thing and what's most appropriate for patients, especially in the context of other branded binders within the marketplace. So we're very comfortable with where we've landed and think the price is exactly where it needs to be and it's appropriate for the patients and what we are going to be bringing for them.

And then maybe for Susan. Susan, if you could talk a little bit more about IBSRELA, [indiscernible] but could you tell us what the refill rate is and the number of scripts per writer so far, if that's data you have access to?

Yes. Yes, we track that closely. We have not specifically disclosed those growth rates. But what I can tell you is that the refill rates are growing at comparable or greater than the new Rx rate. So those are showing very healthy growth and that has been persistent. So reflecting that physicians are continuing to write new scripts for patients. And when those scripts are written, they're getting refilled. So it's very encouraging, looking at those rates. And in terms of the average script per writer, again, it's not a specific metric we have disclosed but we track that very closely. And what's really encouraging is that every single month, we see a new cohort of writers joining the IBSRELA writing group. So we're persistently accumulating writers. And when you track existing riders, monthly on a persistent level, they're increasing their prescription volume for IBSRELA. So all of those fundamental demand indicators continue to be very strong.

Okay. And then one quick one for Justin on the tax and the finances. Obviously, you highlighted a very strong cash position as of yesterday. I'm just curious, you also mentioned that you did report positive net income, although I know that these are driven by, perhaps, some onetime items. But nonetheless, I'm just curious, Justin, if you could kind of give us a sense as to the likelihood that you might need to take use the SLR credit line again? Or is that more of a backup plan and it's not really something where you're expecting to be done again?

I'm sorry, I trouble understanding the second part of your question. You asked about our cash runway because there was onetime items?

And then whether we'd be accessing the credit that we have or financing the company in the future, how's that?

Yes. So we're very pleased with our third quarter. We're clearly not in a point yet where we can share where breakeven is but we think a very measured approach to our funding, as you've seen. I do think with our internal projections, we can be very flexible and patient. We have until March 15 of next year to potentially draw the next tranche of debt. And so that's something that, as the team, we'll evaluate as we see how well XPHOZAH launches and the continued growth of IBSRELA. So it's something that we want to have the flexibility on. We don't have any intentions to do a significant equity raise this time. We're always looking at all of our different ways to raise capital when appropriate.

Yes. And Yigal, what I'd add to that is SLR has been a spectacular and unique partner in this whole process for us, right? I mean, you think about when we first established a relationship with them, the company was in a very different position. And the terms around this loan are really favorable to us and what we're able to accomplish with it which is why we drew down the 22.5%. The additional 50 at our discretion is nice to have. And we may, at some point in the future, take that down before the time frame that Justin just mentioned. But I think it's important that we have taken the approach that we have and have strong partners like SLR to grow the company to where we want it to be.

The next question comes from Ed [ph] with H.C. Wainright.

Congrats on the approval in the quarter. First, I wanted to ask about IBSRELA, given the guidance, the new guidance range. If you could discuss sort of what you're continuing to see as drivers of additional uptake, both with new and existing writers. And then, turning to XPHOZAH. I'm wondering if, with initial sales in the fourth quarter, are you expecting to report quarterly metrics, say, fourth quarter or early next year and sort of disclosing those and tracking those beyond scripts? And then finally on pricing, I know this was already brought off but I wanted to ask how you came to that number as you think about balancing the ability to capture the differentiated value proposition with the patient access and affordability that you've mentioned is important for your launch?

Sure. Let me make a couple of comments on all of those, Ed. And then I'll ask Susan to address all of them as well. So the IBSRELA uptake dynamic, it's because the drug works, right? It is something that people are getting the samples and then their first prescription and the drug is doing something that they've never experienced before with the products that they've previously been utilizing. So that's really what's driving us, it's the experience is positive. And ArdelyxAssistT program that facilitates access is extraordinarily important and a hallmark of what we do and the way that we help patients get access to the drugs that we develop. With XPHOZAH metrics, we'd love to provide as much as we can but we'll provide what we think is appropriate. Early in the launch, we want to make sure that as we did with IBSRELA, it's probably 4 to 5 quarters of these questions being asked and that we'll do the best to answer them before we're giving more solid metrics as we see as things evolve. And with pricing, pricing is an art as well as a science. I think, what we have done here given the expansiveness of the entirety of what we do for patients, that this is a completely appropriate price for what this drug brings because there are no other drugs to manage phosphorus that our next line opportunities with a novel mechanism that may very well be the way that we can ultimately get a greater percentage of our patients to goal. And that's what we should all be focused on is that we, with this approval and the field force out there already, next -- this week, with ASN is going to be spectacular. And we're all going to learn a lot about this together. And we feel very confident that we have prices appropriately and are going to be reflecting that in uptake over the ensuing quarters that we were together talking about this. Susan, would you like to add anything?

Yes, Mike. I think in terms of -- let me take the IBSRELA aspect of your question first and then touch on the XPHOZAH of pricing. I think for IBSRELA, what we're finding is -- I mean, there are many high-writing physicians who are just beginning to prescribe IBSRELA. And as we get in their office, the frequency and the sampling, we continue to bring on more and more new writers. So that's really -- there is a lot of runway there. We continue to bring on new writers for IBSRELA. And then as I mentioned before, on top of that, the existing writers expanding their use across their patient population. And what we're finding, even at the third dimension, is the growth driver is as they gain the favorable experience with IBSRELA, they're expanding their view as they see patients daily in their office on patients who could benefit from IBSRELA. So we have very, very strong growth dimensions there in view for IBSRELA taking us into the future. I think in terms of XPHOZAH pricing, as Mike mentioned, we consider multiple dynamics. Let's just talk a little bit about -- obviously, we talked about the novelty of the drug, the unmet need and our commitment to patient access. If you look at the CKD pricing landscape, there have been a few innovations launched recently which is really encouraging for CKD patients on dialysis in high unmet need areas like nephropathy, IgA nephropathy, lupus nephritis, those products price in the range depending on -- which one, depending to $4,000 to $10,000 a month. If you look at specifically hyperphosphatemia, I know Yigal had mentioned the branded pricing of the product. If you look at the number [indiscernible] which product they're on, the expense of granted binders is actually distributed across a pretty broad range which ranges from $1,400 a month to, as we estimate around $2,400 a month. So in that context, to consider the overall CKD pricing landscape, the hyperphosphatemia branded binder range of cost per month, the novel innovation that XPHOZAH represents, we believe that it's an appropriate price point. You had mentioned the commitment to access, Mike has emphasized this, both for IBSRELA and XPHOZAH, we are quite confident with the program we have in place that we're going to support the nephrology offices with this prior-authorization submissions so patients can gain access to XPHOZAH and that XPHOZAH will be affordable, either because we can offset their co-pay for commercial patients. And for patients who can't afford the product, too, who don't have local pay [ph] program, they would be eligible for our patient assistance program. So access and affordability really is our primary focus and that's what's going to be important to bring XPHOZAH to these patients.

Very helpful. Look forward to seeing the team later this week in Philly.

We'll see you then.

Next question comes from Joseph Thome with TD Cowen.

Maybe the 2 on IBSRELA uptake. I guess, are you seeing physicians -- obviously, the drug is launching well. Are you seeing physicians want to use the drug earlier in the treatment line of their patients? Or obviously, we talked about the target, post market [ph]. But are you seeing them want to use it earlier? And then second, we did see the Phase III trial in adolescent patients. I guess, what is the current uptake in adolescent patients between 12 and, I guess, 17, 18 years of age? And what's sort of the eventual goal of this study? Would it be just to remove that line on the label that said safety and efficacy of the drug aren't available in pediatric patients as of 18? Or is there something else that can be done with out of the study readout?

Sure. And I'll ask Susan to speak to the IBSRELA uptake. But first, let me address the pediatric adolescent question. That was an interim look at some of the data that was presented. We are still indicated only for adults with IBS-C. So that hasn't changed. So any insights that we have, I can't think of any that say that we're treating adolescents because that's not indicated in our label nor is first-line therapy, right? I mean if you look at the way that we position this, it is a drug that's going to be used for patients that are no longer responding to the GCC agonist. Specific feedback as to whether or not people are using it earlier, Susan, do you want to address that?

Yes. Actually, it's interesting for -- if you recall, we have a very focused approach calling on the highest writing physicians for IBS-C indicated prescription. For those physicians, the patients they see in their office is daily have all been cycled -- have cycled through GCC agonist. So very important to think about the context on where we're focused with IBSRELA. So for those physicians, [indiscernible] typically have already been treated with these products. So it depends on how you define early. What we're finding is that, because the patients meet already the prior authorization criteria, it's really the physician's eagerness in identifying increasingly patients that they believe can benefit from a novel option. Remember that the overall label for IBSRELA does support [indiscernible] but in our case, focusing on these high writing physicians, it's really not an issue for the patients who walk into their office every day meet the prior of criteria.

The next question comes from Matt Kaplan with Ladenburg Thalmann.

Congrats on the strong quarter. Just focusing on IBSRELA a little bit. Maybe Susan, can you talk about how patients are using IBSRELA in a real-world setting now versus the use in the long-term clinical studies?

Yes, Matt. Actually, what we're finding, I mean our clinical data package really shows a rapid response to IBSRELA and a sustained response to IBSRELA which is really a piece of our overall product profile and clinical data profile that physicians respond very favorably to. And what we're finding in the real world is that that has been their experience that patients have responded to IBSRELA. And when they respond to IBSRELA, they continue to have a sustained effect. I mean obviously, you're not going -- it's not going to be the best -- the right drug for every single patient but where the physician feedback really has been quite favorable on their treatment experience, consistent with their expectations based on the clinical data package. And [indiscernible] tracking the launch over time and persistently they're reporting either moderate or high satisfaction with treatment with IBSRELA and reporting low discontinuation rate.

All right. And then I guess, given the similarities between the IBS-C market and hyperphosphatemia market, in terms of going into these 2 markets with a novel mechanism of action, combined with the unmet need. Can you talk a little bit about the learnings that you've had in the launch of IBSRELA that you're going to apply to XPHOZAH?

Sure, Matt. Susan, please.

Yes. So yes, you're spot on in terms of the parallels between the 2 markets. And a very important learning is the physician interest, because of the limited options that they have had and the recognized unmet need, their interest in the novel mechanism profile, understanding the way the drug works uniquely and its clinical data package. So we're very much science-based, clinical-based cells, patient-based cell. And also learn the criticality of emphasizing our commitment to patient access and affordability. So physicians, really, they prescribe based on patients needing a drug and it's important that we encourage them that they do not have to have a concern around the prior authorization process, that we can support that. We can remind them that they have familiarity with that administrative process with other drugs they write and this one is no different. And in this case, the patients that they're identifying, who are in need of our novel drug implicitly meet the prior authorization criteria. So all of that will be very critical in really supporting physician uptake, integrating novel mechanism XPHOZAH into their treatment patterns for these patients who have, for so long, have had no options outside of binders.

And Matt, what I would add to that is the power of ArdelyxAssistT and the comprehensiveness of that program, when physicians utilize it in a way that it's been designed, I think they find an extraordinarily seamless program where they get confidence that if they're going to write a script, that their patient is going to get it, irrespective of whether or not it's a co-pay paydown, it's an affordability issue, Medicaid, Medicare, Ardelyx is there to accomplish an awful lot. So it's really the -- that program and how physicians and ultimately the patients who are receiving, whether it's IBSRELA or XPHOZAH are finding that ArdelyxAssistT is really doing the job that it's been designed to do.

Okay, great. And then, last question. Can you provide a little bit more detail on the presence that you're going to have at the upcoming ASN meeting later this week?

Sure. Susan?

Yes. So we will have a very strong presence for XPHOZAH at the upcoming ASN meeting, we will have a strong promotional booth presence, reflecting our whole launch campaign for XPHOZAH. As we mentioned earlier in the narrative, we have a sales force out and deployed calling on nephrology health care providers as we speak. So we'll have a strong promotional presence at ASN. Reminder at banners, I think anywhere you look across the ASN floor, you're going to see XPHOZAH and its novel blocking mechanism campaign. We also have a clinical scientific presence at ASN, we'll have a product theater where we have opinion leaders presenting on the novel product profile of XPHOZAH and its clinical data package. So we're quite encouraged about all of the events at ASN and hopefully, look forward to seeing you there.

The next question comes from Laura Chico with Wedbush Securities.

This is [indiscernible] on for Laura Chico. How should we be thinking about gross to net dynamics for exposure pricing over time? And what your steady-state rate expectations for gross to net discount? And then just our last question is, could you perhaps review why IBSRELA, as a competitor, makes sense?

Let me start with the last one first. It's a great question, is why does IBSRELA as a competitor makes sense? I think Susan is the best one to address that, given what the experiences Ardelyx is that we're seeing in the field. And then, I'll ask Justin to address gross net for XPHOZAH and discounts. Susan?

Yes. So I think IBSRELA as a comparator, let's just take a step back and I think it's some of the parallels that Matt alluded to. So as a novel mechanism drug, a specialty drug, the gross to net components, take into account the distribution, the mandated government rebates and other considerations that [indiscernible] can touch on. Overall and the gross and [indiscernible] between the 2 products, we're going to need to wait and see because the mix of patients, the payer mix of patients also determines the extent to which the government mandated rebates become a part of your gross to net profile. But what is comparable between the two which is an important comparator, is that there will not be incremental rebates that we're providing payers for access to the drug. Access to the drug will be achieved by a prior authorization because for these patients, in both cases, they have limited options and physician prescribing our novel mechanism drug is because those options have not been adequate and they're in need of a new option. So that's how patients will access our drug. And therefore, there will not be the incremental payer rebate gross to net item which we get a lot of questions on that because I think for product launches, those are rebates that are negotiated over time, so they start to integrate themselves into your gross to net profile. That is one item that we can tell you today, it's not going to be something that's going to show up on the profile for either product.

Just to follow up on the question, were you asking about the financial comparator or the clinical comparison to other drugs in the market?

Financial comparator.

Great. Justin, do you want to address those net for XPHOZAH and discounting?

Sure. Susan briefly touched on it but just to elaborate. The most important thing for us is access and making sure the patients have access to it. And so our commercial strategy will be very similar to what we did with IBSRELA which means, as Susan mentioned, we don't do significant repaying the payers but we will have our same generous commercial co-pay, commercial buydown process, where if you have commercial coverage, we will take care of your co-pay 100%. And so as a result, we may expect to see the seasonality that we saw with IBSRELA, where in the first quarter of the year, when many patients plans reset, there may be deductibles where we will help the patient meet that need and then it may improve, if you will, over the course of the following subsequent quarters. So as a general premise, with IBSRELA, as you may have seen, our first quarter was just about 33% and it's come down into the high 20s over the course of this year. And I think it's fair to say, at least initially, we expect similar gross to net margins for XPHOZAH.

This concludes our question-and-answer session. I would like to turn the conference back over to President and CEO, Mike Raab, for any closing remarks.

Thank you, everyone, for joining us this morning. Before I close the call, I want to recognize a member of the kidney community who we recently lost, Derek Forfang. Derek was an incredible person and patient advocate who meant so much to so many people in the kidney community and beyond. For Ardelyx, Derek brought the patient voice to Ardelyx Scientific Advisory Board and was the driving force behind the creation of the Ardelyx Patient Advisory Council. Derek was a warrior, who, despite his many health challenges, always persevered, put others first and continued his mission to advocate for kidney patients with a smile. Derek's passing is a reminder to all of us that our job is not done. There are so many patients with CKD who need innovation. And we need to continue investing in and developing innovations with urgency for this community of patients. With that, we can close the call. Thank you, operator.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.