Our 12-month target price for ARDX is $10, derived using a discounted cash flow (DCF) analysis. We use a weighted average cost of capital (WACC) of 10% and a -25% terminal growth rate post 2033. Ardelyx’s issued and pending patents are expected to expire in 2033 in the US and EU for Ibsrela and 2034 for Xphozah.

We rate ARDX High Risk based on a quantitative screen of volatility in the stock. Share performance is closely linked to commercial launch progress for Ibsrela in IBS-C and Xphozah in hyperphosphatemia. Shares could fail to reach our target price if sales fall short of near-term expectations or appear unlikely to meet long-term peak sales estimates. Specific risks include: 1) lower uptake of Xphozah due to inadequate physician outreach from the company, 2) Xphozah’s lack of revenue potential in Medicare patients results in a lower TP vs what we currently, 3) the Ibsrela launch in IBS-C plateaus earlier than anticipated, and 4) a serious safety signal arises with either Xphozah or Ibsrela in the commercial setting.