A kidney disease drug that seemed to have little likelihood of receiving Food and Drug Administration approval received an unexpected boost late Thursday, when a committee of the agency's outside advisors voted in favor of the proposition that the drug's benefits outweigh its risks.
The drug, Ardelyx's (ARDX) tenapanor, is under consideration for FDA approval as a treatment for elevated levels of serum phosphorus in the blood of chronic kidney disease patients receiving dialysis. The drug is already approved as a treatment for constipation in patients with irritable bowel syndrome, and marketed under the name Ibsrela.
The FDA's advisors voted nine to four in favor of the risk-benefit profile of tenapanor administered alone to treat high serum phosphorus levels, and 10 to two in favor of its risk-benefit profile in combination with a drug known as a phosphate binder.
Investors had attributed low odds to the drug receiving FDA approval, and the agency isn't required to follow the advisory committee's guidance. What's more, given the lengthy and unusual path the drug has taken so far through the FDA's approval process, the path ahead for the drug is complicated, and somewhat hazy.
Still, shares of Ardelyx surged 45% to $1.77 in recent Thursday morning trading, after spiking more than 50% before the market open. The stock saw at least one upgrade Thursday morning.
That upgrade came from Piper Sandler analyst Christopher Raymond, who raised his rating on Ardelyx to Overweight from Neutral. Raymond set a target price of $8, up from his previous target of $3.
"While we found the vote itself remarkable, more meaningful was the fact that the vote was not split along 'party lines,'" Raymond wrote. "Three nephrologists, three cardiologists and both biostatisticians on the panel voted in favor of the monotherapy benefit/risk."
Ardelyx shares were trading at $1.94 before the market opened on Thursday, up from its previous closing price of $1.22. Trading was suspended much, if not all, of the day on Wednesday.
Shares had traded in the $7 to $8 range until July of last year, when the FDA unexpectedly rejected Ardelyx's application for tenapanor's approval, sending the stock down 74% in a single day. At the time, the agency told Ardelyx that while the drug did reduce serum phosphorus levels in the chronic kidney disease patients, the actual effect was "small and of unclear clinical significance."
The rejection took investors by surprise, and analysts suggested that the agency's position was unfair. Piper Sandler's Raymond wrote at the time that the FDA seemed to have "moved the goal posts" by raising questions about the clinical significance at the last minute, after the agency guided the design of Ardelyx's trial.
Ardelyx appealed the decision once and was rejected, but in April of this year, the company said a second appeal had resulted in the FDA agreeing to schedule an advisory committee meeting. The FDA's briefing documents, released on Monday, reiterated the FDA reviewers' questions about the drug's clinical benefit.
"The clinical significance of the magnitude of the treatment effect is unclear," the reviewers wrote in the briefing document. "While there is well established precedent for accepting serum phosphorus as a surrogate endpoint and basis for approval in this therapeutic area, there is no precedent for accepting treatment effects of the magnitude seen in this development program."
Expectations for a new outcome were low going into Thursday's meeting, and the advisors' overwhelming support for the drug's risk-benefit profile, in the face of the agency's skepticism, took analysts by surprise. A positive vote by the advisors, however, doesn't necessarily guarantee FDA approval.
"This is somewhat uncharted territory as it's rare for an appeal to be granted an [advisory committee hearing]; even more rare for the [advisory committee] to resoundingly reject FDA's rationale," Piper Sandler's Raymond wrote.
Now, the FDA's Office of New Drugs, the entity to which Ardelyx had submitted its second appeal, will make a decision within 30 days on that appeal. If the office finds in Ardelyx's favor, the company would then need to resubmit its application for approval of tenapanor. Raymond wrote that he expected approval of the drug in the new indication at the end of next year.
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
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