Ardelyx Inc (ARDX) Hits the Home Run; BTIG Boosts Price Target

Tim Chiang now sees a bigger per share value for ARDX's tenapanor in the IBS-C market.


Ardelyx Inc (NASDAQ:ARDX) shares rocketed 44% yesterday after word got out that the drug maker’s second Phase 3 trial investigating tenapanor in irritable bowel syndrome with constipation (IBS-C) was a massive success.

Investors and analysts alike are thrilled that Ardelyx achieved statistically significant results across the board, from primary to secondary endpoints, and BTIG analyst Tim Chiang believes this “home run” was crucial after May’s lackluster T3MPO-1 study in chronic kidney disease (CKD). This drug maker is getting a new shot of bullish conviction from Chiang, who spotlights an enterprise value circling $107 million- and still carrying “significant upside potential.”

Finding tenapanor even more commercially valuable now that the data read-out points to a “solid efficacy profile” that rivals Allergan and Ironwood’s Linzess, the analyst reiterates a Buy rating on ARDX stock while boosting the price target from $12 to $15, which implies a 92% increase from where the shares last closed. (To watch Chiang’s track record, click here)

Chiang opines, “With the solid pivotal results shown from this Phase 3 study, we think tenapanor’s efficacy / side effect profile will be competitive in a sizeable market where there are more than 30M patients with IBS-C. Based on a 2H18 NDA filing, we expect an FDA approval decision by 2H19. We believe tenapanor has the potential to become a significant new treatment for IBS-C, with peak sales potential of $500M or more by 2025.”

Anticipating Ardelyx could make a real name for itself in more than one market, the analyst concludes, “We believe ARDX’s tenapanor (a twice-daily dosed tablet) has a unique mechanism of action that differs from existing IBS-C treatments like Linzess. Tenapanor acts locally in the gut to reduce sodium and phosphorus absorption in the GI tract, without any absorption into the bloodstream. In our view, tenapanor could be a meaningful new potential treatment for patients suffering from hyperphosphatemia and IBS-C. We believe both of these segments are sizeable market opportunities.”

Moving forward, Chiang anticipates the drug maker has enough cash to fund development for its R&D pipeline, projecting costs of around $94 million this year and roughly $149 million of cash on the balance sheet closing out the second quarter.

Wall Street praise looks initially compelling for this biotech player, as TipRanks analytics exhibit ARDX as a Buy. Based on 2 analysts polled by TipRanks in the last 3 months, both rate a Buy on Ardelyx stock. With a return potential of 92%, the stock’s consensus target price stands at $15.00.