Struggling Ardelyx to raise $110M privately; kicks on with troubled tenapanor

After a year of setbacks that saw it lose Big Pharma partners and its key drug flunk a trial, Ardelyx ($ARDX) is now looking to raise a third of its market cap in a private placement.

The Californian biotech said in a statement released this morning that it will sell shares of its common stock for around $110 million in a private placement, with the deal set to be done by early next week.

Those taking part consist of new and existing investors, including: New Enterprise Associates--the company's largest stockholder--as well as Australia's Future Fund, Rock Springs Capital, and others. The biotech had a market cap just short of $300 million as of close yesterday, making this a fairly major raise.  

This follows on from a deal last summer that saw it sell $77.8 million worth of shares in a private placement--money that was used to accelerate its pipeline.

This latest set of cash will be also be used for R&D, specifically for the Phase III development of tenapanor for two indications: irritable bowel syndrome with constipation (IBS-C) and hyperphosphatemia (elevated level of phosphate in the blood), as well as development of its candidate RDX227675 for the treatment of hyperkalemia.

This means the company will keep plugging away with tenapanor--which is designed to clear excess sodium from the gastrointestinal track--despite the drug flunking one trial and showing high adverse events in other.

In May of last year, it posted data showing tenapanor flubbed the primary endpoint among 154 patients with Stage 3 chronic kidney disease (CKD) and Type 2 diabetes, failing to significantly decrease the urinary albumin-creatinine ratio compared to placebo.

Just before this, the drug met its main efficacy goal in a Phase IIb trial on dialysis patients with dangerously high phosphate levels--but not without charting alarming rates of diarrhea compared to placebo.

It did also hit the target in a Phase IIb study of the drug for IBS, but investors were rattled by signs that the drug triggered serious diarrhea in many patients and triggered a rout, with shares plunging 30% in April last year when the data were posted. 

AstraZeneca ($AZN) signed a $272 million partnership pact on the drug back in 2012, but last year pulled out of the deal, giving rights back to Ardelyx after one too many setbacks (at a cost of $25 million to the biotech).

But remaining positive the drug can be a success, the biotech said in a statement that its new cash would go toward completion of the first registration trial for tenapanor to treat hyperphosphatemia in ESRD patients on dialysis, and initiation of a second registration clinical trial.

It will also pay toward finishing the T3MPO-1 and T3MPO-2 tenapanor Phase III trials to treat IBS-C. The biotech said of these studies that, “assuming success”, these would be used to help it file an NDA for tenapanor.

Ardelyx had also been working with Sanofi ($SNY) on preclinical treatments that target NaP2b, a phosphate transporter. Under that deal, signed in 2014, the biotech was eligible for up to $198 million, plus tiered royalties on any approved products.

But this recently went sour too when last fall, the French Big Pharma backed out of its collab, returning a handful of candidate treatments for high phosphates in patients with kidney disease.

Both pharmas had helped raise a $60 million IPO for the biotech in 2014--but the company is now completely on its own.

Meanwhile, the company said it will also push with more testing for its hyperkalemia (a condition marked by high potassium levels in the blood) candidate RDX227675, its experimental potassium binder. Specifically, the biotech is looking to begin a Phase III in preparation for registration, it said.

Hyperkalemia is an emerging market with potential blockbuster sales involved, but the road to approval and uptake will likely not be easy.

The biotech need only ask its former partner AstraZeneca, which is currently trying to clean up manufacturing issues from an acquisition that has delayed the U.S. approval of its hyperkalemia candidate ZS-9 by around a year.

This has given Relypsa’s ($RLYP) drug Valtessa room to grow in this emerging market, which could be worth as much as $6 billion.

The biotech's shares were up by more than 13% by 10 a.m. eastern time on the news. 

- check out the release

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