A class action lawsuit was filed against Ardelyx, Inc. (ARDX) by Levi & Korsinsky on August 16, 2024. The plaintiffs (shareholders) alleged that they bought ARDX stock at artificially inflated prices between October 31, 2023, and July 1, 2024 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Ardelyx stock during that period can click here to learn about joining the lawsuit.
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Ardelyx is a biopharmaceutical company focused on developing treatments for renal diseases. The company’s drug IBSRELA (tenapanor) is used to treat irritable bowel syndrome in adults with constipation (IBS-C). Also, its other drug XPHOZAH (tenapanor) is used to reduce serum phosphorus levels as an add-on therapy in adults with chronic kidney disease (CKD) on dialysis. The company’s claims about XPHOZAH are at the heart of the current complaint.
Ardelyx’s Misleading Claims
According to the lawsuit, Ardelyx and two of its senior officers and/or directors (Individual Defendants) repeatedly made false and misleading public statements throughout the Class Period. Particularly, they are accused of omitting truthful information about the inclusion of XPHOZAH in the Center for Medicare and Medicaid Services (CMS) Transitional Drug Add-on Payment Adjustment (TDAPA) program from SEC filings and related material.
For instance, in a quarterly report filed with the SEC during the Class Period, the company pointed out certain factors that could impact future revenues and funding requirements as well as the commercial success of XPHOZAH. It further stated that the revenues from the sale of the drug could be meaningfully lower in the TDAPA period than if the drug is not bundled into the ESRD (End-Stage Renal Disease) PPS (Prospective Payment System).
Further, until July 2, 2024 (event discussed below), the company made statements that failed to clearly disclose its decision about whether it intends to apply or not apply for the inclusion of XPHOZAH in the TDAPA program.
Plaintiffs’ Arguments
The plaintiffs maintain that the Defendants deceived investors by lying and withholding critical information about the company’s business practices during the Class Period. Importantly, the Defendants are accused of misleading investors about the commercial prospects of XPHOZAH.
The information became clear on July 2, 2024, when Ardelyx revealed that it has decided against applying for the inclusion of XPHOZAH in the TDAPA program. The company explained that it took this decision “to preserve patient access to its phosphate absorption inhibitor XPHOZAH.”
Ardelyx added that its review of the CMS policy to include oral-only medicines in the PPS and the 2025 ESRD PPS Proposed Rule released on June 27, 2024, revealed that the policy and the way in which CMS intends to implement it could lead to major restrictions on the use of XPHOZAH for all patients. Following the news, ARDX stock collapsed by 30.3% on July 2.
To conclude, Ardelyx allegedly misled investors about the commercial prospects of XPHOZAH and failed to provide clarity about its inclusion in the TDAPA program.
