ARDX Stock Tumbles As Xphozah Loses Final Medicare Reimbursement Battle

• Xphozah is used to lower high phosphate levels in patients with chronic kidney disease who are on dialysis.
• Being moved into the bundle typically reduces pricing power and can slow adoption by dialysis providers compared with separate reimbursement.
• Jefferies noted that the appellate court decision effectively resolves the long-running legal challenge.

Shares of Ardelyx (ARDX) fell 8% on Friday after a federal appellate court reaffirmed a lower court decision and dismissed the company’s appeal regarding its drug Xphozah not being eligible for separate reimbursement under Medicare.

The stock clocked its worst day since late February on Friday.

Court Decision Ends Legal Challenge

The ruling clears the way for Xphozah to be included in Medicare’s End-Stage Renal Disease (ESRD) bundled payment system. Under this system, dialysis centers receive a fixed payment that covers most services and medications for patients. As a result, Xphozah will no longer be reimbursed separately under Medicare Part D.

The U.S. Court of Appeals for the D.C. Circuit said federal law prevents judges from reviewing Medicare’s decision to include certain kidney drugs in the dialysis payment bundle. As a result, the appeals court dismissed Ardelyx’s case and upheld the lower court’s ruling.

Xphozah is used to lower high phosphate levels in patients with chronic kidney disease who are on dialysis. Being moved into the bundle typically reduces pricing power and can slow adoption by dialysis providers compared with separate reimbursement.

Jefferies View

Jefferies noted that the appellate court decision this morning effectively resolves the long-running legal challenge. The firm had viewed the appeal as a “free call option” and said investors had not been heavily focused on it as a major catalyst.

“The loss shouldn’t fundamentally change anything,” Jefferies wrote in a research note.

However, the analyst flagged that second-quarter sales of Ardelyx’s other product, IBSRELA, are likely to come in below consensus estimates. With the Medicare appeal now behind the company, Jefferies said shares could face some near-term pressure. The firm maintained its ‘Buy’ rating and $15 price target on Ardelyx, representing a potential upside of about 170% from the last closing price.

Ardelyx’s two main products are IBSRELA, which treats irritable bowel syndrome with constipation and has shown strong growth, and Xphozah. The company has continued to report revenue growth from both drugs despite the reimbursement uncertainty surrounding Xphozah.

How Did ARDX Retail Traders React?

On Stocktwits, retail sentiment around ARDX stock jumped from ‘neutral’ to ‘bullish’ territory over the past 24 hours, while message volume remained at ‘high’ levels.

“The court case always was a long (as in: loooooooong) shot. Today’s news shouldn’t change a thing,” a Stocktwits user said.

“Fingers crossed that Ardelyx focuses on execution from now on,” another user wrote.

ARDX stock has fallen 5% year-to-date. 

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