ARDELYX, INC.

NOTE 1. NATURE OF OPERATIONS

We are a biopharmaceutical company founded with a mission to discover, develop and commercialize innovative, first-in-class medicines that meet significant unmet medical needs. We developed a unique and innovative platform that enabled the discovery of new biological mechanisms and pathways to develop potent and efficacious therapies that minimize the side effects and drug-drug interactions frequently encountered with traditional, systemically absorbed medicines. The first molecule we discovered and developed was tenapanor, a minimally absorbed, first-in-class, oral, small molecule therapy. Tenapanor, branded as IBSRELA®, is approved in the U.S. for the treatment of adults with IBS-C. Tenapanor, branded as XPHOZAH®, is approved in the U.S. to reduce serum phosphorus in adults with CKD on dialysis as add-on therapy in patients who have an inadequate response to phosphate binders or who are intolerant of any dose of phosphate binder therapy.

We operate inone business segment, which is the development and commercialization of biopharmaceutical products. Refer to Note 12. Segment Reporting for further discussion on our segment reporting.

Basis of Presentation

These condensed financial statements have been prepared in accordance with U.S. GAAP and pursuant to the requirements of the SEC for interim reporting. As permitted under those rules and regulations, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted. These condensed financial statements have been prepared on the same basis as our most recent annual financial statements and, in the opinion of management, reflect all normal and recurring adjustments necessary to present fairly our financial position, results of operations, changes in stockholders’ equity and cash flows for the interim periods presented.

The accompanying condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto included in our 2024 Form 10-K. The results for the three and six months ended June 30, 2025 are not necessarily indicative of results to be expected for the entire year ending December 31, 2025, or for any other interim period or future year.

Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for definitions of terms used throughout the document.

Use of Estimates

The preparation of financial statements requires management to make estimates, judgments and assumptions. The most significant assumptions are estimates used in our revenue gross-to-net accruals and other assumptions. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could materially differ from those estimates.

Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) -Improvements to Income Tax Disclosures. The amendments in this ASU provide more transparency about income tax information through improvements to income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. For public business entities, the amendments in this ASU are effective for annual periods beginning after December 15, 2024. Early adoption is permitted on a prospective basis for annual financial statements that have not yet been issued or made available for issuance. The Company anticipates that the adoption of ASU 2023-09 will result in modifications to its income tax disclosures.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement (Topic 220) -Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses, which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the financial statements. ASU No. 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is in the process of evaluating the impact of this new guidance on its disclosures.

NOTE 2. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

The following table summarizes our cash, cash equivalents and short-term investments:

Realized gains or losses have not been significant and are included in other income, net, in the condensed statements of operations and comprehensive loss.

Unrealized losses as of June 30, 2025 and December 31, 2024 were not material. All of the short-term available-for-sale securities held as of June 30, 2025 and December 31, 2024 had contractual maturities of less than one year. We determined that none of our available-for-sale securities were other-than-temporarily impaired as of June 30, 2025 and December 31, 2024, andno investment was in a continuous unrealized loss position for more than one year. Therefore, we believe that it is more likely than not that the investments will be held until maturity or a forecasted recovery of fair value.

Based on our procedures under the expected credit loss model, including an assessment of unrealized losses in our portfolio, we concluded that any unrealized losses on our marketable securities were not attributable to credit and, therefore, we have not recorded an allowance for credit losses for these securities as of June 30, 2025 and December 31, 2024.

See “Cash and Cash Equivalents” and “Short-Term Investments” captions of Note 2. Summary of Significant Accounting Policies of our 2024 Form 10-K for more information on our accounting policies for cash, cash equivalents and short-term investments.

NOTE 3. FAIR VALUE MEASUREMENTS

Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-level hierarchy for the inputs to valuation techniques is briefly summarized as follows:

The following table sets forth the fair value of our financial assets that are measured or disclosed on a recurring basis by level within the fair value hierarchy:

Fair Value of Debt

The principal outstanding under our term loans is subject to a variable interest rate and therefore, we believe the carrying amount of the term loan approximates fair value as of June 30, 2025 and December 31, 2024. See Note 8. Borrowing for a description of the Level 2 inputs used to estimate the fair value of the liability.

The carrying value of the deferred royalty obligation related to the sale of future royalties approximates its fair value as of June 30, 2025 and December 31, 2024 and is based on our current estimates of future royalties and commercialization milestones expected to be paid to us by Kyowa Kirin over the life of the agreement. See Note 7. Deferred Royalty Obligation Related to the Sale of Future Royalties for a description of the Level 3 inputs used to estimate the fair value of the liability.

NOTE 4. INVENTORY

Inventory consisted of the following:

Prepaid commercial manufacturing with third-party CMOs not included in inventory was $12.7 million and $16.4 million as of June 30, 2025 and December 31, 2024, respectively. There wereno prepayments expected to be converted into inventory after 12 months as of June 30, 2025 and December 31, 2024.

NOTE 5. REVENUE

Disaggregation of total revenues by nature is as follows:

Product Sales, Net

Total product sales, net was as follows:

Concentrations

Gross product sales from Customers accounting for more than 10% of total revenues were as follows:

(1)The total of the above percentages exceeds 100% as the numerators used in the calculations represent gross product sales for each Customer, as opposed to product sales, net as presented in our condensed statements of operations and comprehensive loss.

GTN Adjustments

The activities and ending reserve balances for each significant category of GTN adjustments on product sales, net, which constitute variable consideration, were as follows:

(1) Provisions included approximately $3.8 million of favorable adjustment in the 2025 first quarter, resulting from changes in prior periods’ estimated product returns for XPHOZAH.

NOTE 6. COLLABORATION AND LICENSING AGREEMENTS

We out-license to external partners for the development of tenapanor and commercialization of tenapanor outside of the U.S. We recognize revenue from our agreements with Kyowa Kirin, Fosun Pharma and Knight as licensing revenue, product supply revenue or non-cash royalty revenue related to the sale of future royalties. See Note 7. Collaboration and Licensing Agreementsand “Licensing Revenue Recognition” caption of Note 2. Summary of Significant Accounting Policies of our 2024 Form 10-K for more information on the nature, purpose, significant rights and obligations of the parties, as well as our accounting policies for such revenue streams.

The following table summarizes total revenues by collaboration partner:

The following table presents changes in our current and non-current deferred revenue balances, which are all attributable to Kyowa Kirin:

Significant developments and updates related to our collaboration and licensing agreements in the six months ended June 30, 2025 and 2024 are discussed below.

Kyowa Kirin

In February 2024, Kyowa Kirin announced the launch of tenapanor, marketed as PHOZEVEL®, for patients with CKD with hyperphosphatemia in Japan. In the three months ended March 31, 2024, we began to recognize non-cash royalty revenue related to the sale of future royalties, which was remitted to HCR in accordance with the HCR Agreement.

Fosun Pharma

In February 2025, we announced the approval of an NDA for tenapanor for the control of hyperphosphatemia in adult patients with CKD undergoing hemodialysis by China’s Center for Drug Evaluation of the NMPA. This approval triggered a $5.0 million milestone to us under the terms of the Fosun Agreement, which was recorded as licensing revenue on our condensed statement of operations and comprehensive loss when earned during the 2025 first quarter and was received in April 2025.

AstraZeneca

In connection with the AstraZeneca Termination Agreement, we recognized royalty expense as other cost of revenue in our condensed statements of operations and comprehensive loss of $3.8 million and $12.7 million in the three and six months ended June 30, 2025, and $7.9 million and $12.6 million in the three and six months ended June 30, 2024, respectively. As of June 30, 2025, we have fully recognized the $75.0 million royalty obligation.

NOTE 7. DEFERRED ROYALTY OBLIGATION RELATED TO THE SALE OF FUTURE ROYALTIES

We and HCR have an agreement in which HCR agreed to pay up to $20.0 million in exchange for royalty payments and commercial milestone payments that we may receive under our Kyowa Kirin Agreement. See Note 8. Deferred Royalty Obligation Related to the Sale of Future Royalties of our 2024 Form 10-K for further discussion on the nature, purpose, significant rights and obligations of the parties, as well as our accounting policies regarding the HCR Agreement.

A summary of financial information related to the HCR Agreement is as follows:

NOTE 8. BORROWING

The following table presents our long-term borrowing under the 2022 Loan Agreement:

On June 30, 2025, we entered into an amendment to our 2022 Loan Agreement (the Fifth Amendment), by and among the Company, as borrower, SLR, as collateral agent and the lenders party thereto. The Fifth Amendment, among other things, (1) provided for the immediate draw of the principal amount of $50.0 million (the Term E Loan) on the closing date of the Fifth Amendment and (2) provides us with the option to draw an additional $100.0 million of committed senior secured term loans, consisting oftwo separate term loans, each in a principal amount of $50.0 million: (a) the first of which is available at the Company’s election through June 30, 2026 (the Term F Loan) and (b) the second of which is available at the Company’s election through December 20, 2026 (the Term G Loan and, together with the Term F Loan, the Incremental Term Loans). We concluded that the Fifth Amendment was a modification to the 2022 Loan Agreement and is accounted for accordingly.

The interest rate for each of the Incremental Term Loans, if drawn, will be 4.95% plus the 1-month CME Term SOFR reference rate as published by the CME Term SOFR Administrator on the CME Term SOFR Administrator’s Website, subject to a SOFR floor of 3.50%. On the closing date of the Fifth Amendment, we paid (i) a fee of $0.3 million in connection with the funding of the Term E Loan, and (ii) a facility fee of $1.0 million with respect to the Incremental Term Loans.

Under the Fifth Amendment, the maturity date for the Term E Loan (and the other outstanding term loans) remains July 1, 2028. We are permitted to make interest-only payments on the Term E Loan (and the other outstanding term loans) through July 1, 2028. The maturity date for each of the Incremental Term Loans will be July 1, 2030. We will be permitted to make interest-only payments on the Incremental Term Loans from the date each of the Incremental Term Loans is drawn through July 1, 2030. We will be obligated to pay a final fee equal to 3.45% of the aggregate original principal amount of the Incremental Term Loans, to the extent such loans are funded, upon the earliest of any final termination, acceleration, prepayment or July 1, 2030.

The 2022 Loan Agreement contains certain covenants, including a single financial covenant that the sum of our net product revenue, calculated on a trailing six (6) month basis, plus unrestricted cash and cash equivalents that are subject to a first-priority perfected lien in favor of SLR, shall be greater than or equal to 100% of the principal amount outstanding under the 2022 Loan Agreement. In addition, the 2022 Loan Agreement contains subjective acceleration clauses to accelerate the maturity of outstanding principal amount in the event that a material adverse change has occurred within the business, operations or financial condition of the Company. As of June 30, 2025, the Company believes that the likelihood of the acceleration of the maturity due to subjective acceleration clauses is remote.

The total unaccreted final fee was $7.1 million and $5.4 million as of June 30, 2025 and December 31, 2024, respectively.

As of June 30, 2025, our total future payment obligation related to the outstanding balance of the term loans, excluding interest payments, was $209.9 million, which is due on July 1, 2028.

NOTE 9. LEASES

The following table provides additional details of our facility leases presented in our condensed balance sheets:

The lease costs, which are included in operating expenses in our condensed statements of operations and comprehensive loss, were as follows:

The following table summarizes our undiscounted cash payment obligations for our operating lease liabilities as of June 30, 2025:

NOTE 10. STOCKHOLDERS’ EQUITY

In January 2023, we filed a registration statement on Form S-3, which became effective in January 2023, containing (i) a base prospectus for the offering, issuance and sale by us of up to a maximum aggregate offering price of $250.0 million of our common stock, preferred stock, debt securities, warrants and/or units, from time to time in one or more offerings; and (ii) a prospectus supplement for the offering, issuance and sale by us of up to a maximum aggregate offering price of $150.0 million of our common stock that may be issued and sold, from time to time, under a sales agreement with Jefferies, deemed to be “at-the-market offerings” (2023 Open Market Sales Agreement). Pursuant to the 2023 Open Market Sales Agreement, Jefferies, as sales agent, may receive a commission of up to 3.0% of the gross sales price for shares of common stock sold under the 2023 Open Market Sales Agreement. In the six months ended June 30, 2025, we completed no sales pursuant to the 2023 Open Market Sales Agreement. As of June 30, 2025, we have completed sales pursuant to the 2023 Open Market Sales Agreement, resulting in the issuance of 16.8 million shares of our common stock and receipt of gross proceeds of $70.0 million at a weighted average sales price of approximately $4.17.

NOTE 11. EQUITY INCENTIVE PLANS

Stock-Based Compensation Expense

Stock-based compensation expense recognized for stock options, RSUs and our ESPP is recorded as operating expenses in our condensed statements of operations and comprehensive loss, as follows:

A summary of our total unrecognized stock-based compensation expense, net of estimated forfeitures, as of June 30, 2025 is as follows:

Stock Options

A summary of our stock option activity and related information for the six months ended June 30, 2025 is as follows:

Restricted Stock Units

A summary of our RSUs activity and related information for the six months ended June 30, 2025 is as follows:

Employee Stock Purchase Plan

During the six months ended June 30, 2025, we issued approximately 0.2 million shares of our common stock under the ESPP. The shares were purchased by employees at an average purchase price of $4.56 per share, resulting in proceeds to us of approximately $1.0 million.

Issuance of Common Stock for Services

During the six months ended June 30, 2025, we issued 0.1 million shares of our common stock to members of the board of directors who elected to receive stock in lieu of their cash fees under our Non-Employee Director Compensation Program.

NOTE 12. SEGMENT REPORTING

We operate in a single reportable segment. The CODM primarily uses aggregated net loss as reported on the condensed statements of operations and comprehensive loss to measure segment loss, supplemented by certain additional significant expense details reflected in the table below. There have been no changes in the determination of segmentation or the measurements used to determine reported segment loss discussed in our 2024 Form 10-K. See Note 17. Segment Reporting of our 2024 Form 10-K for more discussion on our segment reporting.

Detailed information regarding our single operating segment’s significant revenues, expenses and operating loss is as follows:

(1)“Other revenues” includes revenues from our collaboration partnerships, including licensing revenue, product supply revenue and non-cash royalty revenue related to the sale of future royalties.

(2)Research and development, selling and general administrative expenses herein do not include certain allocated items, such as stock-based compensation expenses.

(3)“Other segment expenses” primarily consists of allocated facilities, information technology and employee costs of approximately $3.2 million and $7.9 million for the three and six months ended June 30, 2025, and $4.6 million and $8.3 million for the three and six months ended June 30, 2024, respectively.

(4)“Other reconciliation items” includes interest expense, non-cash interest expense related to the sale of future royalties, provision for income taxes and other income, net.

NOTE 13. NET LOSS PER SHARE

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period and excludes any dilutive effect of stock-based awards. Diluted net loss per common share is computed giving effect to all potential dilutive common shares, including common stock issuable upon exercise of stock options, unvested restricted stock units and ESPP shares issuable pursuant to the current purchase period. As we had net losses for the six months ended June 30, 2025 and 2024, all potential common shares were determined to be anti-dilutive during those periods.

The following table sets forth the computation of net loss per common share:

The total numbers of securities that could potentially dilute net income per share in the future that were not considered in the diluted net loss per share calculations because the effect would have been anti-dilutive were as follows:

NOTE 14. COMMITMENTS AND CONTINGENCIES

On December 7, 2021 and March 29, 2022, two verified shareholders derivative lawsuits were filed in the U.S. District Court for the Northern District of California purportedly on behalf of Ardelyx against certain of Ardelyx’s executive officers and members of our board of directors, captioned Go v. Raab, et al., Case No. 4:21-cv-09455-HSG, and Morris v. Raab, et al., Case No. 4:22-cv-01988-JSC (together, the Go and Morris actions). The complaints allege that the defendants’ violations of Section 14(a) of the Securities Exchange Act of 1934, as amended, breaches of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets for personally making and/or causing Ardelyx to make materially false and misleading statements regarding the Company’s business, operations and prospects. The complaint seeks contribution under Sections 10(b) and 21D of the Securities Exchange Act of 1934 fromtwo executive officers. On January 19, and April 27, 2022, the court granted the parties’ stipulation to stay the Go and Morris actions, respectively, until resolution of the motion(s) to dismiss in the lawsuits captioned Strezsak v. Ardelyx, Inc., et al., Case No. 4:21-cv-05868-HSG, and Siegel v. Ardelyx, Inc., et al., Case No. 5:21-cv-06228-HSG (together, the Securities Class Actions). On October 25, 2022, the parties filed a stipulation to consolidate and stay the Go and Morris actions, and on October 27, 2022, the court consolidated the Go and Morris action and stayed the consolidated action pending resolution of the anticipated motion(s) to dismiss in the Securities Class Action. The Securities Class Actions were voluntarily dismissed on March 5, 2025. The court dismissed the Go and Morris actions on April 30, 2025.

On July 17, 2024, in partnership with the AAKP and the NMQF, we filed a lawsuit in the U.S. District Court for the District of Columbia against CMS, claiming that CMS has violated its statutory and regulatory authority under MIPPA, which established the ESRD PPS bundled payment system for dialysis services in 2008. Specifically, the lawsuit claims that moving XPHOZAH, along with all oral-only drugs, into the ESRD PPS is inconsistent with MIPPA’s statutory provision, and contradicts CMS’s own regulations. XPHOZAH and other oral-only drugs, are not administered by dialysis providers and cannot be taken during the delivery of maintenance dialysis. On November 8, 2024, the U.S. District Court for the District of Columbia granted defendants’ Motion to Dismiss and denied plaintiffs Motion for Preliminary Injunction, or in the Alternative, for Expedited Summary Judgment. Following the District Court’s denial of plaintiffs’ Motion to Alter or Amend the Judgment, or in the Alternative, for an Injunction Pending Appeal, plaintiffs filed an Emergency Motion for an Administrative Stay and Injunction Pending Appeal, which was denied by the United States Court of Appeals for the District of Columbia Circuit. Appellants filed an initial brief in the appeal on February 4, 2025; Appellees filed an initial brief on March 6, 2025; and Appellants filed a reply brief March 27, 2025. Both Appellees and Appellants filed a final brief on April 10, 2025. Oral argument in the case has been scheduled for September 25, 2025.

On August 16, 2024, a complaint was filed against us in the U.S. District Court of Massachusetts, captioned Yarborough v. Ardelyx, Inc., et al., No. 24-cv-12119 (D. Mass.). The complaint names the Company, Mike Raab, and Justin Renz as defendants and alleges violations of Sections 10(b) and 20(a) the Exchange Act and Rule 10b-5 promulgated thereunder, related to the our announcement on July 2, 2024 that it had chosen not to file an application for Transitional Drug Add-on Payment Adjustment for XPHOZAH (the “Yarborough Action”). The plaintiffs seek damages and interest, and an award of costs, including attorneys’ fees. The Court appointed Tate Wood as lead plaintiff on October 30, 2024. The lead plaintiff filed an amended complaint on January 13, 2025, in which he added Susan Rodriguez, Laura Williams and Elizabeth Grammer as additional defendants and removed Justin Renz as a defendant. The lead plaintiff purports to bring claims on behalf of all those who acquired Ardelyx common stock between February 22, 2024 and July 1, 2024. Defendants filed a motion to dismiss the amended complaint on March 14, 2025. Plaintiffs filed a response on May 13, 2025. Defendants filed a reply to plaintiffs’ response on June 23, 2025. We believe the plaintiffs’ claims are without merit.

On September 6 and 13, 2024, certain Ardelyx shareholders filedtwo verified derivative complaints purportedly on behalf of the Company in the United States District Court for the District of Massachusetts alleging violations of Sections 10(b) and/or 14(a) of the Exchange Act, breaches of fiduciary duty, unjust enrichment, waste, and aiding and abetting breaches of fiduciary duty against certain members of our board of directors and management based on substantially the same factual allegations in the Yarborough Action. The complaints seek unspecified damages and corporate governance reforms, as well as costs and attorneys’ fees. On September 25, 2024, the Court consolidated thetwo derivative actions into the case In re Ardelyx, Inc. Stockholder Derivative Litigation, Case No. 1:24-cv-12302-LTS (D. Mass.). On November 7, 2024, the Court stayed the consolidated derivative action pending resolution of any and all motion(s) to dismiss in the Yarborough Action. We believe the plaintiffs’ claims are without merit.

From time to time, we may be involved in legal proceedings arising in the ordinary course of business. As of June 30, 2025, there is no litigation pending that would reasonably be expected to have a material adverse effect on our results of operations and financial condition.